Better Regulation

Baroness Andrews Excerpts

Thursday 7th December 2017 Lords Chamber

[Baroness Andrews (Lab)]

I am grateful to the noble Baroness for creating another opportunity to discuss this very important matter. I agree with much of what she said. We have never been at a more important time in carrying out our role to regulate properly, proportionately, wisely and transparently. I am going to pursue a rather different tack this morning.

Even under normal circumstances, the minimum that we should be able to expect from the Government in their approach to regulation is not merely that it is proportionate, providing the right level of safeguarding and reducing the sort of risks that need to be reduced, but that it is transparent enough for everyone to have confidence in and robust enough to invite and withstand scrutiny. I hope that the Minister agrees.

My questions to the Minister today—there are quite a lot—will test whether these assumptions still hold in the light of what the Government plan to do to reduce the scope and functions of the only independent verification body which advises the Government about regulation: the Regulatory Policy Committee, created in 2009. In July I led a debate on regulation, which followed many of the same lines as the noble Baroness. This afternoon it is different. At the end of the debate, the Minister responded to me, in an unsatisfactory way, that the system of regulation was under review. Naively, I thought that that might mean a review which could lead to some improvement. There is common and cross-party agreement that we need to improve the system—to strip out what is redundant, ambiguous and obstructive—and to standardise practice without losing quality. That was the line taken by the Public Accounts Committee recently, when it said that the Government should adopt a more proportionate and efficient better-regulation system.

What has happened in fact, and which is deeply alarming to noble Lords across this House and to industry, is the opposite. Possibly under cover of the challenges of Brexit, possibly driven by it, the Government are planning to reduce the powers of the one independent body which is set up precisely to ensure that regulatory changes planned—whether to create or annul regulations —have the impacts claimed for them. We are talking only about business impact statements here—the very basic currency which has governed the accelerated approach to deregulation in recent years. These changes are planned and are under the radar. Apart from a letter to the chair of the PAC delivered last week, none of them has been publicly revealed, let alone discussed or consulted upon, not even with business interests. Each of them reduces a different part in the process of careful scrutiny and each has massive implications for small businesses—and very much for this House and the way it conducts scrutiny.

The three changes are, first, that the Government plan, as the noble Baroness, Lady Neville-Rolfe, said, to impose a de minimis bar of £5 million on what the RPC will look at in the future. This will have the following effect. Between 2015 and 2017, the RPC looked at 700 measures. Had this new regime been in place over the past year, it would have looked at only 18 measures, and it would be for government departments to self-certify those measures as to which side of the de minimis they fall on. This will reduce the work of the RPC by 90%. Had these measures been in place in recent years, the RPC would not have been able to review important regulations relating to fracking, night-flight restrictions, gender pay-gap reporting, pesticides and water quality, to name just a few. That is only one sort of impact.

The Federation of Small Businesses has been in touch with me as well. It says:

“There are rumours that government are introducing a higher de minimis threshold for scrutiny of impact statements”.


How right it is. In its briefing, it asks me to ask the Minister to provide clarity on this and when he will consult on it. Can the Minister ensure that in the wind-up he answers this question? The federation says:

“Our members cite the cumulative burden of regulation as a key problem, and so we are concerned that this change will allow more regulation to slip through the net unscrutinised, adding to the burden rather than reducing it”.


Exactly. Changes which look minor in themselves, which affect every hairdresser in the country, may well not add up to £5 million so will not be scrutinised—but they affect every hairdresser. That is what the FSB wants information about.

The second change is related to that. The Government have changed the terms on which measures of any size can be examined. With the introduction of de minimis, the RPC was concerned—rightly—that controversial measures could slip through, so it was working with the BRE to introduce powers of call-in to pick up controversial measures that would have a perverse consequence, whatever that might be. This, I understand, has now been abandoned as an idea. There will be no provision to call in any controversial measures that fall below the minimum. In a letter that I have seen, sent by the Minister to Cabinet colleagues, this is simply described as being,

“to enable the BRE to work with Departments to avoid unnecessary parliamentary handling risks”.

Thirdly, the Government have decided to abandon the mandatory first stage of consultation, which was developed by the RPC to spot and iron out mistakes, to the advantage of business and societal groups. This would provide greater departmental autonomy, with only one final cliff edge of confrontation. This proposition had been put forward before but was rejected by the then Cabinet Office Minister, Oliver Letwin. Business is very unhappy.

These are my questions for the noble Lord. Can he explain why the Government are reducing the power of the RPC to a minimal, possibly unsustainable, level at a point when its regulatory function needs to be at its most alert? Can he confirm that these changes are not under consideration but are well past that stage and that, unlike what he said to me in an Answer last week, they have been put into effect without public consideration, debate or review? Can he explain why this has not been brought to the attention of Parliament, let alone our scrutiny committees that deal with secondary legislation? Can he explain why he has not consulted business? Can he tell me what the job description of the new chair of the RPC, announced yesterday, in place of the gentleman who has been doing the job for many years, Michael Gibbons, will consist of? Does Mr Browne understand that, if these changes go ahead, there will be virtually no job to do?

I have already put one question to the Minister from the FSB, and here are two more. When will the Government consult on a new business impact target, which is required within a year of a new Parliament? We are now half way through it. When can we expect confirmation of the appointment of the independent validation body? Those are all questions well within the scope of the Minister, and I expect a reply at the end of the debate.

Finally, exactly what role and process do the Government now envisage for the RPC in relation to the Brexit process—not just in terms of the transposition of EU regulations but in terms of the generation of new regulations as a result of the negotiations or beyond? Are we to understand that this scrap of a body that will be left is to be charged with this crucial part of our future, or will more changes, of which we have not been informed, be sprung on us? When I heard about these changes, I found it very hard to believe that even this Government would make them without informing their eyes in business—the people who have to implement them—and this House.

I have mentioned Brexit and the chilling effect it is having across government. It is also a potential means of evasion and excuse and of doing things that might go unnoticed. We must be exceptionally alert to this. The RPC has been entirely dignified and silent about its treatment. This is no way to treat good public servants whose only concern is for good public policy. We ought to be able to look for a regulatory system which is robust but is also concerned with the social—not just business—impacts, and which is statutorily based and protected, and championed by a leading Minister.

This is not a personal agenda; these are issues of enormous interest across the House and outside, and I look forward very much to the Minister’s response.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I join the noble Lord, Lord Mendelsohn, and other noble Lords in offering my congratulations to my noble friend on securing this debate. As others have made clear, she brings much experience to this field, having served as a civil servant on the better regulation unit with our noble friend Lord Heseltine, in the private sector and as a Minister. I welcome this opportunity to discuss a topic that continues to be a high priority for the Government. It is one in which my noble friend has a long interest.

I am new to this subject but I am grateful for the accreditation that I got from the noble Baroness, Lady Donaghy, who described me as “a gentle soul”—at least I think those were the words she used. She tells me she said “a gentle creature; “soul” is probably too generous a word. As a gentle creature, I hope that I can at least bring the appropriate steel to these matters where necessary. I stress that I am new to the better regulation portfolio. I have yet to meet Anthony Browne, the incoming chair of the Regulatory Policy Committee, but I hope to do so shortly—possibly next week, depending on his and my diary commitments. However, I certainly pay tribute to the outgoing chair, Michael Gibbons, who has done an excellent job for the committee since its inception in 2009. He has completed two stints, serving for eight years, and I and the rest of the Government pay tribute to him for that.

I also completely understand that regulatory reform has become a much more sensitive and emotive issue in the light of the Grenfell tragedy. In due course we will certainly want to reflect on the current inquiries, but at this stage I do not want to say anything that might pre-empt or second-guess what might come out of them. We obviously await the outcome with concern and interest, but at this stage the Government are looking anew at regulation and considering in this Parliament what the better regulation framework should look like.

I also make it clear that our regulatory reform agenda does not come at the cost of people’s safety, and nor would it ever do so. Our aim is to deliver smart, proportionate and balanced regulation, while ensuring that essential protections are retained. The noble Lord, Lord Whitty, preferred the word “proportionate”; my noble friend used the word “balanced”. I agree that words are important but I believe that both “balanced” and “proportionate” can be used. It is important to make it clear that we want to have the appropriate regulation while ensuring, as I said, that essential protections are retained. Regulation should also be proportionate to achieve the outcome required and at an appropriate cost to the business that bears it; this provides an environment that supports the generation of growth, competitiveness and jobs, as my noble friend alluded to.

It is also appropriate that we make it clear that we will decide in due course, in this Parliament, how the better regulation system will operate. The noble Lord, Lord Haskel, referred to the work of the Secondary Legislation Scrutiny Committee, an important committee that does very useful work in this field. My first experience of any committee was the Joint Committee on Statutory Instruments. I think the noble Lord has also served on it and, as he will remember, it had no role in looking at the merits of secondary legislation; it could look only at its vires and so on. In that sense, it sometimes felt like an outer Siberia of committees. The Secondary Legislation Scrutiny Committee has a more effective role in this area. We would certainly want to make sure that not just that committee, but Parliament as a whole, has a proper role to play. However, I think the Government can provide the appropriate assurance that this will not be achieved through reducing necessary public protection.

As we consider how the better regulation system will operate, we will continue to discuss these matters. We have discussed them before and will continue to do so with others in due course. I give an assurance to the noble Baroness, Lady Andrews, that we have discussed such changes with various business groups, despite what she said. Officials have met the key business groups over the last two months. Only last week I attended a meeting with the FSB, the CBI, the EEF and the IoD, and I understand that the de minimis rule was mentioned following recent conversations. I seek to reassure business that any changes that we allow will also allow closer scrutiny of the most important measures.

[Baroness Andrews]

The Minister has answered my question in part, but does that mean he will reconsider establishing a call-in process? Business is most concerned that these measures will fall under the barrier of £5 million and will not be looked at.

[Lord Henley]

Final decisions have not been made; the noble Baroness will have to be patient in these matters. She referred to a letter from me to colleagues in government, but obviously we will not comment on leaked documents.

[Baroness Andrews]

My Lords, the letter came to me in good faith by mistake. It was not a leaked document.

[Lord Henley]

I do not know how the noble Baroness received it, but she will be aware that it was an internal letter from me to colleagues within government. As far as I am concerned, that amounts to a leaked document.