Legislative and Regulatory Reform (Regulatory Functions) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Legislative and Regulatory Reform (Regulatory Functions) Order 2007. The noble Lord said: The Government laid two complementary instruments—the draft Regulators’ Compliance Code and the draft Legislative and Regulatory Reform (Regulatory Functions) Order 200—before Parliament on 15 October. I will speak to the two orders together. The purpose of these instruments is to deliver the Government’s commitment to promote effective, risk-based enforcement, which will make a real difference on the ground to those who are regulated without compromising the UK’s excellent regulatory outcomes. There has been full consultation. The draft code is made under Section 22 of the Legislative and Regulatory Reform Act 2006, while the draft order is made under Section 24. Section 22 enables a Minister to issue a code of practice relating to the exercise of regulatory functions, and requires any person exercising a specified function to have regard to the code in exercising the function. Section 24 allows a Minister to specify by order the functions to which the code and the five principles in Section 21 apply. These principles are that regulatory activities should be carried out in a way that is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed. The draft code gives effect to the recommendations in the Philip Hampton report, Reducing Administrative Burdens: Effective Inspection and Enforcement, while the five principles of good regulation derive from the Better Regulation Commission’s report, Less is More. The Government accepted these recommendations and introduced the Legislative and Regulatory Reform Act to implement them. Part 2 of the Act incorporates the five regulatory principles and allows the Hampton’s enforcement principles to be implemented through a statutory code. When the House debated the 2006 Act, Peers warmly welcomed both the Hampton principles and the principles of good regulation, and supported Part 2 of the Act. As the draft order and code derive from Part 2 of the 2006 Act, we hope that Peers, having scrutinised and debated these draft instruments, will bear in mind particularly the benefits that the regulatory and enforcement principles may bring. We believe that a lot has been achieved in the past years by many regulators since the Government launched a radical and far-reaching agenda for better regulation. Since the Hampton report, for instance, the Environment Agency’s risk-based assessments have enabled it to identify more of those who need inspection and have led to a 20 per cent reduction in the total number of inspections. That can only be good for honest and hard-working businesses in terms of lower compliance costs, as well as allowing regulators to be more efficient and effective in their work. However, we need to do more. We need to promote a real and lasting change in a regulatory culture that embeds a light-touch, risk-based approach to enforcement among all regulators. This will deliver further significant benefits to business in terms of better focused inspection activity, the increased use of advice for business, reductions in form-filling requirements and more consistent penalties. These benefits will not be at the expense of regulatory outcomes. This is because a risk-based, targeted and proportionate approach to enforcement will enable regulators to direct limited regulatory resources to areas of greatest need, while reducing burdens on low-risk, honest and compliant businesses. We therefore hope that this is a win-win for regulators, for most of those whom they regulate and, indeed, for society. I emphasise the extent and depth of consultation with all interested parties since March 2007—for over six months. As a consequence of those consultations, parts of the code we are now debating have been altered. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Legislative and Regulatory Reform (Regulatory Functions) Order 2007. 28th Report from the Statutory Instruments Committee, Session 2006-07.—(Lord Bach.)