Legislative and Regulatory Reform Bill

– in the House of Lords at 3:00 pm on 26th October 2006.

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Votes in this debate

Consideration of amendments on Report resumed on Clause 3.

[Amendment No. 17 not moved.]

Photo of Baroness Wilcox Baroness Wilcox Shadow Minister for the Cabinet Office, Constitutional Affairs 3:13 pm, 26th October 2006

moved Amendment No. 18:

Before Clause 4, insert the following new clause-

"INDEPENDENCE OF THE ECONOMIC REGULATORS

(1) An order under this Part may not restrict the jurisdiction or undermine the independence of any economic regulator.

(2) For the purposes of this section-

(a) restricting the jurisdiction of any economic regulator includes diminishing, removing or transferring to another person any function conferred on or exercisable by an economic regulator; (b) undermining the independence of any economic regulator includes imposing on an economic regulator an obligation to comply with the wishes of- (i) a Minister of the Crown; (ii) a person who owes such an obligation to a Minister of the Crown; or (iii) a person who is controlled by a Minister of the Crown.

(3) An order under this section may not render a person who is a director or member of an economic regulator removable from office on grounds other than those which were in force on the date on which this Act was passed.

(4) In this section, "economic regulator" means any of-

(a) the Gas and Electricity Markets Authority; (b) the Office of Communications; (c) the Office of Rail Regulation; (d) the Postal Services Commission; (e) the Water Services Regulation Authority; (f) the Office of Fair Trading; (g) the Civil Aviation Authority."

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

My Lords, I thank my noble friend Lord Norton of Louth, as this is a slightly modified version of the amendment that he tabled in Committee to great acclaim. I am also very grateful for the support given by the noble and learned Lord, Lord Lloyd of Berwick, to my previous amendment on this issue.

The economic regulators have been given statutory powers and duties for the benefit of us all. Their effective regulation of the networks and infrastructures that provide us with electricity, water and transport is critical for our safety and the reliability of crucial services. It is essential that industry continues to invest in the services in order to maintain and improve their quality. This investment will be put at risk if there is the slightest danger of political interference. At previous stages of the Bill, I reminded this House of the Government's behaviour towards the Rail Regulator during the winding up of Railtrack. We need no reminder that in the past economic regulators have been, and may well be in the future, the target of pressure from politicians.

In Committee, the Minister attempted to reassure us by promising consultation, yet we have all seen countless orders forced through both this House and another place in the face of enormous opposition from consultations and committees. Equally frequently, the Government have ignored advice and warnings from parliamentary committees. I am afraid that I do not share the Minister's faith that future Ministers will consistently adhere to his undertaking not to pursue controversial orders and not to undermine the independence of the regulators, welcome as these undertakings are.

I was contacted by a member of the Government's Better Regulation Commission who was worried that my amendment would allow the economic regulators to impose bad regulation on already overburdened businesses. I have written to the member of the commission to reassure him that the amendment would not let economic regulators off following good regulatory practice. Instead, it would ensure that major changes to the regulators were given the full scrutiny that matters of such financial significance to every man and woman in this country deserve.

We have seen the Government twist and turn to avoid taking the blame for the mountain of red tape burying business in this country today. It is time that they stopped arrogating more and more powers to themselves, while doing nothing with the powers that they already have. They should clean up their departments and break their addiction to government interference. I beg to move.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

My Lords, in supporting this amendment, I wish to reiterate two points that I made in Committee. It is important to stress the independence of the economic regulators and the fact that that independence is not achieved at the expense of accountability.

Regulators have to explain and justify their actions. In the Constitution Committee's report, The Regulatory State: Ensuring its Accountability, the point was made that regulators are subject to what was termed "360 degrees of accountability". They are answerable to a range of bodies, including Parliament. They are bound by statute and can be challenged if they exceed their powers. Stipulating the independence of regulators does not affect the powers of Ministers to determine policy.

The importance of maintaining the independence of regulators has been variously stressed, including by the Government. In Committee, I quoted from the evidence submitted to the Constitution Committee by the Department of Trade and Industry. The department said that,

"the independence of economic regulators from Government—insulating decisions from short term political factors—is a fundamental contributor to regulatory certainty and prerequisite for continuing to attract private finance to regulated sectors".

There is thus a compelling case for protecting the independence of regulators—and to be seen to be so doing. That was the case that I advanced in Committee, and my amendment is designed to ring-fence that independence.

I listened with care to the Minister's response in Committee. His reasons for opposing the amendment were twofold. One was that the provisions of the Bill did not create a new position. Regulatory reform orders under the 2001 Act could be used to change the functions of the economic regulators and the provisions of the Act, he argued, had not led to any uncertainty. The second point was that the provisions allowed for flexibility subject to parliamentary scrutiny.

The first point I do not find compelling. I was a critic of the 2001 Act, and the fact of carrying over existing provisions is no commendation. It has not led to market uncertainty because the powers have not been used in a manner that is contentious. My fears about the provision are more apparent if I rephrase that and say that the powers have not yet been used in a manner that is contentious. If the order-making power were to be employed to try to limit the independence of regulators, it may be blocked by Parliament, but the damage would already have been done. If tried once, the potential is always there, and markets thereafter may be far more wary. The point that has been variously stressed, not least by my noble friend Lord Onslow, and which the Government appear to have difficulty in accepting, is that a Government cannot bind their successors.

The other point developed by the Minister is essentially one of convenience. He cited an example affecting the FSA. I counsel against generalising from an N of one, which seems to have happened an awful lot in discussing this Bill. I am not sure that we should concede the general point of enabling primary legislation to be amended by secondary legislation because there is one example of that proving useful. The potential for creating even one case of misuse should concern us.

The Minister's argument, which is at the heart of what I find worrying about the Bill, is that because circumstances change, there may be a case for changing the functions of the regulator and this could conveniently be done by secondary legislation. In other words, it is an admission that we did not get the legislation right the first time round. Had we done so, there would have been appropriate provision in the Act for amending regulatory functions. We need to think through what this may entail for the Government's approach to primary legislation in future.

I revert to the point that I made earlier. I believe that it is important to protect the independence of regulators and to be seen to be doing so. That combined with my somewhat purist view of primary legislation means that I am very happy to support my noble friend's amendment.

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I have added my name to the amendment because I believe, as the two previous speakers have said, that the question of independent regulation is fundamental not only to regulating monopolies but to attracting private finance.

I shall speak mainly about the railways, because that is what I know most about, and I declare an interest as chairman of the Rail Freight Group. In that sector, £1.5 billion of private investment has been made since privatisation. This industry likes regulators; it does not feel that they are a constraint. It likes them because regulators give certainty and confidence. Independent regulation is fundamental not only to attracting investment, but to avoiding, as others have said, the interference and shocks which would have a disastrous effect on business confidence. Even while this Bill is going through your Lordships' House, the Government have introduced a Bill to build a railway called Crossrail—many noble Lords will know about it—which does exactly what the Legislative and Regulatory Reform Bill seeks to do, but for one particular project.

Clauses 22 to 44 of the Crossrail Bill allow the Government to direct the Office of Rail Regulation to do as it wants—to trample over the rights, obligations and business prospects of other operators and users of the railway on the surface. I am sure that your Lordships will consider that Bill in due course if it gets through the other place. Even while Ministers are saying that this is all covered, the Government are already trying to constrain the independence of a regulator. Having more or less failed to do so on one type of timetabling with Crossrail in the summer, they have now come back and said that all the timetabling work—and therefore how much investment there is and how many trains can run—will be decided by the rail regulator in accordance with industry processes. Everybody will say that that is fine, until you go back to Clauses 22 to 44 and find that, if the Government do not like the regulator's answers, he can be directed to give different ones.

That is unacceptable. The Government should say, "Yes, there was a problem", possibly when Railtrack when into liquidation. People said, "Ah, the regulator is going to milk the Treasury dry". I do not believe that. Since then, however, Parliament has passed the Railways Act 2005, which puts a little constraint on the independence of the regulator by saying that the Office of Rail Regulation must have regard to the funds available to the Secretary of State for the railways. That seems perfectly fair, but still emphasises the independence of the Office of Rail Regulation in deciding how those funds should be spent.

I could give a lot of quotations from the passage of that Bill through your Lordships' House in which Ministers emphasised the importance of independent rail regulation. If any noble Lord wants those, I can see them afterwards. I do not need to quote them now, but Ministers emphasised the importance of independent rail regulation at least three times at various stages.

We do not need this particular section of the Bill for the railways. It would be very worrying if it is passed as it is. I therefore support the amendment, which is designed to stop the Government interfering in the work of independent regulators when the legislation is already there.

Photo of Lord Lloyd of Berwick Lord Lloyd of Berwick Chair, Ecclesiastical Committee (Joint Committee), Chair, Ecclesiastical Committee (Joint Committee)

My Lords, I would have been happy to add my name to this amendment, but I am afraid that I was too late to do so. It seems a well drafted amendment, achieving what is needed in simple language that we can all understand.

I take it that we are all agreed that the independence of economic regulators must be secured and protected. They cannot do their job properly if they are liable to be leant on, especially by the Government. As I understand it, the Government accept that position. In his reply in Committee, the Minister said that the Government would be willing to give an undertaking that the independence of the regulators would not be undermined. That being so, I am at a loss to understand how they can object to this amendment.

I have reread the reasons given by the Minister with great care, and can find only two in addition to those detected by the noble Lord, Lord Norton of Louth. The first that I hit on—at col. 1343 of Hansard on 19 July—was that the amendment would impose "an unnecessary restriction" on the regulators themselves. I find it difficult to envisage any regulator who wanted to undermine his own independence. The second reason was that the amendment would provide no additional protection, because the regulator could always be sacked for incompetence or misconduct. I find it impossible to follow that reasoning and I hope that the Minister will explain it in due course. In the mean time, I hope that the House will support this excellent and necessary amendment.

Photo of Baroness Howarth of Breckland Baroness Howarth of Breckland Crossbench

My Lords, I simply want to ask a question about this amendment and raise some issues. It seems inappropriate that an amendment such as this should be limited to economic regulators. The same principles apply to other regulators across the board. If this amendment were accepted for economic regulators, some of us in other fields might come forward at Third Reading with further suggestions.

I declare an interest as a regulator, being on the board of the Food Standards Agency and the deputy chair of the Meat Hygiene Service. The Food Standards Agency welcomes the structures introduced by the Government to develop better regulation. Even so, we were extremely concerned about the Bill in its earlier form. We accept assurances, which we hope that the Minister will reiterate, that the powers in the Bill will not be used to substantially amend or abolish the powers of any regulator without proper parliamentary scrutiny and consultation. I have heard the Minister say that on a number of occasions, having sat through the debate this morning.

It is not only the economic regulators that wish to retain their independence. The Food Standards Agency is held in high regard and respect by the public and there is greater confidence in food standards. That position was reached through the FSA's transparency and focus on consumers. The FSA has a statutory foundation and statutory powers. I do not need to remind the House of the lack of confidence in food following the BSE crisis and the work that has been undertaken to take us to the position that we are in now.

In no way should the Bill favour economic regulators. If it is going to provide for independence, it should look across the board at regulators that have highly successful records, which are monitored in tables of success. We look for a level regulatory playing field. If the Minister can assure us about that in his reply, we may not come forward with further proposals, but if this amendment is accepted, we will be back at Third Reading.

Photo of Lord Bradshaw Lord Bradshaw Spokesperson in the Lords, Transport 3:30 pm, 26th October 2006

My Lords, I shall speak about the railways. The situation that pertained at the time of the collapse of Railtrack is not the best guide. That was a time when we had very individual regulators who were not subject to regulatory boards. Since regulatory boards have been put in place, there is much less likelihood of a falling out between the Government and the regulators. However, it would be an advantage if, when the Government wish to make changes, they sought the agreement of the regulator or his board; if they do not receive that agreement, they should seek fresh primary legislation so that the matter can come before Parliament not as an order, but in a form in which it can be debated thoroughly.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Non-affiliated

My Lords, I agree with the points made by the noble Baroness, Lady Harris. I do not support this amendment because the list is too short and it would probably be impossible to write a long enough one to satisfy me. The major statutory regulators, for whom independence is important, also deserve some protection from major interference with their roles and purposes—indeed, with their very existence—by secondary legislation. The Minister judged that my previous intervention on this issue—in Amendment No. 9—was not at the right point. I hope that this is the right point and that he will give me the assurance that I sought then that order-making powers are not intended to erode the independence, the role or the existence of major regulators that were established by primary legislation.

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 Lords, I listened to the arguments on this with great care and it is obviously a difficult issue. However, on balance, I am persuaded by those who support this amendment, and if it is pressed to a vote, I intend to support it in order for the Government to have an opportunity to reconsider this issue.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, this is the second amendment on economic regulators tabled by the noble Baroness, Lady Wilcox, and, as she acknowledged, it bears a close resemblance to the amendment on economic regulators tabled by the noble Lord, Lord Norton of Louth, and my noble friend Lord Berkeley. Despite the refinement of the noble Baroness's amendment, the Government remain of the opinion that an amendment on the independence of economic regulators is unnecessary. I set out the reasons for that in Committee, but I am happy to reiterate them for the benefit of noble Lords. We have reflected on that debate to see whether we can provide further assurance to noble Lords.

As the noble Baroness, Lady Wilcox, stated in Committee, and as this amendment seeks to install within the Bill,

"independence and jurisdiction ... are essential if we are to ensure that private investors will have sufficient confidence in the regulatory system".—[Hansard, 19/7/06; col. 1332.]

I agree. This Government are ensuring private investment confidence, and the UK is seen by private investors as one of the best places for companies to start, invest, grow and expand. In fact, according to the recent OECD report, Trends and Recent Developments in Foreign Direct Investment, the UK was the world's largest recipient of inward foreign direct investment in 2005, attracting £91 billion of FDI, the largest inward direct investment ever recorded in the UK. Furthermore, the World Bank's Doing Business 2007 report ranked the UK sixth, out of 175, in the world and first in the EU for ease of doing business. These statistics alone should provide sufficient confidence to private investors. However, the question this House must ask is: did the Regulatory Reform Act 2001, from which the economic regulators were not excluded, impinge on their independence and jurisdiction? The answer is no.

The House must also ask: did the 2001 Act deter private investment in the UK? Given the World Bank and OECD reports just mentioned, the answer would have to be no. The noble Lord, Lord Norton of Louth, suggested that that was because the powers had not yet produced that impact, but I thought the argument was that their existence created the problem. The existence of those powers in 2001 has clearly not created the problem.

Finally, one might then ask: will this Bill, once enacted, deter private investment, on the basis that investors will see the order-making powers as a potential power to disrupt the market? On the contrary, the order-making power gives confidence not just to the private but also the public and voluntary sectors that this Government are serious about reducing or removing unnecessary burdens on those sectors.

Clause 1(3) makes explicit that one of the Bill's objectives is to remove obstacles to "efficiency, productivity or profitability". Given that the Government recognise that investment is one of the main drivers to productivity, they would be extremely unlikely to make, under this Bill, any proposal that would jeopardise productivity through pursuing proposals that would undermine investor confidence. Parliament would also be likely to take a dim view of any such proposal.

This House should be asking itself: will this Bill, once enacted, provide an effective vehicle for cutting red tape? After two previous Acts I hope that this House can be confident in itself to reply in the affirmative.

I was surprised by some of the debate in Committee, which seemed to suggest that, using this Bill, Ministers could amend the regulatory structure on a whim—for example, by removing the chairman of an economic regulator—and as though Parliament had no say whatever in the process. That concern is clearly behind proposed subsection (4) of the amendment.

Noble Lords will of course be aware that this Bill has more stringent safeguards than the 2001 Act and includes an absolute and unrestricted right of veto for Parliament. Ministers cannot act on a whim. They will also be aware that every order is subject to a statutory consultation process, which requires the Minister to consult such organisations and persons that appear to be representative of interests substantially affected by the proposals, including any body, such as a regulator, whose functions would be affected by the proposed order. The consultation will provide the regulator and industry with an opportunity to make their views known. That point was pursued by the noble Lord, Lord Bradshaw. I hope that he is satisfied on that, and that it is absolutely clear.

The results of this consultation will influence both the Minister and Parliament in reaching a decision on the content of the draft order and the appropriate level of parliamentary scrutiny of it. The results will also influence whether Parliament wishes to approve the order, or whether it exercises its right to veto it.

Furthermore, the preconditions in the Bill and the statutory consultation provisions are not requirements for making primary legislation, the availability of which, in itself, does not lead to regulatory uncertainty or act as an obstacle to private investment. The procedural and substantive safeguards for any order should provide the reassurance that economic regulators and their respective markets need that changes to the regulatory structure cannot be made on a whim. In addition to that certainty, the Government have said throughout the parliamentary passage of this Bill that it is not our intention to erode the independence from the Government of those regulators set up by statute. I hope that that reassures the two noble Baronesses who have pursued that point.

This House will, of course, also be aware of the Government's undertaking not to deliver highly controversial proposals by order. If a Minister decided to pursue an order in the face of vocal and evidence-based opposition from a regulator—or, indeed, from the regulated, whom we must not forget—this undertaking would also influence whether Parliament wished to approve the order or whether it chose to exercise its right to veto it. In addition to the protections provided in the Bill, I reiterate that businesses that are being regulated must have the right to raise concerns if economic regulators are carrying out their functions, for instance, overly bureaucratically. If there are sound reasons for suggesting any modification of their statutory functions for the purposes of removing or reducing burdens, or of modifying how those functions are carried out, it should be possible to address these by order, as it would be possible for any other regulator. I ask noble Lords why we should not seek to make that distinction. There should be a level playing field.

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, the Minister is very good on the processes that he proposes and has talked a lot about whims, but the mere threat of a change to a regulator is enough to stop investment. This is true of Crossrail. I know that Crossrail is in a Bill, not an order, but simply putting it into a Bill—which is the same as putting it into an order, except there is less discussion about it—has already stopped investment. Change does not encourage investment. Does he have an answer to that?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, Parliament and Government can set policy on these things quite properly. There is always the option of legislation, whatever the consequences of that may be.

Photo of The Earl of Onslow The Earl of Onslow Conservative

My Lords, the Minister went on about Parliament having a veto, but we all know what happens down the Corridor: three-line Whips are banged on and the measure goes through, irrespective of people's moans or whinges. Up here, as we have just seen with the Motion in the name of the noble Lord, Lord Taverne, we do not divide on Orders in Council. The Minister's undertaking sounds lovely in Whig political theories, and "come back, William III", but the reality is different.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I have more faith in the parliamentary process than the noble Earl clearly does. The provisions are there to be taken account of and to be put into effect.

It is worth my reinforcing the point that these orders can be of benefit to regulators. I referred in Committee to a consultation on a regulatory reform order to relax the consultation requirements imposed on the Financial Services Authority by the Financial Services and Markets Act 2000. This was referred to. I cite one example—we have not spent a lot of time digging out others—where this was of benefit to the regulator. If these benefits exist, why should we preclude them from being obtained through the use of orders under the legislation and the protections that we have outlined?

As I said in Committee, the economic regulators operate not in a stagnant environment but in an ever-changing and diverse one, and they need to be flexible and responsive to the challenges presented by the markets in which they operate. The House will be more than aware, in this age of climate change, of the growth of energy self-sufficiency and the attendant growth of the microgenerator industry. In a press release issued on 20 January 2006, Ofgem said:

"An increased interest in the connection of domestic-scale microgeneration equipment has raised a number of issues that may require a regulatory response, either now or as the penetration of microgeneration increases".

Following a consultation on this issue, Ofgem says in its Next Steps document of October 2006 that it is:

"working to ensure that obstacles to development of microgeneration are identified and addressed, and that, where appropriate, we work with government to ensure that any support is well-designed and works with the competitive market framework."

I am saying not that orders under the Bill are the solution for dealing with those issues, although they might be, but that this example demonstrates the evolving nature of regulation and that this House should not prevent the economic regulators or any other regulator proposing that Ministers use the order-making powers in Part 1 to their own benefit, or indeed to the benefit of those whom they regulate.

I should also like to add that discussions between Better Regulation Executive officials and the economic regulators have revealed that economic regulators are content not to have a total exclusion from the Bill and that they are exploring the opportunities that the Bill might present. Given the potential better regulation benefits for the economic regulators and those they regulate, the stringent safeguards in Part 1 and the fact that the 2001 Act has not led to an environment of uncertainty in the markets in which these regulators operate, I urge the noble Baroness, Lady Wilcox, to withdraw her amendment.

Finally, I shall pick up on one or two points raised during the debate. As regards the fact that the RRC and the DPRRC are not whipped, committees of this House and another place have a statutory right to veto. Whether that could be used to dispense with the services of the chair of any regulator was again raised. It is difficult to see how provisions in this Bill would fall within the vires of the order-making powers in Part 1, although the provision to sack a chairman would fall within the vires of the order-making powers of this Bill. There are currently statutory restrictions on the situation in which the relevant Secretary of State can remove the chair of a regulator. It is difficult to see that existing legislation results in a burden of the sort defined in the Bill. Even if it did, if the burden results only for the Secretary of State, Clause 1(4) rules out an order-making provision to remove or reduce that burden. We are faced with a situation where, in order to protect and ensure that we have independent regulators, we are precluding a benefit taking place because we are failing to recognise the safeguards that this legislation provides, which are substantial and significant.

Photo of Lord Lloyd of Berwick Lord Lloyd of Berwick Chair, Ecclesiastical Committee (Joint Committee), Chair, Ecclesiastical Committee (Joint Committee) 3:45 pm, 26th October 2006

My Lords, I am grateful to the Minister for giving way. I am still not following the argument. If the Government are prepared to give an undertaking not to undermine the independence of regulators, why are they unwilling to put that in writing in the Bill?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, it is on the record in these debates. The amendment seeks to do a number of things in addition to that. If the independence of the regulator means that in no circumstances by way of order could we look to address some of the regulatory burdens that may be imposed on the regulated, subject to all the protections in here, it is entirely reasonable that we would want potentially to raise those matters with regulators. Regulators would have the opportunity to be consulted, for their views to be known, for their views to be published, and to influence the process if they disagree. But what if they agree with the Government? Why does it undermine their independence if we allow through the order-making process what they and Government want and what is good for regulation to be denied them under this Bill? That does not seem to be a logical position.

We have reflected on safeguards. For the reasons that I have set out, the Government do not believe that this amendment is appropriate. Certainly, it is not our view. It is right to allow economic regulators to have access to a legislative route to implement worthwhile regulatory reform where appropriate. The Chancellor of the Duchy of Lancaster has been in correspondence with a number of the economic regulators on this issue. Members of this House should be aware that Postcomm, for instance, on 8 August 2006 in a letter to the Chancellor of the Duchy of Lancaster, asked the Minister to consider the application of the super-affirmative procedure in order to give the industry the maximum degree of reassurance in relation to the exercise of the powers in the Bill. Therefore, Members can see that Postcomm has made a suggestion that we believe could deliver a balance between ensuring that the order-making powers can be used for appropriate purposes while at the same time providing, as Postcomm says, the maximum degree of reassurance to industry.

Members of this House will acknowledge that the Government have listened carefully to this House and the other place throughout the passage of this Bill. We continue to listen and should Members indicate that they think an alternative approach to this Opposition amendment is appropriate, the Government will consider this further and return with an appropriate amendment at Third Reading. We would of course consult with Opposition parties on the drawing up of the amendment.

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

My Lords, most noble Lords who have spoken today have been in on the Bill from the beginning. I am sorry that the noble Baronesses, Lady Howarth of Breckland and Lady Young of Old Scone, have not been able to join us until this late in the day. I know that the noble Baroness, Lady Young, has been very ill following her riding accident. On behalf of these Benches, perhaps I may say that we are delighted to see her back in her place.

I am lucky indeed to have been supported by my noble friend Lord Norton, the noble and learned Lord, Lord Lloyd of Berwick, and the noble Lord, Lord Goodhart, for the Liberal Democrats, which is marvellous—as well as the support of the expert on the railways opposite. It was absolutely marvellous to hear him speak.

Noble Lords have been patient and there is no point in reiterating all the arguments. I do not share the Minister's faith that future Ministers will consistently adhere to his undertaking not to pursue controversial orders and not to undermine the independence of the economic regulators, welcome as those undertakings are. However, I am afraid that the shadow of Railtrack still looms over the City. I can only echo the words of my noble friend: protecting the independence of the regulator and to be seen to be doing so is the most important thing we can do here today. I therefore wish to test the opinion of the House.

On Question, Whether the said amendment (No. 18) shall be agreed to?

Their Lordships divided: Contents, 96; Not-Contents, 110.

Division number 2 Private Parking: Ports and Trading Estates — Legislative and Regulatory Reform Bill

Aye: 94 Members of the House of Lords

No: 108 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the negative, and amendment disagreed to accordingly.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, Clause 4 has aroused some controversy. Whereas the rest of the Bill envisages amendments, repeals and so on, this clause allows subordinate legislation to be made by this order. The House of Commons First Special Report 2004-05 entitled Operation of the Regulatory Reform Act 2001 said:

"The RRC has suggested that the introduction of a power to sub-delegate will be a constitutionally significant extension of the RRO process. They consider that any proposal to introduce a power to sub-delegate will require very careful consideration by the House and would require significant safeguards for the exercise of that power".

People think it is entirely right that we should have a good hard look at this. There were debates in Committee, but I do not feel that we have resolved the problem.

The function of legislating belongs primarily to Parliament. This clause gives the power to sub-delegate so that other bodies can use the provisions of the Bill to legislate. I wonder whether that is correct. Subordinate legislation usually operates under a specific Act of Parliament; Parliament sub-delegates for specific subordinate legislation, and that subordinate legislation is within the framework of a specific Act, for a specific task, within a specific timeframe. If that specific task is not carried out, the subordinate legislation would be ultra vires and therefore void.

However, the danger in this enabling legislation is that such a general power is being given. Let me use the analogy of a key: if, in the ordinary way, you give the Minister a key to a building and then another key to a specific room inside—that is, the subordinate legislation—you are being very specific about what he has access to. We are being asked under Clause 4 to give Ministers a master key which can be used, as it were, for any room in any building.

I understand that the noble Lord, Lord Goodhart, has raised anxieties about this clause with the Minister. I rely for that on the letter which the Minister wrote to all of us on 11 October. Under a passage headed "Sub-delegation", he mentioned that the noble Lord had brought to his attention an issue relating to a clause,

"which sets out the conditions that must apply where Ministers, or other appropriate persons, are exercising legislative functions".

I suspect that many noble Lords present have received copies of the letter. The Minister continued:

"I would like to clarify that it is only in the case that a Minister is conferred functions of legislating by order that this condition applies—a provision set out in subsection (3)".

That was added at the Committee stage. The Minister went on to say:

"The provision reflects recognition that it is not always appropriate for other persons or bodies to exercise functions of legislating by making statutory instruments—for example, where a local authority has a power to make local byelaws. However, the procedural requirements in Clause 5 which apply to Ministers should not be taken to mean that no procedural requirements will be attached to a power to legislate conferred on someone other than a Minister. An order which confers a power to legislate will need to set out the procedural requirements for the exercise of that power, which will depend on what is appropriate in the light of the person who is to exercise the power and the nature of the legislation which will be made".

That is all very well, but there is absolutely no indication of what the safeguards will be. The House needs to be told what the additional safeguards are to which the Minister referred in his letter, and which will provide the protection that we would want to see. The clause gives the power for subordinate legislation to legislate. That should not be as, by and large, it appears in this clause. I think that the Minister has recognised that by saying that there will be limits, but he has not set out what they will be. Different limits may be appropriate to different conditions and circumstances. I should be grateful if the Minister could in his reply give us a clearer indication of what the Government have in mind for the conditions they will attach to the power to legislate. I beg to move.

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

My Lords, the amendment would remove Clause 4. It may be intended to have the effect of preventing orders made under Part 1 conferring powers of legislating. However, since Clause 4 places restrictions on that ability, the amendment would leave the ability to confer the function of legislating untouched, since it would merely remove the restrictions on it.

I do not want to repeat arguments which I have set out previously when discussing the provision in Clause 4, but I will reiterate the key points that need to be considered when looking at the merits of retaining an ability to confer powers to legislate by order and of retaining the restriction on the power currently provided for in the Bill.

The ability to confer the function of legislating by order is essential if we are to ensure that it is possible for orders to deliver large-scale reforms to entire regimes. As with Bills, it is not always possible, or appropriate, for all the detail of a statutory regime to be set out in primary legislation. Powers to make secondary legislation are important also because some aspects of an order might need subsequent amending or updating. That is already possible under the 2001 Act, whereby provisions in orders can be designated as subordinate and be easily amended in future.

I am sure that noble Lords will be aware that the Delegated Powers and Regulatory Reform Committee has commented that including such a power in the Bill for orders to be able to confer the function of legislating is not inappropriate. The committee also recommended that the power to confer legislative powers by order, while not inappropriate, should be subject to further restrictions.

The Government have responded to these concerns. We have strengthened the restrictions on the power through the amendments we made to Clause 4 in Committee. The power to confer legislative functions by order is limited in important ways by Clause 4. The Bill restricts the persons or bodies eligible for such powers to three categories. The first is Ministers, the category of persons most likely to be given powers to legislate as part of future orders. The second category is persons or bodies who have statutory functions conferred on them. This will ensure that powers to legislate can be given only to persons or bodies already recognised by Parliament as suitable to have functions conferred on them.

The third category is a body, or the holder of an office, created by the order itself. This will ensure that the Bill can be an effective vehicle for delivering mergers of regulators, such as those recommended through the Hampton review, when, for instance, a new body is being created by order to take on functions of an existing body and the merger is for the purpose of removing or reducing burdens upon the regulated. Without the power, it would be necessary to deliver such valuable reforms in more than one order, using one to set up the appropriate new body and another to confer functions upon it, rather than this all being done by the same order. This is something that I am sure that noble Lords would agree would be unnecessarily cumbersome and bureaucratic.

I should also make it clear that there are of course other important safeguards in the Bill, including the statutory veto, to protect against the inappropriate use of this power. Clause 4 also makes explicit that it will not be possible further to delegate powers conferred by order to others. Ultimately, however, if Parliament is unhappy with the proposals to confer functions, the order can be voted against. All orders must pass through the prescribed parliamentary procedure and, if either House objects, the order cannot be made.

The ability for orders to confer powers to legislate, along with the important restrictions on that ability set out in Clause 4, are a key part of the order-making powers in the Bill. For those reasons, I cannot support the amendment and therefore ask that it be withdrawn.

The noble Lord asked, too, what safeguards the order would contain. I have set out some of them, and am happy to write giving a more in-depth explanation, but it is worth saying that the order conferring the power to legislate would in any event have to specify on whom the power was conferred, the type of legislation they could make and the procedure to which they would be subject—namely, the negative or affirmative procedure. I am happy to continue a dialogue outside this Chamber on these matters if there are details that trouble him and other noble Lords.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, the Minister reminded us that if either House uses the veto powers, that is the end of the matter and the thing has to be dealt with by primary legislation. He also made it clear that the powers to sub-delegate can be given only to bodies for which Parliament has already approved power to legislate in these circumstances. That goes some way to meet my concerns, but it would be helpful if the Minister could write a letter setting out what he touched on very briefly at the end of his speech. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Taxation]:

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendment No. 20:

Page 4, line 26, leave out from "impose" to end of line 27 and insert ", abolish or vary any tax"

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I shall also speak to Amendment No. 21. Clause 5 restricts the powers in Clauses 1 and 2, preventing an order imposing or increasing taxation. Concerns were raised in Committee that, unamended, the Bill would leave it open for a Minister by order to reduce or remove taxation. That is not the intention. The first of these amendments will make it clear that an order under Part 1 cannot be used to impose, abolish or vary any tax.

The second amendment concerns potential tax liabilities that could arise from the merger of regulators. When transferring regulatory functions from one regulator to another it may be necessary also to make provision in an order to transfer assets and liabilities from the old to the new regulator. In certain circumstances, without further provision, a transfer could result in inappropriate tax consequences for the transferor or transferee body that would arise solely because of the transfer. This amendment addresses those unwanted consequences. It allows the Treasury to make tax provision by regulations in relation to a transfer of property, rights and liabilities by an order under Part 1. This power will allow the Treasury to make appropriate tax provision at the appropriate time to ensure that a transfer does not give rise to a tax charge or confer a tax advantage on either party. It is unlikely that these powers will be needed to be used often, and then only in the unusual circumstances that a merger is being pursued by order that involves the transfer of property, rights and liability. I beg to move.

On Question, amendment agreed to.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip 4:15 pm, 26th October 2006

moved Amendment No. 21:

Page 4, line 28, leave out subsection (2) and insert-

"(2) The Treasury may by regulations make provision for varying the way in which a relevant tax has effect in relation to-

(a) any property, rights or liabilities transferred by or under an order under this Part; or (b) anything done for the purposes of, or in relation to, the transfer of any property, rights or liabilities by or under an order under this Part.

(3) The provision which may be made under subsection (2)(a) includes in particular provision for-

(a) a tax provision not to apply, or to apply with modifications, in relation to any property, rights or liabilities transferred; (b) any property, rights or liabilities transferred to be treated in a specified way for the purposes of a tax provision; (c) the Minister of the Crown making the order to be required or permitted, with the consent of the Treasury, to determine, or specify the method for determining, anything which needs to be determined for the purposes of any tax provision so far as relating to any property, rights or liabilities transferred.

(4) The provision which may be made under subsection (2)(b) includes in particular provision for-

(a) a tax provision not to apply, or to apply with modifications, in relation to anything done for the purposes of or in relation to the transfer; (b) anything done for the purposes of or in relation to the transfer to have or not have a specified consequence or be treated in a specified way; (c) the Minister of the Crown making the order to be required or permitted, with the consent of the Treasury, to determine, or specify the method for determining, anything which needs to be determined for the purposes of any tax provision so far as relating to anything done for the purposes of or in relation to the transfer.

(5) Regulations under subsection (2) are to be made by statutory instrument.

(6) A statutory instrument containing regulations under subsection (2) is subject to annulment in pursuance of a resolution of the House of Commons.

(7) In this section-

"relevant tax" means income tax, corporation tax, capital gains tax, stamp duty or stamp duty reserve tax; "tax provision" means a provision of an enactment about a relevant tax."

On Question, amendment agreed to.

Clause 6 [Criminal penalties]:

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

moved Amendment No. 22:

Page 4, line 30, leave out "that is punishable, or" and insert "and may not"

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

My Lords, Amendments Nos. 23 and 24 are consequential. We discussed in Committee the extent to which order-making powers could be used to impose or repeal penalties involving fines and imprisonment. I expressed the view that we had to be circumspect in providing that any body other than Parliament itself could prescribe specified offences carrying terms of imprisonment. I tabled amendments designed to limit the scope for imposing or repealing penalties carrying terms of imprisonment.

I listened carefully to what the Minister had to say in response. My amendment takes account of what he said. I have decided not to pursue amendments affecting the repeal or modification of existing offences. I can see that there may be a case for retaining those powers in order to remove burdens, but I do not consider that approach the best one. I would have preferred the proposal advanced by my noble friend Lord Goschen; namely, that of an annual deregulation Bill, a medium through which offences could, with Parliament's assent, be removed or created. However, if we are to have this Bill, I am prepared to concede the power to modify or remove existing offences.

I think, though, that there remains a case for requiring primary legislation for new offences. My amendment provides that no new offences may be created under Part 1, and that the penalty for existing offences may not be increased so that they are punishable on indictment for a term exceeding two years, or on summary conviction imprisonment for a term exceeding the normal maximum term or a fine exceeding level 5 on the standard scale.

The case for the amendment is straightforward. New offences, especially those carrying terms of imprisonment, should be introduced through primary legislation and subject to the full rigours of legislative scrutiny. There is greater scope for probing and considering amendments than is the case with the order-making power. Parliament needs to be at its most rigorous and operating in the full glare of public attention when it introduces new offences that may result in individuals being sent to prison.

What, then, is the argument for allowing new offences to be created by secondary legislation? In Committee, the Minister argued that a new offence would be subject to the safeguard that Ministers would need to ensure that the preconditions in Clause 3 were met, and that the order could be vetoed by the relevant parliamentary committee. He also pointed out that the provision was carried over from the 2001 Act, and that the provision had not been abused.

Those arguments are not sufficient to overcome the point of principle in question. The fact that a provision is carried over from the 2001 Act is not, to my mind, a commendation, as I variously argued on other points earlier today. I was as critical of that measure as I am of this one. The Minister's own words could be used against him. To claim that the provision has not been abused is to concede that it could be.

In essence, the choice is between a point of principle and one of convenience. We may be willing to concede that burdens including criminal sanctions may be removed by secondary legislation and that existing sanctions may be modified, but I think we should be extremely wary of permitting, or continuing to permit, the creation of new sanctions by secondary legislation. I beg to move.

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

My Lords, Amendment No. 22 and its consequential Amendments Nos. 23 and 24 seek, as the noble Lord described, to prevent any order creating any new criminal offence.

Taken in isolation, I could understand that the powers to create new offences might raise some concerns. However, the creation of a new criminal offence by order could not be done arbitrarily. This ability is entirely limited by the vires of the order-making powers so that criminal offences could only be created by order for the purposes of either Clause 1 or Clause 2; that is, they would have to be for the purpose of removing or reducing a burden for any person or securing that regulatory functions are exercised in accordance with the principles of better regulation. In an order made under Clause 1, the creation of a new offence would have to be for the purpose of removing or reducing a burden defined, for example, as a financial cost, an administrative inconvenience, an obstacle to productivity, profitability or efficiency or, most importantly, perhaps, in this context, an existing sanction.

Furthermore, the provisions in Clause 1 provide a power to remove or reduce burdens resulting from existing legislation and could not be used to create entirely new regimes. They could, however, be used to replace one statutory regime with another that is less burdensome for any person. In such cases, there might be an existing criminal offence which is no longer considered to be well targeted. This may be, for example, because it applies to too wide a category of situations or persons. The order might then contain provision to replace the existing criminal offence with a new narrow one which was felt to be better focused, where this was for the purpose of reducing or removing the burden of the existing wider criminal offence.

One of the key problems with the 2001 Act is that it contained a number of arbitrary technical restrictions. This prevented proposals being implemented in perhaps the most logical way. In some cases, the restrictions formed such a barrier that it did not make sense to deliver the proposal by order, delaying or preventing, in our view, the delivery of better regulation. We need to avoid creating new technical restrictions, particularly regarding sanctions, which form a major part of ensuring compliance and hence the success of a regulatory regime.

The powers to create new criminal offences provided for in the Bill are not unprecedented. As noted in Committee, this power has parallels in the European Communities Act and as the noble Lord, Lord Norton of Louth, has observed, was carried over from the 2001 Act. I know he does not accept the point, but that is the case.

Clause 6 also specifies the limits on the level of sanctions that may be imposed. These are less than those already contained in a number of regulatory regimes, so the maximum levels in Clause 6 set meaningful limitations to this power. Furthermore, the Government have already made a commitment not to deliver highly controversial proposals by order. Proposals which create inappropriate new criminal offences will clearly come into that category, so that is the limiting effect of our commitment.

In addition, the pre-conditions in Clause 3 prevent a Minister making an order which he considers, among other things, to remove necessary protections or to prevent anyone continuing to exercise any right or freedom which they might reasonably expect to retain. This opinion would have to take account of any representations received during the statutory public consultation period and would be scrutinised by parliamentary committees which have the power, as we have explained on many occasions, to veto any proposal they consider unsuitable for delivery by order.

I understand where the noble Lord is coming from. I know that he will not find it easy to accept the constraints which we argue we have put in place because he thinks we should do this through primary legislation, but I would invite him to consider that we have provided real constraints and a narrowing. I hope he will recognise that this is a practical measure and will withdraw his amendment.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

My Lords, I understand where the Minister is coming from. I was not implying that there was unrestricted power to introduce through an order a term of imprisonment for anything other than what is prescribed in the Bill. He is right about what the measure could be introduced for. It is narrowly limited by the Bill. I do not question that.

As the Minister recognises, there probably will not be a great meeting of minds on this. I still have two problems with the measure. I would not object to a change in wording that made clear that where an offence was introduced it was to replace one in order to reduce a burden. My concern is with its being introduced completely freestanding as a new offence.

I have two sticking points. One is simply the point of principle. I refer to the point I made about principle versus convenience. The argument for the Bill is one of convenience. On the point of principle, even if narrow limitations are applied, as the Minister said, if the measure imposes a term of imprisonment that is a new offence. Parliament should have the opportunity to probe that measure and amend it through primary legislation. I believe that the Minister referred to it as a technical restriction. However, I consider that it is a very important point of principle.

The other point is more general and has been an underlying theme of our debates today. The Minister said that the Government had given an assurance that contentious measures would not be introduced. As we keep pointing out, while we accept his word, he cannot necessarily commit his successors. Given that I have those problems with the measure, I shall want to reflect further on it. I see the point about the possibility of replacing an offence. I shall want to reflect further on that, but it is not a point that I wish to press this afternoon. I hear what the Minister says, but, as he says, we are coming at the matter from slightly different perspectives. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 23 and 24 not moved.]

Clause 8 [Excepted enactments]:

[Amendments Nos. 25 to 27 not moved.]

Clause 12 [Procedure: introductory]:

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

moved Amendment No. 28:

Page 6, line 18, at end insert-

"( ) An order under this Part which creates, amends or repeals any primary legislation must be made in accordance with the affirmative resolution procedure or the super-affirmative resolution procedure.

( ) In this section "primary legislation" has the same meaning as in the Human Rights Act 1998 (c. 42)."

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 Lords, many, though not all, of the orders that will be made under the Bill will involve changes to or the repeal of primary legislation. I believe that the basic principle here is that primary legislation should not be altered by the negative resolution procedure, as that gives virtually no opportunity for either House of Parliament to give proper consideration to the matter.

However, I recognise that there are exceptions to what I have called the basic principle. I am aware that the Delegated Powers and Regulatory Reform Committee sometimes accepts clauses in a Bill that provide for transitional or consequential amendments to be made by the negative resolution procedure. There may be cases where a Bill contains a power to modify provisions in that Bill to a limited extent. In such cases, the negative resolution procedure is appropriate, because the modification is of no significance. But the negative resolution procedure is used appropriately only where the powers to be made by the order using that procedure are very limited and where the ability to make those powers is closely circumscribed.

But with those exceptions I believe that it is right that primary legislation should be altered by secondary legislation only through a process that guarantees that the order is considered by both Houses of Parliament. I recognise that the procedure for dealing with affirmative resolution is unsatisfactory, particularly in the other place, but it is at least better than the negative resolution procedure.

Given that the Bill provides wide powers to alter primary legislation and there is no limitation to the alterations for which the negative resolution procedure would be appropriate, apart from the general restrictions on what can be achieved by the Bill as a whole, we should write into the Bill a requirement that any alteration of primary legislation should be by affirmative resolution or by the super-affirmative procedure. I beg to move.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative 4:30 pm, 26th October 2006

My Lords, I rise to speak to my Amendment No. 30 in this group. Its purpose is to shift the onus for recommending the procedure to be adopted for considering an order from the Government to Parliament. I pursued this issue in Committee, but I have changed the wording of my amendment to take into account a crucial drafting point made by the noble Lord, Lord Goodhart.

The case for my amendment is compelling and twofold. The first argument is a matter of general principle. Parliament should have a far greater say over the conduct of business. As I pointed out in Committee, the House of Commons is remarkable among legislative Chambers in the democratic world for the extent to which the business of the House is determined by the Executive. It is common for other legislative Chambers to have business committees that determine the allocation of time. That practice does not prevent a Government from getting their business; the evidence on that is clear. It is not a blocking procedure, but one that ensures that time is allocated as is deemed to be appropriate by the House, not by the Government. That is wholly appropriate; as far as possible, Parliament should be the master of its own procedure.

My second point is specific to this measure. As I argued in Committee, there is a danger of Parliament missing the significance of an order. Under the Bill as drafted, Parliament assumes a reactive role, in which the onus is on the Minister, and there is a danger that a committee may not pick up on the significance of an order that is recommended for the negative resolution procedure but merits more stringent consideration. A great deal rests on the vigilance of the committees and it is not clear how busy they will be.

My amendment would place the responsibility on both Houses to check an order as soon as it is laid by a Minister and to decide whether it merits being moved from the super-affirmative to the affirmative or negative resolution procedure. The super-affirmative procedure would be the default. That would ensure that no important order slips under the net of parliamentary scrutiny and it would place responsibility for the procedure where it should be—with Parliament, not the Executive.

Because my amendment was grouped with others in Committee, the Minister dealt with it only briefly. He covered it in five sentences, only three of which were substantive. He appeared to consider that losing the reference to a committee in Clause 15(6)(b) removed an important safeguard and that the clause, as drafted, provided the right level of detail to ensure legal certainty. The loss of reference to a committee is not crucial to ensuring parliamentary safeguards. Each House is likely to establish a committee, but that is a matter for each House.

The difference between the wording of the amendment that I tabled in Committee and this amendment is crucial in that it requires the agreement of both Houses to decide that the super-affirmative procedure shall not be employed. It is thus not possible for a Government secure in their majority in the House of Commons to utilise that majority to avoid effective scrutiny of an order laid under the provisions of this Bill. This House, under this amendment, would thus have an important role to play.

The other point raised by the Minister was an expression of view, but not one that undermines the case for my amendment. There will be legal certainty under the procedure prescribed by this amendment, just as there is under the one proposed by the Government. The Minister appeared to mix a claim about legal certainty with one about whether the procedure would be useable. This amendment produces a procedure that will be useable, but in the context of Parliament determining which procedure is appropriate.

I have spent the past quarter-century arguing the case for strengthening Parliament in calling the Government to account and in ensuring proper scrutiny of legislative proposals. I offer this amendment as a small step in the right direction.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, I have Amendments Nos. 31 and 32 in this group. We have listened to two powerful speeches that argued for different amendments to strengthen the oversight of subordinate legislation by Parliament. My wish in relation to this measure is that we should not use the negative procedure at all. The scrutiny period is only 40 days. The review that was published quoted the RRC report on the operation of the 2001 Act and concluded that,

"we have yet to see any hard evidence that a period of less than 60 days for the initial scrutiny period would be appropriate".

I shall not argue that we should have only the super-affirmative procedure but, in view of the nature of the orders being made under this Act and the fact that we are, as it were, delegating blind, because one does not know what is going to come, it seems to me that an affirmative procedure throughout would be appropriate. I recognise that the ordinary affirmative procedure gives only 40 days; nevertheless, it requires an affirmative vote in both Houses before the order can be made. On the other hand, the negative procedure—over the years one has recognised, as others have said, that this is a pretty feeble form of parliamentary scrutiny—requires that there should be a Prayer and that time should be found to debate the Prayer and so on. From experience, one knows just how difficult it is to persuade the business managers to find time for a Prayer that they do not like. For that reason, I argue that the procedure should only be affirmative. My amendments would take out the references to the negative procedure and would remove Clause 16, which sets out the conditions for the negative procedure.

We have had three options, to which the Minister will no doubt wish to reply. The noble Lord, Lord Goodhart, said that if you are amending primary legislation, it should certainly always be affirmative. My noble friend Lord Norton of Louth made a very powerful case for strengthening parliamentary procedure and, in particular, for giving power over the decision on business. I would have no negative procedure at all. I suppose it is a case of divide and rule, but we do not like what is in the Bill.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Non-affiliated

My Lords, I shall speak to Amendment No. 28. I am in the same quandary over this issue: I do not think that the Bill is right but I am not sure what "right" would look like. Amendment No. 28 has merits and demerits. Its merits are that it could ensure—I keep hammering on about this—that changes in the roles, powers and existence of regulators that have been established by primary legislation would receive a higher degree of scrutiny.

Its demerits are that, alas, some primary legislation gets stuffed with small and rather less important detail, which needs to be changed. I am as guilty of that as many other Members of this House, as I am sure your Lordships are painfully aware. I would not want to see a change in the Bill that prevented some of the minor changes established by primary legislation from getting through by the fastest possible means. We must not lose sight of the purpose of the Bill: it is to improve regulation and to ensure that burdens are not disproportionate and that changes to legislation can happen quickly.

With regard to Amendment No. 28, I do not think that the primary nature of the legislation is the issue. Much primary legislation does not concern matters of high importance but deals in the detail to which I referred. It is the degree of controversy or agreement that should be the touchstone or the fundamental nature of the change. Again, I go back to, for example, changes in the role, powers or existence of a regulator established by statute.

During the debate on Amendment No. 18, I was encouraged when the Minister hinted that there might be some movement by the Government to bring forward an amendment at Third Reading to specify in the Bill when the affirmative or super-affirmative procedure might be required. I hope that I did not misunderstand him and that we can press him to give us more information today about his hint before this matter is put to the test—if, indeed, it is.

Photo of Lord Desai Lord Desai Labour

My Lords, I am not persuaded by the idea put forward by the noble Lord, Lord Norton of Louth, that somehow committees of the House can be very busy and that both Houses should consider such matters on the Floor. My experience is that committees scrutinise such matters more thoroughly over more time. When the whole House discusses such issues, the debates are either at a very obscure time or they tend to be rushed. Eventually the orders made under the Bill will not be major orders. I know that the Opposition pretend that this Bill will change the constitution, but it is just about red tape. If we want to expedite the cutting of red tape, we should have a committee that looks at the matter carefully and quickly, and reaches a decision. Leaving the matter to both Houses will take much more time and could be, dare I say it, much more sloppy.

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

My Lords, this has been a valuable mini-debate on the appropriate level of scrutiny for a draft order. In his brief contribution, the noble Lord, Lord Desai, put his finger on it. It is about having something that is appropriate to the scale and level of the problem.

The noble Lord, Lord Jenkin, said that there was a commonality of view but that there were different solutions on offer as amendments, which I shall work through. The first amendment—Amendment No. 28—would prevent any order made under Part 1 from being delivered by the negative resolution procedure, if it amends or repeals existing primary legislation. That is an important caveat. As I said in Committee, the amendment would effectively remove the option of negative resolution for all orders, as most, if not all, made under Clause 1, will include provisions to amend or repeal primary legislation. For this reason, in addressing Amendment No. 28, I also need to consider Amendments Nos. 31 and 32, which would remove Clause 16—the negative resolution procedure—from the Bill altogether.

During our previous debate on this issue, I was delighted when the noble Lord, Lord Goodhart, in speaking in support of an amendment that is not dissimilar to Amendment No. 28, agreed—I think that he may have repeated it this afternoon—that there may be draft orders that are suitable for delivery by the negative resolution procedure. That is how I understood the noble Lord to address the issue then. However, the Government believe that for all orders it is appropriate that the level of scrutiny is determined on a case-by-case basis, depending on the content and impact of the proposals in a draft order. Where orders are evidently straightforward, we should—as the noble Lord, Lord Desai, picked up—maintain the option of delivering them by what is, after all, a proportionate procedure.

Furthermore, Clause 15 ensures that the final decision on the appropriate procedure for an order is left to the House. In a sense, we satisfy a point raised by the noble Lord, Lord Norton of Louth. Parliament should be the master of the process. It is right that Parliament will determine whether, and on what basis, an order should be subject to the negative, affirmative or super-affirmative procedure; it may decide, in any case, that there will be a more onerous level of scrutiny. It is for these reasons that I urge noble Lords not to press their amendments.

The second amendment in this group—Amendment No. 30—removes the provisions set out in Clause 15 for determining the level of scrutiny for a draft order. It replaces these with the condition that all orders are to be subject to the super-affirmative resolution procedure unless both Houses of Parliament require a less onerous procedure. From this and earlier debates on a similar amendment tabled by the noble Lord, I understand that the amendment seeks to ensure that Parliament has a proactive role in determining the level of scrutiny and does not miss the significance of a particular order.

As I have just stated, Clause 15 already provides that either House may require that an order proceeds via the more onerous super-affirmative procedure, and the final decision on the level of scrutiny is left to the House to determine. I also should reiterate that I fail to see the value in preventing a Minister from even recommending a level of scrutiny. A Minister's opinion will not be made in isolation, but will take into account any representations received during the statutory public consultation period. The opinion is there to add some benefit, advice and guidance from the ministerial perspective, but it does not have to be the final determinant.

I also question the value of removing the reference to the parliamentary committees' ability to recommend that a different scrutiny procedure should apply. These committees evidently have considerable expertise in assessing orders under the 2001 Act, and would be well placed to recognise proposals that should be subject to more onerous procedures. Why take that away? Indeed, the Delegated Powers and Regulatory Reform Committee, responsible for scrutinising orders laid under the 2001 Act, stated that it agreed,

"that 30 days is sufficient for either House or a Committee to consider the proposed procedure and if necessary 'upgrade' it".

Furthermore, it is not clear from this amendment how the process of determining the procedure would work in practice—specifically, how the noble Lord envisages that an agreement would be reached between the two Houses, and how this process would affect the time periods provided for scrutinising the proposals. I am not sure how any conflict would be resolved in that situation.

The noble Lord, Lord Norton, asked whether Parliament might miss the significance of an order. Well, committees have 30 days in which to recommend a more onerous process. During that time, they will be scrutinising the content of the order, so it seems unlikely—very unusual—that they would miss the significance of an order during that timeframe, not least because they have great levels of expertise, as we have discovered over the years.

The noble Baroness, Lady Young of Old Scone, probed the offer that we made earlier in the debate. We will give further consideration to that, and I am grateful to her for reminding us not to put it to one side.

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 4:45 pm, 26th October 2006

My Lords, this debate has seen three alternatives proposed, each of which has merits and is arguably an improvement on the present situation in the Bill. Having said that, I recognise that Clause 15 allows either House to require that anything introduced under either the negative or the affirmative resolution procedure can be upgraded as a result of the decision of either House of Parliament. That being so, the difference between what has been proposed in this group of amendments and the Bill as it now stands is fairly narrow. Under those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 [Draft order and explanatory document laid before Parliament]:

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

moved Amendment No. 29:

Page 7, line 17, at end insert ", and

( ) a statement that in his view the provisions of the order are compatible with the Convention rights (as defined in the Human Rights Act 1998 (c. 42))."

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 Lords, this is the first of two amendments in my name involving the Human Rights Act 1998.

Amendment No. 29 requires a statement to be made that the provisions of a draft order put before either House are compatible with convention rights. That requirement is based on Section 19 of the Human Rights Act. It does not, of course, include the second limb of Section 19, which enables a Minister to make a statement that the Bill is incompatible with the convention rights but the Government wish to proceed with it. I think that has happened only once, when an amendment was made to a Bill in your Lordships' House against the wishes of the Government, who took the view that it was inconsistent with the Human Rights Act, therefore they had to make a statement of incompatibility when the Bill moved to the Commons.

It is plainly inappropriate that the procedure under the Bill should be used if the Minister is unable to give a statement of compatibility. Any order made under those circumstances would be seriously controversial, and it would therefore be wrong to introduce it. A Minister should be able to give an order a declaration of compatibility before it can be introduced.

In practice, a statement of compatibility does not apply to primary legislation only; it has also become a convention that one is made in the case of statutory instruments subject to the affirmative resolution procedure, as a result of a decision pronounced some years ago by the late Lord Williams of Mostyn. It is plainly appropriate to require a statement of compatibility for draft orders made under the Bill. This simple amendment would involve no difficulties in practice but it would at least concentrate the Government's mind on the human rights implications of a draft order before they introduce it. I beg to move.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

My Lords, I support the amendment moved by the noble Lord, Lord Goodhart, to which I have added my name. I moved a similar amendment in Committee, but the noble Lord's is better drafted. As we are on Report, I did not intervene in response to the noble Lord, Lord Desai, but, in passing, I note that he confused the House and the Chamber.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, I support this amendment for the reasons given by the noble Lord, Lord Goodhart, and have nothing further to add.

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

My Lords, I always admire the telegraphic style of the noble Lord, Lord Kingsland. It is most helpful on this occasion.

Before I turn to this specific amendment, it may assist the House if I first address some confusion about the interpretation of the Human Rights Act that arose in Committee. As your Lordships will be aware, the Human Rights Act gives effect in our law to rights drawn from the European Convention on Human Rights; those rights are known as the convention rights. Section 6(1) of the Act makes it unlawful for a public authority to act in a way which is incompatible with the convention rights. A Minister of the Crown is a public authority for those purposes and is therefore bound to act compatibly with the convention rights when discharging his or her duties. Parliament is, however, expressly excluded from being a public authority by virtue of Section 6(3).

When a Minister seeks to make secondary legislation, whether under the Bill or otherwise, he is therefore legally required to do so compatibly with the convention rights because secondary legislation is made by Ministers and scrutinised by Parliament, rather than being made by Parliament itself. If secondary legislation is not compatible with the convention rights, the court may strike it down, as it would if the Minister had acted ultra vires in any other way in making it. Your Lordships will, of course, know that the Human Rights Act does not allow a court to strike down primary legislation; instead, a court may draw incompatible primary legislation to Parliament's attention by means of a declaration of incompatibility.

The noble Lord, Lord Goodhart, drew attention in Committee to a provision in Section 21 of the Human Rights Act under which secondary legislation that amends primary legislation is treated as primary legislation for the purposes of the Act. However, if one looks to see where the distinction between primary legislation and secondary legislation arises in the Act, one finds that it has a bearing only on the remedies available to the court should it find the secondary legislation incompatible. In particular, the distinction does not arise in Section 6 and therefore does not change the position that a Minister who makes incompatible secondary legislation is acting unlawfully.

I know that we will come later to the noble Lord's other amendment, which would make it possible for a court to strike down all secondary legislation made under this Bill, whether or not it amends primary legislation. However, even without that amendment, the position remains under the Human Rights Act that it is not lawful for a Minister to make secondary legislation that is incompatible with the convention rights.

This amendment would require that all secondary legislation made under this Bill would have to be accompanied by a statement of compatibility, similar to the Section 19 statement that appears on the front of every Government Bill presented to the House. In nearly every case—including this Bill—this is a statement of compatibility under Section 19(1)(a) of the Human Rights Act. It certifies that, in the opinion of the Minister in charge of the Bill, its provisions are compatible with the convention rights.

It is possible for a Minister to make an alternative statement under Section 19(1)(b) of the Human Rights Act. Such a statement indicates that, although the Minister cannot make a statement of compatibility, the Government nevertheless wish the House to proceed with the Bill.

The Section 19 statement reflects an important distinction under the Human Rights Act: that Parliament is still permitted to act incompatibly with the convention rights. Noble Lords will note that Parliament is expressly excluded from being a public authority in section 6(3) of the Human Rights Act.

It is, however, proper that if the Government are going to ask Parliament to legislate incompatibly, we should be absolutely clear when doing so, which is the point of the Section 19 statement. The option to act incompatibly does not arise for secondary legislation, as I have explained. Therefore, the statement of compatibility with which the Government accompany certain secondary legislation as a matter of convention when it is being scrutinised by Parliament serves only to confirm that the Minister considers the instrument to be compatible. It would, therefore, already be unlawful for the Minister to make secondary legislation that is incompatible.

If a Minister were to indicate that proposed secondary legislation is not compatible with the convention rights, he would effectively be admitting that he was intending to act unlawfully in making it. It is for that reason that I must oppose the noble Lord's amendment. The Government would not, and could not, lawfully make orders under this Bill or any other Act that are incompatible. However, providing in statute for a statement similar to Section 19 could wrongly give the impression that the genuine alternative of acting incompatibly is open to the Minister.

I hope that I have explained clearly why the Government cannot support the amendment. They will continue as a matter of convention to make such statements, but we would oppose any move to require this in statute for the reasons I have given. I hope that the noble Lord, having followed that, will withdraw his amendment.

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 Lords, I am a little puzzled by the explanation given by the Minister. He started by saying that it would be unlawful for any Minister to introduce secondary legislation that is incompatible with the Human Rights Act. As I understood it, he then went on to suggest that, notwithstanding that, it would be possible to make, presumably by using an order, alterations to primary legislation, which by virtue of Section 21(1) of the Human Rights Act would not themselves be unlawful but would have to be dealt with as a matter of incompatibility. Those statements do not seem to fit together very clearly.

Presumably, before the order is submitted to Parliament, when it is in draft, it would be possible to go to the court to say that the Minister had acted improperly because he is introducing legislation which we believe is incompatible with the Human Rights Act, and perhaps to get the court to make an order to stop him proceeding any further with that order. At what stage, if any, does the court become unable to affect the proceedings for the order that introduces something incompatible, except by declaring incompatibility? I am puzzled by this. I will read what the Minister has said in Hansard, but if I am not satisfied, I may feel it necessary to re-table the amendment at Third Reading in the hope of getting more clarification of what the Minister and the Government think the actual position is. For the time being, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 [Determination of Parliamentary procedure]:

[Amendments Nos. 30 and 31 not moved.]

Clause 16 [Negative resolution procedure]:

[Amendment No. 32 not moved.]

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

moved Amendment No. 33:

After Clause 20, insert the following new clause-

"APPLICATION OF HUMAN RIGHTS ACT 1998

Orders made under this Part shall be treated for the purposes of the Human Rights Act 1998 (c. 42) as subordinate legislation and not as primary legislation (whether or not they amend primary legislation)."

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 Lords, I shall deal with the amendment very briefly because we dealt with a large part of its purpose in the previous debate. I draw the attention of the House to paragraph 1.15 of the 21st report of the Joint Committee on Human Rights of the current Session, which says:

"We therefore remain of the view that a provision should be inserted into the 'Restrictions' part of the Bill making clear that no order made under clause 1 of the Bill amending, repealing or replacing any legislation shall be treated as primary legislation for the purposes of the Human Rights Act 1998. We draw this matter to the attention of each House".

Of course, we all regard the Joint Committee on Human Rights as extremely important and believe that its views must be greatly respected. If its view was adopted, we would avoid the difficulties that seemed to arise in the debate on Amendment No. 29, because it would be perfectly clear that the court would have the power to strike down an order that was incompatible in the same way as it can strike down an order that is made ultra vires, irrationally or without the proper procedure. The amendment, if accepted, would clearly improve the Bill. I beg to move.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, we share the view of the Joint Committee on Human Rights and support the amendment tabled by the noble Lord, Lord Goodhart, again for the reasons that he has already given.

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

My Lords, I think that the noble Lord, Lord Goodhart, in proposing this amendment, seeks strangely to replicate a similar provision in the Civil Contingencies Act. There is a considerable difference between orders made under that Act and orders made under the Bill, in that the former have only a short-term effect, usually for a maximum of 30 days, if I correctly recall that legislation, on which I spent some time. The problems of retrospectivity do not arise if they are struck down. In contrast, orders made under the Bill are intended to make permanent amendments to the law.

This amendment would also lead to a situation where provisions of primary legislation would be divided into different categories. Whether or not the courts could strike the provisions down would depend on whether they had been inserted or amended by subordinate legislation. In some cases, it might be very difficult to disentangle what could be struck down and what could not be. This situation does not technically arise under the Civil Contingencies Act because orders under that Act disapply or modify the application of primary legislation, rather than make textual amendments to it. There are of course other powers to make secondary legislation which textually amends primary legislation. For the purposes of the Human Rights Act, none of these is subject to the rule which Amendment No. 33 seeks to impose on orders made under this Bill.

I have already explained why emergency regulations made under the Civil Contingencies Act are very different from those made under this Bill and secondary legislation made under other enabling powers. Given the other safeguards in this legislation, I do not accept that it is necessary to change the way in which Parliament has decided in the Human Rights Act that incompatibility with the convention rights should be dealt with. I should reiterate the Government's clear interpretation that it is already unlawful to make secondary legislation that is incompatible with the convention rights—the issue that we dealt with in the previous debate.

Moreover, where primary legislation—including as amended by secondary legislation—has been declared to be incompatible by the courts, the Government have always responded positively to that declaration by proposing appropriate remedial action to Parliament. For those reasons, notwithstanding the noble Lord's point about the Select Committee on Delegated Powers and Regulatory Reform, I cannot support the amendment. I do not think that it matches the purposes of this 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

My Lords, I am sorry to have that negative reply to what seems a useful amendment. During this debate, it has become apparent that Amendments Nos. 29 and 33 are quite closely linked and should probably have been grouped. If I bring back Amendment No. 29, as I suggested I might, I would probably bring back Amendment No. 33 with it so that they can be considered together. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Howard of Rising Lord Howard of Rising Deputy Chief Whip, Whips, Shadow Minister, Treasury, Shadow Minister, Work & Pensions

moved Amendment No. 34:

After Clause 20, insert the following new clause-

"PUBLICATION OF DEPARTMENTAL PROGRESS

(1) A Minister of the Crown must make available to the public in an accessible format-

(a) all proposals promoting regulatory principles or removing or reducing burdens received by his government department; (b) his response to those proposals; (c) a summary of the action taken on those proposals, including any increase in regulation that may result; (d) a summary of any other action taken to promote the regulatory principles or remove or reduce burdens, including any increase in regulation that may result; and (e) any order made under section 1 or 2, including any increase in regulation that may result."

Photo of Lord Howard of Rising Lord Howard of Rising Deputy Chief Whip, Whips, Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, this new amendment develops some amendments which were tabled in Committee. It would require departments to report to Parliament about their steps to reduce regulation and any orders they have made under this Bill. It also addresses the possibility of changes in regulation leading to an increased burden. The previous amendments were criticised by the Government for wasting Parliament's time or for being unnecessary.

This amendment would ensure that departments make public their steps to reduce regulation. There is already a better regulation portal on the web under the Cabinet Office. While this is a good way to encourage people to report instances of bad regulation, it is not enough to hold the Government to account. Publishing proposals and their responses will save departmental time wasted on responding to duplicate proposals. It will highlight the possibility of making proposals to the wider public and will allow people to show additional support for a proposal already made. The increased transparency would also show what departments were doing towards deregulation. In addition, highlighting where regulatory burdens will increase will provide greater accountability and invite greater rigour in judging whether the increases are necessary. I beg to move.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

My Lords, I rise briefly because I have added my name to the amendment. It strikes me as extremely sensible, not least for the reason just given by my noble friend, which is one of transparency. One would hope that it might also act as an incentive to Ministers actually to get on with deregulation. As we discussed at Second Reading, the real problem is not with Parliament, but with government. Anything that gives a spur to action is to be welcomed.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I start by thanking the noble Lord, Lord Howard of Rising, for introducing the amendment, and the noble Lord, Lord Norton of Louth, for his contribution. Although we are unable to accept it, I have an opportunity to explain what the Government are doing in this area. Amendment No. 34 concerns the procedures in place for ensuring progress in delivering the better regulation agenda. I support the notion that we should be looking constantly to see how well reforms are working. Indeed, no one could argue that this Government do not take seriously their commitment to regulatory reform. Government departments already report on their better regulation work as part of their annual reports, and they have done so for the past two years. Departments are being asked to provide rolling programmes of simplification and set targets for reductions in administrative burdens. Simplification plans will be published shortly. Plans will clearly be expected to list all better regulation proposals developed by departments and summarise how measures to reduce regulatory burdens will be taken forward. Where these proposals require amendments to primary legislation, they may well benefit from the powers in this Bill, and to ensure effective delivery without the need to wait for a Bill.

The better regulation portal referred to by the noble Lord, Lord Howard, is also available to provide an opportunity for businesses, public and voluntary sector organisations, and individuals to make suggestions for where regulation could be simplified. Work is being done to make this process more transparent and to make public all proposals received, along with the departmental responses to those proposals.

Our commitment to deliver on the better regulation agenda is evident in our achievements to date and in our ambitious programme to build on these successes. We have listened to businesses, public and voluntary sector organisations in order to take forward one of the most radical regulatory reform agendas in the world. My concern with the specific amendment proposed here is that in practice it would both replicate existing efforts and impose an unnecessary and bureaucratic set of statutory requirements on departments. What we do not need is a prescriptive and inflexible target on the statute book, especially one which requires that departments focus on continual reporting and detracts from real efforts to cut red tape. Moreover, Part 1 of the Bill obliges Ministers to submit an explanatory document to Parliament when laying a draft order including an assessment, so far as appropriate, of the extent to which the order would remove or reduce any burdens. The amendment would further duplicate the requirements on departments to conduct comprehensive impact assessments on all new proposals for regulatory reform.

The independent Better Regulation Commission will scrutinise and comment on simplification plans. We also expect the Regulatory Reform Committee in the other place to play a key role in monitoring departments' progress. We have been working closely with the committee to develop a new and expanded remit to enable it to report on wider regulatory reform issues. Its wider role will complement the work of relevant committees of this House in ensuring that there are consistent and focused efforts to deliver on the Government's commitment to ease burdens across sectors in the UK. We welcome engagement and suggestions from committees of both Houses on the agenda. For these reasons, I consider the amendment unnecessary and I urge the noble Lord to withdraw it.

Photo of Lord Howard of Rising Lord Howard of Rising Deputy Chief Whip, Whips, Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, as my noble friend Lord Norton commented, it is lack of action that is the problem. I think it is regrettable that the transparency which this amendment would introduce is not to be pursued by the Government as it would enable any lack of action or action to be monitored by a much wider public. It would perhaps bring those Ministers reluctant to deregulate to account. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 [EEA agreement and EEA state]:

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

moved Amendment No. 35:

Page 15, leave out lines 14 and 15 and insert "modified or supplemented from time to time."

On Question, amendment agreed to.

Clause 28 [Power to make ambulatory references to Community instruments]:

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench 5:15 pm, 26th October 2006

moved Amendment No. 36:

Page 17, line 9, at end insert-

"(1B) Where subordinate legislation creates any new or amended criminal offence the subordinate legislation shall contain, in the text and not solely by reference to a provision of the Community instrument, a description of the conduct which, if proved, would constitute that offence."

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench

My Lords, with this amendment I am returning to a point that I raised in Committee. I think the noble Lord, Lord McKenzie of Luton, who dealt with it on that occasion, will probably concede that no very careful consideration was given to the points that I raised, but that has now been repaired. Nevertheless, I must set out my stall. I appreciate that all those noble Lords who have not already caught their trains home are dying to do so, but I must try to set out the problem so that the House can understand what I am talking about.

The problem concerns the formulation of criminal offences which arise out of the transposition of European instruments into British law. Let me give an example of this. Under instrument 1228 of this year—which covers the very important subject of transmissible spongiform encephalopathy—where any premises are occupied and licensed, an occupier commits an offence if he maintains and operates the premises other than in accordance with,

"the requirement of the Community TSE Regulation and these Regulations"— and there are some fairly substantial penalties.

How do you comply with the requirements of the Community TSE regulations? The instrument earlier states:

"Expressions that are not defined in these Regulations and occur in the TSE Community Regulation", have the same meaning here as they do there.

So what is the TSE regulation? It is contained in a schedule and consists of a list of 27 different instruments which have emerged from the European Commission over a period of time, some of them quite recent but many of them amending others. Nowhere in the regulation is there a definition of the offence, simply that you can fail to comply with it.

The Bill is about transparency and reducing burdens, and, under the terms of the Bill, "burdens" include criminal sanctions. It is ordinary good sense that people should understand what they are forbidden to do. I think it is also in accordance with Article 7 of the European Convention on Human Rights that they should know this. There has, however, occurred a massive practice of simply transposing European regulations without ever saying what they mean and what are the offences created under them.

I have been very worried about this. I have been sitting on the Merits Committee for some time and British regulations after regulations occur where we have exactly this problem. I was greatly relieved to find that I am not alone in being upset about this. In the Third Report of the Joint Committee on Statutory Instruments in 2001, the committee, which, of course, contains Members of this House and another place, concluded that in its view the regulation it was considering—it was in exactly the same form as the one I have been talking about—was not consistent with the United Kingdom's traditional legislative practice of precision in the formulation of criminal offences, and it reported that provision for defective drafting. But nothing has been done and the situation continues as before. When we asked in the committee why this was so, one of the answers was that "because EU Regulations"—the TSE one was a regulation,

"are directly applicable in law in all countries, normal drafting practice is to avoid repetition of EU regulations provisions in domestic legislation, as it may result in duplication or in the meaning or effect of the Regulations being obscured".

I doubt whether it could be much more obscure than it is at the moment.

That is not true. I am talking in particular about Defra regulations but this applies to other departments as well. Some other regulations were recently produced by Defra where exactly the opposite of what I have just read out has been applied. SI 2005/3522 related to the disposal of older cattle and slaughterhouses. I drew it to the noble Lord's attention in Committee but he did not comment on it. In the schedule is a parallel set of columns. The first refers to the provision of the Commission regulation that the SI is referring to, while the second contains the subject matter of the offence that will be committed if you do not pay attention to it. So it is not true that you do not put into the British regulation some indication of what you must do to avoid getting into trouble.

There was another very good example in SI 2006/1970 relating to sea fisheries. Here is a whole collection of requirements, again relating to a Council regulation about fishing, fines, and so on. There are three columns: the first refers to the provision of the regulation; the second refers to the subject matter of the offence which you would commit if you were not careful; and in the third column is a very large which you are liable to if you offend. That comes from the same department which said it was impossible to put this into British regulations. There they are. As I said, it is not simply Defra which does this; a number of other departments, including the DTI, do the same.

We do not comply with the transparency provisions underlined by the Bill and we do not comply with the reduction of sanctions in the term of what constitutes a criminal offence underlined by the Bill. The noble Lords, Lord McKenzie of Luton and Lord Bassam, have taken a good deal of trouble to have a meeting with me and to discuss these points with officials, and I am very grateful to both of them. I am told that they do not like my amendment. Well, there is nothing new in that, is there? What amendment has ever been liked by Government? Nevertheless, I think they concede that there is a point. I see them nodding, which means that perhaps there is a point.

The noble Lords have suggested that this problem should go to the review being carried out by the noble and learned Lord, Lord Davidson of Glen Clova, which is to report very soon. I was today given the consultation documents that have so far emerged. This is primarily concerned with that very eminent topic, gold plating, and its two close friends, double banking and regulatory creep. I do not think that the terms of reference are entirely apt to deal with what I am talking about, but there is a passage that gives me a little cause for encouragement.

The noble and learned Lord refers to the tradition of precise drafting, aimed at reducing uncertainty in this country, and contrasts it with a more purposive approach adopted by the legal systems of some continental member states as well as by the European Commission, which broadly speaking deals in civil law rather than common-law terms, and the methods with which we are familiar in this country.

If the Minister is going to say that he does not like my amendment, I shall not be surprised, but something here needs to be attended to. It is not just businesses and charitable and voluntary organisations which are affected by these rules; it is also individuals We cannot have a situation where a farmer confronted with this kind of regulation would have to spend a great deal of time looking up, for instance, 27 different European instruments on the internet, if they have it and are able to use it, and then see whether what they were doing complied.

This approach has been criticised also by those whom we in the committee have in our turn criticised as being faulty because what is done in this country might not be the same as what is done in other European states. A recent example in the latest report of the Merits of Statutory Instruments Committee will come before your Lordships, and some noble Lords might like to think about it.

An ancient, 1985 directive relates to uncultivated land, and doing things to it to make it cultivated, as well as to restructuring projects. Nothing in the European legislation defines either "uncultivated land" or "restructuring projects". Therefore, some time ago—I think it was in 2001—the Government introduced an uncultivated land provision by way of statutory instrument and laid down a threshold of two hectares. If you carry out operations on that land, you are in for trouble. There was an instance of somebody who spread lime on an environmentally sensitive piece of grassland in York and was heavily fined for doing so. There is no threshold equivalent to two hectares that I know of in any other European country.

Then, quite apart from that, the statutory instrument examined in the latest Merits Committee report introduces the restructuring programme. Nobody knows what "restructuring" means. Nobody knows what area it relates to, and Defra has made up the rules—they may be very sensible. They relate to the things that "restructuring" may convey. However, all I can tell your Lordships is that our rules are seriously different in extent from those in Ireland, Belgium and the Netherlands. It is therefore no use saying that, because the offences are not specified, we are liable to get into trouble by not conforming to what is happening in the rest of the European Union—we are already doing so.

What is going to be done about this? If the Minister does not like my amendment, he must first of all assure me that the noble and learned Lord, Lord Davidson, will be able to deal with this point, because I doubt that it is within his terms of reference. If he is not, the Cabinet Office will have to provide instructions to parliamentary clerks in various government departments on how to draft regulations. They are going to have to pay attention to what the Joint Committee said five or six years ago. If they do not, we will not be sticking to the precepts that underline this Bill—transparency, and the removal of sanctions. This is an occasion when we must really emphasise that government departments should pay attention to this problem. It is no use leaving it on the basis that you can look it all up on the internet or find some other method of dealing with it.

The other thing that the Joint Committee said was, "Oh, well, it's always covered by guidance". So it is, but guidance does not do any good in a criminal court, nor does a criminal court have access to the guidance. Indeed, I do not think that the criminal court has access to the European legislation either. When I used to sit at Harrow, there was no indication in the library of the official journal in which one could look all those things up, and I very much doubt whether it would have been readily obtainable by me as a judge. Goodness knows what is going to happen to the clerks to magistrates' courts when they are confronted with this—because that is where the majority of the cases are going to go.

There are provisions which apply the prohibitions with a sanction that includes prison. I very much trust that that is not the course that will be taken. Fines are much more likely to be effective. Nevertheless, somebody has to impose the fine and find out what offence is alleged to have been committed. So ought people to be able to find out what the offence is before they decide whether they are going to commit it. That is one of the basic principles of criminal law in this country. I beg to move.

Photo of Lord Desai Lord Desai Labour 5:30 pm, 26th October 2006

My Lords, I supported the noble Viscount in Committee when he moved a similar amendment. I said at that time that, having served with him on the Merits of Statutory Instruments Committee, I had always been immensely impressed by the amount of work that he put in to trace the roots of every instrument that came before that committee. It took a formidable amount of work and his kind of legal brain to be able to do that.

I do not know what my noble friend is going to say about the amendment, but there is a general point to be made and somebody somewhere ought to look after this matter. When these regulations or orders are published they should contain a succinct summary of all the previous relevant orders and where people can find them. I hope that the Government will also make available an electronic dictionary so that, at the touch of a button, anyone can trace all the 25 or 27 previous items involved in such legislation. That should not be difficult to do. From what the noble Viscount has said, I am convinced that lots of small businessmen, farmers and ordinary people are harassed by such regulations, so we should do whatever we can. What could apply under Clause 1(3)(b), (c) and (d) supports the amendment. I hope that somewhere in the system there is a positive response to what the noble Viscount has suggested.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, I was not tasked by my Front Bench to reply to this amendment, and I find myself somewhat shaken to have to do so. Unfortunately, I missed the noble Viscount in Committee; I was probably one of those who took an early train home. However, as I understand his remarks, he is referring to European Community regulations—

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, that slightly complicates what I intended to say. The report of the noble and learned Lord, Lord Davidson, is about gold-plating, which is a function of directives, not regulations. As I understand it, regulations are instruments that, when issued on a certain date by the European Community, are required henceforth to be obeyed in each one of the member states. Directives, by contrast, are given typically 18 months or two years before implementation has to take place, and thereafter the member Government are not obliged to implement the directive word for word, as long as they reconstitute the objective behind the directive in their national regulations. In so far as the noble Viscount is talking about regulations, it seems to me that the committee of the noble and learned Lord, Lord Davidson, is entirely inappropriate to deal with the matter.

Regulations are not supposed to be amplified or altered in any way by a member state once made by the European Community; but, in the context of what the noble Viscount has been saying, we are in difficulty with regulations that subsequently become the subject of national criminal law. That goes to the heart of the point he is trying to make. The European Community has no authority over the making or implementation of criminal law.

We are in particular difficulties over this point in relation to Article 7 of the European Convention on Human Rights. That article requires the definition of any criminal offence to be sufficiently specific that an individual can assess whether the activity he is about to enter into is capable of constituting a criminal act. As the noble Viscount pointed out, regulations are drafted in many different languages, and they do not define the particular legislative target in a way that fits in with our criminal law—or, in particular, our criminal evidence system—at all. On the Continent, they have the inquisitorial approach to crime: no juries, judges with immense power to investigate the background as well as the specifics of the alleged offence, and burdens and standards of proof that sometimes differ dramatically from our own. It is almost impossible to discern, in a regulation that is intended subsequently to be applied by the criminal law, the traditional approaches of our courts even to such fundamental distinctions as mens rea and actus reus.

Both for Article 7 reasons and because the Continental systems are so different from our own, in my judgment there is a really compelling case here to follow the line suggested by the noble Viscount. Of course, as he rightly says, one of the ways Governments escape from amendments tabled by your Lordships' House is to look at the detail of the amendment and explain why the detail is not quite right, thus avoiding having to confront the principle. However, what matters here is not the detail but the principle. We want to know from the Government whether they accept that principle. I am sure we are going to hear from the Minister why the particular detail that the noble Viscount has set out does not quite fit the bill.

We all owe the noble Viscount a great debt for raising this serious matter. If it is not confronted by the Government now, sooner or later we will find Article 7 points taken, and the Government will not be able to say in those circumstances that they have not been warned.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I add my genuine thanks to the noble Viscount, Lord Colville of Culross, for his diligence and persistence on this issue and for the useful examples of good and bad practice which he brought to our attention in Committee and again today. I readily acknowledge that we did not seek to answer the point that he raised in Committee, but I hope that what has happened in the interim, and what will happen, will demonstrate that the Government take this matter seriously and that there is an effective way forward.

The purpose and effect of Amendment No. 36 are very similar to those of the amendment that the noble Viscount tabled in Committee. As he explained then, the amendment would make it possible to tell, by reading UK legislation alone, without the need to cross-refer to the relevant Community legislation, what one is obliged to do and what one must not do to avoid committing a criminal offence. He said that this was a question of transparency and reducing the burden for those who have to deal with statutory instruments that transpose European Community obligations into domestic law. These are issues which the Government take extremely seriously.

The Government agree with the intention behind the noble Viscount's amendment and that every effort should be made to ensure that European Community obligations are transposed into domestic law in a way that is transparent and reduces the burden on those dealing with them. He was also right in saying that Defra tries to address that by including in some statutory instruments a schedule to explain those provisions in the relevant European directive that, should they be breached, will amount to an offence under domestic law. The two examples of SI 2006/1970 on sea fisheries and 2005/3522 on the disposal of older cattle were cited by the noble Viscount in Committee and again today. He also referred to those instruments as examples of good practice.

The Government will continue to seek ways to ensure that all statutory instruments that transpose European Community obligations into domestic law are drafted in a manner that is clear, simple and transparent. Although I agree with the intention of the noble Viscount's amendment, as he has anticipated we cannot support it today. Current drafting guidance does not explicitly state whether a description of an offence should be included in an SI used to transpose a European Community obligation, or how detailed any such description should be. Instead, departments are given the flexibility to decide on a case-by-case basis how best to draft an SI that transposes a Community obligation. Amendment No. 36 would remove this flexibility by requiring all subordinate legislation used to transpose European Community obligations into domestic law to include a description of any activity which, if carried out, would constitute a criminal offence.

Although I cannot support Amendment No. 36, I can assure the noble Viscount that the Government will consider the points that he has made today. Clearly, one route is through the guidance given to departmental lawyers who draft the implementing Community obligations, which seems an appropriate way of encouraging best practice. We will certainly look at that to see how it might be strengthened to address the point that the noble Viscount made.

There was some discussion about the committee of the noble and learned Lord, Lord Davidson. It is right, as the noble Lord, Lord Kingsland, said, that it focuses primarily on gold-plating issues, which are about directives and not regulations. However, the review is about considering the implementation of EU legislation, and we will ensure that the noble and learned Lord, Lord Davidson, who is undertaking the review of implementation of European Union legislation, receives for his consideration copies of Hansard for the debates today and in Committee, as well as the examples of best practice that the noble Viscount provided. We will also seek to facilitate his own direct engagement with that process, if he so wishes. I hope that, in that manner, we can move the issue forward.

I hope that the noble Viscount will accept that the Government are committed to finding means of transposing European Community obligations into domestic law in a way that is transparent and reduces the burden on those required to comply with European Union directives. For example, they are exploring the possibility of making consolidated versions of statutory instruments used to implement Community obligations into domestic law publicly available. The Davidson review has taken note of these representations. It is likely that the review will recommend that consolidated versions of statutory instruments should be made publicly available. The Government also stated in their response to the Merits of Statutory Instruments Committee's 29th Report of Session 2005-2006 that they will dedicate resources to formally and informally—that is, without making a new instrument—consolidating statutory instruments where departmental Ministers can identify appropriate cases. This intention is consistent with the Government's simplification programme, which requires departments to consider whether they can reduce the regulatory burdens which fall on business, the voluntary sector and front-line public servants by providing greater clarity on the content or interpretation of legislation.

I am conscious that my response has not provided a precise way of dealing specifically with the important point that the noble Viscount has again raised, but I hope that, through the mechanisms and processes that I have mentioned, there is a way forward and that we can achieve the objective he so rightly pursues. On that basis I hope that he will withdraw the amendment.

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench 5:45 pm, 26th October 2006

My Lords, I am entirely in favour of consolidation; there is too little of it at the moment, and it would be a great help if it were available in some shape or form. I dare say that it will be on the website but, never mind, that is better than nothing.

I thank the noble Lords, Lord Desai and Lord Kingsland, for their support. It does not matter whether it is a regulation or a directive, the trouble in the transposition arises in exactly the same way. In neither case does the parliamentary Clerk—or not usually—put into the British statutory instrument anything which says what the offence is. I am very glad that I was supported by the noble Lord, Lord Kingsland, on Article 7 of the European convention. I believe that that is at the heart of the matter. It is not right that people should not be able to discover—or at any rate without the most colossal trouble—what they are not allowed to do, which is subject to criminal sanctions. It certainly is not transparent.

I will happily talk to the noble and learned Lord, Lord Davidson, about this. If he is concerned only with directives, we will have to deal with that, but it does not matter very much, as both sorts of European instruments are involved. I hope that these two short debates will ensure that somebody in the Cabinet Office will tell parliamentary Clerks that there is good practice. I have given two examples of it, and the noble Lord has acknowledged that. I tried to do that in Committee but it was brushed aside as being perfectly hopeless, airy-fairy and nothing other than confusing. However, that does not seem to be the case, as sometimes, but by no means always, parliamentary Clerks continue to put summaries of the offence in schedules. Why can't we have a new instruction across the board that that should always be done? Then someone has, at any rate, the beginning of an idea where to look for the actions that they must avoid if they are not to get into trouble. If that is what the noble Lord is telling me he will set afoot, I will not return to the matter. However, I promise him that the reports of the Merits of Statutory Instruments Committee will continue to look at this. It has not gone away and there is no sign whatever of it improving as a result of anything that has been said.

Please, look again at what the Joint Committee said in 2001 and see whether something can be done about it. The noble Lord nods his head and I am sure that he will probably get something done. I hope that he may communicate with me a little further before Third Reading next week—it is also on a Thursday, so I shall be in the same trouble as I am today.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I assure the noble Viscount that we will not let the matter rest here, and my noble friend Lord Bassam and I will keep him abreast, both before and after Third Reading, of what ensues from our debate.

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench

My Lords, that is as generous as both noble Lords were this morning. The point has been made and will continue to be made by them and others. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

moved Amendment No. 37:

After Clause 29, insert the following new clause-

"BURDENS FROM IMPLEMENTATION OF COMMUNITY OBLIGATIONS

(1) Subordinate legislation implementing any Community obligation of the United Kingdom, or enabling such obligation to be implemented, or enabling any rights to be enjoyed or to be enjoyed by the United Kingdom under or by virtue of the treaties may not impose or increase any burden on any person which is not necessary to implement the Community obligation or right.

(2) In this section-

"burden" has the same meaning as in section 1(3); "subordinate legislation" has the same meaning as in section 27(9)(b); "the treaties" has the same meaning as in section 1(2) of the European Communities Act 1972 (c. 68) (short title and interpretation)."

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, I emphasise at the outset that this amendment is not about the content of the directives themselves. They raise a range of issues that are of great importance but form no part of this matter. The Cassis de Dijon case, decided in the late 1980s, and the White Paper of the noble Lord, Lord Cockfield, which came a few years later, got the Community off to a good start in pursuing its objective of a single market. I think your Lordships will agree that, since then, the results have been like the curate's egg. I am in no doubt that it will not be long before one or other of your Lordships will again be drawing to our attention matters about the contents of the directives.

The noble and learned Lord, Lord Davidson, has been conducting an inquiry about gold-plating, the background to the issue that this amendment attempts to raise; and we applaud that. It is somewhat surprising that it has taken the Government nine and a half years to get down to studying this issue, because concerns about gold-plating have been expressed at least since the mid. or late 1980s; and, to be fair to the Government, my own party did not address this issue when it was in Government.

I hope that I will be forgiven for being uncharacteristically cynical in seeking a reason for the reluctance of both Governments to look at the issue. Community legislation gets on to the statute book very easily in this country because directives are introduced through Section 2 of the European Communities Act 1972; that section requires only an Order in Council for the legislation to be made. None of the legislation goes through the elaborate process that primary legislation has to go through in your Lordships' House and another place.

The framework for everything that has been done in the world of Community directives starts with essentially unscrutinised legislation; and that breeds a morass of regulation that is equally unscrutinised, because the only thing that your Lordships' House and another place can do is to adopt it or refuse it, on a take-it-or-leave-it basis. This is very attractive to officials and Ministers for obvious reasons: partly because they are not obliged to defend their case against the Opposition in Parliament, and partly because they can make wide-ranging decisions about how the British economy should work, without having to clutter up the annual demands for primary legislation or queue for it. So we get a disproportionately large amount of Community legislation on the statute book because it is very easy to get it there. The other reason is that civil servants—in many cases, no doubt, for very good reasons—have been aching to get matters on to the statute book for years and years but have never succeeded in the annual bid for primary legislation. So they tend to add on to a directive a whole range of purely domestic matters for which they could find no happy legislative home at an earlier stage.

I commend the Government on having had the courage at last to come out of the closet on this issue and on inviting the noble and learned Lord, Lord Davidson, to look at it, in a sense, at a stage removed from Government and to come up with some sensible answers. We applaud the establishment of the Davidson committee, but we feel that we are entitled to ask the Government: why nine and a half years? After all, their task force has been going for almost the same length of time as the Government. If they were so enthusiastic about deregulation, one would have thought that they would have confronted the issue of gold-plating head-on earlier. However, we are all looking forward, as I suppose the Government are, to the noble and learned Lord's conclusions.

As I understand it, one technique used by the noble and learned Lord, Lord Davidson, in his investigation is to talk to government departments and non-governmental agencies in other member states, which are recognised as having a lighter regulatory touch than ours, to see whether a similar approach would be acceptable in the UK. If that is what the noble and learned Lord has, in fact, done, I find that enormously refreshing. First, by doing so, the Government—or, at least, the noble and learned Lord, Lord Davidson—are accepting that some other nation states apply a lighter touch than us. That, in itself, is good reason for conducting his investigation. But I very much hope that in his report he will give a full account of the work done in this area.

From what has appeared so far on the noble and learned Lord's website, the questions that he is asking seem pertinent and, in some cases, rather penetrating. His general approach is to ensure that, in future, UK business will not be disadvantaged when competing with businesses in other euro states because of regulatory burdens. I believe that that principle lies behind his investigation. I think that he focuses particularly on whether the implementing measures widen the scope of the original directives. That is a very important area of investigation. You might argue that a directive needs to be elaborated in a certain way because we have law in this country that does not derive from the Community but presents a problem for implementation in exactly the way that the directive suggests. However, I do not think that there is any case for domestic legislation to widen the scope of a directive. That goes to my earlier point about some departments using Community directives to get in purely domestic issues for which they cannot find a primary legislative home.

There are one or two other matters that the noble and learned Lord wisely included in his terms of reference. He asks, for example, whether the UK is really taking full advantage of any derogations in the EU measure, and if not, why not. There are wide-ranging derogations in directives simply because member states negotiate hard, and one of the ways for the Community to end up legislating is by making concessions to such member states. They are not described as concessions to Lithuania, the UK or France; they appear on the face of the directive as derogations—sensible conclusions that all 25 states, or however many there are in the European Community these days, agree with.

The noble and learned Lord will also concentrate on whether enforcement mechanisms themselves, or the sanctions imposed, go beyond the minimum necessary. That matter will be plainly in his sights, as indeed it is in the Bill.

One task that the noble and learned Lord has given himself, which I also find most interesting, is to look at the risks that the Government thought required a measure of gold-plating at the outset—when the directive was implemented—and to assess whether these risks today are still as apparent and of as much concern as they were then. I think that he will ask government departments to address the issue with great particularity.

In the context of the Bill, it seems that the noble and learned Lord's investigation is absolutely central. That is why I tabled my amendment. I sense that the Government will say, "Well, thank you very much for saying that the Davidson committee has been set up, but, unfortunately, we will not know what it says until long after the Bill leaves your Lordships' House. Of course, we cannot be absolutely certain that his conclusions will comply with the absolutist tone of your directive. Therefore, let's wait and see what the noble and learned Lord says, and the issue can then be addressed on some subsequent occasion".

I shall be very interested to hear what the Minister says in reply. I might be quick-footed enough, if I think there is some weight in what the Government say, to change my amendment before Third Reading, but I am not inclined to let this go if the Government turn me down at this stage. I beg to move.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip 6:00 pm, 26th October 2006

My Lords, I thank the noble Lord, Lord Kingsland, for moving his amendment, and for commending the Government for their efforts. I hesitate to nit-pick, but I think that the review by the noble and learned Lord, Lord Davidson, was initiated in the Pre-Budget Report in 2005. It is eight and a half rather than nine and a half years. The review is part of a wider range of things in train, which demonstrates that the Government are serious about this and about avoiding gold-plating.

It is probably a little unfair to suggest that legislation derived from the EU is not subject to scrutiny. The Section 2(2) approach is usually used to make regulations that are subject to either the negative or the affirmative resolution procedure. Of course, EC legislation is carefully scrutinised by the European Parliament as well, so it is not as though there is no scrutiny at all.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, I entirely accept both those points. I did not mention the European Parliament because I supposed that it might be said that I perhaps had a conflict of interest, having once sat in it. On the negative or affirmative resolution, I think that I said in my speech that that, indeed, happened but, of course, we have no opportunity to amend on this occasion.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, the purpose of this amendment appears to be to introduce a legislative barrier to gold-plating European Community obligations when they are transposed into domestic law through secondary legislation.

As the Government have stated throughout the debate on this Bill, we take the issue of gold-plating and the over-implementation of European Community obligations extremely seriously, and we are taking action to deal with the concerns of business on that. The review that the noble and learned Lord, Lord Davidson of Glen Clova, is conducting for the Government, for instance, is specifically aimed at identifying examples where it is clear that Community obligations have been over-implemented. Where necessary, the review will consider ways of reducing the regulatory burdens imposed on business by the existing stock of legislation implementing Community obligations. I presume that the noble Lord has seen a copy of the interim report of the review, which gives an update on progress. The hope is that the report will now be concluded quite quickly.

It has always been the Government's policy to implement European Community obligations so as to achieve the objectives of the obligation without over-implementation. The Cabinet Office guidance on the transposition of European directives makes it explicitly clear that only in certain exceptional circumstances and where it is justified by a robust cost-benefit analysis and extensive consultation with stakeholders should departments consider implementation that goes beyond the minimum required by a European directive. The guidance also makes it clear that all decisions to implement beyond the minimum required by a European directive must be made public.

The amendment would preclude any discretion on the part of any Government in the transposition of EC obligations into domestic law by statutory instrument. Is the intention of the noble Lord, Lord Kingsland, really to further limit the discretion of any UK Government to implement Community obligations in a way that best suits the particular circumstances of the UK? I cannot believe that that is his aim.

The interim report of the noble and learned Lord, Lord Davidson, provides a number of specific examples where the noble Lord's proposed amendment would have precluded the Government from acting in the UK's best interests. The evidence demonstrates that, by implementing European Community obligations in a way that goes beyond the minimum required by a European directive, the Government can ensure that directives are implemented in line with domestic legislation, meet the UK's higher standards and reflect the specific requirements of the UK.

For example, when transposing the temporary work at height directive, the Government extended the scope so that it applied to the self-employed in domestic legislation—something I hope that we all support. By extending the scope of this directive, the Government ensured that it maintained the UK's higher standards, in line with the provisions of the Health and Safety at Work etc. Act 1974, which pre-dated the EC legislation by 17 years. This ensures equal protection for those who might be injured by people working at heights, regardless of whether the person is self-employed or an employee, and prevents unscrupulous contractors from escaping their health and safety duties by claiming that their employees are self-employed. Were this amendment on the statute books when the directive was transposed into domestic legislation, the Government would have had to accept the lower standards of health and safety set by the EC. This would also have caused unnecessary confusion and inconsistency between similar businesses.

A further example is the 2003 prospectus directive. In this case, representatives of the financial services industry commented that this was an example where the Treasury and the Financial Services Authority had engaged with stakeholders early on and, on industry advice, had taken sensible decisions to maintain higher UK standards than the EC directive prescribed so as to provide higher consumer protection and financial stability. The UK financial markets are the leading markets in the EU and, therefore, changing their regulatory practices to tie in with rules appropriate to less advanced markets may have undermined the UK's position.

The amendment would present further problems when transposing Community obligations into domestic law. It would require that, in implementing a Community obligation, the Government do not impose or increase any burden that is,

"not necessary to implement the Community obligation or right".

However, it is often impossible to tell, or at least to agree, the bare minimum necessary to implement a Community obligation. The wording of EU directives is sometimes vague and the Government have to make a risk-based judgment about how the European Court of Justice might interpret the wording in question. This amendment would handicap the Government in their attempts to do that and would be likely to lead to numerous challenges in the UK courts by bodies asserting that the Government were going further than necessary. Ultimately, that would use up time and resources and place UK courts in the very difficult position of having to try to second-guess what the European Court of Justice might rule.

I suggest that the provisions in the Bill are, in fact, better placed to respond effectively and pragmatically to the issues of gold-plating and over-implementation than the noble Lord's amendment. That is because Clause 1 can be used to remove or reduce a burden, which could, in principle, include removing or reducing a burden resulting from implementation of an EC directive that goes beyond the minimum required. Furthermore, Clause 20 makes it possible to combine an order made under Section 2(2) of the European Communities Act 1972 with an order made under the Bill to remove or reduce burdens. That will enable a single order to implement Community law under Section 2(2) of the ECA and remove pre-existing domestic statutory provisions that have been superseded by Community law using the power in Clause 1. That will help to reduce occurrences of double-banking.

Given the undesirable restrictions that this amendment would impose, I urge the noble Lord to withdraw it.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, I am obliged to the Minister for his reply. For reasons beyond the control of both of us, this amendment was not discussed in Committee, so before we conclude this debate I would like to ask him one or two more questions. However, I shall first comment on his contribution. It was extremely full and he obviously took a great deal of trouble over it. I thank him for that.

I was a bit puzzled by the Minister's remark about the European Court of Justice and the uncertainty that a court might experience when making a decision in the context of my amendment. Whether a directive is implemented in terms or elaborated by the national legislature, an English court is in entirely the same position in relation to a matter of interpretation. Even if a directive has been implemented in national law, the ultimate arbiter of what that law means will be the European Court of Justice. Since we have been a member of the Community, there have been countless occasions when a matter at issue in a dispute over a British statute that derives from a Community directive has been referred by the British court to the ECJ. Therefore, in my respectful submission, the distinction that the Minister makes in that part of his argument is a distinction without a difference.

One of the illustrations to which the Minister drew your Lordships' attention was social legislation. However, it has always been accepted in the social sector in the Community that a directive provides a minimum series of social standards, not an exclusive series. At no stage has there been an obligation on the UK Government to accept the minimum necessary, and I do not see my amendment covering circumstances such as that.

The one reassuring point that the Minister makes—and this is the one point that gives me pause for thought about the absolutism of my amendment—was his reference to what I think is called the Cabinet Office transposition guide. The noble Lord nods his head. I am not sure whether it is because of my own negligence or the fact that this document is not easily available that I have not seen it; it is probably the former. But I was very interested to hear what the Minister said about it because it suggests that if what is contained in the transposition document is widely applied by departments, then gold-plating ought not to be a problem. These are very strict requirements in the document.

Can the Minister tell us a bit more about the document, its degree of transparency, the frequency of its updating and, above all, the authority it carries with Secretaries of State and, in particular, Permanent Secretaries in departments? How thoroughly are regulations supervised by Permanent Secretaries to ensure that the Cabinet document to which the Minister referred is actually complied with? The way he described the document suggests that it ought to be extremely difficult to gold-plate any Community directive.

The Minister may feel that at this stage he cannot answer these questions—I do not know. I apologise to him for putting him to the trouble of having to stand up another time. When I drafted the amendment I had not really addressed this area, so this is a genuine inquiry.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip 6:15 pm, 26th October 2006

My Lords, I thank the noble Lord for those questions. I will try to answer them as best I can. The guidance is a document which changes from time to time to deal with changing circumstances. Indeed, in our earlier debate we touched on how it might be used as the mechanism to deal with the point raised by the noble Viscount, Lord Colville.

Part of that guidance requires the regulatory impact assessment to be produced when transposition takes place. That sets out the analysis that must be undertaken. The guidance is on the Cabinet Office website; all departments are aware of it; it is updated regularly; and it is expected that it would be complied with. If the noble Lord is unable to access it readily, perhaps he will let me know and I should be happy to provide him with a copy and the documentation that surrounds it.

On the European Court of Justice, under the proposed amendment legislation cannot be introduced in the UK that is not absolutely necessary to implement a Community obligation or right. If, under the drafting of that Community obligation or right, there is uncertainty about what it might mean, when it is transposed into UK legislation there would be a risk—would there not?—that somebody could come along and say that this is doing more than is absolutely necessary. Therefore, there is another area for contention about how that legislation is introduced. I think that that is the key point.

We read the amendment as precluding dealing with social aspects of legislation. It seemed to me to be an absolute issue—that you should not do anything that was not absolutely necessary to implement the Community obligation. One would think that that would mean that, other things being equal, if there were a range of dates for its implementation you would have to introduce it at the latest period that you could because it would be doing more than was necessary to do so earlier—for example, where you would have to take advantage of all the derogations. How would that impact on what is proposed?

The issue of timing and some of these points are touched upon in the interim report by my noble and learned friend Lord Davidson. That might be worth a review. I hope that I have dealt with the key points the noble Lord has raised. If not, I will try again.

Photo of Lord Kingsland Lord Kingsland Shadow Lord Chancellor, Constitutional Affairs, Shadow Lord Chancellor, Parliament

My Lords, I do not propose to return to the question of the interpretation of the European Court of Justice or of social legislation. Suffice it to say that, if social legislation deriving from purely domestic measures sets higher standards than those in the directive, my amendment would not affect those social rules, which derive from purely domestic legislation. It would therefore in no way inhibit the United Kingdom from having higher standards than those in the directive.

I quite take the point about the possibility of measures for a directive that go wider than the terms of the directive widening the risk of references to the European Court of Justice. However, when we are talking about domestic rules—purely Community regulations rather than the directives themselves, because the directives must always be implemented in some form—I was concerned to underline the principle of the last word on the interpretation of a directive or of directive-derived legislation always being with the European Court of Justice.

I am most grateful to the Minister. I have found these exchanges very useful, both because the noble and learned Lord, Lord Davidson, will not report until long after the Bill is put to bed and because the Minister has given me an idea or two in the context of the Cabinet guidance. I shall not return at Third Reading with this amendment, but I might return with a more nuanced attempt to have some reference to this very important subject put into the Bill. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 [Consequential amendments]:

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

moved Amendment No. 38:

Page 20, line 15, at end insert-

"(3) In Article 17 of the Deregulation and Contracting Out (Northern Ireland) Order 1996 (S.I. 1996/1632 (N.I. 11)), in paragraph (1), for "section 1 of the Regulatory Reform Act 2001" substitute "section 1 or 2 of the Legislative and Regulatory Reform Act 2006".

On Question, amendment agreed to.

Clause 32 [General interpretation]:

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

moved Amendment No. 39:

Page 20, line 34, after "Church of England" insert "or any other religious organisation"

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, I think I can promise noble Lords that I shall be briefer than I was when I moved my previous amendment. All I want to do is to ask two questions. First, why is there a reference to the Church of England in the Bill? Why is it specifically excluded from the definition of functions? Secondly, if it is to be excluded, why does that not extend to other religious bodies? I beg to move.

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

My Lords, the reference to the Church of England in the Bill was inserted in recognition of its particular constitutional position, rather than because it was a religious institution or organisation. The noble Lord may not have been present when I moved the relevant amendment in Committee; I cannot recall. The long-standing convention is that the Government will not legislate on anything within the competence of the Church of England, which has de facto delegated power, without the agreement of the Church.

Such agreement takes different forms depending on the circumstances. Concerns were expressed about the ability to use the order-making powers in the Bill to legislate in a way that affected the Church's functions without having to obtain its consent. The Government took these concerns to heart and proposed an amendment to Clause 32, which was approved by your Lordships' House. The clause was amended to fulfil the Government's obligation under the convention and ensures that the powers under Clause 2 and Part 2 will not apply to the regulatory activities of bishops, church courts and disciplinary tribunals or to the legislative role of the General Synod, where it passes legislation that has a regulatory effect.

The noble Lord's amendment raises other issues and, despite the reasonable intentions behind it, we cannot agree that it should be included. The Church of England has a unique constitutional position with Parliament and the passing of legislation in relation to it. Other religious organisations in the UK do not have similar standing and there is no precedent for treating these organisations in the same way, which probably answers both questions posed by the noble Lord.

Whether this position in relation to religious organisations is correct or wrong in principle is, I would argue, not the subject of this Bill. For the purpose of ensuring that the Bill remains focused on better regulation, I would also say that it is not a subject for this House today. Perhaps I should also point out that the amendment does not attempt to define a religious organisation, so perhaps it does not fall into that trap. There is no agreed definition of the term in English law. If the amendment were agreed, there would of course be a whole host of arguments about whether a particular body fell within the terms of the definition. The noble Lord could stir up something of a hornets' nest if he wanted to. I hope that that satisfies the noble Lord.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, I was well aware that if we got into the detail a hornets' nest may well buzz around our heads. The Minister may be interested to know that this amendment was suggested by the Christian lawyers association, which I have no doubt whatever will read his response with great interest. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 33 [Commencement]:

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

moved Amendment No. 40:

Page 20, line 40, leave out "two" and insert "four"

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

My Lords, this is possibly the final amendment—so it will be welcome in that regard. It would ensure that any standing orders brought under this Bill will have enough time to be sufficiently considered before they are put into force. This Bill will come into force at the beginning of January, very soon after Parliament returns from the Christmas Recess. Any standing orders that the Government wish to implement immediately will have only one month of sitting parliamentary time to be debated and agreed. Clearly, that is not enough time for effective scrutiny.

I understand that the Government do not intend to make any orders until March 2007, which would allow the Procedure Committee enough time to finish its work and allow Parliament to consider the orders to be agreed on. However, if no orders are to be made until March, why will the Bill come into force so long before? Surely it would be more sensible for the Bill's commencement date to be delayed until all the loose ends are tied up, which would also give us some much-needed reassurance that the Government intend to implement this legislation in a considered manner after it has been properly scrutinised. I beg to move.

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

My Lords, I am pleased to hear the noble Baroness at the Dispatch Box. We have not heard enough of her. It saddens me greatly that we have now reached the last amendment and are hearing from her only for the second time.

The noble Baroness of course makes a valid argument. I understand the concern that the time available for parliamentary committees to consider revising orders perhaps is not as she would wish. Obviously, we want to ensure that we have in place a good working system for scrutinising orders when new orders are put to committees under the Bill. We agree that engaging parliamentary committees on revisions to standing orders is essential to that process, but I come back to the point that the amendment seeks only to delay the Bill, which is unnecessary, because that work can continue.

We have said here and in another place that we want to work with committees to ensure that amendments to standing orders are in place, and we have delivered on that commitment. Throughout the passage of the Bill through Parliament, we have provided relevant committees of both Houses with opportunities to consider and share their views on those amendments. Working drafts of the new orders informed by continuing discussions have been shared with the committee chairs, and official drafts will be issued in time for Third Reading. The progress on this dialogue to date indicates that a formal extension of the Bill is not necessary.

I give a commitment that we will continue to work with committees to ensure that they are aware of the timetable for laying orders and have sufficient warning of any approaching work. We think there will be an opportunity for continued discussion after Royal Assent and before orders are laid under the terms of this Bill. I am grateful to the noble Baroness for the amendment, but we do not think it is necessary. I therefore invite her to withdraw it.

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

My Lords, I am sorry about that because it would have been a neat and tidy amendment, but it is the last one and I shall not speak for long. I will, however, say that I enjoy very much standing at the Dispatch Box opposite the Minister and I am lucky in that I have had such a superb team with me on the Bill. I refer to my noble friends Lord Kingsland, Lord Henley and Lord Howard. It seems that putting the right man in the ring matters more than me having my say. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 [Extent]:

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

moved Amendment No. 41:

Page 21, line 5, leave out subsection (2) and insert-

"(2) In section 31-

(a) subsections (1) and (2) extend to England and Wales only; (b) subsection (3) extends to Northern Ireland only."

On Question, amendment agreed to.