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"
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
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
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
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".
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
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
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
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
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