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House of Commons
Session 2000-01
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Standing Committee Debates
Regulatory Reform Bill [Lords]

Regulatory Reform Bill [Lords]

Standing Committee A

Thursday 29 March 2001

[Mr. Frank Cook in the Chair]

Regulatory Reform Bill

Clause 6

Document to be laid before parliament

9.55 am

Mr. Brian Cotter (Weston-super-Mare): I beg to move amendment No. 38, in page 5, line 23, at end insert—

    `and a written statement as outlined in subsection (2A)'.

The Chairman: With this it will be convenient to discuss amendment No. 37, in page 6, line 6, at end add—

    `(2A)The statement referred to in subsection (1) is a statement that in the opinion of the Minister his draft proposals do not have any significant constitutional implications.'.

Mr. Cotter: We have tabled the amendments because grave reservations have been expressed that the Bill's wide scope could lead to constitutional abuse. To narrow the Bill's scope artificially would defeat its object and reduce its overall effectiveness, but some form of safeguard needs to be introduced. In the other place, the Government undertook that the Bill would not be used in that way, but acknowledged that it was extremely difficult to define whether a measure was unconstitutional, or controversial.

The 15th report of the Delegated Powers and Deregulation Committee referred to Lord Falconer's comments on the problem:

    ``It will, he said, be for Ministers to decide whether or not the use of the new power would be `appropriate'...likening the task of so deciding to the difficulty of defining an elephant. `You cannot describe it but you know it when you see it.'''

I understand that stance, particularly given that we have no formal written constitution to act as a measuring stick. I also welcome the Government's promise, made in the other place, not to implement such legislation. However, I cannot share Lord Falconer's faith that future Administrations will interpret an ``elephant'' in the same way and comply with the agreement. Because of the Bill's constitutional implications, some safeguard must be put in place.

We reject the subjective opinion test, but recognise that it is difficult in practice. If the amendments were accepted, any Minister seeking to implement an order would have formally to produce a categorical statement in the parliamentary document to the effect that, in his opinion, the order in question had no constitutional implications.

We have chosen a ministerial statement as the means of ensuring constitutional sobriety because it would be more effective than seeking to define the measures to which the Bill should apply, which would narrow the Bill's scope. Instead, a personal pledge would be made, which would deter rogue Ministers who were able, and inclined, to abuse the power. Such a statement would also make the Minister publicly accountable for his actions, reassure Parliament and the public of his intentions, and ensure that he were not tempted to misuse the legislation.

The amendments are necessary to ensure a proper consultation process. They would act as a further safeguard, ensuring that organisations had adequate opportunity to state their case, and provide another test against which the Committee, or Committees, can measure the order. Were the Committees to feel that the consultation process was lacking, their decision as to whether to accept the order might be affected. A further constitutional safeguard would be provided: by having to account for the details of consultations, Ministers who wanted to abuse the power would be unable to undertake half-hearted consultations in an effort to prevent opposition to any controversial measures.

The amendments address two important points that were also raised in the other place, and I look forward with interest to the Minister's response.

Mr. Richard Page (South-West Hertfordshire): I thank the hon. Member for Weston-super-Mare (Mr. Cotter) for moving the amendment. I had hoped that the hon. Member for Twickenham (Dr. Cable) might have made a guest appearance to reinforce the arguments that he has advanced, but I shall make a few comments.

As I understand it, a proposed regulatory reform order will be accompanied by a statement of the relevant Minister's views on its compatibility with the European convention on human rights. Lord Williams of Mostyn gave an undertaking in the House of Lords on 2 November 2000 that Ministers would always inform the House whether they were satisfied that secondary legislation subject to the affirmative procedure was compatible with the convention. The hon. Member for Weston-super-Mare has outlined that.

I do not always support the Government, but, with an election coming, I am practising with my new Red Box to get into the swing of supporting the system. I shall move on.

The Government have not suggested in the explanatory notes that any prospective orders will have constitutional implications, such as the hon. Gentleman indicated. It would, therefore, be difficult to implement the amendments, and I do not see any reason to support them.

10 am

The Parliamentary Secretary, Cabinet Office (Mr. Graham Stringer): Before I discuss amendments Nos. 38 and 39, I would like to add a final point to our discussion on clause 5 and its relation to the devolution settlement. I said, at the end of Tuesday's debate, that the powers to make regulatory reform follow the devolution settlement. I should have added that the power under clause 1 had not been devolved to the Welsh Assembly. What I said was not incorrect, but did not give the full picture.

The amendment has two aims. First, it tries to define what is appropriate and to deal with the problem of the definition of elephants. That was referred to in debates in the other place. Secondly, it seeks to use detailed wording to tie down rogue Ministers, or even rogue Governments. That theme has run through debates on the Bill. The hon. Member for Weston-super-Mare suggested that a rogue Minister might be tempted to undertake only half-hearted consultation, in seeking to introduce a constitutional regulatory reform order in the guise of something else.

That misrepresents the strength of the consultation process that is laid down in the Bill. As was said on Tuesday, that process is not just a matter for the Minister. The Committees of both Houses will have to be satisfied that the consultation has been properly carried out. The Minister will have to satisfy a host of conditions, and the Committees can insist on further consultation, or even carry it out themselves. The structure of the Committees and of the consultation process means that a rogue Minister should not be a problem.

We are left only with the problem of appropriateness. The details that the Committees must address will reveal whether the Bill could cause conflict and disagreement over constitutional matters. If such a case were proven, that would be an inappropriate path for the measure to go down and even a rogue Minister would be too sensible to go down it.

The amendment is unnecessary because the structure of the Bill deals with the issue thoroughly. I am happy to echo my noble and learned Friend Lord Falconer, who said that it was not the intention of the Government to bring forward constitutional reform via the regulatory reform order process. I ask the hon. Gentleman to withdraw the amendment.

Mr. Cotter: It is important to raise the issue and to ensure that consultation really is consultation—that approach should apply throughout government, at all levels. Consultations are frequently embarked upon. Through discussion of the Bill, we have highlighted that we are concerned that consultation should be of a proper length, correctly done and that those who are concerned with the matter should be contacted. The Minister said that we had received reassurances from the other House and I appreciate that I have taken on an elephantine task in trying to identify rogue elements in the Bill. In view of the latest Conservative-Labour pact, I happily withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: At this point I draw the attention of the Committee to the fact that male hon. Members may divest themselves of their upper garment.

Mr. Andrew Lansley (South Cambridgeshire): I beg to move amendment No. 24, in page 6, line 1, after `benefits', insert `and disbenefits'.

The Chairman: With this it will be convenient to take amendments Nos. 25 and 26.

Mr. Lansley: I am glad that our debate continues in the same good humour as that which characterised Tuesday's discussion. However, I hope that the hon. Member for Weston-super-Mare will not mention pacts again because that could lead us into bad humour. We would do best to avoid that.

The purpose of amendments Nos. 24, 25 and 26 relates to the comprehensiveness and efficacy of the document that will be laid before Parliament under clause 6. Amendments Nos. 24 and 25 relate to paragraph (i), which requires the document to illustrate the benefits that will arise from implementation, other than savings on costs identified in paragraph (h). The amendments seek to note the disbenefits that might flow from a proposal, in addition to the benefits—neither of which might be cost related. It does not always follow that elements that are not benefits are necessarily burdens. The Minister may ask for an illustration and I confess that I do not have one, but it appears to be true that if there are benefits that are not cost related there may also be disbenefits and, in so far as they do not impose costs, they are not necessarily burdens. I have now thought of an example. Clause 2 makes it clear that

    ``any burden which affects only a Minister of the Crown or government department''

is not included. In the context of regulatory reform orders, there may be disbenefits which are not cost-related but impact on Ministers and Government Departments, so they would not be burdens under the definition in clause 2. We want to be fair to Government Departments and it should be clear in the document to be laid before Parliament whether those disbenefits are covered.

I confess that the purpose of amendment No. 26 is not comprehensiveness of drafting. We perceive a significant gap in the armoury of the material required under clause 6 and the document to be laid before Parliament. The clause does not require a regulatory impact assessment as such, but many of the matters that would be included in such an assessment are included: burdens imposed, protection that must be maintained, legitimate expectations and, in paragraph (h),

    ``savings or increases in cost''

are isolated. The amendment would require

    ``a statement analysing the financial and other impact on persons likely to be affected by any of the provisions''.

Its purpose is not simply to ask for a regulatory impact assessment because, as hon. Members are aware, such assessments tend not to be comprehensive or uniform. The purpose of the amendment is to make it clear that we are looking not for aggregate estimates of cost, but to discover what the disaggregated impact might be on persons, industry sectors and sub-sectors, small businesses and so on.

I want to refer to one of the five consultation documents and will come to the others later. My reading matter has burgeoned during the past two days. The Minister said that five consultation documents were published in anticipation of the passage of the Bill. They are interesting because if they are intended, as they must be, to pave the way towards the preparation of a document under clause 6 in due course and are illustrative of what is occurring under the preliminary consultation in clause 5, they raise some interesting points.

The Department of the Environment, Transport and the Regions issued a consultation paper on the business tenancy legislation in England and Wales, but there are various problems with it. First, unlike the other four consultation papers, it sets out in detail, item by item, the tests that should be applied under the Bill. The chart in annex A states:

    ``Would the proposals impose a new burden? ... Would the proposals remove any `necessary' protection under the existing law? ...Would the proposals prevent someone exercising a right or freedom they might reasonably be expected to continue to enjoy?... Would any new burdens be proportionate to the expected benefit?...Would the proposals strike a fair balance?''

On the face of it, all those tests have to be applied under the Bill. The first three tests—Are there new burdens? Is there necessary protection? Are there reasonable expectations?—are perfectly proper. The preliminary consultation should indeed cover those elements. However, it is curious that the latter two tests—those of proportionality and fair balance—are being answered by the consultation document sent out by the DETR before the point at which the DETR, according to what the Minister said in the debate on Tuesday, would have had the necessary information to reach such a decision, as the persons who will be affected have not had an opportunity to tell the DETR what is to happen. In my view, the tests of proportionality, fair balance and desirability—although desirability does not appear in the chart—should be for the document and for the Minister's presentation to the House, not for the preliminary consultation.

10.15 am

The other three tests, and the Government's views on them, could be in the document; that would be perfectly reasonable. However—this is the issue that lies at the heart of the documents to be laid before Parliament—where is the prior test, namely: what are the existing burdens affected by the proposal, how are they to be changed, and where are the burdens to be reduced or removed? If a chart of this kind were to be set out, one would hope, in the context of a deregulatory measure, that the third step would be to illustrate to those receiving the consultation document that there are existing burdens and that they are going to be changed, and the net effect is to reduce or remove burdens. Yet there is no evidence in the DETR document that this proposal is intended in any way to reduce or remove burdens upon persons. Indeed, the opposite is the case. It gives a series of answers to the question,

    ``Would the proposals impose a new burden?''

On procedures for excluding security of tenure, it says:

    ``The proposals would impose new burdens''

in the form of

    ``a requirement for the landlord''.

On ownership and control of the business, it says:

    ``The proposals . . . would impose a burden on a landlord''.

On whether notices would require information, the answer is ``Yes''.

On renewal procedures, it says:

    ``One element could be considered a burden—a requirement for a landlord''.

On interim rent, it says:

    ``Yes—the formula for determining interim rent would be more complex, in the interests of greater fairness.''

So in five instances, the answer to the question whether the proposals would impose a new burden is yes. In at least three cases, the new burdens would apply to landlords in particular. That is interesting in terms of amendment No. 26. The impact assessment should not simply be an aggregate test of savings and increases in costs or benefits, but should isolate and identify for landlords the burdens that will be imposed on them as a consequence of such a measure.

I freely confess that I have no idea whether this is, on balance, a good or a bad proposal. It is clear from the document that burdens will be imposed on landlords. In the interests of fairness and a reduction of burdens on tenants, the proposal is desirable. However, the purpose of the impact assessment is to isolate and identify the burdens that fall upon landlords in particular, because it is they who should have an opportunity in the preliminary consultation to present their arguments to Ministers.

We need not delay ourselves on the Home Office documents, because the Home Office does not attempt a systematic examination of the kind that clause 6 requires. To be fair to Departments, they all set out in the consultation papers a uniform presentation of what the Bill will in due course require to be proven for an order to be passed and a note on the parliamentary consideration of those proposals. However, what really matters in this context is the extent to which those reading the document and looking at the proposals would have their attention drawn to precisely the facts and information that they should supply in order for a document under clause 6 to be created successfully.

The two Home Office documents are essentially deregulatory and I suspect, although I may be wrong, that they could have been introduced under the Deregulation and Contracting Out Act 1994.

It is interesting that the document about private sector housing renewal, which is clearly a substantive proposal, does not include the chart that the DETR sought to introduce on the business tenancies proposal. The document contains a draft regulatory impact assessment, but it is not set out like the chart, which I admittedly criticised. Nevertheless, the chart and the test should be set out in detail. Essentially, the proposal allows the DETR to spend money differently; it is not a deregulatory proposal. We hoped for exceptional proposals, but one of the first five to be introduced is not even deregulatory. It simply permits the Government to spend money, which might or might not benefit the public. That is not deregulation.

The last proposal is curious. The letting of business premises is covered by section 57of the Landlord and Tenant Act 1954. The DETR has included a relevant chart, but the tests are different. It sets out several options and seeks to address benefits, costs and compliance. However, it does not refer in a formal sense to matters such as necessary protection and it adds a first column that concerns risks. The Department is trying to apply what I regard as a risk assessment alongside a compliance-cost assessment, which is not what the regulatory reform order sets out to achieve.

At the risk of saying that we told the Committee so on Tuesday, the more comprehensive we can make clause 7, the more we shall encourage Ministers and Departments to use the structure of clause 6. Indeed, the document should be laid under clause 6, rather than under clause 3, making judgments that should be made subsequently. The structure of the document in clause 6 should be the basis upon which consultation occurs. On the evidence of the first five documents, it is self-evident that Departments are not proceeding down that path, or when they attempt to do so, they are not getting it right. Amendment No. 26 should be included to direct Departments to the necessity of identifying specific impacts that occur on persons. Of course, in that context persons means categories of business, which can be identified by size or sector.

The Fair Regulation Campaign, which is an umbrella body for several organisations, is an effective promoter of regulatory impact assessments. It produced a document—I confess that I do not know when—that contains a checklist for Departments on producing effective regulatory impact assessments. One item, which I referred to previously, states:

    ``The full commercial impact of regulation, rather than just the cost of adapting to it, is the key factor for organisations. Regulatory Impact Assessments should therefore take account of the effect of proposals on prices, sales and all overheads.''

It is important to understand the commercial impacts of a measure. Unless one has a statement that examines the financial and other impacts of the form that is required in amendment No. 26, it is unlikely that the additional commercial consequences of a proposal will be isolated in the document, so can be understood.

Impacts must be understood as meaning direct impacts in terms of costs—indeed, paragraph (h) may include savings and costs—and indirect impacts in terms of commercial and qualitative effects. Indirect impacts should be a significant part of the document provided in clause 6.

I hope that my colleagues and other members of the Committee have borne with me as I explained the purposes of the amendments and set them in context. I hope, too, that the Minister sees some merit in them and I urge my colleagues to support them.


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