Background
The previous deregulation order-making power
9.The deregulation order-making power under the 1994 Act was used 48 times to remove burdens from business and individuals which might not otherwise have received Parliamentary time. Deregulation orders included, for example, removing the need for 3-yearly re-authorisation of deductions of union subscriptions from salary; permitting bookings at registry offices up to 12 months in advance instead of three; and relaxing the restrictions on opening hours of licensed premises over Millennium Eve. A full list of deregulation orders made under the 1994 Act is at Annex B.
Transition to the 2001 Act
10.When the 2001 Act was passed, there were four proposals for deregulation orders before Parliament for scrutiny, as set out at the end of Annex B. The Act provides in section 12 that Parliament can complete its scrutiny of any proposals for deregulation orders that have been laid before it.
11.As provided for under section 5(4), the Government also published six consultation documents on prospective use of the regulatory reform order-making power before the Act received Royal Assent. They are as follows:
Business Tenancies Legislation In England And Wales: The Government’s Proposals For Reform(1);
Gaming machines: methods of payment - a consultation paper(2);
Letting of Business Premises, Landlord and Tenant Act 1954 Section 57 - Consultation Paper(3);
Consultation on Licensing Hours for New Year’s Eve 2001 and during Her Majesty’s Golden Jubilee in June 2002(4);
Reform of the Housing Grants, Construction and Regeneration Act 1996, Local Government and Housing Act 1989 and Housing Act 1985 - a consultation paper(5); and
Removing the 20 partner limit: a consultation document(6).
12.After Royal Assent and as at publication of these notes a further three consultation documents have been published:
Voluntary Aided (VA) Schools in England: Proposals for Governing Body and Local Education Authority Financial Liabilities and Funding for Premises.(7)
Changes to Invalid Care Allowance: Amending Section 70 of the Social Security Contributions and Benefits Act 1992(8)
Amending the Vaccine Damage Payments Act 1979(9)
Order-making process
13.The order-making process for regulatory reform orders is based on, and is very similar to, the process for deregulation orders. Orders are subject to thorough public consultation followed by detailed two-stage scrutiny by the scrutiny committees, currently the Deregulation and Regulatory Reform Committee in the House of Commons and the Delegated Powers and Regulatory Reform Committee in the House of Lords.
14.The special Parliamentary procedure which orders will undergo (sometimes called the “super-affirmative” procedure, a term first coined by the House of Commons Procedure Committee in its 1995 Report on Delegated Legislation (HC 152)) affords a greater degree of Parliamentary scrutiny than that which ordinary affirmative resolution orders receive. First, the Minister lays his regulatory reform proposal before Parliament “in the form of” a draft order together with a full explanatory document. Following the 60 day period of Parliamentary consideration, during which time the proposal is referred automatically and simultaneously to the Committees appointed by Parliament for the purpose, the Committees make their first report to their respective Houses. If the reports are favourable, the next stage is for the Minister formally to lay a draft order in each House, along with an explanation of any changes made compared to the earlier proposal. If the Minister is minded to accept any changes that are proposed to the draft order by the Committees or others between this stage and the final vote on the order, he must formally take up the draft order he has laid and replace it with another which incorporates the changes.
15.The ability to make changes (minor or otherwise) to the draft order while it is being scrutinised and in response to the scrutiny is a key feature of the order-making power, which is not available to statutory instruments dealt with in the usual way. Ministers in charge of past deregulation orders have on several occasions taken the opportunity to change their draft order in line with recommendations from the Committees. On no occasion did any Minister ignore an adverse report on a proposed deregulation order from either Committee; the proposed order was always re-cast or withdrawn accordingly. The Government intends to continue this practice in its use of regulatory reform orders, and Ministers re-affirmed this intention on a number of occasions during debate on the Bill (see Annex C).
16.The final procedural stages for Parliamentary scrutiny of draft regulatory reform orders are set out in Standing Orders (reproduced at Annex A). The Commons Committee produces a report on the draft order within 15 days. The Lords Committee has no set time period but usually reports within the same time period. Both Houses then consider the relevant Committee report on the draft order (this is the main feature that distinguishes this form of Parliamentary consideration as “super-affirmative”).
17.The procedure leading up to the final vote on the order differs in the two Houses:
In the Commons, the final procedural stages for draft orders depend on the nature of the report of the Deregulation and Regulatory Reform Committee, and are set out in House of Commons Standing Order No 18 (Consideration of deregulation orders, etc), as reproduced at Annex A. This requires that no motion to approve a draft order shall be made in cases where the Committee has reported that the draft order should not be approved “unless the House has previously resolved to disagree with the Committee’s report.” If Committee members agreed without a division that the draft order should be approved, the Motion to approve it is put to the House forthwith. If they voted to approve the draft order following a division of the Committee, there is a debate on the draft order lasting a maximum of one and a half hours, after which the Motion to approve the draft order is put. If the Committee recommended that the order should not be approved, and the Minister still wishes to pursue the order, he is faced with two options: either he may take up the draft order and replace it with an amended draft, or he may table a Motion to disagree with the Committee report. The latter has never occurred in proceedings on a deregulation order. If it were to happen, the debate on the Minister’s Motion, which would be amendable, would last a maximum of 3 hours. If the House supported the Minister’s Motion, a Motion to approve the draft order would be put forthwith.
In the Lords, following the publication of the Committee's second report, the Minister tables a Motion that the House should approve the draft order. There is also the opportunity for a debate, if any peer wishes it, on an accompanying motion at the same time as the motion to approve a draft order. The companion motion is moved first and can be amended and voted on. There is a Government undertaking that, in the event of a motion hostile to a draft deregulation order being agreed to by that House, the motion for the draft order would not be moved (House of Lords Hansard, 20 October 1994, col. 352). This commitment was repeated during the Lords Committee stage (see Annex C).
Aspects of the Regulatory Reform Order-making power
18.The deregulation order-making power was limited in its scope. It applied only to legislation enacted up to and including the 1993/94 Session, and was mostly used for small items. The Regulatory Reform Act extends the power so that it can be used more widely. The Government published illustrative lists of the measures that it wishes to achieve by way of regulatory reform order, as set out at Annex D. The power is sufficiently wide, but no wider than necessary, to achieve such regulatory reforms.
19.Orders under the Act, which are called regulatory reform orders, are capable of:
making and re-enacting statutory provision – the order can amend or repeal statutory provisions, it can replace provisions with a restatement of the law, or it can modify or replace them with new provision;
imposing additional burdens where necessary, provided that they are proportionate, that the order strikes a fair balance between the public interest and the interests of persons affected by any such burdens, that the order also removes or reduces other burdens and that the extent to which other burdens are removed or reduced or there are other beneficial effects makes it desirable to make the order;
removing inconsistencies and anomalies in legislation, provided the order also removes or reduces other burdens;
dealing with burdensome situations caused by a lack of statutory provision to do something;
applying to legislation passed after the Act if it is at least two years old when the order is made and has not been amended in substance during the last two years;
relieving burdens from anyone, including Ministers and government departments but not where only they would benefit; and
allowing administrative and minor detail to be further amended by subordinate provisions orders, subject to either negative or affirmative resolution procedure.
20.The test of maintaining necessary protection is carried over from the 1994 Act and supplemented by an additional test that no order should prevent anyone from exercising an existing right or freedom which they might reasonably expect to continue to exercise (the “reasonable expectations” test). The Act also requires that any burdens imposed by an order must be proportionate to the benefits expected from them. In addition to this objective of proportionality in section 1, two further stringent tests (fair balance and desirability) apply if an order would increase or impose a burden. The requirements for extensive public consultation and thorough scrutiny by two Parliamentary Committees remain, but Ministers bringing forward regulatory reform orders are required to present more explanatory information to Parliament than they did with deregulation orders, to reflect the wider powers and additional safeguards.
21.More generally, from January 2001, the Government has applied a Code of Practice to all its written consultation exercises under which, as a general rule, a minimum of 12 weeks should be allowed for consultation (the consultation period should only be for less than 12 weeks in exceptional circumstances and, where the period is less than twelve weeks, the document should state Ministers’ reasons for the restriction, and what special measures have been taken to ensure that consultation is nevertheless as effective as possible). The Code has been issued by the Cabinet Office and is available on line(10), and further advice on best practice is also available on line(11). In addition to publication on the policy Department’s own website:
all consultation documents on proposals for regulatory reform orders will be published on the Cabinet Office website(12); and
all consultation documents, including those on proposals for regulatory reform, will be published on the Internet Register at UKOnLine(13).
22.The importance of full and thorough consultation was stressed during debate in both Houses. The Government has issued advice for Departments on the particular requirements of consultation on proposals for regulatory reform orders, as set out at Annex E.
23.These cumulative procedural and legal safeguards are illustrated at Annex F.
The policy on enforcement
The Enforcement Concordat
24.Following the 1997 election, the Government decided not to pursue the section 5 procedures in the 1994 Act but to adopt a new approach based on co-operation between enforcers and those subject to enforcement. Representatives of business, the voluntary sector, the enforcement community and consumer groups were closely involved in the development of the Enforcement Concordat. The Concordat is a non-statutory code that describes for businesses and others what they can expect from enforcement officers. Central and local enforcement bodies commit themselves voluntarily to its principles and procedures. The full text of the Concordat is at Annex G.
25.The principles can be summarised as follows:
standards – service standards that business can expect from local authority enforcers will be published annually with performance against them;
openness – information will be given in plain language and advice will be disseminated widely;
helpfulness – staff will work on the basis that prevention is better than cure;
complaints procedures – well-publicised and timely complaints procedures will exist;
proportionality – any action required will be proportionate to the risks; and
consistency – arrangements will be in place to ensure that different enforcers treat businesses in the same way.
26.The Concordat also sets out procedures, including that:
a business will be told what is good advice and what is a legal requirement;
as far as possible in the circumstances, there will be discussion before formal action is taken; and
if action does have to go ahead for urgent reasons, this will be followed by a prompt written explanation of the reasons.
27.The Concordat has similar objectives to the now repealed enforcement provisions in section 5 of the 1994 Act but excludes those elements with which enforcers and businesses had difficulty. Enforcers signing up to the Concordat do so voluntarily, and are encouraged to monitor their progress against it.
28.Announcing the launch of the new policy on 4 March 1998 (House of Commons Hansard, columns 692-94), the Parliamentary Secretary for the Cabinet Office said that where “minded to” procedures had been applied in primary legislation, these would be amended as the opportunity arose. The one order made under section 5 (the Deregulation (Improvement of Enforcement Procedures)(Food Safety Act 1990) Order 1996 (SI No. 1996/1683) ceased to have effect in England and Wales upon commencement of the Regulatory Reform Act at Royal Assent.
29.A full list of the organisations that have adopted the Concordat can be found on the Cabinet Office’s website(14); it is updated monthly.
Enforcement Provisions in the Act
30.The Act repeals section 5 of the 1994 Act and replaces it with a power for Ministers to set out a code of good enforcement practice. This provides a safeguard if problems are encountered with the voluntary approach. The policy, including the “light-touch” nature of the reserve power, was the subject of a consultation exercise published by the Cabinet Office on 28 September 1999(15) involving both enforcers and those subject to enforcement.
31.The provisions are designed to provide assurance to business, the voluntary sector and others that the Government would be able to bring pressure to bear on enforcers that failed to apply best practice along the lines of the Concordat. A code made under this power would not be directly binding on enforcers. But businesses found by a court or tribunal to be in breach of a statutory requirement would be able to ask for the enforcer’s failure to follow the code to be taken into account in determining the appropriate penalties, award of costs or other action.
32.The power is intended to counter unjustifiably inflexible or over-zealous enforcement. The provisions of the Act allow a code to be tailored to address the particular enforcement problem that had emerged. Before making an Order the Government must consult publicly on why and how the power should be used; any such consultation will follow the Government’s Code of Practice on Written Consultation(16). This will explain the underlying circumstances, the enforcement bodies or activities that would be affected and the proposed content of the code. In accordance with the requirements of Good Policy Making: A Guide to Regulatory Impact Assessment(17), published by the Cabinet Office, the consultation document will be accompanied by a thorough regulatory impact assessment, setting out the expected benefits to business as well as the impact on enforcers.
Assessment of Impact of Orders
33.The Cabinet Office produced a regulatory impact assessment for the Bill, which was placed in the Library of each House. Copies are also available from the Cabinet Office on 020 7276 2198 or by e-mailing ian.ball@cabinet-office.x.gsi.gov.uk or for download at http://www.cabinet-office.gov.uk/regulation/act/ria.rtf. The amendments during the passage of the Bill have not changed the regulatory impact assessment. In sum, the regulatory impact of the Act itself is negligible because it contains only enabling powers. The regulatory impact on business, charities, the voluntary sector, individuals or the public sector will flow from orders and any codes brought forward under the Act.
34.Each proposed regulatory reform order and any enforcement code brought forward will be accompanied by its own regulatory impact assessment. As orders are primarily aimed at lifting regulatory burdens, the net effect in each case is expected to be positive. Similarly, the provisions on the making of enforcement codes are intended to be for the benefit of business and so the result would be expected to be beneficial to business.
35.While the Act has no public expenditure implications itself, an order under it could give rise to the expenditure of public monies.