Select Committee on Delegated Powers and Regulatory Reform Eighteenth Report



24.  This is a private member's bill brought up from the House of Commons. The Treasury has provided a memorandum for the Committee setting out the delegated powers in the bill. The memorandum is printed in Annex 3 to this Report.

25.  The bill is intended to update some aspects of the legislation about co-operatives and community benefit societies and also to make new provision for asset "lock in", described in paragraphs 6 to 10 of the Treasury's memorandum.


26.  There are delegated powers at clauses 1, 3 (new section 7F(3) of the Industrial and Provident Societies Act 1965), 7 and 8. The delegations in clauses 7 and 8 (relating to commencement and application to the Channel Islands) and those in clause 3 (applying, subject to negative procedure, seven specific subsections of the Companies Act 1985 for the purposes of new section 7E(1) of the 1965 Act) are, in our view, appropriate.

27.  Clause 1 contains a power for the Treasury to make regulations (subject to affirmative procedure) enabling community benefit societies to ensure that assets cannot be used or dealt with except in certain cases. Paragraphs 8 and 9 of the Treasury's memorandum explain why a power has been taken and why the provisions do not appear on the face of the bill. It is a wide power which includes the power to prescribe:

  • the type of society to which the provisions apply (subsection (1));
  • the assets covered (subsection (1)(a) to (c));
  • the cases in which the assets may be used or dealt with ( subsection (2));
  • how assets must be dealt with in some of those cases (subsection (4)(c));
  • enforcement mechanisms and investigations procedures (subsection (4)(f) and (g));
  • criminal offences (subsection (5)(a));
  • rule-making bodies which can make legally binding rules (subsection (5)(d)).

The regulations may modify, exclude or apply any enactment or rule of law (subsection (5)(f)).

28.  The Committee has three concerns about the powers under clause 1. First, clause 1(5)(a) will allow regulations to impose criminal liability but there is no limit on the face of the bill on the maximum penalty for criminal offences under the regulations. In view of the range of provision which may be made under clause 1, the Committee considers that the delegation in clause 1(5)(a) would be appropriate only if such a limit were included in the bill.

29.  Secondly, clause 1(5)(d) enables the regulations to authorise a prescribed person to make binding rules (not required to have a parliamentary procedure). It is suggested in paragraph 13 of the Treasury's memorandum that these rules are intended to relate only to supervision of the regime established by the regulations, rather than to impose some of the requirements for which it would be expected that the regulations would provide. The Committee considers that the delegation in clause 1(5)(d) would be appropriate only if expressly limited in the bill to a specific purpose such as that described in the Treasury's memorandum.

30.  Finally, clause 1(5)(f) enables any enactment or rule of law to be modified or excluded altogether and the case for this is set out in paragraph 13 of the Treasury's memorandum. In our report on Henry VIII powers to make incidental, consequential and similar provision,[3] published earlier this Session, we concluded that there are occasions when Henry VIII powers to make such provision are justified. We also concluded that there should be a presumption that the affirmative procedure should apply. In this case, although the affirmative procedure applies, the Henry VIII power is not restricted to incidental, consequential or similar provision and, for this reason, we believe that the power is too wide and is, therefore, inappropriate.


31.  We draw to the attention of the House the recommendations in paragraphs 28, 29 and 30 above. There is nothing else in the delegated powers in the bill to which the Committee wishes to draw the attention of the House.

3   3rd Report, Special Report on Henry VIII powers to make incidental, consequential and similar provision, HL Paper 21, Session 2002-03. Back

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