Select Committee on Delegated Powers and Deregulation Seventeenth Report



SEVENTEENTH REPORT


24 MAY 2000


By the Select Committee appointed to report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate degree of parliamentary scrutiny; to report on documents laid before Parliament under section 3(3) of the Deregulation and Contracting Out Act 1994 and on draft orders laid under section 1(4) of that Act; and to perform, in respect of such documents and orders, the functions performed in respect of other instruments by the Joint Committee on Statutory Instruments.

ORDERED TO REPORT

POSTAL SERVICES BILL

INTRODUCTION

1.  This bill implements the proposals in the White Paper on Post Office Reform published in July 1999. It provides for the Post Office to be converted to a public limited company registered under the Companies Act with ownership remaining with the Crown (it would take new primary legislation to change that). The bill also introduces a new system of licensing and regulation for postal services operators/providers in the present monopoly area of the Post Office. A new regulator, the Postal Services Commission, is created and the Post Office Users National Council is replaced with the Consumer Council for Postal Services.

2.  The Department's Memorandum gives an account of the powers in the bill, including the powers of the Secretary of State to give directions. The Committee does not regard these particular directions as amounting to legislative powers and so does not comment on them.

3.  For a bill of this size concerned with regulating an area of the market there are relatively few delegated powers. These are in clauses 8(1), 9(1), 10, 59(2), 62(1), 70(1), (2) and (5), 71(1), 75(2), 93, 101(2), 102(1), 103(2), 119(1), 120(1), 121 and 122(1) and paragraph 4 of Schedule 7. This report indicates the Parliamentary control (if any) over each and discusses those which raised issues which the Committee considered with particular care.

Affirmative instruments

4.  Clause 114 extends certain powers and provides which form of Parliamentary control applies. Subsection (9) applies affirmative procedure to the following Clauses.

5.  Clause 8 is a Henry VIII power to "modify" clause 7. "Modify" is defined in clause 117(1) as including amending or repealing. Clause 7 is essentially a list of exceptions to the Post Office monopoly. An order may be made only on the recommendation of the Commission and if the Secretary of State rejects a recommendation he must lay before Parliament a report containing the reasons for his decision (clause 8(4)).

6.  Clause 9 is converted into a Henry VIII power by clause 114(3) and allows the suspension of the operation of clause 6 (restriction on provision of postal services). The clause follows clause 8 in its provisions about Commission recommendations.

7.  Clause 71 places a limit of £5,000 million on Post Office loans and other arrangements with government. The Secretary of State may increase this limit by order only if a draft of the order has been approved by a resolution of the Commons (subsection (3)).

8.  Clause 93 is a Henry VIII power to modify clauses 89 to 92. Clause 114(4) extends it to allow also the modifying of "any enactment comprised in or made under [the bill], or any other enactment". Clauses 89 to 92 replace sections 28 to 30 of the Post Office Act 1969 which deal with the relationship between the Post Office and its customers. The clauses deal with any universal service provider and its customers. The Explanatory Notes state that the power to modify is to ensure that on any review of the working of clauses 89 to 92 the conclusions can be implemented without delay.

9.  Clause 102 enables the Secretary of State to make an order establishing a scheme for subsidising public post offices. Such an order may not be made without the consent of the Treasury.

10.  Clause 119(1) is another Henry VIII power. It allows the Secretary of State to make by order "such modifications in any enactment, instrument or other document as appear to him necessary or expedient in consequence of" the bill.

Negative instruments

11.  Clause 10 allows the Secretary of State, if he considers it expedient in the national interest, to suspend by order the operation of clause 6 for a period not exceeding six months and "to such extent as may be [specified in the order]". Clause 6 is the prohibition on providing postal services without a licence. Clause 10 is extended by clause 114(3) to allow the modification of "any enactment comprised in or made under [the bill], or any other enactment." As the suspension is only temporary, negative procedure seems appropriate.

12.  Clause 38 requires the Commission to keep a public register of actions taken by it in relation to the licensing regime. Subsection (8) requires that the contents of the register are available for inspection by the public during such hours as may be specified in an order made by the Secretary of State. We agree with the Department's memorandum that this delegation is appropriate because it is an administrative matter which requires flexibility to respond to changing circumstances. We also agree that the proposed negative resolution procedure is appropriate.

13.  Clause 58 gives the Council the power to require information which it may reasonably require in the exercise of its functions from the Commission, universal service providers, or other licence holders. Clause 58(7) gives the Secretary of State a power to restrict this power in relation to the Commission, by an order subject to negative resolution procedure, which the Committee considers appropriate.

14.  Clause 114(7) makes regulations under clause 103 subject to negative procedure in the Commons. Clause 103 is concerned with the application of customs and excise enactments to certain postal packets.

15.  Clause 114(8) applies negative procedure to orders under clauses 10, 38(8), 58(7), 59(2), 70, 74, 101 and 120 and paragraph 4 of Schedule 7. Of these the Committee found it necessary to comment only on:-

16.  Clause 70 contains three order-making powers concerned with extinguishing certain liabilities of the Post Office. Subsection (5) allows an order to repeal the clause. As the clause will be spent when the liabilities have been extinguished, this repeal will not raise policy issues and the Committee considers negative procedure appropriate.

17.  Clause 74 makes further provision relating to the capital structure of the Post Office company. Subsection (6) allows the Secretary of State to repeal the clause by order. Subsection (7) requires consultation with the Treasury. As this power would be used only when the purpose of the clause has been achieved, the Committee considers negative procedure appropriate.

18.  Clause 101 gives the Secretary of State power to ensure compliance with a Community obligation under the Postal Services Directive. The power to make an order under this clause is extended by clause 114(3) to include "modifying any enactment comprised in or made under [the bill], or any other enactment." Although the definition of "modify" makes this a Henry VIII power, the Committee considers negative procedure appropriate.

19.  Clause 120 allows an order to make modifications in local enactments in consequence of the bill. The Committee accept that it is appropriate that negative procedure should apply to this limited Henry VIII power.

20.  Paragraph 4 of Schedule 7 allows the modification of paragraph 3 of that Schedule which contains a list of Acts and subordinate legislation. That list is referred to in paragraph 3(1)(b) and (j). Paragraph 1 imposes a general prohibition on the disclosure of information obtained by virtue of the bill if it relates to the affairs of an individual or a business. Paragraph 3 lists exceptions to this prohibition; sub-paragraph (1)(b) allows disclosure by a person listed in sub-paragraph (2) for the purpose of facilitating the carrying out of functions under an enactment listed in sub-paragraph (3) and sub-paragraph (1)(j) allows disclosure for the purposes of civil proceedings brought by virtue of the bill or any enactment in that list. While an amendment to the list would either relax or extend the prohibition on disclosure, the Committee considers negative procedure appropriate.

Powers not subject to Parliamentary control

21.  Clause 62 provides for the transfer of property etc. from the Post Office to a nominated company. The date of the transfer is to be appointed by order and the company is to be nominated by order.

22.  Clause 75 provides for the dissolution of that Post Office when nothing further remains to be done by it under paragraph 8 of Schedule 3 (vesting of foreign property etc.). An order made by the Secretary of State specifies the date of dissolution.

23.  Clause 121 allows transitional provisions to be made by order.

24.  Clause 122(1) is a commencement power.

25.  The Committee considers it appropriate that these powers should not be subject to Parliamentary control.

Other provisions for Parliamentary control

26.  Clause 43 allows the Secretary of State to give the Commission guidance in relation to social and environmental matters. There are provisions for consultation and the Secretary of State has to lay a draft of any guidance before each house and cannot give it unless 40 days have passed and neither House has resolved that he shall not give the guidance.

27.  Clause 67 sets out the procedure to be followed in order to obtain the approval of Parliament to make share issues or disposals which would otherwise be prohibited by clause 66. Under clause 67(1) the proposed issue or disposal has to be approved by a resolution of each House of Parliament passed on a motion moved by or on behalf of the Secretary of State. The Committee regards this as akin to an affirmative instrument, but does not wish to comment on it.

Recommendation

28.  The Committee considers that no amendment is necessary either to the delegated powers in the bill or to the parliamentary control provided for these powers.



UTILITIES BILL

INTRODUCTION

29.  This bill establishes the Gas and Electricity Markets Authority ("the Authority") and the Gas and Electricity Consumer Council ("the Council") and amends the legislation regulating the gas and electricity industries. The Department's Memorandum discusses the delegated legislative powers and also draws attention to a number of powers to give directions. The Committee has not commented on these particular directions as it does not regard them as amounting to delegated legislative powers. Similarly the Committee has not commented on the powers given to the Secretary of State to issue guidance in clauses 10 and 14.

30.  There are legislative powers in clauses 24(6), 26(2), 28 (see section 5(1), (6) and (7) of the 1989 Act), 29 (see section 6A(2), (3) and (6) of that Act), 34 (see section 11A(6)(b), (7), (10) and (11) of that Act), 42 (see section 56A(1) and the provisions about consultation in section 56F of that Act), 45(3), 53(2) (see sections 39A and 39B of that Act), 57 (see section 42A of that Act), 61 (see section 32(1) of that Act supplemented by section 32A, inserted by clause 62 and extended by sections 32B and 32C, inserted by clauses 63 and 64), 66, 68 (see sections 43A and 43B of that Act), 69 (see section 41A of that Act), 71 (see section 7B of that Act), 81(3), 85(2), 87 (see sections 41C and 41D and the supplementary provisions in sections 41G and 41H of the 1986 Act), 89(2) (see section 33AA of that Act and the provisions about consultation in clause 91), 93, 97 (see section 41A of that Act and the supplementary provisions of section 41B), 98 (see section 33BC of that Act), 99, 100, 106 and 107(2) (commencement), paragraph 4 (extension of existing power to make regulations) of Schedule 5 and paragraph 12 of Schedule 6.

Powers subject to affirmative procedure

31.  The new section 11A inserted in the 1989 Act by clause 34 allows the Authority to modify the standard conditions of licences of any type mentioned in clause 6(1). Subsection (3) restricts the use of this power (not in itself a legislative power) to circumstances where one (or more) of the tests set out in that subsection is satisfied. One of those is that the objections of licence holders to the proposed modification do not exceed a prescribed threshold. The calculation is rather complicated and involves three factors which are to be "prescribed" in an order made by the Secretary of State (see subsections 6(b)(i) and (ii), (7) and 10)). The Memorandum does not explain why affirmative procedure is provided, but the Committee considers it appropriate in view of the significance of the subject matter.

32.  Clause 42 inserts new sections in the 1989 Act. New section 56A(1) confers power by order to alter the activities which require an electricity licence. Subsection (3)(a) makes this a Henry VIII power. Subsection (5) allows activities to be made licensable only on the application of the Authority. Subsection (6) allows an order to remove the requirement for a licence on the application of the Authority under section 56E or following consultation by the Secretary of State under section 56F. Subsection (8) applies affirmative procedure, which the Committee considers appropriate because of the need to bring important changes of policy before Parliament.

33.  Clause 61 substitutes a new section 32 in the 1989 Act. Subsection (1) allows the Secretary of State to make an order imposing the "renewables option" (see subsection (3) - "electricity generated by using renewable resources") on a "designated electricity supplier" (defined in subsection (1) supplemented by subsection (2)). There are supplementary provisions in new sections 32A (in clause 62), 32B (in clause 63) and 32C (in clause 64). Affirmative procedure is applied by section 32(9), which the Committee considers appropriate to ensure that Parliament is actively involved in this area of policy-making.

34.  Clause 68 inserts two new sections in the 1989 Act. New section 43A(1) allows the Secretary of State to establish by order a scheme to help disadvantaged groups of electricity customers. New section 43B contains supplementary provisions principally about consultation. Section 43A(6) applies affirmative procedure, which the Committee considers appropriate to give Parliament the opportunity to consider whether the scheme provides appropriate help for the disadvantaged.

35.  Clause 69 substitutes a new section for section 41 of the 1989 Act which allows the Secretary of State to make an order imposing "energy efficiency targets" on electricity distributors and suppliers. Subsection (10) requires the Secretary of State to consult the Authority, the Council, distributors and suppliers "and such other persons as he considers appropriate". Subsection (11) applies affirmative procedure, which the Committee considers appropriate to give Parliament the opportunity to consider the adequacy of the targets.

36.  Clause 81 is the equivalent for gas to clause 34.

37.  Clause 87 is the equivalent for gas to clause 42.

38.  Clause 97 is the equivalent for gas to clause 68.

39.  Clause 98 is the equivalent for gas to clause 69.

Powers subject to negative procedure

40.  There are negative resolution powers in the following clauses: 24(6) (provision of information to the Council); 26(2) (provision of information by the Council to the Authority); 28 and 85 (exemptions from licensing); 45(3) (power to recover expenditure); 65 (modification and abolition of fossil fuel levy); 66 (supplementary); 71 (uniform prices in certain areas of Scotland); 106 (power to make transitional provision etc.)

41.  In each of these cases the Committee considers both the proposed delegation, and the negative resolution procedure, appropriate.

Authority's powers to make regulations

42.  The Authority is given by a number of provisions in the bill power to make regulations, including the following:-

    clause 29 — in section 6A(2), (3) and (6) (procedure for licence applications);

    clause 55 — in section 39A(1), (2), (3), (5) and (6) (standards of performance for distributors);

      — in section 39B(1), (3) and (5) (procedure for determining disputes about standards of performance);

    clause 57 — in section 42A(1) and (2) (information to be given by suppliers or distributors to customers);

    clause 89 — the gas equivalent to clause 55;

    clause 93 — the gas equivalent to clause 57;

    clause 100 — standards of gas quality;

    Schedule 5 — in the amendment made by paragraph 3(2) (circumstances in which gas may be supplied otherwise than through an appropriate meter);

      — in the amendment made by paragraph 4 (ditto); and

    Schedule 6 — in the amendment made by paragraph 12(a) (standards of performance for gas supplies in individual cases), subsection (2) inserted by this sub-paragraph requires the Secretary of State's consent for regulations.

43.  Regulations made by the Authority are to be statutory instruments (see clause 99 and paragraph 10 of Schedule 1) but are not subject to Parliamentary control. Schedule 7 of the 1989 Act allows the Director General of Electricity Supply to make regulations about electricity meters and the regulations are made statutory instruments by section 106(1). It is becoming more common for regulatory bodies to be given delegated powers and the Committee sees nothing inappropriate in the delegation of these matters, which are mostly technical, to the Authority.

Other powers

44.  The bill makes a number of amendments affecting existing delegated powers (not all of which are mentioned in the Memorandum) but the Committee sees nothing of significance in these amendments.

45.  Schedule 7 contains in Part I a power for the Secretary of State to make one or more schemes for the purpose of the transition from the present electricity licensing system to that created by the bill. This transitional power is not treated as delegated legislation.

Recommendation

46.  The Committee considers that no amendment is necessary either to the delegated powers in the bill or to the parliamentary control provided for these powers.



HORSERACE TOTALISATOR BOARD BILL [HL]

47.  This Private Member's bill provides for the transfer of the Board's property, etc. to the Secretary of State and allows him to "issue securities to dispose of" that property, etc.

48.  Clause 3 provides for the dissolution of the Board by order subject to affirmative procedure.

49.  Clause 4 provides for an order to make provision with respect to pensions for the Board's employees. Negative procedure is applied.

50.  Clause 5 contains a commencement power which allows the making of transitional provision.

Recommendation

51.  The Committee considers that no amendment is necessary either to the delegated powers in the bill or to the parliamentary control provided for these powers.



STREET WORKS BILL [HL]

52.  This Private Member's bill allows a charge of £1,000 a day to be made for occupying a street to execute street works. The new section substituted for section 74 of the New Roads and Street Works Act 1991 contains at subsection (3) a power for the Secretary of State to make regulations supplementing the charging power given to the highway authority by subsection (1). Subsection (3)(c) allows regulations to provide that the authority may reduce or waive the charge. Subsection (4) creates another regulation-making power which allows the daily charge of £1,000 set by subsection (1) to be increased. Subsection (5) applies affirmative procedure to regulations increasing the daily charge. Regulations under subsection (3) will be subject to negative procedure (section 104(2) of the 1991 Act.)

Recommendation

53.  The Committee considers that no amendment is necessary either to the delegated powers in the bill or to the parliamentary control provided for these powers.[1]


1   This report is also published on the Internet at the House of Lords Select Committee Home Page (http://www.parliament.uk), where further information about the work of the Committee is also available. Back

 
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