Select Committee on Regulatory Reform Second Special Report


4.1    During the passage of the Regulatory Reform Bill, Lord Falconer gave the following commitment:

1/4 "I can and do undertake on behalf of the Government that a Minister of the Crown will report to this House three years after enactment—I say three years rather than two years; I am not sure that that is a critical point between us--on the operation of the regulatory reform act should it become an Act. I undertake that that report will cover the operation of the order-making process and any associated constitutional and procedural issues. As the debates to date have indicated, these are areas of key concern to your Lordships' House. It is right that the government of the day should address them fully. After that first report, it would be for the government of the day and the House to decide on the need for any further report. The timing, scale and scope of the next report seems to me a matter best decided after that. I do not think that it would be right for such reports to reopen matters of policy which had been debated fully during the consultation, scrutiny and approval stage of the order-making process. There would be no point if a reformed regulatory regime order was working smoothly. Indeed, it could cause uncertainty. But the process—how the system is working—needs to be looked at".[15]

4.2    The Government believes that, while we are only at the Act's first anniversary, it would be helpful to set out a summary of progress made and some of the lessons learnt.

Work to date

4.3    The Regulatory Reform Act 2001 received Royal Assent on 10 April 2001, and the following table summarises activity up to early May 2002:








Awaiting Parliamentary votes



Stage 2 scrutiny



Awaiting stage 2 scrutiny




Stage 1 scrutiny



Consultation completed, preparing for Stage 1 scrutiny



Out to consultation






A full list of proposals laid before Parliament since the passage of the 2001 Act can be found at Annex C.

4.4    To date, six RRO proposals have been laid before Parliament and five more have been publicly consulted upon. Three RROs are now in force on the statute books. The first Regulatory Reform Order—the Special Occasions Order—was made on 6 December 2001.[17] Two more—the reform of funding and liabilities for the estates work at Voluntary Aided Schools and the reform of alcohol licensing for the Queen's Golden Jubilee celebrations—have now been made. Another two—the Vaccine Damage and Invalid Care proposals—are likely to be made in a matter of weeks.

4.5    By comparison, no deregulation orders were made in the year the Deregulation and Contracting Out Act was passed, and only two in 1995. They also concerned reforms of a more limited nature.[18]

Deregulation Orders and Standing Orders

4.6    All four outstanding deregulation orders[19] that were tabled while the Bill was still going through Parliament have now completed their scrutiny stages and three have now been made:

    The Deregulation (Restaurant Licensing Hours) Order 2002;

    The Deregulation (Bingo and Other Gaming) Order 2002; and

    The Deregulation (Disposals of Dwelling-houses by Local Authorities) Order 2002.

The final deregulation order—the Deregulation (Correction of Birth and Death Entries in Registers or Other Records) Order 2002—is awaiting the motion to approve in the House of Lords which is scheduled for 14 May.

This brings the final total for deregulation orders made to 52 orders. No further deregulation orders are possible, except for those made by the Scottish Parliament in relation to devolved matters.

4.7    The Committee comment in their 9th report[20] on the draft Correction of Birth and Death Entries Deregulation order, as follows:

"12. Finally, we note that this is the last of the draft Orders to be brought forward under the old Deregulation and Contracting Out Act 1994, which has for almost all relevant purposes now been superseded by the Regulatory Reform Act 2001. We are pleased that all these Orders have now been dealt with, and we look forward to the Government making time for the appropriate rationalisation of the Standing Order governing our work, including a change of name to the Regulatory Reform Committee."

4.8    The Government agrees with the Committee's view that its Standing Orders should be revised to reflect the change in its business. It is, of course, for the House to decide on the precise nature of the changes, and the Government looks forward to them being made in the near future.

Committee procedures

4.9    The Committee also states in its 9th report[21] that:

"28. Notwithstanding our comments above concerning the nature of the representations which have been made to us about this proposal, we would like to take the opportunity to remind other Members of the House of the procedures available for debate on issues, such as these, which may be unconnected with the regulatory reform criteria and therefore outwith the normal remit of this Committee—or indeed any issue concerning a regulatory reform proposal which other Members may wish to pursue. Standing Orders provide that this Committee may invite Members of the House who are not Members of the Committee to attend meetings at which witnesses are being examined; and that such Members may, at the discretion of the Chairman, ask questions of those witnesses. This procedure may be considered analogous to the debate in Standing Committee which would normally take place on orders subject to the affirmative resolution procedure, and is in addition to the provision for debate on the floor of the House should the Committee divide on its recommendation as to whether the draft Order should be approved.

"29. Although this procedure has been available since the institution of the deregulation procedure in 1994, it was never used by our predecessor Deregulation Committee, nor have we yet found occasion to use it ourselves. However, should any Member, now or in the future, wish to make representations to us that the procedure should be used in any particular case, we will of course consider those representations, and if appropriate make arrangements for a hearing before the Committee."

4.10  This proposal is clearly a matter for the House and for the Committee, but the Government recognises this as a potentially valuable way of involving MPs more closely in regulatory reform order-making. It complements the Government's suggestion below that MPs should be encouraged to sponsor reforms for take up by Ministers as proposed regulatory reform orders.

Scope and nature of RRO proposals

4.11  The Government notes that the Clerk to the Delegated Powers and Regulatory Reform Committee wrote to Lord Macdonald on 20 February 2002 stating that:

"the Committee considers that the proposals which are now starting to come before it1/4 are worthwhile improvements to the law and are exactly the sort of reforms which they hoped the new procedure would make possible."

The Government agrees with the Committee that, as the letter goes on to say in relation to the proposed Fire Safety RRO:

"if such major overhaul of significant areas of law can be achieved using the powers of the 2001 Act, this will be a major step forward."

4.12  The Government also notes that the order-making process is qualitative in nature, requiring the same sorts of resources that would be needed if the proposal were to be taken forward by primary legislation. It agrees with the Commons Committee's remark in its 1st Report[22] that:

"the regulatory reform procedure is no "easy route" for ill-considered or badly handled proposals. Properly conducted, however, it provides an excellent opportunity to effect reforms which might not otherwise see the light of Parliamentary day."

4.13  It is Government policy to use RROs whenever possible as a legislative vehicle and the Government looks forward to a substantial increase in throughput as the order-making power establishes itself as a viable and powerful alternative to Bills.

Scrutiny arrangements

4.14  The Government recognises that the initial scrutiny period cannot be varied according to the work involved in particular proposals. From the proposals laid before Parliament to date, the Government believes that the length of this period—60 calendar days excluding breaks of more than 4 days—is proving sufficient given that the proposals are tabled in completed form and with comprehensive supporting documentation.

4.15  The Government also notes the close working relationship between the Lords and Commons Committees, which the Clerk to the Lords Committee describes as "proving very fruitful, and is probably closer than in any other area of co-operation between the Lords and Commons."

4.16  The Government notes that the Act adopts a one-size-fits-all approach. This was clearly right for deregulation orders that tended to be relatively small and limited in scope. In developing the Bill, the Government hoped that the superaffirmative procedure could be used for both small and large proposals. However, the Government considers that there may be circumstances where the procedures, taken as a whole, are too burdensome. For example, it may be that an expedited procedure would be appropriate for those that are simple, uncomplicated and command widespread support. It is our experience that some Departments are put off using RROs because of the time-scales and bureaucracy involved.

4.17  The Government fully accepts that the Committees have to work within the framework provided by the Act, and that any such changes to the Act would need to be taken forward by way of a Bill. The Government will keep under review whether this rigorous and protracted scrutiny is appropriate for all proposals. It may be that the Committees have their own ideas as to the ways in which the process and the legislation could be improved, and the Government would welcome the opportunity of debating them with the Committee.


4.18  The Government understands the importance of the careful and precise drafting of proposals and draft RROs.

4.19  The Commons Committee pointed out in an initial report[23] on one proposal that the legal drafting did not meet the necessary standard:

"It appears to us that the reason for the poor standard of drafting in this case may have been the result of the proposal having to be laid before Parliament in something of a hurry, in order to ensure that it could pass through the necessary Parliamentary stages in time for implementation on the planned date of 1 April 2002. We appreciate the need for speed in this case, given the objective of implementing these changes by that date, and the desirability of ensuring that all parties involved were given sufficient time to prepare for it. However, we remind Departments that the requirement under the Regulatory Reform Act is to lay before Parliament "proposals in the form of a draft of the Order, together with [an explanatory memorandum]." The draft Order is not therefore simply an indicative adjunct to the policy proposals contained in the explanatory memorandum, but should rather represent a full and complete expression of how those proposals are to be given legislative effect. We trust that future proposals will come before Parliament in such a state as to ensure that this is the case".[24]

4.20  The Government appreciates that, although tabled "in the form of a draft order" at 1st stage scrutiny and then as a draft order for 2nd stage, the legal text of the instrument must be complete and final, rather than a work-in-progress. The Government is pleased to note that the final report[25] on the proposal acknowledges that the Department concerned acted promptly to correct this. It notes the importance of ensuring that proposals are drafted carefully so that they meet the necessary standards to give proper legal effect to the policy proposal.

4.21  It is worth noting that, just as the Committee is concerned about the level of its own resourcing, there are emerging concerns within Departments as to the legal and other resources required for the development of RRO proposals. While committed to a demanding programme of regulatory reform order-making, Departments must balance resources against competing priorities. RROs require equivalent resources to Bill work but place increased burdens on Departmental lawyers. The Committee might like to note that, to help ensure quality, the Regulatory Impact Unit has recently increased its legal resources in order to help advise Departmental lawyers on drafting and vires issues.

4.22  There are also still aspects of the Act where we have yet to develop precedents: for instance, we have yet to come forward with a free-standing RRO that repeals and replaces Acts of Parliament as opposed to inserting amendments into them, and this may require a different approach.

4.23  The Government notes the additional pressures on internal resources created by regulatory reform order-making, and will keep its options under review for managing the order-making programme.


4.24  The 2001 Act was designed with the various devolution settlements in mind. The Government, for example, is monitoring closely the operation of the requirement in the Act for the Welsh Assembly to give its consent to proposals to vary or remove a function that had been transferred to it. The Act requires this to be signified when the order is about to be made.

4.25  Some Departments have discovered that this requirement can be an unexpected source of delay. There is an emerging procedural arrangement that the Assembly will indicate its consent where needed before the order is laid for 2nd stage scrutiny. That is what happened, for example, in the case of DTLR's housing grants and loans proposal.

4.26  The Welsh Assembly Government will have been consulted on the detail at much earlier stages of policy development, but there is still the possibility that, after the Committees have reported on a proposal, the Assembly plenary session could withhold its consent or that it could attach conditions. If that were to happen, the Government would need to consider carefully whether we could proceed with the RRO. We might need either to re-consult or to re-table the order or, at worst, to drop it or confine it to England only. That raises the prospect of disappointment for consultees whose expectations had been raised and of criticism from the Committees whose time and energies would have been fruitless. The Government would be interested in the Committee's views on the timing considerations at issue here.

Explanatory Documents

4.27  The Government has also taken the step of making the explanatory documents that accompany the proposal at both scrutiny stages available on the Cabinet Office website.[26] This parallels the availability of the Explanatory Notes that accompany the introduction of Bills in either House.

4.28  The Government has taken this step in order to increase further the transparency of the order-making process. It should also help ensure that people who wish to make representations to the Committees or to the Minister at that stage (such as those who were not for whatever reason able to comment during the consultation period) can do so on an informed basis.

4.29  The Government notes from Committee's[27] 4th report that it has, on occasion, required additional information to supplement that given in the Explanatory Document at 1st stage scrutiny:

"We did, however, find it necessary to extract a significant amount of information from the Department in addition to that contained in the explanatory document before we could be satisfied that the proposal could proceed."

4.30  The Government notes this concern and will re-emphasise to Departments the need for the explanatory documents provided at each scrutiny stage to be as comprehensive as possible. The Government believes that good policy making is embedded in proper use of the order-making procedure. It welcomes that Committee's illustration in that report of the way in which the process can result in further improvements:

"21. We were pleased to note the Department's acknowledgement of the benefits of pursuing the Regulatory Reform Order route to legislative change. "[This] route has helped in building awareness of our proposals and achieving a strong consensus for change amongst all key stakeholders," it says, and quotes a response from the Chief Building Surveyor at Portsmouth City Council which commented favourably on the explanatory document laid with this proposal. We hope other Departments, and other interested parties, will find the Regulatory Reform Order route similarly attractive, and we welcome the stated commitment of the Department for Education and Skills to using the procedures available under the Regulatory Reform Act."

The Government shares that view.


4.31  The Committees have previously expressed their strong views that effective consultation is at the heart of the regulatory reform order-making process, and that their role is to ensure that each Department proposing an RRO has properly discharged its responsibilities in that respect. The Government considers this function of the Committees to be a powerful guarantee of the order-making process.

4.32  The Government notes the Committee's criticisms in its 9th report:

"11. We cannot conclude our Report on this draft Order, however, without expressing our dissatisfaction at the way it has been handled by the Government Departments concerned. Although the eventual result was, in our opinion, the right one, neither the Office for National Statistics (ONS) nor the Official Solicitor's office emerge from this saga with much credit. The ONS should have made sure that all Government departments, and parts of departments, with an interest in the proposal were consulted even before an official public consultation document was issued. For its part, the failure of the Official Solicitor's office to respond in timely fashion to ONS's requests for further comments on the concerns originally raised on the second round of consultation was, to say the least, unfortunate. We trust that other Departments will learn the lessons of ONS's experience, and ensure that all necessary consultation is carried out in a full and timely manner."

4.33  The Government agrees with the Committee that proposals for RROs should, so far as is possible, be cleared internally with relevant Government Departments or parts of Departments as early as practicable. This is undertaken as a matter of standard practice as part of the collective process of Government, and as such any views expressed are incorporated in the supporting documentation. However, there may be times when it would be appropriate for public bodies to comment as part of the formal consultation process, which would generally not be the case for Government Departments. This would mean that their views would be made publicly available and treated as distinct from those of the Government. That may be appropriate with office holders, for example, and with Non-Departmental Public Bodies, and the Government envisages proceeding on a case-by-case basis.

4.34  The Cabinet Office will draw these points to the attention of Departments in the draft guidance manual on order-making.

Electronic Communication

4.35  The Government notes that its dealings with the Committees are increasingly conducted electronically—this is the case with e-mail notifications, with the Committee's subsequent requests for further information and the Department's responses to them. This is to be welcomed.

4.36  The Government also maintains the Cabinet Office website as the main public source of information on the Act, orders made under it, proposals currently before Parliament for scrutiny and consultation exercises on proposals. It records the entire history of each proposal. The Government considers that there should continue to be a single focal point on the web for regulatory reform order-making, and agrees with the Committee in its 8th Report that:[28]

"1/4websites may well be an effective means of contacting potential respondents, and a practice to be encouraged".

4.37  In passing, the Government notes that the only transactions that are exclusively paper-based take place at the start of the two formal pre-legislative stages when the Parliamentary Branch in the Cabinet Office delivers large numbers of hard copies of the documentation. The Government looks forward to the day when that function can also be effected electronically as it would produce efficiency gains.

Role of Cabinet Office

4.38  The Cabinet Office has overall responsibility within Government for the Regulatory Reform Act, while policy Departments are responsible for implementing it through the proposals that they bring forward.

4.39  At present, the Cabinet Office lays proposals at both stages on behalf of policy Departments given that the super-affirmative procedure is still novel. It provides a central source of advice for Departments on order-making, through advice on particular proposals, through seminars and guidance material. It also provides a public access point through its website to consultation exercises, orders as made and other information on the Act. It helps manage the flow of proposals through to the Committees, and in doing so it seeks to promote the use of the order-making power throughout Government.

4.40  The Government considers that, as the order-making process beds in, precedents will be established and the process will become smoother as stakeholders will be familiar with what is involved. The Government considers that it will therefore be right for the Cabinet Office to reduce its role gradually to one of monitoring and oversight.

The effect of the two-year exclusion in section 1(4)

4.41  In their 1st report on their initial scrutiny of the Special Occasions order, the Commons Committee raised concerns as to the application of the 2-year exclusion in section 1(4):

"We are satisfied, therefore, that on this occasion, it is appropriate to proceed as Treasury Counsel has suggested. Although clearly designed to circumvent the restriction in s1(4), in our view this means of drafting does not, in these circumstances, offend against the spirit of the Regulatory Reform Act. We give notice, however, that if, on a future occasion, a regulatory reform proposal was drafted in such a manner without the reasons being clear and the policy aims spelt out, both to Parliament and to consultees, we would regard it as an abuse of the power contained in the 2001 Act".

4.42  And, in their 2nd report after their final scrutiny of that proposal, the Committee concluded that:

"6. More substantially, the Government has amended the draft Order so as to meet our concerns, which were also expressed by the Lords Committee, that the proposal might prejudice the making of further regulatory reform orders relating to the relaxation of licencing hours on certain future dates. As recommended by Treasury Counsel, the draft Order would transfer the restrictions currently applying to the sale of alcohol on all New Years' Eves and during the Golden Jubilee from Part III of the Licensing Act 1964 into this Order. In our Report on the original proposal, we suggested that an order redrafted in this way would be likely to meet our concerns without offending against the provisions of the Regulatory Reform Act 2001; but indicated that it would not be until we saw a draft of the Order as it would eventually be made that we would be able to satisfy ourselves that it would do so. We are now satisfied that this draft Order does so, and we have no further comments to make on the drafting of the Order. However, we recommend that the Cabinet Office take note of this episode, and issue guidance to Departments to ensure future orders do not fall foul, or risk causing subsequent orders to fall foul, of section 1(4) of the 2001 Act."

4.43  The Government regards the use of regulatory reform order-making for one-off purposes as a special case given that the power was framed with everyday regulatory regimes in mind. It also notes that the solution in this instance involved a much more comprehensive approach to the legislative reform, involving the restatement of large parts of the Licensing Act but in relation only to the licensing of special occasions. The Government will encourage Departments to adopt similarly inventive solutions, should this sort of difficulty arise again.

4.44  That said, the Government accepts that any disapplication of section 1(4) would need to be in relation to clear policy aims. It agrees that, where practicable, this should be addressed in the RRO consultation document (but see paragraph 4.46 below).

4.45  The Government accepts the need to provide guidance to Departments on the effect of the two-year rule in section 1(4), and will cover the Committee's points in the draft guidance it has prepared for Departments on regulatory reform order-making. As mentioned in its previous Memorandum, the Government intends publishing this guidance more widely once the regulatory reform order-making procedure has established itself. It considers that future proposals for disapplication would be suitable subjects for the informal 'without prejudice' advice mechanism.

4.46  Leaving to one side the particular problem of RROs in relation to annual events, the two-year exclusion is proving to be much more of an obstacle than we had envisaged. One way around would be for related Bills to disapply section 1(4) in particular cases, and that approach is being tested in relation to the 'power to innovate' in the current Education Bill.[29] The Government notes the comment in the DPRRC's 14th Report[30] on this particular issue:

"CLAUSE 2(8)

3. Clause 2 allows the Secretary of State by order to make provision for modification, exemption or relaxation of specific aspects of the education legislation for pilot projects and experiments. Examples of the sort of pilot schemes which might be considered under this clause include experiments with the "continental" school day, or using a small part of a school's budget for community purposes (Government memorandum, paragraph 29). The lifetime of the power is limited, to four years, after which the lessons learnt will be evaluated. The duration of any particular order is limited to three years in the first instance.

4. Clause 2(8) provides that the effect of a temporary order under the new powers described above may be disregarded for the purposes of Section 1(4)(b) of the Regulatory Reform Act 2001. That section prevents the amendment, repeal or replacement of primary legislation through Regulatory Reform Orders within two years of substantive amendment of the relevant provision.

5. The effect of clause 2(8) is that the Government could put in place a temporary scheme, and subsequently use the Regulatory Reform Act procedure to prolong it, or make it permanent, within two years. Without this provision, the Government would have no option but to proceed by way of primary legislation.

6. The Committee suggest that the House may wish to explore with the Minister the possible uses to which this derogation from the Regulatory Reform Act 2001 may be put. Whatever the justification for the use of this derogation on this particular occasion, we will consider future uses on their merits, and we would not envisage that such derogations should be a regular feature of legislation."

4.47  The Government considers that disapplication is only appropriate in special circumstances—for example, the justification in this instance is that the "power to innovate":

    acts as a pilot for the follow-on RRO which would otherwise not be able to be done for 2 years; and

    is subject to the safeguard of a sunset clause.

4.48  Any proposal for disapplication will, of course, require careful co-ordination in order to ensure that the disapplication is framed appropriately. The Government considers, though, that disapplication may prove attractive in drawing a "bright line" in related Bills around the subject-matter of a proposed RRO so that there was no doubt on that count that the RRO could proceed. This may prove to be particularly the case with the larger reforms such as reform of the Civil Registration Service or of fire safety legislation. In such cases, we envisage that the Government would write to the Committees explaining to them the reasons for the disapplication, which would also be rehearsed in the Explanatory Notes for the Bill.

The Future

4.49  The Government does not have any monopoly on ideas for suitable reforms. Over the years, we have encouraged business organisations and others to come forward with detailed and specific proposals for reforms. We would welcome views from the Committee as to more effective ways to stimulate suggestions for reforms. For example, given the relationships that MPs have with their constituents and with representative bodies, including trades unions, businesses, local authority groupings, charities and other interest groups, there may be scope to involve MPs fruitfully in the generation of suggestions.

4.50  While Private Members Bills offer a useful way to effect change, RROs are not subject to the same timetabling constraints and are potentially a more certain method, provided of course that the safeguards are met. Where an MP considers that there may be scope for reform and that it would be suitable for an RRO, he or she could act as a catalyst, gathering the initial evidence and lobbying the responsible Minister for action. While the MP would act as sponsor, it would, of course, remain for the Minister to consult formally, to draft the instrument and explanatory material and to table them for pre-legislative scrutiny. This approach may produce worthwhile proposals, and the Government would be interested in the views of both Committees as to its practicability and whether there might be better alternatives.

4.51  The Government also takes particular note from the Committee's 6th Report of this Session of the fact that the Select Committee on Transport, Local Government and the Regions[31] has suggested there may be scope for an RRO to address the current inability of local authorities to use personal data held on council tax registers to identify the owners of empty homes.

4.52  This is a very helpful development—and the Government would want to support the Committee whole-heartedly in encouraging other Select Committees to consider the scope in their enquiries for recommending the use of RROs in order to remove unnecessary and inappropriate burdens from people in the everyday conduct of their affairs. DTLR are now investigating this proposal in more detail, and will inform the Committees of their conclusions as to the feasibility of using an RRO to deliver this particular reform.


4.53  The Government considers that the regulatory reform order-making power is beginning to prove its mettle as an effective alternative to primary legislation, but that there is scope for speeding up the flow of order-making.

4.54  The Government values its open and constructive relationship with both Committees and wants to work with them to deliver real benefits to those affected by over-complex, over-lapping and over-burdensome legislation.

Cabinet Office  May 2002


15   Lords Hansard (13 Feb 2001: Column 215). Back

16   Those are: DTLR's business tenancies proposal and the proposal to reform s.57 Landlord & Tenant Act 1957, and HMT's credit unions proposals. Back

17   see Back

18   see  Back

19  Back

20   HoC 708, Back

21   See footnote 19. Back

22   HoC 265 Back

23   HoC 583,  Back

24   HoC 311, Back

25   HoC 677, Back

26 Back

27   HoC 583, Back

28   HoC 691 Back

29  Back

30   HoL91, Back

31 Back

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