Regulatory Reform (Scotland) Bill: Stage 1

– in the Scottish Parliament on 12th November 2013.

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Photo of Tricia Marwick Tricia Marwick None

The next item of business is a debate on motion S4M-08240, in the name of Fergus Ewing, on the Regulatory Reform (Scotland) Bill.

I call Paul Wheelhouse to speak to and move the motion.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I am pleased to open the debate on the general principles of the Regulatory Reform (Scotland) Bill. A number of committees—in particular, the Economy, Energy and Tourism Committee and the Rural Affairs, Climate Change and Environment Committee—have taken both written and oral evidence in their consideration of the bill. I thank all those who gave evidence to the committees.

I also thank those who responded to the various consultations for their invaluable contributions. Those contributions have provided firm foundations for the legislative proposals that have been introduced and important clarity on a shared understanding of where change is needed.

I have read the committees’ reports, and I am pleased to note that the committees agree that the bill’s principles are sound and that they are broadly supportive of them.

Both the Minister for Enterprise, Energy and Tourism and the Minister for Local Government and Planning are alongside me today, reflecting the fact that regulatory reform is a cross-government agenda. The three of us will be pleased to speak to our respective portfolio interests in the bill during the debate.

As members will be aware, the Scottish Government has a clear and unambiguous purpose. That purpose is to focus Government and public services on creating a more successful country, with opportunities for all Scotland to flourish, through increasing sustainable economic growth.

The key components of that purpose—a successful and flourishing Scotland, the creation of opportunities for all, and sustainable economic growth—cannot, and will not, be achieved in isolation from one another. Put simply, our country will not flourish without sustainable economic growth but such growth will be of little value if it does not lead to the better, flourishing Scotland that we all want to see.

The bill will improve the way in which regulations are developed and applied, creating more favourable business conditions and better protecting our environment. It will support and empower regulators and provide a clear line of sight between regulatory activity and the Scottish Government’s purpose. Collectively, the changes will support those who are regulated to comply; support the protection of communities, businesses, individuals and the environment; and support more effective and transparent delivery by a wide range of regulators.

The bill will introduce a range of measures to deliver consistent and proportionate regulation while maintaining local accountability. That will include both the definition and implementation of national standards and systems and a duty on regulators to give due regard to sustainable economic growth in their decision making.

A statutory code of practice will also be developed, which will describe in more detail how regulators will apply regulatory principles and good practice in order to find the optimum balance between regulatory and economic factors.

Photo of Jenny Marra Jenny Marra Labour

Will the minister explain how the principle of sustainable economic growth will be tested given that it has no clear legal definition?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I will come on to that point, and I hope that Jenny Marra will understand as I develop my speech just how we will take forward the approach.

The bill also contains provisions to improve the performance of planning authorities by establishing a link between planning fees and performance. In addition, the bill will change the mechanism for bringing legal challenges to offshore energy decisions.

The bill aims to give clarity to regulators on what is expected of them. There are those who say that the protection of the environment and the promotion of sustainable economic growth are incompatible and that it is an either/or choice. I understand and respect their view, but I disagree with the argument that has been made. The two approaches can be compatible, mutually supportive and in harmony.

Scotland’s environment is a national asset that is worth protecting not only because of its beauty and contribution to our national identity, but because it is vital to our economic success. Our understanding of the ecosystem services delivered by our environment and natural resources is developing apace, and we estimate that our natural environment generates between £21 billion and £23 billion of value a year for Scotland.

Many of this country’s most successful sectors, such as tourism, food and drink—for example, trout and salmon farming and shellfish growing—and renewables, depend on a clean and healthy environment. It therefore makes absolute sense, from an individual commercial as well as a national economic perspective, that we protect those resources not just for now but for future generations.

As I said in evidence to the RACCE Committee,

SEPA’s primary purpose is and will remain the protection and improvement of the environment.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 5 June 2013; c 2323.]

That includes the sustainable management of natural resources.

At present, both SEPA and the businesses it regulates operate in an unnecessarily complex legislative landscape. Much of that is down to the iterative way in which regulation has been developed over the years, particularly given the significant requirements created by Europe. It has resulted in complexity and a lack of transparency for regulated sectors and businesses. The new framework that the bill will deliver will be easier for regulated businesses and SEPA to understand and administer. That will lead to efficiencies for both and, it is hoped, improved compliance levels.

As a result of the bill and as part of our wider better environmental regulation programme, SEPA will change the way in which it prioritises its regulatory activities. That will ensure that its resources are directed towards the most important, highest-risk activities that have the greatest actual or potential environmental impact on communities. Most of all, the bill will protect our environment and, in the round, reward and encourage good behaviour. Let us help to prevent non-compliance rather than mop up breaches after the fact.

The bill is not a leap into the unknown. We already have an example of better environmental regulation in the way in which the water framework directive has been implemented in Scotland.

Photo of Jenny Marra Jenny Marra Labour

Can the minister clarify whether he has the power to reorganise SEPA’s activities through regulations? Does he require primary legislation for that?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

The bill includes a number of measures that are required. We certainly feel that the bill will move SEPA and other regulators on to a footing that provides them with more enforcement powers so that they are more able to take action to prevent serious breaches of environmental regulation. I hope to explore those issues further as I develop my speech, but I will happily come back to Ms Marra’s point later.

The implementation of the water framework directive has enabled the creation of a single permissioning structure and simpler, more consistent procedures. That is similar in approach to the model that we intend to introduce for the other regimes. The benefits of that approach have included: excellent stakeholder engagement; close working between the regulator and the regulated; a better understanding of regulations; and a simpler, more efficient regulatory service. The European Commissioner for the Environment, Janez Potocnik, praised Scotland’s approach as an exemplar when he visited the Royal Highland Show earlier this year.

Improving regulation is an important agenda not only in Scotland but elsewhere in the United Kingdom and across Europe. However, it is important to recognise that, while the agenda elsewhere is focused on deregulation or a “bonfire of red tape”, our agenda is clearly focused on better regulation and on ensuring that things work effectively for regulators and those that they regulate. Our vision is for Scotland to be a world leader in environmental protection, and I believe that the best way to achieve that is through creating a system of consistent, proportionate and targeted regulation that works.

The statutory purpose for SEPA that the bill will introduce will give recognition to the broader role that SEPA has and recognise the importance of the environment to our economy and to the health and wellbeing of our communities. It is important to note that, although the purpose is new, the need to balance environmental, economic and social considerations is not. As we heard in the evidence to committees, balancing judgments are already taken by SEPA, Scottish Natural Heritage and other regulators on a daily basis. The new statutory purpose for SEPA will formalise what is already current practice and will help to provide a line of sight from the Scottish Government’s purpose to what our public bodies deliver.

Let me reiterate for the record that we reject the argument that our agenda is about sacrificing the environment to promote economic growth, as some have suggested. As is right and proper, SEPA’s primary purpose is, and will remain, the protection and improvement of the environment. Section 38 of the bill gives primacy to the function of environmental protection, including the sustainable management of natural resources. That will always be at the top of SEPA’s hierarchy of responsibilities. However, the approach reflects the fact that we cannot look at issues in isolation.

The fundamental principle of sustainable development is that it integrates economic, social and environmental objectives. SEPA’s new statutory purpose acknowledges the three elements of sustainable development but gives clear primacy to the environmental element. I want to be clear in placing that point on record.

Photo of Claudia Beamish Claudia Beamish Labour

In view of those remarks, why does the minister not see it as appropriate to include the term “sustainable development” on the face of the bill?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I point out to Ms Beamish that, as I hope to explore further, section 38 establishes SEPA’s three areas of responsibility: health and wellbeing, which represents the social dimension; sustainable economic growth, which represents the economic argument; and, above both, environmental protection and the sustainable management of natural resources. Although the term “sustainable development” may not be used, the three pillars—if you like—of sustainable development are included in the bill in a clearer and more explicit way than would be the case if there was simply a reference to “sustainable development”.

Let me be equally clear that the duty to contribute to sustainable economic growth will not replace the duties that bodies have as regards sustainable development. Ministers will continue to give guidance on sustainable development in line with statutory obligations.

The bill will also give SEPA a wider, more strategic range of enforcement tools to deploy. Combined with the new sentencing options that are being given to the criminal courts, those will play a key role in tackling poor performance and non-compliance. The polluter-pays principle is already widely accepted and supported. The proportionate enforcement powers that we propose will ensure that the offenders pay the price for remedying damage that is done to the environment.

All responsible businesses, large and small, will benefit from an effective environment protection system for Scotland. By focusing resources on the greatest environmental harms, SEPA can more effectively target lawbreakers, support non-compliers to become compliant with regulations, and protect communities and our natural environment. To put the new enforcement tools in context, SEPA’s approach has been, and will continue to be, about achieving the right outcomes. Sometimes that needs enforcement tools, but sometimes it does not.

This morning, I opened a conference in Peebles at which the focus is on the approach that we have taken in Scotland to reducing diffuse pollution. That approach has involved SEPA in a programme of partnership working with the rural sector. There is always the need for a regulatory backstop but, to achieve the maximum benefit for water quality, SEPA has worked closely with the sector and farmers through a campaign to provide advice on compliance with the diffuse pollution general binding rules and to improve performance.

The outcome of that approach has been encouraging, with 79 per cent of farms that have been revisited by SEPA having improved their performance without the need to revert to enforcement measures. That is a clear example of the proportionate and effective approach that SEPA has taken and wants to continue to take in other areas. The conference has attracted interest from Government, regulators and the rural sector across the rest of the UK. Further, our approach has been quoted by Commissioner Potocnik as an exemplar in Europe, and a recent Chinese delegation is considering how the approach could be adopted in China.

Let me be clear that, where individuals and businesses deliberately or negligently damage the environment, the powers in the bill will enable SEPA to take robust enforcement action. Criminality will not be tolerated. During a visit to a waste site on the outskirts of Edinburgh earlier this year, I was horrified to hear evidence of serious threats of violence being made against SEPA officers and in some cases their families, as well as evidence of stalking of SEPA officers on social media. That is totally unacceptable. I can therefore confirm that the bill will be supported by a stage 2 amendment that will make such behaviour a specific offence.

As I said at the outset, I welcome the vital contribution that stakeholders have made to the development of the bill. I also acknowledge and appreciate that there are diverse and strongly held views on a number of areas that the bill covers. We are committed to working with stakeholders, and I encourage all stakeholders to continue to engage to help shape the work. The bill is largely an enabling bill, and much of the detail will be set out in regulations. Our door remains open for stakeholders to help shape the development of those regulations and their associated guidelines.

The bill is not about introducing new regulations; it is about strengthening the effectiveness of regulations that the Parliament has approved. It is about delivering better regulation. We have strong stakeholder support for much of that work, which will deliver greater regulatory consistency and transparency, efficiency benefits for regulators and the regulated, and protection of the Scottish public, businesses, communities and the environment. However, some will not benefit from the work: serial poor performers, who are a burden on their competitors and a risk to sustainable economic growth and all that it stands for.

I commend the Regulatory Reform (Scotland) Bill to the Parliament and I urge members to support the principles underlying it at decision time.

I move,

That the Parliament agrees to the general principles of the Regulatory Reform (Scotland) Bill.

Photo of John Scott John Scott Conservative

I call Murdo Fraser to speak on behalf of the Economy, Energy and Tourism Committee.

Photo of Murdo Fraser Murdo Fraser Conservative

I am pleased to contribute to this debate on behalf of the Economy, Energy and Tourism Committee, which is the lead committee on the bill. I thank all those who provided written and oral evidence to the committee, as well as my fellow committee members and members of other committees that considered the bill at stage 1. I also thank our team of clerks, who supported us so ably, and the members of the Scottish Parliament information centre who provided advice.

The committee welcomed the introduction of the bill and agreed to recommend to the Parliament that its general principles be agreed, although I should say that that was not a unanimous view of the committee, as two members dissented. As the lead committee, we took evidence on parts 1, 3 and 4. I will concentrate on the issues that are raised in our stage 1 report.

As the minister pointed out, the bill is wide ranging and covers a range of discrete policy areas. Part 1 has three main proposals: first, it gives the Scottish ministers the power to encourage or improve consistency in the exercise by regulators of their functions; secondly, it introduces a new duty on regulators to contribute to achieving sustainable economic growth; and, finally, it includes a code of practice to assist regulators.

The aim of the enabling power is to improve how regulations are developed and applied so that they create a more favourable set of business conditions while delivering environmental benefits. Standardisation of the way in which regulations are implemented is intended to tackle the economic impact on the business community of dealing with inconsistently applied regulations.

The committee heard concerns that the power for ministers would centralise decision making and, thus, remove democratic accountability and local knowledge from the decision-making process. That point was made particularly by local authorities.

The committee welcomed the fact that the Scottish Government and the Convention of Scottish Local Authorities agreed a memorandum of understanding to achieve consistency in the exercise of regulatory functions and future national standards. We also welcomed the collaborative approach that that demonstrates and hope that it will result in national standards that are transparent and workable and which take account of local circumstances.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The Scottish Government places on record its gratitude to COSLA and to Stephen Hagan for the assistance that he has given in the work that we have done in that regard. I offer Mr Fraser, as convener of the committee, an unqualified assurance that our collaborative work with COSLA will continue throughout the bill’s passage to ensure that it does not imperil local democracy in Scotland.

Photo of Murdo Fraser Murdo Fraser Conservative

I thank the minister for that assurance, which I am sure committee members will welcome.

The committee heard that there is widespread support for inclusion in the bill of exemptions that enable regulators to opt out of national standards where exceptional local circumstances exist. Witnesses asked for clarity on the circumstances in which an exemption would apply and for a consistent approach to be adopted.

We recommended that the exemption criteria be included in the forthcoming code of practice or the guidance that will accompany the bill. It is a little disappointing that the minister did not agree that that is necessary, but the proposal to publish ministerial directions in respect of the exemptions or variations is welcome. It would be helpful if, when he speaks, the minister could clarify where those directions will be published and how he will ensure that regulators are aware of them.

I turn to probably the most contentious issue in the bill, which is the duty on regulators to contribute to achieving sustainable economic growth. We received a lot of evidence on that provision and witnesses raised a number of concerns about it. We also heard that, at the moment, there is no legal definition of sustainable economic growth and, as a consequence, regulators could face legal challenges in respect of how they choose to comply with the duty.

The committee was clear that, for regulators to be able to comply with the duty, they must understand its meaning. During the evidence-taking sessions, we heard many different definitions of sustainable economic growth—somebody even suggested the one from Wikipedia, although I am not sure that that is helpful to the law-making process—but the Scottish Government provided us with its definition and explained that that is the one that it wants regulators to use.

Because, in the end, it might be a matter for the courts to decide, the Scottish Parliament and Government have a duty to minimise the risk. The committee asked the Scottish Government to ensure that its definition of sustainable economic growth be explicitly stated. If it will not appear in the bill, it must be absolutely clear in subsequent guidance. We also asked for a commitment to be made that drafts of guidance be submitted to Parliament for scrutiny prior to being published.

In his response to our report, the minister indicated that the definition will be included in the code of practice, which is subject to parliamentary scrutiny, but he made no mention of providing in the guidance to regulators details of how they will be expected to comply with the duty. Given the importance of that point, I would be grateful if he would address it when he speaks later.

The Law Society of Scotland, among others, expressed the firm view that the duty raises questions of legal enforceability. Many witnesses questioned how regulators would be able to demonstrate that they have contributed to achieving sustainable economic growth and expressed concerns that it might leave their decisions open to legal challenge. There was a particular concern in relation to planning applications and, therefore, we were pleased that the minister decided to exclude the planning functions of local authorities from compliance with the new duty.

Many witnesses also raised concerns about a conflict of interest. We heard in an intervention by Jenny Marra about the existing definition of sustainable development. Some people said that it would be better for that to be in the bill because it is better understood. The Scottish Government was quite clear in its response to that and, in evidence, the minister said that regulators were not to prioritise sustainable economic growth over other duties and that the code of practice would provide guidance to them on balancing competing duties. That, again, is why the code is so important.

The committee wants to take evidence from stakeholders on the draft code of practice before the final version is laid before the Parliament. We also welcome the Scottish Government’s commitment to publish the guidance that will accompany the bill and to consult widely on the draft code.

I turn to part 3 of the bill, which deals with three points, the most contentious of which is the issue of linking the level of planning fees to the performance of a planning authority. It is clear to the committee that an efficient and effective planning system benefits us all. We heard a lot of views from the business community that it wants to see a more streamlined planning system.

The business community was of the view that the 20 per cent uplift in planning fees that will be introduced should be reflected in an improvement in planning authority performance. However, many of those who gave us evidence thought that reducing the income to underresourced planning authorities would only exacerbate the problem. The committee welcomed the minister’s confirmation that positive measures would be used initially before any reduction in planning fees.

When it came to measuring performance, the committee was not convinced that the Scottish Government’s statistical data could adequately determine the performance of planning authorities. The committee welcomed confirmation that the Scottish Government will now use quantitative and qualitative measures to assess performance.

We are aware that COSLA remains opposed to linking planning fee levels to the agreed performance markers. It is important that that issue is resolved prior to the conclusion of the bill’s parliamentary passage. Any update on progress from the minister today would be welcome.

Photo of Derek Mackay Derek Mackay Scottish National Party

I may never convince COSLA that a penalty mechanism is in its interests. However, the Scottish Government believes that it is in the interests of the planning system not only to have positive mechanisms to improve performance but to have a penalty mechanism should all else fail.

Photo of Murdo Fraser Murdo Fraser Conservative

I am grateful to the minister for that intervention. It is interesting that, during stage 1 evidence sessions, there was a clear divergence of opinion between the business community, which was very enthusiastic about those proposals, and people on the other side, particularly in local authorities, who were much more concerned. The adoption of a conciliatory approach by the Scottish Government, which is more about carrot than stick, will go down very well with COSLA.

I am aware that I am short of time so I will briefly cover a couple more points.

The committee largely welcomes the marine licensing provisions in the bill, which will streamline the current process. Similarly, there was unanimous support for improving the certificate of compliance for mobile food vans so that those who travel around the country selling burgers and ice creams no longer have to get 32 separate licences but can rely on one, which I am sure will be very welcome.

The Government has indicated that a number of amendments will be introduced at stage 2. One of those is on primary authority, which we look forward to taking evidence on at stage 2. There was some suggestion at the last minute that there will be other proposals: one on the imposition of fixed penalties in relation to carrier bags, one on the abandoned mines provisions in the Control of Pollution Act 1974 to deal with cases in which contaminated land falls to the Crown, and one on allowing the Scottish ministers to authorise fuels that can be burned in smoke control areas. We look forward to hearing more details about those amendments, either in the course of the debate or subsequently.

This is a comprehensive, wide-ranging bill. It is well intentioned and has generally been welcomed. It was certainly the majority view of the committee that it should proceed.

Photo of Jenny Marra Jenny Marra Labour

As the Federation of Small Businesses has pointed out, regulation is necessary to protect our environment and communities from harm. Through the bill, we have the opportunity to enshrine in law the expectations, practices, relationships and penalties for the many bodies that carry out regulatory functions. Sadly, however, the bill falls short of such expectations.

Labour member’s speeches today will cover different sections of the bill. My colleague Margaret McDougall will focus on part 1 and Claudia Beamish will examine some of the environmental aspects in part 2. That leaves me to introduce the main areas that we feel need to be addressed. Central to our concerns, and reflected in a wide range of evidence to the Economy, Energy and Tourism Committee, is the loss of local accountability when regulations are made, changed or removed.

The bill will give the Government a great deal of power over future regulatory reform, but there is little in the way of scrutiny of how that power will be used. Indeed, the committee report states that it heard from many witnesses who had difficulty understanding the implications of the proposed enabling power because of the lack of detail on the circumstances in which it would be used, or to whom it would apply. The Scottish Council for Development and Industry and the Law Society of Scotland both expressed concern that there is no clarity around the duty, which makes it difficult to interpret what the bill will achieve in practice. The Law Society urged Parliament to clarify the approach that the Scottish Government is taking.

My fear is that the approach that the Government is taking is to centralise the power to set, change and create new regulations that will fulfil the more modest policy intention of providing national standards in regulation. In the process, we are losing transparency and accountability, because the bill will not allow Parliament to scrutinise those powers, although they are being centralised, or to scrutinise the changes to the regulatory frameworks that they will bring.

Given that a number of businesses and stakeholders are voicing similar concerns, we need to know what action the Scottish Government is taking to ensure that changes will be made democratically and transparently. In particular, I urge the Government to reconsider whether the super-affirmative procedure is a more democratic way of exercising its powers.

With regard to the national standards themselves, I appreciate that there is a need to eradicate duplication and inconsistency. However, must that come through the sacrifice of local decision making? Unison and the Scottish Trades Union Congress have both questioned whether the legislation strikes the right balance. Unison stated:

“Authorities must be able to set their own standards and respond to local situations.”

Although I am glad that the minister is working with COSLA, I urge the Government to consider whether the bill needs to be amended to reflect the memorandum of understanding that has been agreed. As Andrew Fraser of North Ayrshire Council said:

“It is unusual for legislation to require a non–statutory memorandum of understanding to make it acceptable and workable.”—[Official Report, Economy, Energy and Tourism Committee, 5 June 2013; c 2946]

I agree. We need legislation that is sustainable on its own. If the Government is to introduce national standards, it has a responsibility to balance those standards with the duty on local authorities to respond to local needs.

In turning from a provision that is not in the bill to one that should not be in it, I will touch on the duty to promote sustainable economic growth. Just 29 per cent of those who were consulted agreed that that duty should be in the bill; there are serious concerns about how it will work in practice, which have already been aired. The STUC, in its submission to the committee, argued strongly that a mandatory duty on regulators to pursue economic growth could create a conflict of interests in relation to their function to regulate.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I am grateful to Jenny Marra for taking an intervention, but I hope that she picked up the point that I made in my opening speech that we have a situation in which SEPA, for example, is being asked to look at sustainable economic growth in the context of health and wellbeing, but the overriding statutory duty on environmental protection and sustainable management of natural resources takes primacy in that arrangement of three different duties. Those are three pillars of sustainable development.

Photo of Jenny Marra Jenny Marra Labour

I thank the minister for that clarification. From my reading of the bill, it seems to me that the duty on sustainable economic growth overrides many of the other regulatory considerations—we are looking for clarification on that—and that is certainly the concern of many people who gave evidence to the committee. Only 29 per cent of those who were consulted agreed that the duty should be in the bill, because it overrides other regulatory functions. The STUC notes that duties that were placed on the Financial Services Authority that prevented it from introducing new regulatory barriers or discouraging the launch of new financial products severely weakened its ability to regulate the banking sector effectively, which illustrates that conflict of interests.

Scottish Environment LINK has said that the duty could override environmental protection or wellbeing and the Law Society has raised significant concerns about the validity of a duty that is not properly defined in law, as we have rehearsed this afternoon. Unison has stated that without a legal definition it will be hard for regulators to make clear-cut decisions, and they may be left vulnerable to challenge through the courts, even with the minister’s proposed code of practice.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Does Jenny Marra not recognise that, on the regulator’s duty in respect of sustainable economic growth, section 4 quite clearly states:

“In exercising its regulatory functions, each regulator must contribute to achieving sustainable economic growth, except to the extent that it would be inconsistent with the exercise of those functions to do so”?

That surely makes it clear that what Jenny Marra has said—that the economic duty would override those functions—is factually incorrect.

The Deputy Presiding Officer:

Ms Marra, I will give you a little more time.

Photo of Jenny Marra Jenny Marra Labour

I do not accept the minister’s assertion. If there is a duty with regard to sustainable economic growth without a properly defined legal interpretation of that, the matter becomes a very grey area that is open to many arguments in court. That is the view of the Law Society of Scotland and of many people who gave evidence to the committee. It may not be the minister’s view, but only 29 per cent of consultation respondents agreed that the duty should be included. I think that we will have an on-going debate about that this afternoon, and probably at stage 2 and stage 3, but we should really get to the nitty-gritty of what the impact of the duty will be.

The implications were put to the committee by Professor Andrea Ross of the University of Dundee—a legal expert—who wrote to the committee:

“Regardless of how this government interprets sustainable economic growth, there is no guarantee that a future government or the courts will not interpret it to mean a stable economy with no mention of its impact on ecological and social sustainability.”

Given the level of opposition, I am not convinced that the duty should be in the bill. I see no reason why the widely used and legally defined duty for sustainable development is insufficient.

Photo of Derek Mackay Derek Mackay Scottish National Party

For clarity, will Jenny Marra tell me whether the Labour Party supports sustainable economic growth?

Photo of Jenny Marra Jenny Marra Labour

The Labour Party does indeed support sustainable economic growth, but not at the cost of absolutely everything else, such as hard-fought-for health and safety regulations that are very important to workers and our local authorities.

I fear that the bill suffers from one narrow aim: to centralise power. The detail is scant on how it will be used, but we know that that power will be exercised here in Edinburgh, rather than in our communities. Regulations must work for the communities that they keep safe, the businesses that they affect and the environment that they protect.

We are uneasy with much of the bill and when we take out those concerns we are left with a reorganisation of SEPA, for which we do not need primary legislation. That leaves us with not much to support at all.

Photo of Jenny Marra Jenny Marra Labour

I have taken all the interventions so far, but I think that I am out of time.

The Deputy Presiding Officer:

The member is close to closing.

Photo of Jenny Marra Jenny Marra Labour

We will vote against the principles of the bill tonight and we hope that the Government will reconsider many of the measures before stage 2.

Photo of Gavin Brown Gavin Brown Conservative

We welcome much of what is in the bill today. We think that it is a step in the right direction, although there is still much to do on regulatory reform, both in principle and in the bill itself, so we will vote for the bill at 5 o’clock today.

It is a common complaint from business of all shapes and sizes that the volume and burden of red tape is too much. In the recent Federation of Small Businesses in Scotland survey, 45 per cent of those who were surveyed said that the cost of compliance had risen over the past year, and 29 per cent said that the time that is taken in order to comply with regulation had increased over the past year. Some regulation clearly is necessary and some of it is less so, but having as much regulation as we have can stifle potential and innovation and, ultimately, make us less productive as a country.

We welcome the bill, the better regulation agenda and, indeed, the work of the regulatory review group. It is not just regulation itself, of course, but the way in which it is interpreted and enforced that causes much of the angst across the business community.

Let us look at some of the key issues, many of which have been touched on. First, section 4—which is entitled “Regulators’ duty in respect of sustainable economic growth” and is to be read in conjunction with sections 5 and 6—provides that regulators

“must contribute to achieving sustainable economic growth”.

That is a principle that I and my party support—indeed, there was something pretty similar in our manifestos in 2007 and 2011. The provision gives a signal that sustainable economic growth is a priority for Government. It raises the profile of the issue, and it sets out a clear vision: Scotland needs sustainable economic growth.

I do not agree with Jenny Marra’s suggestion that the provision will override all the other duties that regulators have. The minister was right to point out the precise wording of section 4 in that regard. Two parts of the section are relevant. First, section 4 provides that regulators

“must contribute to achieving sustainable economic growth”.

The achievement of sustainable economic growth is therefore not an overriding duty, but something to which regulators must contribute.

Secondly, in relation to the duty to make such a contribution, section 4 provides for a clear exception for all regulators, where

“it would be inconsistent with the exercise of” their

“functions to do so.”

Before we even consider that guidance will be produced, those two points in section 4 mean that the argument about the duty overriding all other duties is overblown and ought not to be central to the debate.

Questions were asked and fair points were made by people who are against and people who are in favour of the principle. The conclusion was that the success of section 4 and the bill as a whole will depend almost entirely on the guidance and code of practice that the Government will issue under sections 5 and 6. The FSB was right to say that how the code is monitored and reported on will determine how effective it will be in changing practice. I hope that ministers will focus on that in their speeches, in the context of subsections (2) and (3) of section 4.

Fair questions were asked by people who are in favour of the principle. How will we ensure that the duty is enforced at operational level, where it matters? How will we avoid legal challenge? That is a fair question, which Jenny Marra and other members asked. None of us wants to see time being taken up in the courts. How will we ensure that the meaning is narrowed down, so that that does not happen?

People who are concerned that the section 4 duty might override other duties have asked how it will sit alongside regulators’ primary purpose, and how regulators will balance their priorities. It is crucial that the code of practice and guidance are right in that regard, so I was pleased to hear from the Economy, Energy and Tourism Committee’s convener that the committee will take evidence on the code of practice and the guidance in order to ensure that Parliament and the Government get things right.

It is possible to get things right. I trawled through the written submissions to the committee and noted that the Office of the Scottish Charity Regulator said that it

“already reports on sustainable growth, as required by” section 32(1)(a) of the Public Services Reform (Scotland) Act 2010. The approach in the bill is therefore not without precedent. One regulator must already comply with a provision, the wording of which is pretty close to what is in the bill. There is much to be done, but I am persuaded that it can be done at stages 2 and 3.

We heard about primary authority partnerships. We strongly approve of the approach, which will bring cost efficiency for businesses and local authorities, and greater consistency across the board, which is important for all concerned. It would be helpful to hear from the minister, in his closing speech, about the analysis of the responses to the consultation, and about the Scottish Government’s updated position on that.

We heard about the planning authorities. I do not know whether the planning minister will speak in the debate, but it would be helpful to hear from the Government what its definition of unsatisfactory performance is likely to be, what levels of reduction we are talking about and what measures could be put in place.

Photo of Gavin Brown Gavin Brown Conservative

Do I have time, Presiding Officer?

Photo of Derek Mackay Derek Mackay Scottish National Party

I thank Gavin Brown. I do not have a dedicated speaking slot, but I am here to answer questions such as those he has asked. We have a high-level group, which has established high-level principles around what is good performance, thereby enabling us to define poor performance. There will be a range of measures whereby we will be able to determine whether a planning authority is performing well or not, in the way that Murdo Fraser outlined.

Photo of Gavin Brown Gavin Brown Conservative

I am grateful for the minister’s intervention and am pleased to hear that work is being done on the matter. I simply note that Audit Scotland said that data must be qualitative and quantitative, and that SCDI—which is very pro-business in much of what it says—warned of creating

“false incentives to prioritise speed over optimal results.”

Both pieces of advice are worthy of note.

As the committees that have been involved have made clear, there is still work to be done on the bill and no doubt other suggestions will be made in the course of the debate. However, because it is a step in the right direction, we will support the bill, come 5 o’clock.

The Deputy Presiding Officer:

We move to the open debate.

Photo of Mike MacKenzie Mike MacKenzie Scottish National Party

I am pleased to speak in the debate not just because I am a member of the Economy, Energy and Tourism Committee, but because of my previous career of running a business for many years, when I often used to ask myself, “Who regulates the regulators?”

It was clear to me then that much of our regulation was inconsistent and disproportionate, and that regulatory powers were often placed in the hands of people who used them unwisely and without proper regard for the wider consequences. That said, I fully acknowledge that I have a particular genetic defect that sometimes gave me difficulties when it came to dealing with regulators. Members might not be surprised to learn that I completely lack the forelock-tugging gene; as hard as I try, I cannot force my hand up to grasp it. Regulators did not always appreciate that.

The recent FSB survey of its members indicated that a substantial proportion reported an increase in the cost of dealing with regulation over the past year. I wonder how that cost has increased over the past 30 years, although I suspect that we already know what the answer is. I also wonder about the wider cost to our country with regard to growth or, indeed, the lack of growth and prosperity, and about the impact on numbers of jobs, on living standards and on tackling poverty. In this matter, I pay particular regard to the voices of small businesses, because the burden of regulation often falls most heavily on their shoulders—in other words, the shoulders of those who are least able to bear it.

That said, I fully understand the need and requirement for regulation. After all, without it, we cannot function as a civilised society, and the quality of our life and environment would plummet. As a result, in considering improvements to regulation, we need to make it more consistent and make it a less blunt instrument. I believe that that is exactly what the bill will do—not as a final solution, but as a step on the road towards better regulation.

With regard to environmental regulation, I believe that the bill gives SEPA a valuable toolkit that will enable it to protect our environment more effectively, thereby freeing up resources to tackle serious environmental problems and crimes while offering a lighter regulatory touch to businesses that have every intention of complying.

It is often the case that regulation varies from one local authority to another for no good reason.

Photo of Alison Johnstone Alison Johnstone Green

Is Mike MacKenzie aware that, in its written evidence, the STUC said that Scotland is already

“a good place to do business” and that it is

“part of the second least regulated product market in the developed world and the third least regulated labour market”?

Photo of Mike MacKenzie Mike MacKenzie Scottish National Party

I am not quite sure exactly how one might measure that, but I certainly listen carefully to Scottish businesses on these matters.

As I was saying, regulation often varies from one local authority to another for no good reason. The committee heard evidence to that effect. Some regulators, principally local authorities and COSLA, said in evidence that they are unhappy about that because it conflicts with the concept of local democracy. Unfortunately, they were unable to give a single example of it happening in practice; it seems that their concerns are purely abstract. In any case, I welcome the Government’s assurance that it is prepared to consider exceptions.

Witnesses also expressed concern about the economic duty. I am afraid that the apparent opposition of some regulators to sustainable economic growth rather makes the case for that duty to be enshrined in legislation. I cannot understand why anybody should be opposed to that duty, or why the term “sustainable” seems not to be understood. Much of the discussion seemed to be merely semantic, and none of the witnesses was able to give a single practical example to illustrate their concerns.

Photo of Alison Johnstone Alison Johnstone Green

I can give Mike MacKenzie an example. The building of a golf course on a site of special scientific interest is an example of the environment taking second place to economic considerations.

Photo of Mike MacKenzie Mike MacKenzie Scottish National Party

As I said, none of the witnesses gave us an example and, in some quarters, the jury is still out on that matter.

Planning fees prompted some interesting discussion. Some witnesses were firmly of the belief that, because planning delivers a public good, full cost recovery through fees is inappropriate. Our planning system is the midwife to sustainable economic growth, so I am delighted that the minister is focusing on a range of improvements that will help to deliver that growth while protecting and improving the quality of our built and natural environments. The notion that sustainable economic growth is incompatible with that is a dismal notion that could condemn us to slow growth and failure to achieve any of our aspirations. The minister intends to increase planning fees, but it is only proper that developers and the public alike also see an increase in performance.

I look forward to the forthcoming code of practice, which will offer reassurance to anyone who has remaining doubts about the bill, and to the enhanced and economic growth that the bill will help to deliver.

Photo of Margaret McDougall Margaret McDougall Labour

I am happy to take part in the debate as a member of the Economy, Energy and Tourism Committee. The Regulatory Reform (Scotland) Bill aims to cut back on the hoops that certain organisations need to jump through by streamlining and standardising certain parts of the process. However, I have several concerns that I hope will, at the very least, be addressed at stage 2. I will focus on the increasingly centralised agenda that is displayed in the bill and the planning changes that are set out. I will also briefly mention street traders’ licences.

Local democracy is central to our society and, where possible, we should devolve powers to where they are most applicable. Although we all support consistency, we must not strip local councils of their functions. In written evidence to the committee, COSLA spokesperson Michael Cook stated:

“Local communities should remain empowered and have the right to differing standards to reflect different locally required outcomes.”

Photo of Margaret McDougall Margaret McDougall Labour

I need some time to proceed.

Unison stated in written evidence:

“Authorities must be able to set their own standards and respond to local situations. National standards and systems conflict with the bottom up approach recommended in the Christie Commission report which the Government welcomed. Local authorities have a range of different aims”.

Photo of Mike MacKenzie Mike MacKenzie Scottish National Party

Does the member acknowledge that, although Mr Cook made that theoretical point, he was unable to give any practical examples of where that has occurred?

Photo of Margaret McDougall Margaret McDougall Labour

COSLA was very straightforward in not supporting the proposal. I will use another quote from COSLA later in my speech.

I fully agree that, in most cases, there is no one-size-fits-all solution. Planning authorities operate in diverse communities and need different strategies and solutions for their own unique situations. Otherwise, we run the risk of national standards undermining local democracy.

Photo of Derek Mackay Derek Mackay Scottish National Party

Is the member not conflating what she sees as consistency or centralisation and what we propose for planning? South of the border, if a planning authority is performing poorly, the minister takes absolute control of that planning department through his inspectorate. I am not proposing that for Scotland. We propose to encourage conditions that will improve performance and, if that fails, that the poorly performing planning authority will not enjoy continued increases in planning fees, which would be unfair.

Photo of Margaret McDougall Margaret McDougall Labour

I thank the minister for that intervention, but I think that all those who gave evidence agreed that removing funding from a local planning authority would be detrimental to that authority.

We should not be looking to burden local authorities with a set of national standards that do not work for them. Although I acknowledge the need for consistency, I argue that it might be better for that to be provided not by central Government but through best practice guidelines and co-ordination.

The proposal to link planning application fees to the performance of the planning authority would mean that the Scottish ministers could reduce fees to underperforming planning authorities when it was felt that they were operating less than satisfactorily. We need to be extremely careful about the way in which the proposal is implemented. Despite the proposal forming a relatively small part of the bill, the question on it was one of the most frequently answered of all the consultation questions.

The Royal Town Planning Institute stated in its submission that it was

“disappointed that Ministers intend to pursue a statutory mechanism to penalise authorities who they consider under perform”.

It went on to say that it would be “counterproductive to withdraw funding”, and that

“a national continuous improvement programme ... should be put in place”.

What does the Government mean by unsatisfactory performance? That is not defined anywhere in the bill. Who will make the decision about whether performance is satisfactory or unsatisfactory? In an earlier intervention, the minister mentioned that there was a working group. When will that working group report to the committee or to the Parliament?

The Deputy Presiding Officer:

The member is now in her final minute, so Mr Mackay’s intervention must be very brief.

Photo of Derek Mackay Derek Mackay Scottish National Party

I will be happy to share all the workings of the high-level group with all members so that they are fully informed about the key performance indicators. I hope that that will give the member some reassurance.

Photo of Margaret McDougall Margaret McDougall Labour

I am now running very short of time.

What role will democratically elected councillors play under the new system? I understood that it was their job to scrutinise the process. Is that function to be removed? COSLA is not supportive of the bill’s proposal, as Stephen Hagan stated in his letter to the Economy, Energy and Tourism Committee, in which he described it as

“fundamentally too much Ministerial interference in the operations of a specific council service”.

What discussions is the Scottish Government having with councils to resolve the issue? What role will councillors have under the new system?

I hope that the Scottish Government will take on board the concerns that I have raised and make the necessary changes at stage 2 to avoid the distinct feeling of creeping centralisation that local authorities are experiencing in relation to some of the proposals in the bill.

Photo of Graeme Dey Graeme Dey Scottish National Party

I do not think that any reasonable person would question the wisdom or desirability of what the bill seeks to achieve—surely everyone benefits from improved regulation and an improved ability to regulate. The challenge in relation to the areas of the bill that the Rural Affairs, Climate Change and Environment Committee scrutinised as a secondary committee lies in ensuring that, in facilitating sustainable economic growth, we in no way compromise or give rise to the possibility of compromising protection of our environment or our natural heritage.

The committee’s scrutiny of the bill centred on part 2, which covers environmental legislation, along with those areas of part 1 that relate to SEPA and SNH. In its submission, SNH revealed that it had no difficulty with the principles of the bill but admitted that it was not fully clear on its priorities and purpose. It should be acknowledged that SEPA revealed itself to have a clear understanding of its role. It stated that its new general purpose, as drafted in section 38 of the bill, accurately reflected the manner in which it currently operates.

The Minister for Environment and Climate Change told the committee that he did not intend the duty on sustainable economic growth to subvert in any way the existing regulatory duties of SEPA and SNH, and that regulators would take economic impact into account only when there was no conflict. Despite that, the committee came to the view that, given SNH’s hugely important role in securing the conservation, enhancement, understanding, enjoyment, sustainable use and management of the natural heritage, a provision similar to the one that is provided for SEPA in section 38 might reasonably be included.

The minister indicated that he did not feel that to be necessary. However, although we were largely reassured by the minister’s evidence, we remained of the opinion that the hierarchical model that is set out in section 38 might still be deployed to provide that clarity. The intention is understood, but we were simply of the view that it might be more clearly understood were the Government prepared to take the suggested approach.

The minister indicated that regulators would be able to identify the outcomes of their new duties in future annual reports, but the committee was concerned that if regulators were unclear on what the duty would mean for them in practical terms, that would impinge on their ability to report. However, we welcomed the Government’s commitment to produce, in consultation with stakeholders, appropriate guidance.

The undertaking given that the statutory code of practice will be comprehensive and define what is expected of regulators as regards their duties under section 4 is also to be welcomed, provided that the guidance includes clear instruction on how to resolve any conflict that arises between compliance with their primary functions and achieving sustainable economic growth.

Of course, things have moved on with the creation of the Scottish regulators code of practice working group to develop the draft code, with a view to entering into full consultation later in the year, and the Minister for Energy, Enterprise and Tourism reiterating in evidence and again today that sustainable economic growth is not to be prioritised over other regulatory objectives but is simply something to which regulators must have regard. The direction of travel is therefore one that satisfies the concerns of this member of the committee.

However, concern was expressed in the evidence that we took about how a high-level code of practice that is designed to be applicable to a wide range of regulators could be meaningful and effective. Subsequent ministerial reassurance that the new code was designed not to replace but to complement the detailed and specific subject codes that are already in existence—in other words, the already well-functioning codes specific to individual regulators would remain their driver—has helped to allay those fears. However, like the Economy, Energy and Tourism Committee, we in the Rural Affairs, Climate Change and Environment Committee might well renew our interest in the subject prior to the draft code being finalised and laid before Parliament.

I very much welcome the planned enhancing of SEPA’s powers of enforcement through the bill and planned Government amendments. The package of measures that we might end up with by stage 3, judging by what is in the bill as drafted and the Government’s proposed stage 2 amendments, will give those who police and protect our environment the means to do so effectively. I welcome the planned new section focusing on SEPA’s investigatory powers with a view, among other things, to determine any financial benefit that has accrued in relation to serious environmental crime.

I similarly welcome the proposed amendments to schedule 2, which will mean that permits can be varied, suspended or revoked if the holder ceases to be deemed a fit and proper person and that a permit transfer can be refused if the would-be transferee is not a fit and proper person. I also welcome the intended amendments to sections 69 and 166 of the Criminal Procedure (Scotland) Act 1995.

Concerns were raised that SEPA might use its new powers to impose fixed-penalty fines in relation to weaker cases rather than pursue the issue through the court process. However, SEPA stated in evidence that in practice it would still have to carry out a thorough investigation into the evidence and that guidelines to be provided by the Lord Advocate would further direct its approach. The committee was told that the nature of the offence and whether criminal intent was involved would be taken into account in determining the balance of probability.

As a member of the committee, I was particularly pleased to learn that regulations made under the bill will enable SEPA to consider issues on a company-wide basis rather than an individual-site one. That will ensure that organisations that have a corporately bad attitude to the environment will be appropriately held to account, not just slapped across the wrist because at an individual location level their actions are not deemed to be significantly serious. Plans to issue publicity orders are also a step forward, because they might be used alongside or in place of alternative sentences, and someone who is convicted of an offence would be required to make public details of the misdemeanour and the sentence imposed.

Discretion on whether to deploy that approach would lie with the courts. However, it strikes me that, used in a commonsense way, that would draw a distinction between a one-off accidental breach and a perpetrator deliberately playing fast and loose with the environment. It is another useful weapon in the environmental protection armoury. Allowing directors of a company and similar office-holders to be prosecuted for the offence of failure to comply with a publicity order in certain circumstances is a logical accompanying step.

I welcome moves to better protect SEPA officials from threats of violence and intimidation. The committee heard of cases of serious organised environmental crime in which SEPA officials had been subjected to such threats. SEPA officers do hugely important work on our behalf and they must be afforded the fullest protection and backing.

Photo of Claudia Beamish Claudia Beamish Labour

As a member of the Rural Affairs, Climate Change and Environment Committee, I identify myself with many of the remarks that my colleague Graeme Dey made.

I want to speak about the term “sustainable development”. I ask ministers to consider including that in the bill and, further, I ask them not to include the term “sustainable economic growth” without a clear statutory definition. I do not believe that this is just semantics. As others have said, the term “sustainable economic growth” lacks legal clarity, and in my view it does not represent a sufficiently holistic approach, so it is more likely to founder. There is already a term whose legal meaning is clear and which is holistic by definition, and that is “sustainable development”. For those reasons, and others that colleagues have raised, we will not be able to support the bill at this stage.

Photo of Claudia Beamish Claudia Beamish Labour

Very briefly. I want to develop my point.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I am grateful to the member. I hope that I will not disrupt her flow. I just wanted to point out that, at the European environment council level, the member states are currently discussing the definition of sustainable development, and the German Government has pointed out that it does not even include the word “environment”. In European policy, a lot of thinking needs to be done on how to define sustainable development. In section 38, we make it quite clear to SEPA exactly what we mean.

The Deputy Presiding Officer:

I will give you a little extra time, Ms Beamish.

Photo of Claudia Beamish Claudia Beamish Labour

I will go on to develop arguments about the rationale for adopting the five pillars of sustainable development, so I will proceed on that basis.

As we all know, sustainable development takes into account the social, environmental and economic, which in my view fuses them into one and provides a way forward. Sustainable economic growth, though, is wrong-footed in that way. Further, the word “sustainable” has had too many meanings attached to it when it is the precursor to “economic growth”. Does the phrase refer to growth that is sustainable or to an environmental or social brake on growth? Further, sustainable economic growth can entail irredeemable degradation of the planet, increasing inequality and even arms production, and a poor diet leading to obesity. Those are bad factors, but they are still defined in that way. Sustainable economic growth can also entail debt, which can be sustained for decades, as we have seen.

Significantly, there appears to be confusion about what sustainable economic growth really means. There is concern about the lack of clarity in policy definition itself, which could cause confusion in the development of regulation as the Government and successive Governments act in a range of areas. Even worse, in the draft marine plan, which is out to consultation, we read:

“The ... High Level Marine Objectives ... reflect and incorporate the five guiding principles of sustainable development, which the Scottish Government acknowledges as an important element of increasing sustainable economic growth.”

So sustainable development now becomes a subset of sustainable economic growth in Scottish Government policy.

As we have heard, there are concerns that confusion may lead us to the courts. In written evidence to the Rural Affairs, Climate Change and Environment Committee, Professor Colin Reid of the University of Dundee stated:

“It is unsatisfactory for legislation to impose a legal duty where there is so little clarity as to its meaning”.

I think that we can all agree that legislation must be robust and clear. The recent Crofting (Amendment) (Scotland) Act 2013 is a salutary reminder of what can happen to people if it is not. In the words of the Law Society of Scotland’s written submission to our committee,

“Effective legislation is best made with precise terms.”

The term “sustainable economic growth” is not clear and precise enough. We are more likely to get it right with the term “sustainable development”, as it reflects a more holistic approach, and a range of stakeholders argue for it to be used in the bill.

Scottish Environment LINK is concerned about the economic growth duty on regulators. It states:

“We know of no legal definition of sustainable economic growth and, therefore, have no assurance that it aligns with the sustainable development definition and principles”

The Scottish Council for Voluntary Organisations highlights in its briefing that the importance of sustainable development was recognised in the passage of the Water Resources (Scotland) Bill, which was amended at stage 2 in response to the Economy, Energy and Tourism Committee’s recommendation to give equal emphasis to all three pillars of sustainability rather than just the economic aspects.

The national performance framework aims for a flourishing and prosperous Scotland through the balance of 50 indicators including biodiversity, carbon and equality issues and, as members know, much work is being done on the appropriateness of gross domestic product being Scotland’s only top-line measure of progress. Strangely, the two committees that were involved in the passage of the bill were unable to agree on that issue at stage 1.

Photo of Claudia Beamish Claudia Beamish Labour

I am sorry, but I cannot do so now.

The Deputy Presiding Officer:

The member is in her final minute.

Photo of Claudia Beamish Claudia Beamish Labour

The Economy, Energy and Tourism Committee, which is the lead committee, noted the “conflicting views” of stakeholders, but asked only that “sustainable economic growth” be

“explicitly stated and explained in subsequent guidance”, but not on the face of the bill. That is not good enough.

The Rural Affairs, Climate Change and Environment Committee, which is the secondary committee and my committee, expressed concerns in its report to the lead committee. It said:

The Committee agrees with stakeholders that if a duty to contribute to achieving sustainable economic growth is to be included in the Bill then, to ensure clarity and to safeguard against any reinterpretation of its intended meaning at a later date, a definition of the term should be included on the face of the Bill.”

Finally, that committee said:

“The Committee remains unclear as to why the term sustainable economic growth has been used in the Bill rather than sustainable development on the grounds that while neither has a statutory definition sustainable development has international recognition and is understood legally across a number of regimes and jurisdictions. The Committee recommends that the Scottish Government bring forward amendments to the Bill at Stage 2 to include a definition of sustainable development in section 38 of the Bill.”

I whole-heartedly support that approach.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I hope that, whatever our differences are this afternoon, we can agree on the need to place an emphasis in the bill on assisting business in Scotland and on creating an environment in which business can flourish, while recognising that we need to offer protection to people and the natural environment in which they live.

I will discuss a particular case in my constituency that is presenting considerable challenges to a number of my constituents. A situation has arisen through no fault of their own, and the current regulatory framework does nothing to ease their plight.

The bill is an opportunity to look afresh at the regulatory framework and identify ways in which to improve it—for instance, by making legislation that promotes better consistency of approach across the country and thus assists businesses in understanding what standards are expected, while acknowledging local circumstances.

I was taken by the mention of “pointless inconsistency” in the MSP briefing from the Federation of Small Businesses. That is what the bill is really about. That clearly causes frustration to businesses and I hope that it can be addressed by the bill’s proposals, as it is a recurring theme with the businesses and individuals I speak to in my constituency, particularly regarding the actions of local authorities and organisations such as SEPA and SNH.

Another key aspect of the bill is the environmental standards that it encapsulates. I very much welcome that thrust.

I turn to an environmental matter in my Stirling constituency. The bill has the potential to have a major beneficial impact on some of my constituents. I will explain what I mean.

Around 18 months ago, I was contacted by constituents from Blanefield about contaminated land in a part of the village that had been built on the site of an old printworks. It was found that the houses, which were built in the 1930s, were situated on land that had been contaminated with high levels of lead and other hazardous substances. After testing and retesting, 13 properties are now in need of remediation due to the level of contamination. The residents in Blanefield and Stirling Council have come together to work to find the best possible solution to that matter, but they face many obstacles.

First, the cost of remediation to Stirling Council and my constituents is extremely high, partly due to the cost of the landfill tax. Estimates suggest that the cost of cleaning the land is likely to be over half a million pounds.

Secondly, my constituents’ main concern after remediation is that, although the land may be made safe, their properties will still be listed on the contaminated land register. As things stand, if a local authority finds a site to be a significant threat to human health, it may issue a notice that identifies the land as contaminated and places it on the contaminated land register, but even when the land is remediated and no longer meets the contaminated land criteria, it will remain on the register, as the legislation does not provide for a site to be taken off that public record. My constituents will have to endure the stress of their homes being on contaminated land, the financial cost of remediation and the upheaval during the clean-up process, and, once the land has been made safe, their properties will remain on the contaminated land register. As members can imagine, that is causing my constituents a great deal of unease.

The bill will provide an opportunity to alleviate some of my constituents’ anxieties. I have been in correspondence with the Minister for Environment and Climate Change about the issue and he was able to inform me of the Scottish Government’s intent that the bill should give local authorities the power to declare that land that they have previously identified as contaminated is no longer contaminated and need not remain on the register. Closer examination of the bill’s provisions on that subject suggests, however, that further clarification is required. I say that because Stirling Council officials have pointed out to me what the SPICe briefing paper has to say about section 34:

“Section 34 relates to contaminated land and special sites, and amends the Environmental Protection Act 1990 by proposing the following provisions: ... enabling the local authority or SEPA to remove from a register of contaminated land a notice designating a special site; if it considers that the land in question should no longer be specified as such.”

However, that provision appears to relate only to designated special sites and the SPICe briefing describes a special site as follows:

“This is a specific designation for land where e.g. oil has been extracted, purified, or refined; or explosives processed or manufactured.”

There does not appear to be a provision that would allow the land that could be determined to be contaminated land on the former Blanefield printworks site to be removed from the register of contaminated land once it has been remediated.

Providing this example, as I have done today on behalf of my constituents in Blanefield—I have no doubt that there are other affected communities in Scotland—demonstrates an area in which ordinary individuals’ lives could be improved by the bill. I look forward to hearing the Scottish Government’s response today, or certainly before stage 2, so that I can consider whether to lodge amendments.

In the meantime, I fully support the bill’s intent to bring a better regulatory framework into being in Scotland.

Photo of Alison Johnstone Alison Johnstone Green

I thank the witnesses, who have given valuable input into the bill, and the clerks for their sterling work. As always, they have enabled us to scrutinise the bill and bring it to stage 1.

I dissented from the committee’s recommendation to the Parliament that the bill be passed and I will argue why I believe that changes should be made.

Section 4 of the Regulatory Reform (Scotland) Bill introduces a new duty for regulators. If the bill is passed, the regulators that are named in schedule 1, such as local authorities and the Food Standards Agency, must, when carrying out their regulatory functions,

“contribute to achieving sustainable economic growth, except to the extent that it would be inconsistent with the exercise of those functions to do so.”

That provision hands regulators a conflicted remit. We are asking that, while regulators are doing their main job, they should focus on another job, unless that other job distracts them from their main job. As confusing duties go, that one is up there. In a world of limited resources, focusing on another outcome will inevitably reduce someone’s ability to deliver their primary purpose.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I hope that I made it clear in my opening remarks that this provision is not a case of distraction; it is a case of looking at where there is a conflict. Indeed, the Minister for Energy, Enterprise and Tourism made the same point. If there is a conflict between the regulator carrying out their sustainable economic growth function and their primary objective, they are not required to do the former. If a regulator’s primary objective is environmental protection, it is only right and proper that it should prioritise that.

Photo of Alison Johnstone Alison Johnstone Green

When the Minister for Energy, Economy and Tourism gave evidence to the committee, he suggested that that was not the case. It is okay for ministers to say one thing, but what is written in the bill is what becomes law. In Scotland, we should be passing legislation that is clear and focused and gives our public bodies and businesses clarity about what is expected of them. It is not good enough to argue that the courts can decide in cases of doubt.

The FSB’s briefing for today says that 51 per cent of its members found that the most challenging aspect of regulation was interpreting which regulations applied to their business. The new duty will make the picture no clearer and it could make the role of the regulator less clear.

Regulators help to stop the tiny minority of people who may cheat or deceive, thus gaining an economic advantage over businesses that are playing by the rules. This is how regulators help our economy to operate smoothly: they enable a fair, competitive environment for business to develop and they should be allowed to focus on their main purpose.

Unison reported that many of its members were concerned that the duty

“will leave their decisions open to a range of challenges when they give priority to ensuring public safety over that of the environment.”

The Law Society of Scotland said that it would

“make it less easy for the regulator to make a clear-cut decision.”—[Official Report, Economy, Energy and Tourism Committee, 26 June 2013; c 3099.]

It also questioned our ability to enforce such a duty, and suggested that that may just add a further complication to process. Andrew Fraser from North Ayrshire Council thought that

“the duty will end up as a lawyers’ charter”.—[Official Report, Economy, Energy and Tourism Committee, 5 June 2013; c 2955.]

The bill will allow—and the Government plans to produce—guidance and a code of practice to help, among other things, regulators interpret what the economic duty means for them. I welcome the role that the committee will play in considering the code, but the primary problem remains: the duty in primary legislation risks diluting the main role of regulators and skewing decision making, instead of promoting a balanced consideration of economic, social and environmental priorities. Regulators such as SNH already have a challenging enough time protecting our environment.

Let me be clear: nobody wants regulators to act in inefficient or overly complicated ways and unnecessarily interfere with business, but they must be able to focus on their job. I have yet to see convincing evidence that there is a major problem here that requires regulation. Regulators are willingly engaged with the regulatory review group and good progress is being made in non-legislative ways. Why add complications with unnecessary legislation and new duties when collaborative initiatives are working?

The definition of sustainable economic growth, as we have heard, received a lot of attention from witnesses and the committee. That is quite right—the phrase has never appeared in primary legislation before. The bill is a first and it should be scrutinised closely. I do not have strong views on where or whether any definition is spelled out. The real question is whether that is the right duty to place on regulators in the first place.

During scrutiny it became clear that the duty would play havoc with decisions made in the land use planning system. Under current legislation, as I have mentioned, a golf course took precedence over a site of such special scientific interest that an eminent scientist described it as

“Scotland’s equivalent to the Amazon.”

I welcome ministers’ intentions to lodge an amendment to exclude a local authority’s planning functions at stage 2, as I can only imagine what decisions could arise if a duty to promote sustainable economic growth impacted on planning decisions.

To me, the Economy, Energy and Tourism Committee’s report on the subject reads like a cogent argument against any economic duty, but the conclusions, agreed by majority vote, do not follow. There was significant witness concern, both during the bill’s consultation and stage 1 scrutiny, that the duty would skew decision making. Many suggested that the duty should refer to sustainable development. That term is understood well: it has international currency, it is embedded in Scots law and it explicitly balances economic, social and environmental issues. I hope that the Minister will explain why that concept in law was not used instead.

It is the Government’s right to focus policy on a single purpose, even if some of us question the concept, but there is a difference between the Government’s policy and what the Parliament should write into law.

Photo of Elaine Smith Elaine Smith Labour

Before moving on to the closing speeches, I remind members that all members should be in the chamber for closing speeches if they have participated in a debate. I note that Margaret McDougall is not in the chamber.

Photo of Jamie McGrigor Jamie McGrigor Conservative

I am pleased to close today’s debate for the Scottish Conservatives. I, too, thank those organisations that have provided briefings for today, and those who took part in the various consultations. I commend the Economy, Energy and Tourism Committee, ably led by my friend Murdo Fraser, on a thorough stage 1 report. I also welcome the work undertaken by the Rural Affairs, Climate Change and Environment Committee as secondary committee in relation to part 2 of the bill.

There have been some good speeches from across the chamber and a good deal of consensus. Gavin Brown has set out the Scottish Conservative position. I therefore want to pick up on some of the issues that have emerged during the debate.

There has been general agreement that the Scottish Government’s five principles of better regulation, namely that the bill should be transparent, accountable, proportionate, consistent and targeted where needed, are sensible and appropriate.

There has also been recognition of the need to ensure that, while regulation should protect Scotland’s built and natural environments, which are key assets for our country that are vital for our economy and wellbeing, it should do so without placing undue burdens on business and should help to support economic growth. We all recognise that this is a balancing act—and a challenging one.

The volume, type and cost of regulation is a big issue for businesses throughout Scotland, especially small and medium-sized enterprises, including many SMEs in my region of the Highlands and Islands, which often raise the matter with me. Last year, the Federation of Small Businesses said that around 30 per cent of its members cited regulation as the biggest barrier to growth, with 62 per cent of its members reporting that the costs of complying with regulation have increased over the past four years. The Confederation of British Industry Scotland stated:

“Red tape is a significant and avoidable constraint on business investment and growth”.

Policy makers need to address that issue.

Regarding part 2 of the bill, I welcome the proposals to update the role of SEPA as our environmental regulator and I welcome the fact that SEPA’s objectives will include helping to achieve sustainable economic growth—we all need growth. I was pleased to note that, in its submission to the Rural Affairs, Climate Change and Environment Committee, SEPA stated that it is committed to continue

“Engaging much more with business” and

“Ensuring that environmental regulation is not unnecessarily burdensome on businesses”, which I must say has often been the case in the past. CBI Scotland has been positive about the progress that SEPA has made in those regards, and I hope that that can continue.

On part 3 of the bill, I welcome the proposal in section 40 for a single appeals system for offshore marine energy projects. On section 41, I note that the linking of planning fees to performance was one of the most frequently answered of all the consultation questions. We support the Government’s aim of seeking to eliminate undue delay in the planning system and we support the linking of planning fees to performance, as that should incentivise planning authorities. We are aware of concerns about how planning authority performance will be measured and we look forward to seeing the Scottish Government’s guidance on that. We also agree with representatives from the business sector that they should be able to expect an improvement in performance from increases in planning fees.

In conclusion, the Scottish Conservatives support the consolidation and streamlining of regulation at every level, wherever that is possible. The Minister for the Environment and Climate Change will know that my crofting constituents—many of whom I visited last weekend on Skye—would dearly love to see that applied to some of the legislation that engulfs their sector, although some of those issues are being considered by the crofting law group’s sump.

We want regulation that is concise, precise, easy to understand and transparent. We look forward to the bill helping to achieve that aim and we look to ministers to improve the bill further at stages 2 and 3.

Photo of Jenny Marra Jenny Marra Labour

I began the debate by talking about the importance of regulation to our communities and to our environment. Regulations keep us safe, they contribute to sustainability and they make the everyday easier. For regulatory reform to work, it must be built by Government, yes, but also by the communities that benefit directly from it.

Under the bill as it stands, I fear that we will lose the democratic element to our regulation, lose the input of the representatives who are closest to people and, therefore, risk suffering from regulation that works against our local communities and businesses rather than with and for them. I completely agree with Bruce Crawford that regulation is about creating the conditions for business to flourish while protecting people. I completely agree with that assertion, which the Minister for Enterprise, Energy and Tourism challenged me on in my opening speech. We want to see the ideal conditions for business, but we need the balance that Bruce Crawford talked about. I do not think that the bill goes to the heart of striking that balance properly.

I am not opposed to national standards, but the bill must do the responsible thing by telling us unequivocally how national standards will work with our local authorities, whose duty is to serve the needs of the community.

Principles in a memorandum of understanding offer small comfort compared to the clarity of the law, but I fear that the Government is not prepared to clarify its law because it does not yet know the impact of the changes that it proposes. What good is a duty to promote sustainable economic growth to a regulator whose function is to penalise businesses when they flout environmental standards? How will that balance be struck and who will make that decision? The experts—the Law Society of Scotland, which regulates and represents its members—tell us that it might be the courts, which are already overburdened, yet we are being asked to take comfort in a code of practice that has not yet been thought of.

I ask the minister to seriously consider the issue. The cart is being put before the horse. All that we really know is that power will come to Edinburgh, but we do not know how it will be used. The bill will give the Government the power to introduce, amend and delete regulations without proper oversight by the Parliament. That is the stuff of a Government that is more concerned about where power lies than about how the power is used and that is not why we fought for this Parliament.

I urge the Scottish Government to seriously consider the remarks of the Law Society with regard to section 4, “Regulators’ duty in respect of sustainable economic growth”. The guidance that Fergus Ewing relied on earlier in his intervention has not yet been thought of or drafted, but it is what the lawyers would refer to in deciding on such cases. It is worth reiterating the Law Society’s concerns. In written evidence, it said of the duty:

“The underlying question in relation to the avoidance of burdens on commerce must be whether the imposition of this new duty actually contributes to better regulation or merely adds a further complication to process. If the duty is imposed, the failure to write it into decisions, difficult, as it is to apply, may only result in generating a further ground for appeal of the decision.”

I ask the minister in his closing remarks to address that concern about section 4. Concerns have been voiced from across the chamber. The duty will cause problems in local authorities and in the courts, so I ask the Government to review the issue before stage 2.

I want better regulation for Scotland, but I do not believe that the bill guarantees that in any way. My colleague Claudia Beamish made a good case for including a provision on sustainable development in the bill; that was echoed eloquently by Alison Johnstone. I ask the Government to make that one of its considerations.

We have made clear our view that the principles of the bill are currently unsupportable, although I hope that the Government is listening carefully and will come back with alternative proposals.

Photo of Gavin Brown Gavin Brown Conservative

The Economy, Energy and Tourism Committee recommended to the Parliament that the general principles of the bill be agreed. Half the Labour members on the committee voted against that, and half the Labour members voted in favour of it. Can the member explain that?

Photo of Jenny Marra Jenny Marra Labour

That is exactly correct. I am clarifying our position, which is that the general principles of the bill are unsupportable. I hope that the Government listens carefully to those considerations and comes back with proposals that we can support.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I thank members for their contributions to the debate. I pay tribute to Murdo Fraser, the convener of the Economy, Energy and Tourism Committee, for the way in which he presented the arguments, and I thank the clerks of that committee, who as always performed a power of work in the background to assist members in their scrutiny of the bill.

We have had a useful debate, although I cannot say that any of it has been desperately surprising, because we have rehearsed and rehashed arguments that were put at some length in committee and perhaps probed to a greater extent, as is possible given the committee procedure.

I hope that I will cover most of the points raised in the debate but, as always, I am happy to correspond with any member should I fail to deal with any significant point in this relatively short speech.

Better regulation is an important example of the Government’s determination to use every available lever to support sustainable economic growth and make Scotland a more successful country with opportunities for all to flourish. The Regulatory Reform (Scotland) Bill is a key element of our continuing work to deliver better regulation.

As Jamie McGrigor stated, better regulation should be characterised by a number of principles: it should be transparent, accountable, proportionate, consistent and targeted. Those principles have been expounded and developed by Professor Russel Griggs and the regulatory reform group, whose recommendations are always worthy of careful scrutiny by members of the Parliament and have helped us enormously in a great many areas of Scotland’s economic and environmental life.

The bill will help to provide a favourable business environment, in which companies can grow and flourish. Successful businesses create wealth and jobs, as well as improving communities and ordinary people’s lives.

I was delighted at the support that the business community in Scotland evinced for the bill. Much reference has been made to the Federation of Small Businesses, which has taken a particular interest in the bill. It starts off its briefing not by talking about business, economic growth and jobs but by saying:

“We know that regulation is necessary to protect communities and the environment from potential harm. We also know that it protects small businesses, employees and the public from the irresponsible and unscrupulous practices of a minority.”

That is the beginning of the FSB’s comments and it is extremely welcome.

We are for better regulation, not for removing all regulation. Regulation meant that children were no longer put down mines or up chimneys. Regulation—the Parliament has seen a lot of it—helped to deal with some of the horrific illnesses and problems associated with asbestos. Regulation has produced a health and safety regime in our oil and gas industry that is regarded as an example to other countries around the world.

Regulation is not per se wrong but necessary. However, it must be the best regulation and conform to the principles that we have described. Laws and regulations play an essential role in fostering a prosperous, fair and safe society. They provide essential rights and protections for citizens, consumers, workers, businesses, communities and the environment. In so doing, they also support sustainable economic growth. However, as ever, we are ambitious for Scotland and want much better regulation—better in concept and development.

I am delighted to have worked, along with the Scottish Government officials to whom much credit is due, with our key stakeholders, especially COSLA. I mentioned Stephen Hagan and those who work with him in COSLA. We have spent quite a lot of time trying to reach a modus operandi with which COSLA and local authorities in Scotland can broadly feel comfortable. We are on course to achieve that, but that work will continue.

We have also engaged closely with SEPA and SNH on their role. Paul Wheelhouse has led that aspect of the work. In his opening remarks, he covered clearly how it relates to the bill’s provisions.

I am delighted that the bill reflects the views and active input of the key stakeholders. To suggest that it does not is somewhat unfair to all those who have been involved in that serious work. However, the committee’s consideration of the bill will also enhance it, and we will lodge a number of amendments based on its recommendations. We listen carefully to what the committees say, as is right and proper.

I am delighted, too, that Mr Wheelhouse will lodge amendments designed to protect those who are working for SEPA from assaults and attacks on them in the course of their employment. That was covered very clearly by Graeme Dey in his contribution. As Mr Wheelhouse indicated, protection will be extended to employees who face that type of threat in their work in the same way as we have extended such protection to other emergency services workers.

Out of a sense of inquisitiveness, I turn to those members who would vote against the bill today and say to them that, were the bill to go no further, one effect would be that that protection could not be extended to the workers of SEPA. This is really an issue for members of the Labour Party to consider. Were they, as appears to have been indicated, to vote against the principles of the bill—rather than being split down the middle, which is what they appear to have been in committee—rather than to try to amend it, improve it and deal with the points that Claudia Beamish and others made, the effect would be to deny SEPA employees the very protection that I would have expected Labour members to wish to extend. Perhaps, even at this late stage, they will reconsider.

I turn to what is perhaps the main point, which Jenny Marra—to be fair to her—Alison Johnstone and several other members mentioned, and that is economic growth. As I think the committee has recognised and acknowledged, we have made it absolutely clear that the duty in respect of sustainable economic growth will be clearly set out in a strategic code of practice. I recall that we alluded in committee to the fact that John Swinney has already provided a definition of sustainable economic growth in response to parliamentary written question S4W-10994. Although the code of practice will not necessarily duplicate that definition, the suggestion that there is no definition perhaps means that people need to pay a bit more attention to what we have said in the course of this session of Parliament, including what the Cabinet Secretary for Finance, Employment and Sustainable Growth said in responding directly—as is right and proper—to a parliamentary question.

Having listened to businesses, and with the endorsement of local authorities, we are minded to lodge amendments to introduce a framework for primary authority in Scotland, which will deliver consistent regulation through partnership working with local authorities. A more supportive business environment through consistent, effective and efficient regulation will be provided through other specific measures in the bill, such as the integrated framework for environment regulation; linking planning fees to satisfactory performance of planning authorities; speeding up the process of resolving legal challenges to offshore marine energy projects; and introducing a transferable certificate of compliance for mobile food businesses applying for street traders’ licences.

Incidentally, that matter was originally raised by a member of the CBI at a meeting that I had with it a couple of years ago. That shows, I hope, that this Government is ready to, and does in practice, consider and respond to appropriate matters raised by businesses and organisations such as the FSB, the CBI, the SCDI, the Scottish Chambers of Commerce, the Institute of Directors and, of course, the trade representative organisations.

I thank those representatives of the STUC with whom I have engaged. It is fair to say that we have not reached total agreement on matters but, of course, we continue to engage regularly and very seriously with the STUC.

I am determined that we will promote among all Scottish regulators a broad and deep alignment with the Government’s purpose of focusing government and public services on creating a more successful country, with opportunities for all of Scotland to flourish through increasing sustainable economic growth. I believe that Parliament shares that ambition, as indeed do regulators and business. We will therefore continue with a team Scotland approach, working with regulators, business and others to deliver sustainable economic growth for Scotland.