Select Committee on Delegated Powers and Deregulation Fourteenth Report



OPINION OF THE COMMITTEE

15.  The Committee agrees with the Government's analysis that the order-making process under the Deregulation and Contracting Out Act 1994 has been a success, and that the stringent parliamentary procedures provided for this exceptional Henry VIII power have worked well. As one of the two Committees charged with scrutinising deregulation orders, we are all too well aware that the existing powers have been little used over the past two years. In the view both of this Committee and Dr Cunningham (Q 1) this is in large part because in the new Parliament both ministers and officials had more important priorities in meeting manifesto commitments.

16.  We consider that it is much more important to overcome any practical difficulties in using the existing powers than to seek to gain significant new ones while the existing powers are scarcely used. We were therefore encouraged by Dr Cunningham's assurance that the Prime Minister has issued clear instructions to ensure that wherever possible departments bring forward new measures under the existing provisions (Q 2) - and by the fact that two new proposals for deregulation orders have been laid within the past fortnight.

17.  One of the features of the publication of the original Deregulation and Contracting Out Bill in 1994 was that a large amount of briefing material was published at the same time, including some 13 pages of "measures for which the order-making power might be used". (The Bill itself also effected a substantial number of deregulatory measures). No similar list has been provided for the ways in which Ministers envisage that the proposed extended powers would be used. The provision of a detailed list of possible uses of each of the extended powers will, in our view, be essential when Parliament comes to consider any bill resulting from the Government's present proposals.

18.  As we have already observed in paragraph 9 of this report, effective consultation is essential to maintain confidence in the deregulation system and to ensure that proposals have been tested by the opinion of those who would be affected by them. We therefore attach considerable importance to Dr Cunningham's reassurance to us that the Government has "no plans to reduce the consultation procedure laid down in the Act" (Q 4).

ALLOWING AN INCREASE IN BURDENS

19.  The Government's proposal to be able to impose limited additional burdens would fundamentally change the philosophy on which deregulation orders were based. At present, as we have set out above, deregulation orders may only remove or reduce a burden. The consultation paper proposes "that the Minister should have the discretion to decide the circumstances in which [the imposition of limited additional] such burdens are acceptable, subject to the agreement of the Parliamentary Committees" (paragraphs 13-15).

20.  As a Delegated Powers Committee, we have at present considerable reservations about this proposal. First, the Committee considers that this is delegation in the widest terms, described in the expression "to impose limited additional burdens in the interests of the greater good" (question at the end of paragraph 15 of the consultation document).

21.  Second, the imposition of a new burden almost inevitably requires the creation of a criminal sanction for failure to comply with the new requirement. Despite Dr Cunningham's attempts to reassure us that criminal sanctions would in practice be little used (QQ 7, 9, 12-17), we cannot envisage that compliance will be enforced if the imposition of a new burden will not usually require the creation of a criminal sanction (cf paragraph 15).

22.  Third, the language of paragraph 13 of the draft document suggests to us that new burdens are more likely to be imposed on small organisations or businesses to reduce the burdens on large ones.

23.  We regard it as essential that Ministers should specify in which areas of activity they see it as potentially desirable to be able to use this very wide power. Moreover, in our view any amending legislation should specify on the face of the bill what are the criteria - such as proportionality and that the proposal "did not adversely affect any right or freedom which those concerned might reasonably expect to be able to continue to enjoy" (Q 18) - by which Ministers will decide that they may impose additional burdens "in the interests of the greater good". Although we understand to some extent the reasons for Ministers wanting this additional power, without more information as to the activities potentially to be covered, and an assurance as to the inclusion of appropriate criteria, we would find it difficult to support this proposal.

REMOVING AMBIGUITIES IN THE LAW

24.  This is another very wide power, with few parameters suggested for its use (paragraphs 21-26). The Government states it "would like to [be] able to correct genuine ambiguities[14] which impose a burden using an order, rather than waiting for primary legislation or litigation to clarify its meaning".

25.  In our view the Law Commission, with its wealth of experience, should be consulted on uncertainties of this kind.

PERMITTING RESTRICTIONS TO BE REMOVED FROM THE REGULATORS AS WELL AS THE REGULATED

26.  This proposed extension of the power is to allow statutory burdens to be removed from local and central government and statutory organisations "to enable more effective government". Paragraph 30 states "we do not propose seeking to define in legislation "better government" parameters for the application of the revised order-making power. As elsewhere we believe it is for Ministers to consider the appropriateness of the order-making route for proposals where amendment to primary legislation is required."

27.  As we have already mentioned, the Government has provided few practical examples of the uses to which the extended powers it seeks might be put. In the case of this part of the Government's proposals, however, the Committee has already considered the issue when it considered the draft Deregulation (Civil Aviation Act 1982) Order 1997. We reported that this proposal was extremely limited in its scope but that it raised, however, an important issue of vires. The Committee had to consider carefully the issue of vires because it was the first proposal which had raised this issue and because of its significance for possible future proposals.

28.  Existing legislation imposes many duties on public authorities, including local authorities and the police. If one of these duties is no longer of practical value, the question arises of whether it is possible to remove it by a deregulation order. Clearly the performance of the duty involves expense which will add to the burden on the taxpayer or increase the council tax burden on local residents. We doubted whether the reduction of those burdens could be in itself a justification for action under section 1 of the Deregulation and Contracting Out Act 1994.

29.  The Committee asked the Department of Transport to justify the vires of the proposal, both in writing and orally. The Department of Transport's explanatory memorandum argued that the fact that the 1982 Act prevents the Civil Aviation Authority (CAA) and its potential contractors from doing business in the most efficient manner is a burden on both parties. There was no direct burden on the rest of the aviation community.

30.  To the Committee, the vital question was whether the burden on the CAA was "a burden affecting any person in the carrying on of any trade, business or profession or otherwise". The Department accepted that the CAA does not carry on a business - or, by implication, a trade or profession - and rested its case on the words "or otherwise".

31.  The scope of the words "or otherwise" was discussed at length during the Committee Stage consideration of the Deregulation and Contracting Out Bill in the House of Commons, where concerns were expressed at the apparent width of that phrase. During that stage an amendment was moved on 17 February 1994 to leave out the words "or otherwise".[15] The Minister, replying to the debate, explained what these words were intended to cover. At column 62 he said the words extended the power to include "burdens on charities, voluntary organisations and individuals as well as commercial enterprises". He repeated this later (col. 63) when he said that omitting the words would exclude individuals, charities and the voluntary sector. The Committee concludes from this that the Minister provided reassurance to Parliament that the words "or otherwise" were not of unlimited application. In the light of the legislative history of section 1 of the Deregulation and Contracting Out Act 1994 the Committee considered that it was difficult to read the words "or otherwise" as covering the CAA.

32.  The Committee concluded that although the words "or otherwise" on their face are wide, they must be read in the context of the subsection as a whole. We thought that a distinction should probably be made between a burden which relates to the provision of services, whether by a business, a charity or a school, which fell within the scope of the Deregulation and Contracting Out Act, and a burden which could properly be said to be an aspect of governmental regulatory procedure, which falls outside the scope of the Act. The CAA, as a statutory body, is primarily a regulatory body. We doubted whether the proposal was intra vires subsection 1(1)(a), and in the light of the discussion of this subsection during the Committee stage of the Bill in the House of Commons, we did not think it was appropriate to bring forward this proposal in reliance on the subsection.

33.  Based on its consideration of the draft Deregulation (Civil Aviation Act 1982) Order 1997, the Committee understands the case for the extension of this power to include local government and statutory organisations, although we note that the latter can include non departmental public bodies, about which there can be difficulties in maintaining effective parliamentary scrutiny.

34.  We have, however, considerable reservations about the extension of the power to include central government, since it would mean that government could, by means of delegated legislation, propose the removal of statutory burdens on itself. We are also concerned that this power might be used, as the consultation paper itself points out (paragraph 30), in conjunction with others "such as being able to impose a small additional burden in order to remove a burden from others". Although as presently proposed we are not satisfied that Ministers can guarantee that the extended power would not be abused, Parliament might consider that the consultation procedure and scrutiny by the two Parliamentary Committees provide a adequate safeguard. In any event, this aspect of the Government's proposals would merit particularly careful scrutiny in any draft bill.

EXTENDING THE POWER TO REGULATIONS UNDER THE EUROPEAN COMMUNITIES ACT 1972

35.  The Government proposes to extend the power to regulations under the European Communities Act (paragraphs 37-41), but has provided no example of why it should wish to do so, apart from that of Open-Ended Investment Companies (OEICs), which the Government has already announced it plans to amend in the Financial Services and Markets Bill.

36.  The Committee sees no need for this extended power, and we do not support it. We note that there is a general power to amend or revoke regulations by further regulations made under the same power (section 14 of the Interpretation Act 1978 which is applied by paragraph 3 of Schedule 2 to that Act to regulation-making powers in Acts passed after 1889.)

PERMITTING CHANGES TO RESTRICTIONS IMPOSED BY COMMON LAW

37.  Again, the Government proposes a very wide power, which it justifies in only two brief paragraphs, explaining that "there are areas where, in the absence of a statutory framework, case law has grown up in a way which prevents people from doing perfectly reasonable things" (paragraph 42).

38.  The Committee considers that this part of the Government's proposals might be reasonable, provided that, on each occasion, the Law Commission was consulted. But we do not at present have sufficient information about, or justification for, what is proposed for us to form a definitive view at this stage.

EXTENDING THE POWER TO POST 1994 LEGISLATION

39.  The order-making power can only be applied to primary legislation made up to and including the 1993-94 session, unless it consolidates earlier legislation. The Government wishes to remove this time limit on "the eligibility of legislation for reform" (paragraph 44).

40.  The Committee supports to some extent this part of the Government's proposals. But we do not accept a totally open-ended power. We consider that, as currently drafted, this aspect of the proposal would increase the tendency for ill-considered legislation, as legislation could be introduced one session and deregulated the next. We also consider that there would be some risk of legislative instability in the event of a change of Government. We therefore suggest that the proposal should be revised to provide a three-year cut-off.

41.  As an alternative to taking this sweeping power we would much prefer the use of an annual redundant legislation bill as a vehicle to tidy up the statute book.

PERMITTING ORDERS TO BE PROGRESSED IF THE COMMITTEES ISSUE REPORTS BEFORE THE END OF THE FULL 60 DAY INITIAL SCRUTINY PERIOD

42.  We have already referred to the fact that the original Bill was amended to provide for 60 (rather than 40) days for initial parliamentary scrutiny. The consultation paper now proposes that scrutiny should only occupy as much of the 60 days as the Committees find necessary (paragraphs 49-60).

43.  Although we have some sympathy for this suggestion for those proposals which the two Committees find non-controversial, we can see considerable practical difficulties. First, it is important to ensure the necessary protection of the rights of those affected by the proposals. Organisations, particularly small ones or those with large numbers of members to consult, often do not respond instantly to the publication of a proposal, and indeed in the case of controversial proposals submissions are often made to the Committees towards the end of the 60-day period.

44.  Moreover, at present, once the 60-day period is over and the Committees have reported, the Minister has to "have regard to any representations made during the period for parliamentary consideration" as well as to the Committees' reports. As a matter of legislative drafting, we cannot see how the Act could be amended to specify that the Minister has to have regard to any representations made before both Committees have reported, during a period which would not be more than 60 days, but could be considerably less. We consider that although the thinking behind this part of the Government's proposals has its attractions in theory, we cannot see how it could sensibly operate in practice, and therefore, reluctantly, we cannot support it.

45.  Paragraph 60 invites Parliament to consider whether the second stage scrutiny is necessary where draft proposals have not been amended in any way.

46.  We do not consider that the second scrutiny stage (for which 15 sitting days are allowed in the Commons, and in practice the Lords Committee has always reported well within that timescale) causes "unnecessary delays in the process" (paragraph 59 of the consultative document), and recommend that second stage scrutiny should be retained.

THE COMMITTEE'S ADDITIONAL SUGGESTION FOR LAW COMMISSION PROPOSALS

47.  There is a backlog of Law Commission proposals waiting for a slot in the legislative timetable. In our view the Deregulation order-making procedure could be adapted to enable those proposals which are non-controversial to be placed on the statute book with the minimum of delay. The Committee has already suggested to the Government that its proposals should be modified to provide the possibility of a fast track procedure for non-controversial Law Commission proposals.

48.  In oral evidence to us Dr Cunningham expressed broad support for the Committee's alternative proposal (QQ 33-35). Discussions are continuing between the Government and the Law Commission, and we hope that agreement will soon be reached.


14  The Committee would prefer the word "uncertainties". Back
15  The amendment was defeated on division. Back

 
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