Enterprise Bill [HL]

Lord Curry of Kirkharle Excerpts

Wednesday 25th November 2015 Lords Chamber

So I do not share the scepticism which lies behind Amendment 38: the belief that the new duties might in any way undermine a regulator’s abilities. But even if one accepts that a review might from time to time be necessary, I do not think that the RPC is the right body to carry it out.

[Lord Curry of Kirkharle (CB)]

My Lords, I remind the House once again that I chair the Better Regulation Executive and clearly have an interest in this subject. I compliment the noble Lord, Lord Mendelsohn, on his eloquent speech, because we—the BRE—absolutely agree with the tenor of what he said. I shall comment on Amendment 17.

At the beginning of the coalition Parliament, when the BRE embarked on the one-in, one-out process, as your Lordships will be aware, we reported every six months on our progress. Initially, we did not include the impact of EU regulation in that six-monthly reporting process. It was precisely because we became very concerned that we were potentially misleading the business community by not highlighting the impact that EU regulation was having on it that we then, part-way through that process, declared through the RPC’s reporting mechanisms the cost as we understood it of EU regulation and its impact on the business community. Yes, the cost of EU regulation in the previous Parliament largely equated to the savings that we achieved through our domestic one-in, two-out process, but the reason for our declaring that through the RPC is precisely why the noble Lord raised the subject this evening: because we did not want to mislead the business community.

Our policy has been to work in Brussels to try to encourage the same transparency and to apply the same principles there of setting a regulatory budget. We encourage the Commission, the Parliament and the Council to adopt the same policies as we have adopted here, and to work with other member states, seeking their support through agreement to sign up to these principles. We have made significant progress there, although it has to be said that we have not quite achieved that budgetary process yet. But in our view, that is where we should now target our resources to address the cost of EU regulation.

[Baroness Neville-Rolfe]

My Lords, I start by associating myself with the comments of the noble Lord, Lord Mendelsohn, about the noble Lord, Lord Stevenson. I am so glad to see him back and on the road to recovery.

This part of the Bill is about transparency and accountability, and about asking regulators to assess the impact of their work for the business impact target and to report on the effect of the Regulators’ Code and the growth duty.

I was glad that my noble friend Lord Lindsay was able to bring his great knowledge of regulation and of being a regulator to this debate. Of course, the RPC assesses the impact of EU regulation, as we discussed in Committee, but this is not taken into account in checking against the business impact target. We agree that the cost to business of EU legislation should be transparent, but the SBEE Act already achieves that. I cannot agree that those costs should now automatically be added to the target.

As a Government, we are rightly held accountable for the impact of our regulation on business. We should therefore focus the target on the measures that we are wholly in control of, not on EU regulation. That needs to be dealt with at source. As the Prime Minister’s recent letter to Donald Tusk made clear, the Government will continue to press the Commission to introduce a target to cut the total burden on business. This could include stock as well. The European Council and Parliament have already made similar calls on the Commission for burden-reduction targets, so this is under active discussion.

Amendment 18 provides for publication of guidance regarding qualifying regulatory provisions—measures which will score in the business impact target—but Section 21 of the SBEE Act already requires the Government to publish their determination of qualifying regulatory provisions and the methodology for assessing their economic impact.

The noble Lord, Lord Mendelsohn, said that Amendment 18 required a review of the stock of regulation. That is not how we read it, but I do not think that that matters for today’s purpose. The Government agree that the stock of regulation should be reviewed regularly. In the previous Parliament, Red Tape Challenge reviewed thousands of regulations, and our new programme of Cutting Red Tape reviews is continuing that work.

We will publish information regarding the operation of the target soon. I think that we have to do it by May, but I am hopeful that we will do it a long time before that. These documents will be laid before Parliament, which can debate them if it chooses to do so. The SBEE Act already requires annual publication of a list of all provisions outside the target, and the Bill will add to that a summary of other regulatory activity outside the target.

Turning to Amendment 38, I note that the duties in this part are aimed at ensuring that regulators are open and transparent about the impact that they have on the businesses that they regulate. This enables them to be properly held to account. I understand the concern about the impact of these measures on regulators’ capability and capacity. We agree that these duties should operate proportionately; we do not, of course, want to overburden regulators or, indeed, the RPC. I agree with my noble friend Lord Lindsay that the RPC’s involvement could actually help to make the job easier because of the good systems that it has developed, the way that it approaches analysis and the way that that can be spread across the public sector.

Our initial impact assessment suggests that the transparency obligations that we are introducing here will cost less than £1.5 million across all 65 regulators. That is less than 0.1% of their total budget for regulatory activity. Of course, if our implementation were to lead to disproportionate cost, we would look at the approach again. I am absolutely sure that the costs of transparency will be more than outweighed by the benefit. The discipline of assessing impact will encourage regulators to look at different options, including non-regulatory approaches and sharper targeting. They will be prompted to think harder about whether regulation is necessary.

Let me give an example. In 2013, the Environment Agency very sensibly voluntarily assessed the impact of a proposed measure on hydro power. When the agency board saw its own assessment, it concluded that the costs did not justify the benefits and withdrew the proposal, eventually bringing one forward that was much better. It was a benefit to both the businesses and the agency.

Reporting will encourage proper application of the Regulators’ Code. Section 2.2 of the code asks regulators to engage with business. Doing so could help regulators to find ways of regulating that are more effective and require less enforcement.

I understand concerns about costs; I always share them, but we are trying to keep those to a minimum and I am sure that the benefits will be considerable. I hope I have reassured the House that the transparency we seek is already provided for, and that the Government intend the duties to operate in a proportionate manner. The House has noted our plans for the business impact target and to publish more detail on that. I hope, in the circumstances, that the noble Lord will feel able to withdraw his amendment.

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Moved by

[Lord Curry of Kirkharle]

39: After Clause 16, insert the following new Clause—
“Secondary legislation: duty to review
In section 30 of the Small Business, Enterprise and Employment Act 2015 (meaning of “provision for review” in section 28(2)(a) of that Act), in subsection (3)—(a) after “must” insert “so far as is reasonable”, and(b) omit third “the”.”

[Lord Curry of Kirkharle]

My Lords, I am moving a small, technical amendment to correct a drafting error in the Small Business, Enterprise and Employment Act 2015. This came to light as departments included the statutory review clause for legislation being introduced in this Session.

An important and often overlooked part of the better regulation agenda is reviewing legislation that impacts on business on a regular basis to see if it is working, is cost effective and continues to be needed. That is a really important principle. The Small Business, Enterprise and Employment Act strengthened the previous system of reviews through a statutory duty requiring Ministers to include a provision in secondary legislation to review the legislation. Where this is not considered appropriate, Ministers need to publish a statement. Once the legislation is in force, the Minister must carry out a review of the legislation within five years. These reviews are published as a report. They look at the legislation to see if it has worked, continues to be needed and is cost effective. Recommendations will be made around keeping the legislation as it is, repealing it or amending it to make it more cost effective and less burdensome to business.

This duty applies both to domestic and EU-derived legislation. For EU-derived legislation there is a requirement to look at how other EU member states implemented the directive to ensure that how it is implemented in the UK does not put British business at a competitive disadvantage. As part of that exercise, it is clearly sensible for the comparative process to embrace other member states which are most relevant from a UK perspective, bearing in mind the nature of the activity subject to regulation. For example, in many cases there may be more to be learnt from member states that have a broadly similar institutional and regulatory structure to us in the UK, or where the scale of activity is comparable to that found here.

My amendment helps achieve that outcome by correcting a drafting error. The Act introduces a “the” in front of “other member states” in Section 30, where it says,

“have regard to how the obligation is implemented in the other Member States”.

This unfortunately implies that in their reviews, departments must look at all the other EU member states. Clearly, that would be very burdensome and was never the intention. I therefore propose to remove “the” and add “so far as is reasonable” to the requirement to ensure that departments are able to carry out their reviews in a proportionate way and are not open to judicial challenge. I thank noble Lords, hope the amendment will be supported and beg to move.

[Baroness Neville-Rolfe]

My Lords, I am glad to be able to take this opportunity to thank the noble Lord, Lord Curry, for his great work on deregulation. “Intelligent regulation” was the phrase used by the noble Lord, Lord Mendelsohn, and that applies here. I also associate myself with earlier comments that he made about the Better Regulation Executive, which is the dynamite behind the Red Tape Challenge.

I thank the noble Lord for proposing this amendment. It is supported by the Government. The principle that new regulation should be kept under regular review is widely supported, but I accept the noble Lord’s argument that it is important that these reviews are carried out in a proportionate manner. In the case of EU measures, that must mean focusing the comparison on those other member states most relevant from our perspective.