Better Regulation

Lord Henley Excerpts

Thursday 7th December 2017 Lords Chamber

[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.

[Lord Haskel]

I can shed a little light on the subject. The letter was from the Minister to the Public Accounts Committee in another place.

[Lord Henley]

I think the noble Lord is referring to another letter. The postal service has been quite busy. I will come to the comments of the Public Accounts Committee in due course. I am referring to what amounts to a leaked document.

[Lord Stunell]

The Minister talks about coming back to this in due course, but I understand that the new regime is in place now. Is there a hiatus between the new regime and him coming back to consider matters?

[Lord Henley]

The noble Lord is correct that the new regime is in place, but that does not mean that all proposals are finalised; these matters can always be considered in the light of representations made, even by the noble Lord. He and I were in the coalition Government together; we worked together in the past. I am sure we can take account of comments made here, and I would be more than happy to listen to him.

I want to make it clear—not commenting on leaked documents—that our proposals actually increase scrutiny by bringing significant deregulation measures into scope. They focus the system on measures with large impacts. This brings me to the Public Accounts Committee, whose recommendations it is worth commenting on. The 2016 report said:

“The Better Regulation Executive’s rules for assessing and validating the expected impact of a regulation are the same, regardless of the scale of the regulation’s impact. The Better Regulation Executive … has established a complex bureaucracy across Whitehall that diverts departments’ resources away from potentially more productive efforts … Of the 95 regulations that the Regulatory Policy Committee has scrutinised during this Parliament, 64 of them have an individual expected net impact of less than £5 million”.


The committee then recommended that we should change the rules to allow a more proportionate approach whereby significantly more effort can be applied to the assessment and validation of the small number of regulations with the greatest impact. That is what we are doing with the de minimis rule.

That is why we took this action and why I wrote to the Public Accounts Committee only last month to inform it that we intended to follow its recommendations and adopt a more proportionate and efficient better regulation system by introducing that threshold. Obviously, we can always reconsider those matters, but that is why I wrote. It will allow the RPC to focus on the measures that matter most. If it had been in force in the last Parliament, 90% of the costs would still be subject to independent scrutiny.

It is only right that regulation should be kept under constant review as products and technology change. Where regulatory requirements are not clear or easily understood, it can lead to confusion and potentially an increased risk to the public. Over the last 20 years, Governments have been working on getting the delicate balance or proportionality right and the costs and benefits of regulation right. That has included the establishment of the Regulatory Policy Committee, as I mentioned earlier, which gives independent scrutiny of the evidence for regulatory changes when they are debated in Parliament.

There were previous government initiatives to review the stock of legislation. Going back to the beginning of the coalition Government, which the noble Lords, Lord Stoneham and Lord Stunnell, will remember, there were the Red Tape Challenge and the cutting red tape reviews. The noble Lord, Lord Stunnell, took credit for introducing the one-in, one-out measure, which I think he accepted served a useful purpose in encouraging the process, even if another noble Lord—I think it was the noble Lord, Lord Whitty—did not like the idea and said that it led to getting rid of something purely for the sake of it. But it encouraged the others and served a useful purpose.

Those reviews sought views from the public to help identify outdated, unnecessary or overly complex legislation and led in due course, as both noble Lords and others will remember, to the Small Business, Enterprise and Employment Act 2015. My noble friend will remember that because she took the legislation through the House. It introduced a requirement for the Government to set a business impact target, focused on the economic impact of regulatory change on business activities, and the need to report annually on its achievements against that target.

These initiatives have delivered some real improvements in how people, businesses and public bodies are regulated, and have also encouraged a cultural shift in government departments towards more appropriate and smarter regulation. The one-in, one-out or one-in, two-out proposals played a part in that. For example, my own department’s business perceptions survey last year showed a decline in the proportion of businesses that believed that the overall level of regulation in the UK was an obstacle to their success. It went down to 49% in 2016, from 62% in 2009.

As I said earlier, the Public Accounts Committee produced a number of recommendations about how we can further improve our regulation system, following the report from the National Audit Office last year. We have been reflecting on those conclusions, including ideas about how to make our approach more proportionate.

[Lord Mendelsohn]

Will the Minister clarify the changes to the RPC that are in effect? Is he suggesting that the change to the regime is more permissive, less permissive or exactly the same as what stood before? To be clear on the purpose, is he saying that the changes were directly as a result of those suggestions from other committees? Were some of the changes requested by departments to have freedom and flexibility, or were they in any way related to the pressures in the system as a result of the EU exit?

[Lord Henley]

My Lords, I do not accept that the EU exit has led to those changes. I said that the Public Accounts Committee had made some recommendations. We considered those and brought in the de minimis rule. We are not bound to keep that. We could change it if necessary, but it gives the RPC a freer hand in what it does and allows it to focus its efforts more appropriately on the job that it does very well.

I can also give an assurance, since there was some criticism of our attitude to the RPC, that we are still committed to it and its work. We are making sure that it has the appropriate number of members. It currently has eight members and it will continue to have eight members. Announcements will be made in due course as to whether some members have been reappointed, or where necessary new members will be brought in, so that it can continue to do its work.

I am beginning to run out of time and I do not want to deprive my noble friend of the chance to say a few words at the end of the debate. However, I should like to deal with one or two of the other questions that have been raised.

I think I have more or less touched on it, but the noble Lord, Lord Haskel, referred to the letter from my noble friend Lord Trefgarne, the chair of his committee, about the threshold. We acknowledge the good work of the committee and I am aware of the letter from my noble friend. I think that it was received in the department on 28 November and I intend to respond to it shortly. I can reassure the noble Lord that the department will continue to provide appropriate analysis of its policies to the committee.

Perhaps I may also give an assurance to my noble friend Lord Altmann on pensions auto-enrolment. As a former member of the Department for Work and Pensions, where I have also served, she will know that auto-enrolment has been a great success. Some 8 million people have now enrolled and the Government are conducting a review to build on this success and make sure that the programme works in the long term. The review will be led by the Department for Work and Pensions supported by an external advisory body. I am told that it will report by the end of 2017, so my noble friend does not have to wait for long because that really does mean pretty soon.

Concern was expressed by my noble friend Lady Neville-Rolfe and the noble Baroness, Lady Andrews, about the RPC’s processing not applying to tax or the national minimum wage. I can give them an assurance that HMRC has a separate body, known as the Administrative Burdens Advisory Body, to consider reducing the burden of tax administration, so there is a role for it which provides scrutiny.

Lastly, the noble Lord, Lord Stoneham, was concerned about what plans we have for EU exit. This is a concern that comes up in every Question and debate in the House. We have made it quite clear that the withdrawal Bill will be designed to ensure that EU exit will take place with certainty and that we maintain continuity and control. The Bill will help to maximise certainty for business on what regulation will apply on exit and to maintain important protections for consumers.

As always, I apologise for the fact that I have not been able to address every point that has been put before me, but again as always I promise to write to noble Lords on any issues that I have not addressed. I end by thanking my noble friend once more for introducing this debate.