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Legislative and Regulatory Reform Bill

9th February 2006

This has been a very interesting debate and the value and weight of the contributions, from all parts of the House, has been significant.

5.8 pm

Mr. Jonathan Djanogly (Huntingdon) (Con): This has been a very interesting debate and the value and weight of the contributions, from all parts of the House, has been significant. I hope that, as a result, the Minister has had a taste of where Members are coming from on this Bill. The ability to deliver more regulatory reforms quickly and efficiently should be good news for business. Given that more than 3,800 new regulations are created every year, British business needs some good news. According to the Cabinet Office, since 2001 27 regulatory reform orders have been made. As my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) and my right hon. Friend the Member for Wokingham (Mr. Redwood) said, this does not seem a particularly large number of RROs given their impact, nor given the thousands of regulations that have been created since then. Indeed, the Government anticipated that 60 RROs would be made when the original Bill was going through Parliament in 2001.

The Conservative party has argued consistently and strenuously for serious deregulatory policies, and we agree with the concerns expressed by the director general of the CBI, who said that British business had a £30-billion millstone around its neck. The burden of regulation was a subject expanded on strongly by my hon. Friends the Members for Christchurch (Mr. Chope) and for Harwich (Mr. Carswell). The hon. Member for Somerton and Frome (Mr. Heath), and even some Labour Back-Benchers, such as the hon. Member for North-West Leicestershire (David Taylor), also recognised the size of the problem.

Productivity underpins strong economic performance and sustained increases in living standards. According to the Federation of Small Businesses, the people who run small businesses are forced to spend 200 per cent. longer on managing regulation-or up to 10 hours extra a week-under Labour.

We over-regulate at our peril. The hon. Member for Cannock Chase (Dr. Wright) took that further, and said that too much legislation can, by itself, lead to bad law and weak scrutiny of law.

Mr. Redwood: Was my hon. Friend stunned, as I was, by the Minister's proposition that we could have 1 per cent. per annum more growth if we took deregulation seriously? That would amount to more than £10 billion extra being added to our national income, out of which an extra £4 billion could be devoted to public services. Would that not be good news?

Mr. Djanogly: It would be superb news for Great Britain plc. However, given that the Minister said that, one has to wonder why the Government have not taken the matter seriously up to now.

The Hampton review found that there are some 63 national regulators, which perform at least 600,000 inspections and send 2.5 million forms to businesses each year. We over-regulate when we do not understand or trust business. The Conservative party believes that businesses and markets have responsibilities to staff, customers and to wider society. However, we also believe that we must trust business and business people enough to allow them to flourish and provide the growth and prosperity that our society depends on to protect and enhance our way of life.

Rob Marris: I caution the hon. Gentleman about trusting business. By 2010, 10,000 people each year will die from asbestos-related diseases because some idiots-a lot of them members of the Conservative party-trusted business about the use of asbestos.

Mr. Djanogly: The intellectual paucity of that remark is such that I shall not even respond to it.

After much talk on deregulation, the Government must deliver, and companies must see that delivery and start to feel tangible benefits for their businesses and the economy. In his opening remarks, the Minister said that the Bill aims to deliver better regulation, but my right hon. Friend the Member for Wokingham was right to ask how it could do so when it contains nothing that relates directly to deregulation.

We remain concerned that the Bill does not do enough to reduce regulation or create the light-touch deregulatory culture in Whitehall that is so needed. In addition, we are worried about the constitutional problems that it raises. That concern was shared by many hon. Members, including the right hon. Member for Swansea, West (Mr. Alan Williams) and the hon. Members for Cannock Chase, for Plymouth, Devonport (Alison Seabeck), for Somerton and Frome and for Cambridge (David Howarth), as well as my hon. Friends the Members for Harwich and for Christchurch, and my right hon. Friend the Member for Wokingham. Indeed, the hon. Member for Cambridge went further and said that the importance of the constitutional issue was such that it should be reviewed and debated on the Floor of the House. We agree, and hope that the Government will make a positive response to that point.

Part 1 of the Bill supersedes the RRO provisions in the Regulatory Reform Act 2001, and gives the Government wide powers to reform legislation and implement recommendations from the Law Commissioners. According to the Regulatory Reform Committee's report published on 31 January-I congratulate the Committee on a thorough piece of work-part 1 is explicitly less focused on regulation than the 2001 Act. There is nothing in the Bill that requires orders to have a deregulatory element. Despite the assurance that the Committee says it needs fully to support the Bill, the so-called safeguards are-according to the report-dwarfed when set against the increased powers that the Bill will provide to Ministers. My hon. Friend the Member for Christchurch elaborated fluently on that theme. I also agree with the comments by the hon. Member for Somerton and Frome that if something looks too good to be true, it probably is. My hon. Friend the Member for Wimbledon (Stephen Hammond), a member of the Committee, made a similar point.

We should be aware of the recommendations of the Committee. In particular, it noted that as a matter of urgency the Cabinet Office should retrospectively assess the estimates, costs and benefits that have previously been submitted to the House for each regulatory reform order, with a view to establishing whether the estimated savings have been realised. Several hon. Members also noted that the breadth of powers granted could be used in areas that are politically sensitive, not least in relation to the use of criminal penalties. That is an issue that will have to be addressed carefully in Committee. The hon. Member for Somerton and Frome said that part 1 is unacceptable as it stands, and we agree.

Part 2 introduces statutory principles of good regulation which are to be used to inform a code of practice to which specified regulations must have regard. Although we welcome that, we have explained today the need to go much further to create the sort of light touch regulation business needs and to address the concerns that my hon. Friend the Member for Wimbledon expressed about super-regulators.

Part 3 relates to legislation emanating from the EU. We have said that we support the idea of making it easier for UK institutions to deal with EU legislation, but-as my right hon. Friend the Member for Wokingham and my hon. Friend the Member for Harwich asked-how will that actually work? As my hon. Friend the Member for North-East Hertfordshire asked, what are the rules and schemes for EU law referred to in the Bill? We need to know.

The Bill has a striking resemblance to parts of other Bills before this House and the other place. Those need to be looked at in context to highlight the growing constitutional trend away from primary legislation. The Company Law Reform Bill and the Government of Wales Bill both include a similar means of introducing orders through forms of delegated legislation. Part 31 of the Company Law Reform Bill is described in its explanatory notes as

"a new power to reform company law by means of a special form of secondary legislation."

It constitutes a significant change to legislation and was described by Lord Freeman on Second Reading in the other place as "a parliamentary outrage". He then quoted the recommendation of the Delegated Powers and Regulatory Reform Committee to strike out part 31. While those observations are in the context of the Company Law Reform Bill, they tackle many of the same questions of delegated legislation that arise in the Bill before us.

The procedure proposed in part 31 of the Company Law Reform Bill is similar, but not identical to that proposed for regulatory reform orders. The document to be laid before Parliament, for example, is broadly the equivalent of the statement that is to be laid under regulatory reform orders. Although there are procedural differences, part 31 orders are comparable to clause 16 super-affirmative resolution procedure regulatory reform orders. Is the Department for Trade and Industry not talking to the Cabinet Office? For instance, the Delegated Powers and Regulatory Reform Committee concluded that the existing regulatory reform order procedure is not suitable for large and controversial measures, such as those that may be the subject of part 31 orders. Will the Minister explain when it will be acceptable to use one or the other order? It is bizarre that the Government should introduce three similar but varying super-statutory instrument regimes at the same time. That could cause confusion and conflicting procedures. How does the Minister reconcile that? I would be grateful if he could write to me explaining the rationale behind that very important issue.

Despite the undeniable crossover between the three sets of orders that come from such legislation, we need significantly to increase accountability in any event, as the right hon. Member for Swansea, West said, so that the Bill can be used to control a huge increase in Executive power. That could include limiting the orders to deregulation matters and then to genuinely minor and uncontroversial matters, with veto provisions either in the Bill or perhaps in Standing Orders-we have yet to debate that-while recognising the complexities that were noted by my hon. Friend the Member for Wimbledon. It could also include increasing the period allowed for parliamentary consideration, or reducing the subjective ministerial aspect of decision making.

As the hon. Member for Cannock Chase said, those powers could include determining whether an order or primary legislation is appropriate in the first place, or whether to use a mandatory majority or unanimous votes in the relevant Select Committees of either or both Houses, as my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) suggested. They could include inserting retrospective scrutiny, as mentioned by the hon. Member for Somerton and Frome. To answer the questions on delivery, quite rightly posed by my right hon. Friend the Member for Wokingham, they could even include creating a body similar to the proposed company law and reporting commission to review law and conduct independent consultation and propose changes likely to be implemented by order. So there will be much to consider in Committee.

Although we acknowledge the Minister's hope to reduce unnecessary red tape and burdens on business, the public sector and voluntary organisations, we want assurances from the Government that that will happen with the Bill. Proper protections are needed in determining whether regulations are necessary in the circumstances, and we remain concerned about the breadth of the order-making powers that the Bill confers. It is vital to review how the Bill will work in practice, which is why we shall request that a sunset clause be inserted. The Bill is of major constitutional significance in changing the way that legislation is processed, taking the onus away from Parliament and directing it to Ministers and Whitehall, so it will be fully reviewed by us in Committee and reconsidered as a whole during its later stages.

5.22 pm

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