Excerpts from speech to the Commons 2nd Reading debate on the Legislative and Regulatory Reform Bill
"The House supports deregulation and the Opposition are determined that there should be not only a reduction in the stock of regulation, but that we should regulate less, year on year. However, the worry is that this Bill does not refer to deregulation at all. It is a sad reflection on the Government that burdens on business are rising. I have already referred to the burdens barometer produced by the British Chambers of Commerce, which has increased by £40 billion since 1997. That puts in context the Chancellor's target of cutting regulation by £10 billion, because that is only a quarter of the increased burden on business.
Meanwhile, the World Economic Forum shows that the United Kingdom is becoming less competitive. In 1997, the UK was the fourth most competitive country in the world. It has now fallen to 13th. The World Economic Forum specifically cites regulation and bureaucracy as two of the main obstacles to business in the Britain...
The hon. Member for North-West Leicestershire (David Taylor) was telling us how keen he is to represent the interests of small businesses, so perhaps he would find it a useful read. It shows, for example, that in just the past two years, the burden has gone up by £9 billion. That, of course, does not refer to the minimum wage at all, but if the hon. Member for Wolverhampton, South-West (Rob Marris) wants to read it, I am happy to pass it across the Dispatch Box, if the Minister will allow it to be passed on...
Later in my speech I will talk about the one in, one out principle that Sir David Arculus considered when he was in charge of the Better Regulation Task Force—now renamed the Better Regulation Commission—when trying to balance new regulation against the removal of outdated regulation. I accept that protection is also important.
Other measures, such as the International Institute for Management Development's "World Competitiveness Yearbook", show that the UK has fallen from ninth to 22nd since 1997. The London School of Economics recently warned about
"concerns that tougher competition could be undermined by increasing regulation"
The CBI has said:
"Many businesses believe regulation is damaging the UK's attraction as a place to invest . . . the burden has grown and expect it to increase further."
The Library has shown that there are 3,887 regulations a year on average under this Government—15 every working day. That is a 50 per cent. increase on what happened under the last Conservative Government.
Against the background of failure that was evident in 2000, Lord Falconer introduced the Regulatory Reform Bill, which was described as a major measure for deregulation. He said:
"The Bill will provide a major tool to tackle unnecessary over-lapping, over-complex and over-burdensome legislation."—[Official Report, House of Lords, 21 December 2000; Vol. 620, c. 850.]
In the House on 19 March 2001, the then Parliamentary Under-Secretary of State for Cabinet Office, the hon. Member for Manchester, Blackley (Graham Stringer),
"Do the Government intend the measure to be used to introduce orders that have a net deregulatory effect—yes or no?"
"The Bill makes it clear that each regulatory reform order must contain a deregulatory element."—[Official Report, 19 March 2001; Vol. 365, c. 118.]
The Bill was described as "a valuable tool", "an excellent tool" and "a major tool", but the sad history records that only 27 regulatory reform orders have been made, although everyone expected more than 60.
Of course, a review was promised. It talks about whether it should be possible to amend or appeal primary legislation to do one of three things: remove, reduce, re-enact or impose burdens; simplify legislation; and implement uncontroversial Law Commission recommendations. We wanted that power to be as flexible as possible, so it went out to consultation. Not surprisingly, business groups in particular supported the consultation and the idea of that flexibility, but something strange then occurred. The Government changed tack and removed all reference to removing burdens on business. What we have now is constitutionally novel. The Bill extends the scope of powers available to Ministers while relaxing the constraints of parliamentary scrutiny. Ministers will be able to amend, repeal or pass primary legislation without going through the normal parliamentary procedures. There is no requirement that such measures should have a deregulatory effect, so the danger is that we shall have legislation, regulation and parliamentary corner-cutting with no deregulation at all.
Like the Minister, the Government talk much about deregulation and better regulation. They have their Better Regulation Commission, with its new chairman, and their simplification process, whereby every Department has to find simpler legislation. Expensive consultants have calculated the costs to many businesses of every burden or cost of regulation. Now, we have the Bill, but the sad truth is that so far, despite the talk, there has been no deregulation.
All the talk of one in, one out—the idea that every time a regulation is passed another should be repealed—is a vain hope. The Minister will have seen the latest list from the Department of Trade and Industry showing the regulations coming in on 6 April and 1 October—the regulation-making days. It runs to 30 pages, but there is not even the sniff of a list of regulations that will be scrapped. As the Institute of Directors said recently:
"We are pleased to see all the policy activity, but are still waiting to see tangible action on the ground." …
The Government are taking several overlapping measures, all of which remove power from the House and give it to Ministers. There is a process in the Government of Wales Bill to take power from the House and give it to Wales on a case-by-case basis. There are similar procedures in the Company Law Reform Bill and other measures. My hon. Friend the Member for Huntingdon (Mr. Djanogly), who will wind up the debate, has detailed knowledge of the Company Law Reform Bill and will have something to say about it.
In Committee, we shall make a range of suggestions to toughen up regulatory impact assessments so that they concentrate on whether regulation is cost-effective and necessary as a last resort. We shall try to include a special assessment of whether small business should be exempt from regulation, instead of the current patchwork, whereby only some small businesses are exempt and there is no clear theme. The Government will have to consider whether small business should be exempt on every occasion, which relates to the point made by the hon. Member for North-West Leicestershire about the disproportionate burden on small businesses.
We want to ensure that regulatory impact assessments are audited at a later date to determine their accuracy. The Better Regulation Commission or the Regulatory Reform Committee might have a role in that. We shall propose sunset clauses, proper post-legislative scrutiny and perhaps an enhanced role for the Law Commission to consider outdated legislation. We shall try to focus the Bill much more on deregulation than regulation.
Part 1 is of concern due to the breadth of the power taken by the Government to replace, amend or introduce legislation, including any Law Commission Bill. The Minister will be aware of criticisms made by various Committees, and that the Law Commission is considering measures to introduce palimony—giving people who have lived together equal rights with those who divorce. It is also considering how to deal with tenants' rights and the termination of tenancies and with criminal law reform, including reform of the law of murder and the question of provocation in domestic violence.
I might well agree with the Law Commission about such matters, but they are the sort of issues that hon. Members will want to discuss on the Floor of the House in the normal way because there are strong feelings about them in the House. However, where in the Bill is there anything to reassure us that that will happen? The Minister told the Procedure Committee on Tuesday that the Government would not use the procedure for highly controversial matters and that there was a sort of veto for the two Select Committees. However, I worry about dealing with the matter on the basis of such assurances because I can find no such veto in the Bill.
The right hon. Member for Berwick-upon-Tweed (Mr. Beith), who cannot be here today, once wrote an article called "Prayers Unanswered" about the change that was made in 1954 to the way in which regulations were considered. The old tradition that every set of regulations was debated on the Floor of the House was changed and statutory instruments were then taken upstairs. The right hon. Gentleman wrote:
"Until 1954, all prayers could be debated. Any Member could put a prayer down for debate on any sitting day except Friday, and unless a closure was carried there was no time limit at all. In 1954 a rule was established that debates were to end at 11.30 . . . Nonetheless, the Committee which recommended the 1954 rule clearly intended that all prayers would still be debated on the floor of the House and the Leader of the House at the time, Captain Crookshank, insisted that 'if honourable Gentlemen put down prayers, time will be found for prayers.'"
Of course, the rest is history. I believe that now only a tiny number of prayers are ever debated.
The Minister has said that we will continue to have full parliamentary debate for terrorism measures and the Parliament Acts, but he must accept that they are of the highest importance among the measures that we expect to debate on the Floor. The House would wish to debate many matters that were controversial, but not in that highest category. I will want the Minister's assurances to be included in the Bill so that they bind his successors.
The House should also be worried about clause 9, which contemplates conferring functions on the Welsh Assembly without full debate. The Minister needs to explain how the power would operate in conjunction with the Government of Wales Bill. Is it really envisaged that powers will be gradually devolved by the back door using the order-making power in the Bill? Few hon. Members would think that appropriate for something as important as devolution?
Clause 8 deals with Scottish matters. Does it mean that Sewel motion legislative proposals—changes that are within the remit of the Scottish Parliament, but made by the House—will be dealt with by order? If so, has the Scottish Parliament been consulted? What assurances can the Minister give us that we will have the right to debate important matters? Where in the Bill are those assurances?
The Regulatory Reform Committee and its equivalent Committee in the other place have the important role of deciding how regulatory reform orders should be dealt with procedurally. Why does that role not include the ability to refer such an order for full parliamentary scrutiny as though it were a Bill? There might be cases in which a Minister's decision about the nature and importance of a measure does not reflect the opinion of the House itself. In such circumstances, surely it would be useful if we were able to transfer into full Bill mode.
Part 2 of the Bill includes provisions that are based on the Philip Hampton proposals. We welcome his commitment to entrenching the principle of risk assessment throughout the regulatory system and ensuring that administrative burdens are reduced. We also welcome his concentration on substantially reducing the need for form-filling and the requirement to follow good principles of enforcement. Will the Minister confirm that that is what the codes of practice will be about?
Part 3 seems to introduce simpler provisions for bringing European law into force in the United Kingdom. However, there is reference in clause 26 to "rules" and "schemes" being used to implement provisions, instead of provisions simply being implemented "by regulations". What does the Minister have in mind? We should be interested to hear his reply. I do not know whether my hon. Friend the Member for Stone (Mr. Cash) is here—[Hon. Members: "He is not."]—but I know that he was hoping to ask that very question.
The Bill should be about deregulation and building a culture of light-touch regulation. We should ensure that Whitehall treats such matters as seriously as it does the passing of new legislation and regulations. I was struck by what the Minister told the Procedure Committee. He conceded that in the present culture it is more exciting and one is more likely to be promoted if one is in charge of or on a Bill team than if one is a successful deregulator—or, in his terms, a better regulator. How to change that culture is at the heart of the problem.
It is easy to see how a Government who were not all that keen on deregulation could decide to regulate in fields such as social rights—particularly employment rights—and that the regulatory reform order would be a convenient way of doing that. As the hon. Member for Wolverhampton, South-West said, the subjective tests in clause 3 are not adequate to protect against that sort of action. The Minister may well agree with the social rights in the EU charter of fundamental rights and want to introduce new legislation on employment rights. Is he able to give us any assurance that he would not use regulatory reform orders to do that sort of thing? Just as it would be simple for a Government who had a strong view on the social rights in the EU charter to introduce those rights through the back door by using such an order, a Government who took a different view could do the opposite. That is precisely what worries the TUC, whose head of equality and employment rights, Sarah Veale, said a couple of days ago:
"The current government has undertaken not to use RROs for measures that are 'large and controversial', but this will not apply to future governments. Future governments will not be detained long by safeguards that are tested by standards that are matters of judgment and not objective".
The experience of the introduction of Standing Committee hearings in the 1950s shows what can happen: a procedure is introduced, assurances are given and no one thinks that it will end a particular way of doing things, but over time the protections fall away as Ministers enjoy the convenience of the new arrangements. Both those who worry about the way in which the EU operates and those whose views are the opposite can see how the RRO procedure might be abused. In those circumstances, would it not be right to insert stronger safeguards into part 1? …
Whether the veto is put into the Bill or introduced by changing the Standing Orders, which might be a better way, it should be a cast-iron measure. I am not happy about the definition of "controversial" or "highly controversial". Originally, the word used was "controversial". The Minister cranked up the language to "highly controversial", and when he was asked for examples, those he gave were of the highest level of importance—ultra-controversial. Our concern is that we do not really know what we are talking about.
I think that the traditional way of passing a Bill, although it is a laborious procedure, has some advantages. If, during the passage of Bill, one listens to debate and accepts that things need to be changed, one can do that. A super-affirmative procedure would be much more rigid than the procedure used for Bills. I should therefore like to retain the existing arrangements...
We do not need more assurances—we need action in the Bill. We accept that the Bill could provide genuine benefits for business, but it requires amendment. Ministerial assurances, too, would be helpful, and we would like the main assurances to be incorporated into the Bill or into Standing Orders. It is particularly important that the fast-track procedure is not available for controversial measures. Things do not necessarily appear highly controversial. As the hon. Member for Somerton and Frome (Mr. Heath) said, Ministers may not think that something is controversial, but many hon. Members may think that it is. It should be possible for Committees to act effectively and second-guess Ministers on such issues. The Bill is a novel constitutional measure, so when it is enacted we will suggest that it should be subject to renewal or a sunset clause, perhaps after five years, which is an appropriate period in which to test it. However, we would not want to give such measures carte blanche at this stage."