Legislative and Regulatory Reform (Regulatory Functions) Order 2007

I am extremely grateful to the Minister for that thorough explanation of the order and the code. He will probably not be aware that, when I was doing some background reading on this, I saw that, on 2 November 2006, the House debated the then Legislative and Regulatory Reform Bill and followed it up with the then Companies Bill, to which we shall turn shortly. Those pieces of legislation were taken on the Floor of the House at the same time but were very different in that only 11 amendments were tabled on Third Reading of the first Bill, whereas 1,029 Commons amendments were tabled to the Companies Bill. I note that the Minister’s predecessor, the noble Lord, Lord Sainsbury, claimed three scalps or personal records: the most Commons amendments to a Lords Bill ever; the most Commons amendments taken in a single day; and the most amendments—more than 300—taken in a single grouping. We on these Benches welcome this important if in part slightly technical instrument. The principle must be entirely praiseworthy. We are concerned at the increasing regulatory burden; one has only to open a newspaper on any day to see descriptions and discussion of how the regulatory burden has increased and is increasing. The impact on British life is felt in the economic sphere and is considerable and far reaching. It greatly saddens me when I read about school trips being cancelled because of problems with regulations or village halls being closed because they cannot comply with construction regulations. The weakening of the richness of educational experience and of the social fabric is a great shame. I have described it in debates as the barnacle principle: that although a single barnacle on a ship makes very little difference indeed, as the number of barnacles increases the ship’s speed through the sea is slowed. I am sure that, as the Minister hinted, at some point we will need a much more widespread and far-reaching debate on the nature and level of risk that society is prepared to tolerate. In the mean time, we support a measure that encourages proportionate and flexible regulation. I turn to the specifics of the regulation in the code. First, however, I make a point which, although the Minister may consider it a drafting point, may indicate an underlying approach. The code begins with a paragraph on the purpose. Paragraph 1.1 states that, "““the Government believes that, in achieving these … regulation and its enforcement should be proportionate and flexible enough to allow or even encourage economic progress””." I know that the Minister will tell me that that repeats the principle outlined in paragraph 3 of the code, on page 3, on the economic progress principle. However, it is a rather sad reflection that we say ““or even encourage””. Economic activity is the lifeblood of what we are seeking to achieve in this country, and it should not really be added here as an afterthought. The provision could say ““allow or encourage”” or, if the Minister wanted to try for a major prize, say ““allow and encourage””. That approach seems rather more appropriate. That is enough of the trivia. The order is a fascinating read. If anyone needed to be convinced of the regulatory burden, 24 closely packed pages of authorities, bodies, statutes, UK and European regulations are a convincing answer. I believe that the News of the World once advertised itself by saying, ““All human life is here””. Well, all human life is certainly in this order. I was tempted to ask the Minister to explain its application to the Pedlars Act 1871 or, even more surprisingly, to the Hypnotism Act 1952, but I shall not surrender to that temptation. However, there are two important issues of principle. Article 4 of the regulatory functions states: "““Article 2 shall not apply to any regulatory function … (a) so far as exercisable in Scotland, if or to the extent that the function relates to matters which are not reserved matters””." That is a slightly dense use of prose, and there are two negatives, but as I understand it, it means that matters that are devolved to Scotland are not covered by the order. Similarly, Northern Irish matters that are handled in Northern Ireland are not covered by it, and the same applies to Wales. If I am right about that—I should be delighted to be told that I am not—serious situations could develop that will undermine a good deal of what the Government are seeking to achieve by this order and this code. I illustrate that briefly by way of an example. Part 1 of the schedule on page 3 states: "““All the regulatory functions exercisable by the … Charity Commission for England and Wales””." Charity law is a devolved matter. A Scottish charity law has recently been passed. The Scottish charity law regulator goes by the name of OSCR—the Office of the Scottish Charity Regulator. The Scottish Parliament is passing detailed regulations that are burdensome and expensive to comply with. They are being enforced, appropriately, by OSCR. They are being passed by the Scottish Parliament without reference to the Charity Commission in London. Let us consider the position of a UK-wide charity, for example the Red Cross or Cancer UK. I should make it clear to the Committee that I have not been asked by the Red Cross or Cancer UK to raise this, but I pick them as two well known charities. They have to comply with two sets of regulations where previously they complied with one. They are taking extensive and expensive legal advice on this. When people are approached by the RNLI lifeboat lady holding a tin in the street, I wonder whether they realise that at least part of the money they are giving will be devoted to obtaining advice to deal with this double layer of regulation. So, far from being deregulatory, the instrument permits an increase—two layers—in regulation. However, that is not the whole story, because the Welsh Assembly—following the Scottish example—has already begun to consider whether it should have powers over charities that operate in Wales. The Government are on record as saying that they propose to introduce a charities law for Northern Ireland, which will presumably have its own regulator. There could therefore be four sets of regulations for national charities to comply with. I was a poor student, especially in mathematics, but I remember two concepts: one was called LCD, the lowest common denominator; and the other was called HCF, the highest common factor. My hope was that what the Government propose here would lead to the LCD, the lowest common denominator, but I fear that they will end up with the HCF, the highest common factor, in charities law, where charities have to comply with the most burdensome regulations to avoid undue administrative burden. That is not in the interests of donors, who give their money to help the charity itself. It is clearly not in the interests of charities, whose management has to spend time finding ways to deal with the matter. It is clearly not in the interests of recipients, because they want to receive charitable endeavour, not have it wasted on professional fees. I hope that the Minister can explain how the Government propose to tackle that. I am not clear why we could not have reached agreement with the Scottish Parliament, the Welsh Assembly and the Northern Ireland government to buy into those provisions. Surely minimising regulatory burdens cannot be just an English concern. This is a serious matter, and I look forward to hearing from the Minister about it. The second point of principle can be summed up in that fine old country phrase, ““Fine words butter no parsnips””. There are lots of fine words here, but what will the follow-up be? Most of us on this side of the House believe that regulatory impact assessments are usually fairly desultory or inadequate at the outset and are rarely, if ever, properly reviewed. The code and the order will require considerable review and follow-up. I remind the Minister of what was said by the Merits of Statutory Instruments Committee. It said: "““We welcome the code as a clear written expression of the ‘better regulation agenda’””—" as do we— "““in the context of regulatory activity, but it will be important that the Government monitor what it in practice it achieves, not least in the face of competing legislative requirements””." I am sure that the Minister’s officials have read the House’s report on UK economic regulators, which was published on 20 October. There is a lot of stuff in this report, but there are two or three quotations that the Minister ought to be prepared to address. Paragraph 1.5 states: "““We recommend that regulators should jointly develop methodologies to quantify the impact they have in line with current best practice””." Paragraph 1.8 states: "““Regulators should strengthen their cost/benefit analyses, using quantitative estimates where they can be made robustly, and should improve the presentation of their IAs with clearer sign-posting and a commitment to conciseness and clarity””." Paragraph 1.10 states: "““Post-implementation evaluation should be conducted with greater frequency ... on occasion an independent body ... should monitor the quality of assessments and the objectivity shown by regulators in completing them.""““Post-implementation evaluation should always be made publicly available””." Finally, paragraph 1.29 states: "““The question of who regulates the regulators has not been answered and will not go away. There is a need for a committee to pursue cross-sector best practice and to ensure that the recommendations””," are met. I began by saying that we support the principle behind the regulation, and we do—we want flexible, proportionate regulation—but some serious issues have been overlooked here. Devolution—the devolved Assemblies and devolved powers—is one. How can we ensure that that does not drive a coach and horses through what the Government are seeking to achieve? There is also the need for serious evaluation in one year, two years or three years from now.