Legislative and Regulatory Reform Bill

– in the House of Lords at 3:32 pm on 10th July 2006.

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Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 3:32 pm, 10th July 2006

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The LORD SPEAKER in the Chair.]

Clause 1 [Power to remove or reduce burdens]:

[Amendment No. 28 had been withdrawn from the Marshalled List.]

On Question, Whether Clause 1 shall stand part of the Bill?

Photo of Lord Goodhart Lord Goodhart Spokesperson in the Lords (Shadow Lord Chancellor), Constitutional Affairs, Advisory Team On Legal Matters, Cross-Portfolio and Non-Portfolio Responsibilities

By objecting to Clause 1, it looks as though I am trying to wreck the Bill, but that is not the intention. My intention is simply to probe the circumstances and I want to know, in particular, why we are having this considerably extensive new Bill instead of merely amending the Regulatory Reform Act 2001. We debated this issue to some extent on the Motion moved last week concerning whether the House should go into Committee—the noble Lord, Lord Jenkin, and others spoke on that occasion—but I think that it is necessary to go over these issues fairly briefly again.

I believe that it would have been much better to begin with amendments to the 2001 Act. Following changes to the Bill, in what way does it differ from that Act? Several of the differences are set out in a letter of 27 June from the Minister to me and in the annex to that letter. I accept that Parts 2 and 3 of the Bill are new and that they would be additions rather than amendments to the 2001 Act, but perhaps I may compare what we now find in Part 1 of the Bill with what is in the Act.

Four changes have been proposed by the Government. First, they say that the procedure under the 2001 Act is too onerous. That may well be true, and I acknowledged that at Second Reading. It is supported by two examples in the annex to the Minister's letter. Therefore, we shall need amendments to replace some sections of the 2001 Act with Clauses 13 to 20 of the Bill but I do not believe that that would be a fundamental change. Secondly, under the 2001 Act, there is a need to remove a legal burden. There is no power to remove an administrative or financial burden which does not remove any legal burden. Again, I accept that as desirable, but it requires only a short and simple amendment to the 2001 Act.

Thirdly, there is an inability under the 2001 Act to use the procedure under that Act to change legislation within the previous two years. No example is given of any problem that has arisen, but it simply requires the removal of a few words in Section 1(2)(a) and (4) of the 2001 Act. Fourthly, there is an inability under the 2001 Act to confer powers of delegated legislation by order. It is highly questionable whether that is desirable, but again if it were desirable it could be dealt with by a short amendment. Finally, there is the absence of any power under the 2001 Act to remove burdens arising other than from the carrying on of activities. That again needs only a very short amendment.

Therefore, four short amendments are needed to the substantive provisions of the 2001 Act plus a rather more substantial amendment to the sections dealing with procedure. Why did the Government not start from there instead of pressing for excessive powers to amend primary legislation? The suspicion is that the Government wanted the power to enable them to bypass most of the existing parliamentary checks on the legislative process. The Government are very fond of the expression "fit for purpose". What is the purpose for which this Bill, in its original form, was thought to be fit?

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

I, too, oppose Clause 1 standing part of the Bill. The clause now constitutes the principal mischief in the Bill. In essence, it is a Trojan horse; it may never be used as such but the potential is there. The institution under threat from the inclusion of the clause is Parliament itself. Why is this clause before us? We have not had a satisfactory answer, either in respect of process or substance? By process, I refer to the Bill being brought before us without being subjected to any pre-legislative scrutiny. The explanation given is that the Bill is urgent. History demonstrates that any Bill brought forward by Government on the grounds of urgency requires the most careful scrutiny. What urgency attaches to the provisions of this clause? There is a case for getting rid of red tape and unnecessary bureaucracy, but that is not in itself sufficient to justify bringing forward this measure and trying to get it passed in best "Yes Minister" style, before Parliament has had an opportunity to grasp its full implications.

Picking up on what the noble Lord, Lord Goodhart, said, if there are particular burdens that need to be removed urgently, what are they? In our discussions so far we have not been awash with examples. Which of the few examples listed in the annex to the Minister's letter of 27 June justify rushed legislation? At best, the Minister has made the case for some action to be taken, but not for it to be treated as urgent. Indeed, I remind the Minister what his colleague, the noble Baroness, Lady Ashton, said only a few minutes ago about the Electoral Administration Bill: we should make changes that affect our democratic arrangements only with great care. I believe that this Bill impinges on our system of representative parliamentary government.

We still wait for a compelling, substantive case to be made for the provisions of this clause. As I pointed out at Second Reading, the motivation for this clause is that officials find the mechanisms under the 2001 Act overly difficult. The problem, as I argued, lies within government, not Parliament. The Minister's letter of 27 June, to which frequent reference was made in our earlier discussions, concedes that the Government consider the provisions onerous and complex. As the noble Lord, Lord Bassam of Brighton, points out in the annex to the letter, departments "perceive" that RROs are disproportionately onerous.

Even if we accept that the existing mechanisms are problematic for officials, that does not make a case for the clause as drafted. It may make the case for finding some alternative methods to the existing one, but it does not demonstrate that the provisions of this clause create a preferable method. All the Government have done so far is make a case against the provisions in the 2001 Act. They have not made a case for the provisions in Clause 1.

There are alternatives. The noble Lord, Lord Goodhart, pointed out that one could have an amendment to the 2001 Act. At Second Reading, my noble friend Lord Goschen raised the prospect of a deregulation Bill. If such a Bill was brought forward on a regular—say, biennial—basis, it would avoid all the problems associated with the clause. It would be confined to those burdens that the Government say they wish to be removed. Minor burdens incorporated into such a Bill would presumably require little attention; more significant ones would attract greater scrutiny. It would probably lessen the burden on departments, since they would not need to bring forward the mass of different orders that they will presumably have to bring forward if the provisions of the clause are as necessary as we are told. Above all, a regular deregulation Bill would avoid the major constitutional implications arising from the provisions of the Bill; principally, this clause.

In short, the Government have made a case for some change to facilitate deregulation, but have not made a compelling case for Clause 1. As it stands, the clause's potential renders it dangerous.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

I, too, have questioned the clause's necessity, and will certainly not repeat the arguments I adduced both at Second Reading and when I spoke on the Motion to go into Committee. The noble Lord, Lord Goodhart, was kind enough to say that he agreed with everything I said but that he could not support me. That is a familiar syndrome from those Benches.

The problem we face—certainly on this side of the Committee—is that, in crude terms, the Government have form on enabling legislation. That is why my noble friend Lord Onslow, who will no doubt be joining us at some stage, has said that he deeply mistrusts giving these legislative powers to Ministers to be exercised by order. When one adds the powerful arguments of my noble friend Lord Norton on why we have not yet been told what the urgency for the Bill is, I maintain the view that the Government would do much better to take the Bill away. After all, it has had a pretty chequered passage in another place. When we discuss the amendment of my noble friend Lord Waddington, we will come to some of the arguments adduced on his case: the Government have had massive changes of mind—not just once, but twice and three times—on what they want to see in this Bill.

The clause contains a dangerous power: the power for Ministers to legislate, and to repeal and amend existing legislation, by order. To my mind, it is incumbent on this House to demand a clear exposition from the Government—a much clearer one than anything we have had from the Minister—justifying the immediate need for it instead of a much simpler, shorter Bill, amending the 2001 Act, as the noble Lord, Lord Goodhart, said.

We are faced with the demand that this legislation should be rushed through in this Session of Parliament. The Report stage will be in October on the timetable scheduled for the Bill. It will then have to go back to another place for consideration of the substantial amendments that will have been made here, not least by the Government. This is the classic example of the Government making the mistake of, first, trying to pass too much legislation and, secondly, when the legislative programme becomes severely congested, trying to rush things through in order to achieve what they see as their parliamentary objectives.

I believe that this Government would, after the changes made in the Commons, have taken the matter away were it not that this would have been seen as a most tremendous loss of face. One thing that the Prime Minister in particular and his Ministers in general simply cannot abide is any thought that they should lose face any further than they have already. I totally support the case made that we should not let this clause go through.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament 3:45 pm, 10th July 2006

Two fundamental matters distinguish what was in this Bill, as it originally appeared in another place, from the 2001 Bill. The first one was the attempt by the Government to blur the distinction between primary and secondary legislation. The second was to introduce a new procedure for Law Commission proposals. The first was abandoned on Report in another place. The second is to be abandoned this afternoon by the noble Baroness when she speaks to Clause 3.

What is left is, essentially, the 2001 Bill in slightly different form. Is there anything we can do to rescue the Government from their dilemma of having to carry on with the time-consuming passage of this Bill? Yes, there is. It is to transform Clause 1. How should we transform Clause 1? We should transform it by reminding ourselves why the Government said they were introducing the Bill in the first place. They said they were introducing the Bill to implement the Hampton report.

It is a very important report, which has many wise things to say about regulation. Its fundamental message is that regulation should be proportionate to risk. That is the core message that we receive from its author. Where do we find that message in the Bill? Nowhere. Where should it be? It should be in Clause 1. Instead of that we have essentially the same language from the 2001 Act which the Government have repeatedly described as an Act that has failed.

So I share the views of all those who have spoken to this clause stand part Motion this afternoon: that we should remove the text of Clause 1, keep what is in the 2001 Act, and use Clause 1 to state in a very clear way the principles that appear in Hampton. This clause should be about deregulation. Why is it cast so widely when the purpose of the Bill is, solely, to promote deregulation?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

I am grateful as ever to those noble Lords who have contributed to this short debate, but it is a rerun of a debate we had at Second Reading, and, as the noble Lord, Lord Jenkin of Roding, said, a debate we had before we entered into the Committee stage. There appears to be a measure of agreement among noble Lords on the Opposition Benches, although perhaps not absolute agreement. The noble Lord, Lord Goodhart, seemed to accept that there are two or perhaps three, new areas. The noble Lord also accepted that the old procedure under the 2001 Act for instruments of deregulation is too onerous. He then described how he thought that the Act could be amended and took the point that amendments to the procedure for deregulating by order would need to be substantial.

So there is a measure of agreement, but there is also a measure of disagreement in the views of opposition Members about how we should improve or modify the Bill. At the heart of it, for opposition Members, the question remains why we did not simply amend the 2001 Act. Of course, we could have done and the Bill clearly builds on the strengths of that Act. However, if we had amended the 2001 Act, the legislation would have been spread over two enactments. It would have been messy and, I would argue, difficult to use by departments which must deliver better regulation. If anything can be learnt from the experience of the 2001 Act, it is that it must be clear how departments can deliver better regulation by order.

What is really important here is evidence about why the Bill should work better, and deliver more than the 2001 Act, and specifically what the Government intend to deliver through the Bill. This is what I shall focus on in responding to the points made by Members of the Committee.

What is clear from the debate in this House is that we all agree that there is a need to deregulate. What has been lacking so far is the actual and swift delivery of wide-ranging better regulation measures to effect real change on the ground. The order-making power in Clause 1 will allow us to remove or reduce burdens in a way that the 2001 Act did not.

The definition of burden in the Bill is substantially different from that in the 2001 Act. It is outcome-focused—focused on why legislation should be reformed, rather than on how legislation can be reformed. What I mean by that is that the 2001 Act required disproportionate and sometimes nugatory analysis. The department proposing an order had to carry out a large amount of legal analysis on whether the proposal removed, reduced, re-enacted or imposed specific legal restrictions, requirements, conditions, sanctions or limits on statutory powers. The analysis required by the 2001 Act often had little to do with the desired better regulation outcome of, for instance, reduced costs on business or charitable organisations. It is certainly not as direct as the current definition of burden, which will require Ministers to focus on the financial costs or obstacles to productivity that the order would reduce or remove.

Those stakeholders whom we consulted argued forcefully that orders should be an outcome-focused tool to deliver better regulation. To cite but one of those consulted, the Federation of Small Businesses told us:

"The concept of a burden as a legal one means that there is a wide gap between what the small business man or woman would consider to be a burden and what a legislator—or even an enforcer—would consider to be a burden".

The new definition of burden in the Bill does exactly this: it forces those using the order-making power in Clause 1 to focus on the practical benefits that the order will deliver; it forces those using the order-making power to focus on the financial cost, administrative inconvenience, obstacle to efficiency, profitability or productivity or sanctions that the order will reduce or remove. That is not necessarily about reducing analysis that has proved a disincentive for departments' use of the 2001 Act, but about ensuring that the analysis and evidence is proportionate and is focused on the costs and impacts, on the economic, financial and other practical evidence that reforms are worth while. It is also about ensuring that the policy makers and economists focus on the evidence that demonstrates why a proposal is necessary. The change in emphasis that the definition of burden in Clause 1 requires is therefore completely different from the justification necessary under the 2001 Act.

As we have stated on a number of occasions, the Bill, and Clause 1 in particular, does not stand in isolation and neither can we consider it in a narrowly focused way. The Bill is part of a much wider government agenda of cutting the red tape that is such a burden on the public sector, businesses, charities, and so on. As part of this agenda, the Government are also measuring the costs of all administrative burdens. The outcome of this work and the concerted push across government departments for better regulation will be reflected in concrete simplification plans from each department, to be published later in the year. In those plans, government departments will identify deregulatory measures, which they will deliver with the most appropriate measures available to them.

The Government have also accepted in full Philip Hampton's report on more efficient approaches to regulatory inspection and enforcement, in which he recommended the merger of regulators into seven thematic groups. The Government's better regulation aims have become more ambitious since 2001, when the present Act was devised. We have found that the 2001 Act does not offer the appropriate alternative mechanism that the radical programme of reform demands.

It may be helpful if I cite four examples of generic better regulation proposals which orders under the 2001 Act could not deliver: first, the reduction of administrative burdens if no legal burdens in the narrow technical sense of the original Act are reduced or removed; secondly, delivering uncontroversial Hampton mergers to reduce the burden of inspection and compliance on the regulated; thirdly, the limited power to sub-delegate, which meant that under the 2001 Act carrying risk-based inspections and enforcement through to the detailed level of regulations was more difficult; and fourthly, reducing the burdens on individuals or others that affected them passively rather than actively.

There is recognition here and at EU level of the need to identify and remove administrative burdens. That is why the Government have done their ground-breaking analysis of the cost of all administrative burdens on the regulated. In their simplification plans, departments will set challenging targets to remove unnecessary administrative burdens.

Photo of Lord Berkeley Lord Berkeley Labour

I am very grateful to my noble friend for giving way. I have understood his long and very clear explanation of the benefits of deregulation to the Government, to charities and many other organisations, but he has not once mentioned the effect that it may have on the customers and others on the other side of the coin. Why were these regulations introduced in the first place? Is he investigating at the same time the effect that it will have on the people who might come off worst if these changes are made?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

That is a fair point, and one that is acknowledged in the legislation. It is one of the protections that are part of the process to be gone through. Regulations are put in place from the best of motives. Sometimes it is discovered subsequently that the measure of regulation is not appropriate, does not work, is excessively burdensome and adds costs. The noble Lord asks about the consumers. Some regulations probably cost consumers because of how they operate.

We have attempted in the Bill to improve and strengthen the procedures put in place under the 2001 Act, which built on the 1994 Act put in place by noble Lords opposite when they were in Government. We are trying to ensure this time around that the important work that we have done so far under the 2001 Act can be built on so that it works better and is more precise and better defined. In that way, the protections are there when they need to be and we can remove unnecessary costs and burdens on business and make the regulatory regimes much simpler and easier to understand. This will enable us to bring together the important regulatory bodies, which really should be working together as a single regulator, to work much more coherently and simply.

Noble Lords opposite have a very simple choice to make: either they can join the Government in the important practical work of enhancing and improving our regulatory regimes and ensuring that we do not have regulatory burdens, or they can continue to force the Government to muddle along by deleting the clause. I have not heard a convincing argument from noble Lords opposite against the Government's deregulatory programme. I rather thought that they shared our agenda. If they do not, they and their colleagues on the Liberal Democrat Benches may try to strike out the clause. That retrograde step would send out entirely wrong messages not just within the political system but to the business communities, in particular, and voluntary organisations, which are very much behind this Bill and our attempt to improve the regulatory framework in this country. I hope that the Committee will think long and hard before attempting to wreck or disassemble our Bill, which has virtue and value. That is not just the opinion of the Government, it is more widely held outside your Lordships' House. I recommend that Clause 1 stand part of the Bill.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative 4:00 pm, 10th July 2006

I am not sure that the Minister has been listening to the debate. We have put forward an alternative. It is not a simple choice in the way that he has outlined. In so far as he has made a case for this clause, it is in explaining what the Government want the clause to deliver. He has not addressed what the clause could potentially deliver; that is the real mischief.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

The noble Lord presses the issue of mischief. We have listened carefully throughout the debates in another place, which is why we have brought forward amendments designed to allay some of the wilder fears and concerns that somehow the Government were using this Bill to negate the value of Magna Carta and undermine all previous constitutional legislation. Clearly, that was not our intent. In the end, this is humble legislation intended to do humble things, as I have described in some of our earlier debates and discussions.

If Members of the Committee seriously think that they can improve the Bill by taking out Clause 1, they misunderstand our intentions on deregulating. We want coherent regulatory frameworks and a sensible parliamentary procedure to ensure that, when measures are required to make the regulatory framework simpler and easier for people to work, they do that job.

Photo of Lord Goodhart Lord Goodhart Spokesperson in the Lords (Shadow Lord Chancellor), Constitutional Affairs, Advisory Team On Legal Matters, Cross-Portfolio and Non-Portfolio Responsibilities

I am sure that both sides of the Committee recognise the need to deregulate, but in doing so we do not wish to put a weapon in the hands of the present or any future Government which could be used to abuse that objective. I remain unconvinced by what the Minister has said. Saying, for example, that orders should be outcome-directed, seems, basically, jargon. There should be a modest modification of the definition of burdens which appears in Section 2(1) of the 2001 Act. I am not sure that there is such a great difference between the definitions of the 2001 Act and this Bill, which the Minister suggests would make it inappropriate to use the old definition with some modification.

The reasons put up by the Minister for not using the 2001 Act are inadequately argued. As I indicated, this was introduced as a probing measure. It is therefore not my intention to vote against the Question that Clause 1 stand part. We will obviously consider what the Minister has said to see whether there is any practicable course to enable us to use this Bill to amend the 2001 Act, which is where I think it should have started.

Clause 1 agreed to.

Photo of Baroness Wilcox Baroness Wilcox Shadow Minister for the Cabinet Office, Constitutional Affairs, Shadow Minister, Work & Pensions

moved Amendment No. 29:

After Clause 1, insert the following new clause-

"SECTION 1 ORDERS: REPORT TO PARLIAMENT

A Minister of the Crown shall annually lay a report before Parliament detailing, for each government department that made an order under section 1 in that year-

(a) what burdens have been removed, (b) what burdens have been simplified, (c) what burdens have been imposed, and (d) what the impact of each order has been."

Photo of Baroness Wilcox Baroness Wilcox Shadow Minister for the Cabinet Office, Constitutional Affairs, Shadow Minister, Work & Pensions

The new order-making powers in Clause 1 are significant. If Parliament does confer these powers on Ministers, it is important that they are held to account and use them in the way Parliament intended. The audit proposed in this new clause should be easily carried out if departments stick to the better regulation agenda being espoused by the Government. It would be useful if the Minister could tell us how the operation of the new order-making powers is to be reviewed and what formal mechanisms the Government intend to deploy to ensure that they are used appropriately. The amendment does not seek to create an administrative obstacle to the use of Section 1 orders; indeed, we hope that far more orders will be made under the new scheme than was the case under the 2001 Act. The transparency of a formal report system will give an impetus to Ministers to make it a political priority to show that they are deregulating and removing red tape. From what I have heard expressed on all Benches so far in the debate, that is what we all want. I beg to move.

Photo of Baroness Carnegy of Lour Baroness Carnegy of Lour Conservative

I support the amendment moved by my noble friend. It should not be difficult for the Government to accept it. They will know which burdens have been removed, which have been simplified and which have been imposed. From that they will know the impact of the orders. If they do not know these things, they should.

Hope springs eternal, but I wonder whether any more orders will be brought forward under Clause 1 as it stands. As I said at Second Reading, my experience of the previous system makes me wonder whether there are sufficient improvements here to achieve the swift delivery of lots of orders, a point made by the noble Lord in the previous debate. If there are many more orders, it is particularly important to ensure that the outcome is brought before Parliament once a year so that we can see whether this clause, one which makes us all anxious, has the effect the Government are hoping for.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

I support my noble friend's amendment, which is an extremely sensible and rather modest proposal. If Clause 1 is to remain, this should be the first of several amendments accepted by the Government. The amendment would provide two benefits: first, it would impose a useful discipline on the Government in drawing the material together, which might be valuable in itself; secondly, it would inform Parliament about what is being done under this measure so that we will have at least this mechanism for evaluating whether it is having the effect the Minister has said is intended.

Photo of Lord Goodhart Lord Goodhart Spokesperson in the Lords (Shadow Lord Chancellor), Constitutional Affairs, Advisory Team On Legal Matters, Cross-Portfolio and Non-Portfolio Responsibilities

My name is attached to this amendment, which we support. The considerable power conferred on Ministers by this Bill, if passed, needs to be monitored properly by Parliament and therefore requires an annual report as proposed here.

Photo of Viscount Bledisloe Viscount Bledisloe Crossbench

I am a little puzzled by the amendment. I assume that the noble Baroness's purpose is to encourage departments to make orders that would remove burdens. It you make an order removing a burden, you will have put into the report what you have done. The one person who would not get into the report is the person who does nothing. If we are going to name and shame, surely we want a long list of those who have not made orders, not a list of those who have. When the noble Baroness brings the amendment back at a later stage, perhaps she will include a suggestion that those who have done absolutely nothing should be at the top of the report in capital letters.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

The noble Viscount, Lord Bledisloe, makes a very good point and no doubt we shall wish to return to it. It is not only Ministers and government departments who will need the information my noble friend's amendment would provide, but also all those from whom burdens will have been lifted—notably those in industry and commerce, which are the bodies calling for more deregulation.

My mind was drawn back to the speech made at Second Reading by my noble friend Lord Sainsbury of Preston Candover who, when he was describing his experience in 1993, said:

"I suggest that it needs the input of industry, commerce, small firms and large companies. They are better placed to assess the priorities of deregulation than are government departments".—[Hansard, 13/6/06; col. 140.]

One of the effects of my noble friend's amendment—and I can understand why the Government may hesitate to accept it—will be to reveal the paucity of reports that are likely to come forward as a result of anything in the Bill. The Government will not want to advertise that.

The people who need to know what is being done are those who are enduring the burdens of over-regulation. As the noble Lord, Lord Goodhart, and others have said, we are all in favour of dealing with this mass of over-regulation with which we seem somehow to have saddled ourselves. We will need to know what has been achieved— which, I think, is at the heart of my noble friend's amendment—and, as the noble Viscount, Lord Bledisloe, said, what has not been achieved.

I hope we shall return to the very interesting response that the noble Lord, Lord Bassam of Brighton, gave to an amendment brought forward by my noble friend Lady Wilcox on the first day in Committee. He said that perhaps we should have some sort of procedure by which those who are subject to burdens can initiate a process to make sure they are properly considered. The noble Lord, Lord Bassam, is nodding that that is what he implied. I thought that was one of the most hopeful things to come out of last Monday's debates and I hope we shall hear more about it. But it will need both sides. We may not have achieved very much and very much more still remains to be achieved. It seems to me that our old friends, openness and transparency, require the Government to accept the amendment.

Photo of Lord Berkeley Lord Berkeley Labour

Noble Lords who have spoken to the amendment have been talking up the benefits of removing burdens from big business, small business and many other people, and a report to Parliament, on the face of it, sounds a very good idea. However, the problem with removing burdens from business is that, again, some people may suffer. If we are going to start saying what a great job we have done in removing burdens—some of which it may be a very good idea to remove—we should also list the people who have suffered. No doubt we shall hear from them in due course, if and when the Bill is passed. I hope that the Committee will look at both sides of the coin.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

I hope the same because not all regulation is bad. However, this Bill is about deregulation and, as such, we ought to make sure that it comes into operation properly and that Parliament is informed of what is happening. That is why I support the amendment.

There are two other reasons why I support it. First, the amendment, if accepted, would impose a discipline on Ministers and their departments thoroughly to examine whether or not regulations are necessary, and then to bring forward to Parliament proposals for deregulation. Parliament will then, presumably, be able to debate the proposals to see whether they comply with what it wants. So, it is a good disciplinary amendment.

Secondly, we are often told when we ask questions that this information is not kept centrally. Of course, in order to see how deregulation is proceeding, it will be necessary for us to know what the position is overall and not department by department. The amendment would require the Government and departments to have centrally held information to enable Parliament to debate deregulation realistically. I therefore hope the Minister will accept the amendment.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 4:15 pm, 10th July 2006

This is an amendment with which I am familiar, in the sense that noble Lords opposite frequently table a reporting amendment to Bills to ensure that the standard and threshold of holding the Government to account are raised. I have some sympathy with that intent; reporting should certainly be part of the process. Yet admirable though this amendment is, ultimately I cannot support it. However, I can certainly support its spirit and advise your Lordships that we have already given a very clear commitment to having a review process. My honourable friend Mr McFadden gave that commitment in another place during a debate on a similar amendment.

We certainly support the idea that we should constantly look at how well the reforms are working. It was in part the review of the 2001 Act which persuaded us that we needed a rather more dramatic piece of legislation that would be more effective. So, if you like, a review of the legislative framework has already had an impact. It has meant that we have tried to design better procedures for the process of deregulating.

We also believe that all departments should keep their legislation under review. That is why the Government set up the Panel on Regulatory Accountability—the PRA— chaired by the Prime Minister, and why there are regulatory reform Ministers in each of the main regulatory departments. That is also why there is a Better Regulation Commission, keeping an eye on them all.

Departments are currently reviewing their regulations and drafting simplification plans, which include measures to reduce administrative burdens on business and the public and voluntary sectors. These will be published by the time of the PBR, later this year. The Better Regulation Commission will provide independent advice to government from business and other external stakeholders about new regulatory proposals and the Government's overall regulatory performance. It will continue the challenge role carried out by the Better Regulation Task Force.

It is perhaps worth saying that since 1 January this year, the commission has taken on a new responsibility to review the simplification plans that government departments and some independent regulators are preparing. The commission sits on the PRA committee reviewing the plans; and its opinion of a department's plan will be made public at the time of the plan's publication.

Departments will be required to revise these plans annually; as part of that, they will include details of simplifications delivered, including orders made the previous year. All departments are also obliged to report on their better regulation work as part of their annual reports, as they have done for the past two years. That picks up something referred to by the noble Viscount, Lord Bledisloe, with regard to a wider review to look at areas where the deregulatory genie has not yet reached. Members of your Lordships' House will be aware that while debating a similar amendment in another place, we gave very clear commitments.

In addition to departmental reports, we would expect departmental Select Committees to report on the annual reports I referred to, as appropriate. The Commons Regulatory Reform Committee, with its new expanded remit, will also take interest in these reports and departmental simplification plans.

Although I agree that we should be open to reviewing orders, it would be unnecessarily prescriptive to write that into the Bill. I am sure that Members of your Lordships' House share my view and that of Members in another place that there must be a cultural shift within Whitehall as a whole to deliver the real benefits on the ground to those who are being regulated. While we debate the Bill here, it may seem as though we are debating something in isolation, but Members of your Lordships' House may not see in the same way the work being carried out throughout the departments. There is a much greater desire to move the deregulatory agenda on and the Bill is a reflection of that, not an absolute in itself.

The amendment would impose an annual reporting cycle on the Government, which would be an unnecessary burden and may well deflect attention from the important work done by the task force, the commission and the various committees that look at regulations. It would be contrary to the spirit and the purpose of the Bill. Although I understand and sympathise with the desire to have annual reports, in the end it would be counter productive.

The noble Lord, Lord Jenkin, referred to comments that I made in earlier debates, possibly when I was summarising the portal that we have set up to encourage greater public participation in the deregulatory drive throughout government. That portal provides us with a sensible approach because it enables a much more interactive and interrogative means for business, the voluntary and public sectors, and people who require and are part of the general deregulatory flow to bring forward their propositions for deregulation. The Better Regulation Executive is currently discussing with departments the best way to use that portal so that we can have a regular summary of the progress that has been made towards particular items of deregulation that people have brought forward. That would provide us with a useful public window for what we are trying to achieve in a way that people can understand. Such practical measures would achieve much more than a burdensome annual report, which runs against the spirit of the Bill in terms of deregulation and ignores the important point made by the noble Viscount, Lord Bledisloe, that we should encourage departments which are less enthusiastic about deregulation than other departments which are keen to move that agenda forward.

Photo of Baroness Carnegy of Lour Baroness Carnegy of Lour Conservative

The Minister talks about producing this report as a burden. He has given us a great description of the many excellent internal arrangements that will try to get more and better deregulation. But for goodness's sake, you cannot describe as a burden the Government's duty, having legislated for a Bill about which Parliament has many doubts, to tell Parliament how it is working. It will not be difficult at all because they will know the answer to all those questions. The only one that might present slight difficulties is the question of how much impact there has been in a short space of time, but I suspect that the people to whom the noble Lord, Lord Berkeley, referred—those who are disadvantaged by any measure—will soon talk about the impact. They will not wait a year to do it. It is extraordinary in this case, where we have a Bill that Parliament is doubtful about, to say that the Government think that the report would be a burden.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

In all these things, I would argue that we have to be proportionate. The amendment calls for an annual report and other amendments would place reporting obligations on the Government. An annual report is disproportionate in terms of its likely impact on the deregulatory process. It may hamper some of the deregulatory work.

Pat McFadden gave an undertaking to report on the working of the Act within five years of it coming into effect. That is a sensible approach, because it will enable the Government to reflect on where there are strengths and weaknesses in how the legislation works, consider the legislation's effectiveness, pick up on all the detailed work that I described earlier in responding to the amendment and enable us to publicise and promote the progress that has already been made. It is for that practical reason, and a desire to let civil servants and officials get on with the job, that encourages me to think that the amendment is excessive in its impact.

Perhaps I should also put on record that the simplification plans that I referred to will be published annually and publicly, and I am more than happy to ensure that they are placed in the Library of the House. We are trying to ensure that there is good quality information but that we are not necessarily tied absolutely to an annual reporting cycle which in itself may deflect from the important work of deregulation itself.

Photo of Baroness Wilcox Baroness Wilcox Shadow Minister for the Cabinet Office, Constitutional Affairs, Shadow Minister, Work & Pensions

I am impressed and delighted by the number of people who have taken part in this debate. I was happy to hear the warm words of the Minister, and I thought that we were getting somewhere; but now I feel that we are not. We are back in the debate that we had on the 2001 Bill, saying all these warm things.

The Minister says that he wants this to be dramatic and effective—but "dramatic and effective" means the transparency of a formal reporting system. I pick up on the point made so well by the noble Viscount, Lord Bledisloe, whom I am delighted to see taking part in debates on these amendments. I hope that he will stay with us throughout all this, because the points that he makes are certainly being picked up elsewhere. But if the Bill requires every Minister from every department and his senior officials to report to Parliament, it will be self-evident when they have failed to pick up something or have done nothing. It will all be there for us to see.

At this stage, I shall not press the amendment, but I hope that the Minister will look at the matter again and see how much support there has been for such an amendment right across the House. That does not necessarily mean that my wording is perfect and it is the Minister's Bill and his right to come back with whatever wording he likes. But unless we start hardening up and putting things on the face of this Bill, we are merely using warm words and wasting our time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Waddington Lord Waddington Conservative

moved Amendment No. 30:

After Clause 1, insert the following new clause-

"DISAPPLICATION OF EUROPEAN COMMUNITIES ACT 1972

(1) An order made under Part 1 containing provision relating to Community Treaties, Community instruments or Community obligations shall, notwithstanding the European Communities Act 1972 (c. 68), be binding in any legal proceedings in the United Kingdom.

(2) In subsection (1)-

"Community instruments" and "Community obligations" have the same meaning as in Part 2 of Schedule 1 to the European Communities Act 1972; "Community Treaties" has the same meaning as insection 1(2) of the European Communities Act 1972."

Photo of Lord Waddington Lord Waddington Conservative

I had an opportunity of trailing this new clause the other day, so I shall try not to dwell too long on what I said then.

Most of the regulatory burden on business has its origin in Europe, and many may think that a deregulatory initiative that does not recognise that fact is little more than window dressing. The Government said that better and less regulation was a priority of the EU, but the figures that they cite in support of that proposition show nothing of the sort. At Second Reading, the noble Lord, Lord Bassam, said that the Commission had dropped more than 65 proposed pieces of legislation and had undertaken to simplify up to 1,400 pieces of legislation. In plain English, that means that while some measures in the pipeline are not going to be taken any further, there are no plans whatever to repeal any existing legislation.

The noble Lord, Lord Bassam, seems reluctant to admit that to the best of my knowledge not one single measure introduced by the Commission over the years has ever been repealed. That is hardly surprising. If you have a system under which only the Commission can introduce legislation, it is only the Commission that can introduce repealing legislation, and it is not in its nature to do so.

Where does that leave us? Have we just to accept that a burden placed on business is irremovable, and there is nothing to be done about it if that burden has been placed as a result of a decision in Europe? I suggest that if Parliament so wills, there is something we can do about it, and this new clause points the way. If the new clause is accepted, three things will happen. First, it will be plainly stated in legislation—for the first time, I think —that the 1972 Act, although of great importance, is no different from any other Act of Parliament. With the European Communities Act 1972, there was, in the words of the noble and learned Lord, Lord Bridge of Harwich, in the Factortame case, a voluntary surrender of sovereignty. What has been given, however, can be taken away. The Act can be repealed by any other Act, and other legislation can disapply it in specified cases. It is no bad thing for Parliament to assert that fact. If it does not, the time may come when the courts say, "It's too late to assert that the 1972 Act is like any other Act; too late to ask the courts to affirm a law which contradicts a treaty obligation, even if Parliament states in plain and unambiguous terms that that is the law's intent".

I must emphasise that the new clause is not an invitation to the Government to break our EU treaty obligations. It is a reminder that Parliament is sovereign and can, by appropriate legislation, override earlier legislation, none of which is entrenched, and can certainly, if it so wishes, use machinery such as is provided in the Bill to make laws relating to Community obligations. The clause does not attack the 1972 Act, but merely states that, notwithstanding what is contained in the 1972 Act, a Minister may make an order removing or reducing a burden of the type referred to in Clause 1, and we can ensure by the use of clear and unambiguous words that the order is binding in any legal proceedings in the United Kingdom. The new clause is a timely reminder of Parliament's rights—an assertion of Parliament's sovereignty.

Secondly, I want to be sure that a Minister is able to make a legally binding and effective deregulation order where the original order was made in purported compliance with the 1972 Act, but in fact went further than was necessary to meet our EU obligations. Surely the Bill should make it clear that a new order could be brought into force doing no more than is strictly necessary to comply with the EU law. When we were last in Committee the noble Lord, Lord Bassam, seemed to be suggesting that the powers in this Bill could be used to get rid of what is often called "gold-plating". I suppose it depends what one means by gold-plating, but I want to make absolutely sure that a Minister will have the power to revisit regulations that have been made under the 1972 Act, but which on later consideration are thought to go further than necessary to meet the Community obligation in point. The new clause would give that assurance.

I can give two examples where the new clause might be helpful. One example of how the power might be used is in relation to the droit de suite directive, which gives artists the right to a cut when their works are resold. Although the Government opposed the directive, and it was imposed on us only by majority voting, the Minister did not take what many might have thought was the obvious course of implementing the directive to the letter, but proceeded to enlarge its scope dramatically by applying it to transactions of far less value than those covered by the agreed scheme. This provision could be used to take the regulations back to what is strictly required.

Another example was highlighted by a case in the Court of Appeal the other day. Under the EU regulations, boats less than 10 metres in length do not have to keep records of their fish catches. In Britain there is no such exemption for small boats. In that way Defra makes the common fisheries policy even more onerous than is necessary for many of our fishermen, and ensures, incidentally, not that fish stocks are preserved but that the fish are caught not by British fishermen but by those of other nations.

This new clause is an assertion of sovereignty and would meet the need to ensure that the Bill's machinery can be used in respect of orders made under the 1972 Act, in particular when an order has gone further than is necessary to meet the Community obligation. Finally, the new clause would enable the Government in an exceptional case, and after appropriate negotiations, to say to our partners in Europe and/or the Commission, that we insist on deregulating on our own terms and propose to make such deregulatory law binding on the judiciary in this country, notwithstanding the 1972 Act. I submit that that is a common-sense approach. It lacks common sense and it is an insult to Parliament to say that what is done in Europe, however absurd it may be, is inevitable and that in no circumstances can Parliament touch it. With that I could never agree. I beg to move.

Photo of Lord Willoughby de Broke Lord Willoughby de Broke Conservative 4:30 pm, 10th July 2006

I have added my name to the amendment standing in the name of the noble Lord, Lord Waddington, because it fills an extraordinary gap in the Bill. I understand and approve of the value of the Bill to deregulate and to reduce red tape. As the Minister said at Second Reading, the Bill will,

"effect real change in the UK's regulatory environment".

He went on to say:

"it is of crucial importance for the continued competitiveness of this country that any Government pursue as many measures as possible to ensure that regulation is kept to an absolute minimum so that businesses ... can concentrate their efforts where they add most value".—[Hansard, 13/06/06; col. 121.]

We can all agree with that.

The Minister went on to trumpet the fact that the UK was rated the second most competitive economy in the EU, which is rather like boasting that you are the second most successful penalty taker in the English football team—it really is not terribly relevant. We are competing not just in the EU but globally, and our global competitiveness is being eroded by the torrent of EU legislation that is brought forward without, as my noble friend Lord Waddington said, our apparently being able to change a single syllable of it, even where we disagree with it. It is important that the amendment is considered seriously in the light of the fact that between 50 per cent and 75 per cent—estimates vary—of our business legislation is imported from the EU. I believe that the Government said that the figure was 50 per cent in an Answer to my noble friendLord Pearson, while the German Government have said that 80 per cent of their laws and burdens on business come from the EU.

The think tank Open Europe has produced a study which found that EU legislation has been responsible for 77 per cent of the costs of regulations on UK businesses since 1998, at a cost of £30 billion to the UK economy. But none of those regulations, as my noble friend Lord Waddington pointed out, can apparently be touched by Parliament. Neither the other place nor this place can change a single syllable of any EU regulation. It simply has to be rubber-stamped and I do not believe that that is at all helpful when it comes to lessening the burden of deregulation, as this Bill is purported to do.

Perhaps I could give a few examples from the coalface of the cost and burden of these regulations. I am a farmer and just a few of the regulations that I have to face are as follows. I begin with the 18 cross-compliance directives which govern our payments through the rural Payments Agency from the European Union. We have the fallen stock directive, which is an expensive scheme to stop us disposing of fallen stock on our own farms. "Fallen stock" does not refer to the FTSE index but to animals that die on farms. We have the horse passports directive, which is totally unnecessary and completely unacceptable. It is just to prevent food from those who eat horse flesh on the Continent being affected by exports from this country. We have the waste disposal directive, which is adding costs by the day to agriculture; the work at height directive, also known as the "how many men does it take to change a light bulb?" directive; the temperature at work directive; the veterinary medicines directive; and the waste of water framework directive, which I am struggling with at the moment. For some obscure reason it requires all farmers and rural businesses to put non-return valves on every single tap on their farm and to make sure that they cannot be used to hose anything down. The reason for this, apparently, is that there may be some danger, however remote, of contaminating the mains water supply. I wrote to our enforcing agency through the Severn-Trent river authority, asking it whether there had ever been such a calamity, but as yet I have not had an answer. Meanwhile, I have had several letters from the inspectorate and I have gone round the farm installing these various bits and pieces. So far it has cost £2,800, but counting.

If this Bill is to be effective, it has to deal with EU legislation, as well as home-cooked legislation. Therefore, I hope that the Committee will listen very carefully and take on board the import of this amendment.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour 4:45 pm, 10th July 2006

I too have signed this amendment, so shall speak to it. I remind the Committee of the 1972 Act and the debates which we had in Parliament at that time. As I was a Member of the House of Commons and took part in those debates, I have a memory of what was said about the impact that the 1972 Act would have on British life. We were assured when we were giving away the right to make our own rules that we had the veto. There was the "empty chair" situation, whereby nothing really mattered because if things affected us adversely, we could veto them. But times have changed. Gradually, over a period of time, ratchet by ratchet, treaty by treaty, the veto has been virtually taken away. Now, it almost no longer exists and everything is done by qualified majority. When regulations and directives are made, the United Kingdom has an influence on those decisions of only about 8.5 per cent. One could say that 55 per cent or 60 per cent, or whatever, of our laws are not being made here in Westminster, but that they are being made in Brussels by 24 countries, including ourselves, on the basis of qualified majority voting, and that decisions that are inimical to our own interests may very well be made.

The amendment tabled by the noble Lord, Lord Waddington, attempts to deal with this and I hope that it would deal with the matter if it were accepted. It makes the assertion that British sovereignty remains completely intact, given that all appearances suggest that it does not. In Committee, the noble Lord, Lord Bassam, stated:

"We want open markets—that is what the single European market is about".—[Hansard, 3/7/06; col. 44.]

But, of course, we are not simply talking about the single European market; and, in any event, only10 per cent of our GDP is involved in such trade, which is a point that the noble Lord, Lord Pearson, would have made had he not had to visit his physician today. However, the regulations that come from Brussels affect the whole of British industry, not just the 10 per cent of it that is involved with the European Community. Regulations are being placed on areas of our industrial and, indeed, our national and political life, that are completely unnecessary for operations in this country and are sometimes not necessary in respect of the European Union, either.

In addition, because we are part of the EC and the European single market, we are not allowed to decide what our trading policy should be. The results of that have been seen just recently, when the European Union placed tariffs on shoes coming from China and Vietnam. Perhaps people think that that does not matter, but it does. It will certainly matter to people with children, because we now find that the imposition of those tariffs will put 15 per cent on the cost of British shoes—so we have lost control of our trading arrangements.

The other point I wish to make is that we are not really in a European Union market that believes in free trade, which I thought Her Majesty's Government, the Opposition and everyone else believed in. In fact, the single market is a closed market and access to it is only by agreement and is not open in the true sense of the word. So, again I say that the amendment is important.

Once a regulation has been made, as noble Lords will know, it is incumbent on this country to put it into operation, whether it is gold-plated or not. Once a regulation is made by the Council of Ministers and once qualified majority voting is applied, it is incumbent on this country to put it into operation and there is nothing we can do to alter it.

What are the consequences of that? I have been questioning the Government about a recent consequence which arises from the hazardous waste directive. The directive affects the use of lead and some other metals in electrical and electronic goods, and it will affect industries in this country to a large degree. It will put up their costs and, indeed, will put some companies out of business. I have tabled Questions to the Government about this, to which the Answer has been, "Well, we can't do anything about it, and it's in the best interests of the single market that we can't." So, once a regulation is made, it does not matter how much it costs industry in this country, it has to be imposed and there is nothing that our Government can do about it. The cost of the directive throughout Europe will be about £44 billion, yet it is imposed on individual countries and there is nothing that they can do to protect their industries from possible bankruptcy. One could give all sorts of examples of the way in which the regulation operates in the European Union.

At Question Time today, the Lord Chancellor accused me of being anti-European. That simply is not true. I am not anti-European: I am simply anti-European Union and anti the impositions that it makes on our sovereignty and on our industry and national life. It affects not only our trade but virtually everything, and we are not the only ones involved. The other day, the Bavarian environment Minister, Werner Schnappauf, talking about European over-regulation, said that in the 1990s the German regions had to comply with 90 regulations a year but that now the figure is closer to 500 a year. If that is happening in Germany, it must also be happening in this country. Thus, there has been a five-and-a-half-fold increase in the number of regulations since the 1990s, and that is an enormous burden on our industry and on the country generally.

I have spoken for long enough—I am sure that some people think that I have spoken for too long—but I feel very strongly about the way that we are governed by regulations from the EU, which, in the context of the United Kingdom, have no real relevance. I believe that, by agreeing to the amendment, something could be done to mitigate the baleful effects which I fear come from our membership of the European Union and the way that it is operated.

Photo of Lord Goodhart Lord Goodhart Spokesperson in the Lords (Shadow Lord Chancellor), Constitutional Affairs, Advisory Team On Legal Matters, Cross-Portfolio and Non-Portfolio Responsibilities

Three of the four usual suspects who put their names to this amendment have spoken and the fourth, the noble Lord, Lord Pearson of Rannoch, is not in his place today. I shall be very brief.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

In response to the noble Lord's remarks about the noble Lord, Lord Pearson of Rannoch, earlier I said to the Committee that he regrets not being here but he had an important appointment with his doctor.

Photo of Lord Goodhart Lord Goodhart Spokesperson in the Lords (Shadow Lord Chancellor), Constitutional Affairs, Advisory Team On Legal Matters, Cross-Portfolio and Non-Portfolio Responsibilities

I had assumed that something important had kept him from this debate. I certainly do not intend to cast any aspersions on the assiduity with which he pursues this cause.

There is a short answer to this amendment. Any attempt to use the procedure in the Bill to override European legislation would plainly be highly controversial and inappropriate. It would have to be dealt with by primary legislation and primary legislation alone. On gold-plating, nothing in the Bill makes this amendment necessary or would prevent the use of this procedure to remove the gold-plating element in any secondary legislation that was introduced under the European Communities Act.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

I support my noble friend's amendment. I speak with a very clear memory of having taken the financial resolution to the European Communities Bill, as it then was, through the House of Commons. It was an extremely unusual procedure because an entire day was given to debating the financial resolution in contra-distinction to the normal maximum of one and a half hours. In those days, I was a very firm supporter of British membership of the European Union, or the Common Market, as it was then called. I wrote an article, which was quoted in a number of places, called Integration or Isolation—the title speaks for itself. However, my experience since then has shown that that has altogether got out of control; it has gone too far. Although I do not for one moment go the whole way with the noble Lord, Lord Stoddart of Swindon, the amendment moved by my noble friend and the very measured terms in which he moved it are far short of the apocalyptic wishes of the noble Lord, Lord Stoddart of Swindon.

My noble friend made three points. The first was that it is important that the British Parliament should assert what has been at the heart of our jurisprudence over centuries: the supremacy of Parliament. I could quote a number of statements by prominent jurists to make it clear that, as is always said, no Parliament can bind its successor and that the courts have an inalienable duty to apply the law as propounded by Parliament. I believe that we are in danger of allowing the 1972 Act somehow to become part of a constitution that cannot be amended by the British Parliament. My noble friend has stated that as his first reason for his amendment and I think he is right.

His second reason was his clear assertion—here he is at one with Ministers—of the wish to avoid the charge of gold-plating. It seems to me that, in these circumstances, it is entirely right that when an order falls to be made to implement a European directive, it should be perfectly possible to implement it in a way that does not involve gold-plating. We have had a recent example of the European directive on the use of lead in manufacturing which immediately had all the organ builders in Britain up in arms. The Government then had to say, "Oh, but it does not apply to organ builders". They had no power to say that because the directive was completely sweeping. Would they not have preferred a procedure under which they could have said, "We are going to interpret this order in this way", and so it would not apply to the people who provide one of the glories of the Anglican Church and other Churches, the tradition of organ music?

When my noble friend came to his third point, on which such emphasis was laid by the noble Lord, Lord Stoddart of Swindon, he was extremely careful to say that this would have to be only at the end of extremely careful diplomatic discussion. It could not simply be a question of kicking sand in the commissioners' faces, but there would be a case in those circumstances for saying, "Look, I am afraid we must ask for a derogation". To secure that, they would need the power to implement the order differently from how the Commission had perhaps assumed.

That does not seem to go against this country's obligations, particularly under the 1972 Act, to the European Union in any way, but provides the Government with an avenue of escape. The noble Lord, Lord Goodhart, said it would clearly be controversial and entirely wrong to do it as an order under the Bill. But the point is that this Bill will be an Act, and the Government would clearly only do it if it had wide support in the country. They would say "We are not going to do it as the Europeans apparently expect; we have negotiated that, it has been agreed, and we now have the power to do it differently". In those circumstances, I see my noble friend's amendment as restating an important principle—the sovereignty of Parliament—in a way that gives the Government avenues of escape, so that we can avoid some of the absurdities which have landed burdens on industry and others in the country.

I have never been regarded as one of the "usual suspects", to quote again the noble Lord, Lord Stoddart. On the contrary, I have usually been regarded as a warm supporter of membership of the European Union, and have been so all along. There must be some flexibility, however. The "magic words", as they have been described in another place, in my noble friend's amendment—

"notwithstanding the European Communities Act 1972"— would bind the courts. They would have to have regard to a later Act passed by Parliament. My noble friend's amendment is a careful, modestly worded proposal for something we could certainly accept.

Photo of Lord Henley Lord Henley Shadow Minister for Constitutional Affairs & Legal Affairs, Constitutional Affairs 5:00 pm, 10th July 2006

Despite the rather drastic title that my noble friend has given this amendment, it is not about an argument with the European Union. As he made clear, it is simply a reminder to all of us that Parliament is sovereign.

My noble friend wants to be sure that a Minister can bring in an order that does no more than is necessary to comply with European Union law, to ensure that there is no gold-plating and that the Minister can revisit powers that he or one of his predecessors might have made under the 1972 Act if he thinks that there has been gold-plating. My noble friend mentioned the droit de suite example, where we know that Ministers in the Department of Trade and Industry indulged in quite a degree of gold-plating. He then mentioned the recent issue of small boats under 10 metres, and the case of the two fishermen from Eastbourne; I think that is before the courts.

The amendment raises the question of whether, as my noble friend put it, Parliament is sovereign, so that it can pass an Act—or, in this case, an order—that effectively disapplies the European CommunitiesAct 1972 on a case-by-case basis. Section 2(4) of the 1972 Act provides that past or future laws shall be construed and have effect subject to the provisions of that section. Section 2(1) of the 1972 Act incorporated all existing EU legislation into UK law, and,

"all such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties".

The effect of the Act is that Community law takes precedence over United Kingdom legislation. The Factortame case, quoted by my noble friend Lord Waddington, resulted in a United Kingdom law being overruled by the European Court of Justice. I will not go into the details of that case now, but many have argued that if the United Kingdom legislation in question in that case had expressly disapplied the 1972 Act, it was still incumbent on United Kingdom courts to uphold the United Kingdom law because of the sovereignty of Parliament.

The Government have always admitted that Parliament has power to repeal all or any of the Acts that give effect to European Union treaties, even if that would put us in breach of our treaty obligations. Perhaps the Minister will confirm that fact. I will not cite all the references, but, for example, in another place on 24 March 2004 the then Minister for Trade and Investment said as much. He said that,

"our position has always been ... clear, and we have held it throughout. Parliament already has the power to legislate contrary to our treaty obligations".—[Hansard, Commons, 24/3/04; col. 317WH.]

For the avoidance of doubt, the courts have also clearly expressed that. For example, in the so-called metric martyrs' case, Thoburn v Sunderland City Council, Lord Justice Laws said:

"For the repeal of a constitutional Act or the abrogation of a fundamental right to be effected by statute, the Court would apply this test: is it shown that the legislature's actual—not imputed, constructive or presumed—intention was to effect the appeal or abrogation?".

He went on to state that constitutional statutes, of which the European Communities Act is an example, could be abrogated only by unambiguous words in the later statute.

So, given the judicial and ministerial unanimity about this principle, there is no reason not to accept the amendment tabled by my noble friend Lord Waddington. It merely puts the principle of parliamentary sovereignty, expressly stated, in this Bill. As I understand it, it would not change the current situation, but it would make clear where Parliament stands on our European Union obligations.

Photo of Lord Desai Lord Desai Labour

Will the noble Lord explain why, in the 16 years after 1972, when his party was in power, at no stage was such an amendment introduced—not in the 1994 Act or anywhere else? Was there a great obstacle, so that only when the Conservative Party is in opposition does it suddenly become capable of amending the rights of Parliament?

Photo of Lord Henley Lord Henley Shadow Minister for Constitutional Affairs & Legal Affairs, Constitutional Affairs

The noble Lord is quite unfair. The deregulation Act that we introduced in, I think, 1994, was a very different animal from this Bill. My noble friend Lord Waddington felt that in the light of this Act it was worth getting the provision down on paper and putting it in the Bill. That is why he brought forward this amendment, and why we are prepared to support it.

Photo of Baroness Carnegy of Lour Baroness Carnegy of Lour Conservative

In reply to the noble Lord, Lord Desai, it is the job of oppositions to do just this. It would be difficult for a Minister to make that speech, nevertheless it is true.

Before the Minister joins the Peers on his Benches and the Liberal Democrats in laughing at what my noble friend behind me said about farmers' difficulties—because there is a habit of laughing whenever somebody who is violently against them speaks—I offer to take any noble Lord from those parties to farmers living near me who will tell exactly the same story about what regulation is doing to them. Most people in farming find it very difficult to make a living. The noble Lord behind me may be able to pay £2,800 and more because of the directive about water, but many farmers cannot. I hope that noble Lords are not going to laugh at what is being said about this amendment.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

In response to the noble Baroness, Lady Carnegy of Lour, I certainly was not laughing at the plight of farmers. I fully accept that many farmers are struggling to make ends meet and to conduct their businesses as we would all wish them to.

I have no doubt that, because of its deregulatory spirit, our legislation is designed to make easier the regulatory regime for farming businesses. We seek a regulatory regime that is in balance and that works in everyone's interests. I see no mirth in that.

The amendment is rather different. In pure drafting terms, I must tell the noble Lord, Lord Waddington, that its inclusion would add nothing to the Bill, as orders validly made under Clause 1 are already binding in any legal proceedings in the UK, by virtue of their being UK legislation.

However, the intention behind the amendment, however carefully argued, seems to be to underline that the power in Clause 1 could be used to enact legislation that is inconsistent with Community obligations—hence the words,

"notwithstanding the European Communities Act 1972".

Indeed, it would appear that the new clause is intended to provide for an express order-making power to override Community law.

Despite what I have heard, I think that the new clause would pretty speedily lead to infraction proceedings, and would be likely to be found in breach of Community law by the European Court of Justice. That is not just my view; it is also that ofMr William Cash, who tabled a similar amendment on Report in the House of Commons. In promoting his amendment, he conceded that if orders were passed that were incompatible with Community law:

"Predictably, there would be ... infraction proceedings".—[Hansard, Commons, 15/5/06; col.757.]

Furthermore, if the power provided by the new clause were used to make an order incompatible with Community law, the Minister responsible would be in breach of the Ministerial Code, section 1 of which requires a Minister to comply with the UK's international obligations.

In domestic court proceedings, judges would be required to regard an order made under the power provided by the proposed new clause as binding, notwithstanding the European Communities Act, and thus notwithstanding the usual requirement under the Act for domestic judges to follow the case law of the European Court of Justice. However, that would not prevent the ECJ finding that the order breaches Community law.

It is perhaps worth noting that, were an order to be made under the proposed clause that was incompatible with Community law, it could be followed by proceedings seeking either a lump-sum fine or a daily penalty fine until the UK came into compliance with Community law.

Furthermore, when a member state is clearly flouting Community law and in so doing causing financial or other harm, the Commission may at short notice seek interim relief—an injunction—from the president of the European Court of Justice, as happened in the now much-cited Factortamecase.

Damages are also available where a member state infringes a Community rule of law conferring rights on an individual or company where the infringement is "sufficiently serious" and a causal link can be shown. It would be extremely difficult to avoid liability for such damages in appropriate cases.

I cannot see that the new clause takes us very far; nor do I think that it achieves part of what the noble Lord, Lord Waddington, sought in moving it, which was to prevent over-implementation—the gold-plating of which he and, for that matter, Ministers are wary. I think that I can make the case that the amendment is unnecessary to deal with gold-plating. Clause 1 can already be used to remove it—a point already made by the noble Lord, Lord Goodhart, in opposing the amendment.

On gold-plating, as I think I explained at Second Reading, and I am sure I have done since, we have also put in place the Davidson review, which is considering the over-implementation of EU legislation. We have called for evidence for that, and the review will report to the Government in the autumn. No doubt that will stimulate wide public debate, which is right and will be very helpful to us and the regulatory framework.

The noble Lord, Lord Goodhart, made the points that I have made: that the power is already in the Bill, the legislation would be contrary to Community obligations and it would make the Bill and its order-making power highly controversial. In absolute terms, Parliament could revoke the 1972 Act if it wanted to because ultimately it is supreme. I see no need for the amendment. It would not achieve what the mover wants it to achieve—an end to gold-plating. Ultimately, Parliament is sovereign. If we were to adopt the amendment, it would run us into difficulties when working with our European partners and would be likely to lead to infraction proceedings, which could be equally damaging for our reputation in the European international community. For all those reasons, I must resist the amendment.

Photo of Lord Waddington Lord Waddington Conservative 5:15 pm, 10th July 2006

Noble Lords will appreciate from what has been said that an amendment with identical terms was moved in the other place. I have to tell the noble Lord, Lord Goodhart, whom I greatly respect—I have certainly paid full attention to what he has said on these matters—that I recall that the Liberal Democrats in the other place seem to be rather impressed by the amendment; certainly some of them spoke in favour of it. I cannot say with certainty that they all voted for it, because I do not have Hansard in front of me, but I have the clearest recollection that the Liberal Democrat leading for his party spoke enthusiastically in favour of the proposed new clause in the other place. Whether that is a matter to which we should pay great attention and on which we should place great weight, I know not, but it is important to put the record straight.

The other thing that I should tell your Lordships is that a great deal of work went into drafting the amendment, because we are clearly dealing with sensitive constitutional issues. The matter was discussed at length with parliamentary counsel, and I think the Committee will take it from me that this is the wording which the Government would have been asked to accept as the correct wording of a new clause if they had wished to achieve the three aims to which I referred. If they had wished to make absolutely sure that the Bill could be used to get rid of gold-plating, this is the appropriate wording. If they had wished to make it plain in the measure that the 1972 Act can be disapplied, this is the correct wording to use—of that, Members of the Committee can be absolutely certain.

To return to what the noble Lord, Lord Goodhart, said, if the procedures available to this House were used with the intention of enacting law that made us fully compliant with our EU obligation, but having used those procedures, tailor-made for meeting our EU obligations, the Government believed that we had gone too far, I doubt very much whether, without this wording, it would be safe to use this measure to get rid of the gold-plating and to amend what we had originally done.

I do not know how certain the noble Lord, Lord Goodhart, is in his mind. I am not certain in my mind, and I would rather be sure. Common sense tells one to spell out clearly in this measure that it could be used to get rid of gold-plating. This was not the matter which was dealt with by the noble Lord, Lord Goodhart. We have not done it yet in any statute, but it is about time that we made it plain on the face of a Bill that there is nothing all that special about the 1972 Act, which can be disapplied in a particular case if the appropriate wording is used. If it is disapplied, our courts would be obliged to give effect to Parliament's plain intention if that was clear in the Bill.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

I should like to clarify one point. I have listened carefully to the noble Lord, Lord Waddington. When talking about the wording of his amendment, he got close to suggesting that it was in some way given the Government's blessing or approval. That is not the case. I know that there were discussions with the Public Bill Office, which probably sought advice from parliamentary counsel. That is rather different from saying that this is Government-approved wording to achieve the objective which the noble Lord is seeking to secure by virtue of this amendment. I want to make clear that this amendment does not have Government approval. Whether it works is another matter. I have described exactly what I understand to be the effect of the amendment. I have also advised the Committee that Clause 1 tackles gold-plating perfectly well.

Photo of Lord Waddington Lord Waddington Conservative

I can assure the noble Lord that I never thought that the amendment had the Government's approval. I am saying that this is the appropriate form of words to use if one wants to be absolutely sure that this Bill can be used to amend a provision which was originally introduced in purported compliance with an EU obligation, but was later thought to go too far. We must make sure that the Act can be used for that purpose. I therefore commend the new clause to the Committee, and I wish to take the opinion of the Committee.

On Question, Whether the said amendment (No. 30) shall be agreed to?

Their Lordships divided: Contents, 107; Not-Contents, 192.

Division number 1 Legislative and Regulatory Reform Bill — Disapplication of European Communities Act 1972 — rejected

Aye: 102 Members of the House of Lords

No: 190 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 444 Members of the House of Lords

Absents: A-Z by last name

Resolved in the negative, and amendment disagreed to accordingly.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.