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A Better Regulation Executive consultation document

Comments from ACCA
October 2005

Executive Summary

The ACCA welcomes the opportunity to comment on this very important consultation document. The regulatory burden faced by all aspects of the private sector, and indeed the public sector, affects this country’s productivity, flexibility and competitiveness. We accept that a degree of regulation is necessary, and the discussion about what that degree is will continue ad infinitum. Immediately though, the country must ensure that the regulations there are, are as efficient, as manageable and as simple as possible. This is why the ACCA is supportive of the Government’s better regulation agenda.

The consultation document only, really, addresses the extension of the Regulatory Reform Orders (RROs); this is less than half the equation. The Government must make it their priority to ensure that primary legislation is not defective; that primary legislation does not place onerous burdens on the private sector; and that primary legislation takes into account legitimate concerns expressed by stakeholders, particularly small businesses.

It is suggested that the Government should be allowed to amend primary legislation within two years of its implementation. We find this recommendation dangerous. It is surely embarrassing for the legislature if their ability to scrutinise legislation is so effective that the legislation may need amending within two years? This measure will also create problems for businesses, rather than help them. Businesses already have enough trouble keeping up with regulatory changes, why introduce further rapid change?

We do accept that it is necessary to have an effective method of amending primary legislation without losing valuable Parliamentary time. Parliamentary time is increasingly constrained, especially given parliament’s obligations to enact EU-derived legislation and the demands of the Government’s policy agenda. This means that reforms which reduce administrative burden on business will have a low political profile, and so will struggle for attention.

The extended Regulatory Reform Orders (RROs) should not be capable of imposing new burdens in place of existing ones. We would not wish to see reform that leads to any material increase in the amount of new or amended legislation, or in the frequency with which it is brought into force. We suggest that the Government needs to give assurances to Parliament and the business community that no such increases will occur.

The Regulatory Reform Act (RRA) should focus on the needs of those being regulated not the regulators. An informal quota or target should be adopted to ensure that this is the case.

Currently RROs are allowed to remove/reduce the burdens faced by Ministers or Government departments providing that they also reduce burdens faced by a third party. This situation should continue. We would argue, that if a benefit to a third party is not immediately obvious than the proposed regulatory reform order should not necessarily be carried out.

Introducing fast track procedures for RROs should be resisted. The Government seem to be arguing that since there is a lot of defective legislation on the statute books, a point we would not disagree with, so they should be able to amend it without any formal scrutiny. This is a counter-intuitive approach.

On the following pages we reproduce the recommendations put forward in the consultation document and answer specific the questions posed in it.

Burdens, Simplification and Law Commission Proposals

RECOMMENDATION ONE

“Orders under the amended Regulatory Reform Act 2001 (RRA) should be able to amend or repeal primary legislation in order to do one or more of the following three things:

• remove, reduce, re-enact or impose burdens (as now);
• simplify legislation; and/or
• Implement uncontroversial Law Commission recommendations.

We would like this power to be as flexible as possible while still reflecting the safeguards and working within appropriate procedures. We recommend that the simplification and Law Commission powers should not be linked to the removal or reduction of burdens.”

Question – “Do you think it is appropriate that Regulatory Reform Order (RRO) powers should be extended to allow the implementation of simplification measures and uncontroversial Law Commission reports?”

The main focus of RROs should continue to be on removing superfluous burdens and so the definition of burden should be expanded. This is to ensure that any measure which imposes any form of statutory burden on a business should be capable of being revisited if it is considered excessive, obsolete or disproportionate. The exercise of this power should expressly take into account the particular situations of businesses of different sizes. RROs should not be capable of imposing new burdens in place of existing ones.

We sympathise with the comments made regarding the work carried out by the Law Commission. The Commission’s studies are invariably exhaustive pieces of research, which involve extensive consultation. It is to be regretted that many of its reports are shelved for so long that their conclusions and recommendations may become out of date before they are acted upon. Ideally, the Government should manage the flow of material referred to, and received from, the Commission more effectively so as to minimise the potential for reports to be shelved. But provided there was thorough and proper scrutiny of Law Commission bills, both inside and outside Parliament, we would be sympathetic in principle to the idea of incorporating them in any new fast-track procedures.

Simplification goes hand in hand with reducing burdens. However, any definition adopted by the Government must be customer facing, with a focus on making life simpler for individual businesses and reducing the day to day burdens they face. This should not be an exercise in making life simpler for civil servants, whilst keeping the conditions for businesses the same. Although we envisage that most reforms will deliver simplification and burden reduction for both sides.

Question – “Are there other ways in which the powers should be widened in order to enable the delivery of better regulation and law reform measures?”

The focus of the proposals is exclusively on establishing the power to make remedial changes to ‘defective’ legislation which has already been enacted and come into force. There is no attempt in the paper to address the fundamental issue of why so much of our legislation produces the excessive levels of complexity and regulation, that the Government is now minded to counter. This should form any part of any comprehensive attack on over-regulation.

Rather than concentrate solely on remedial action, we suggest that it would be more efficient and satisfactory for the legislative process to address these issues before primary and secondary legislation is passed in the first place. There should be standard tests for proportionality and simplicity, particularly with regard to SMEs, which all new legislation should be required to meet before they are passed by Parliament.

Parliamentary committees responsible for de-regulation should be required to assess new legislation in the light of these tests, and the responsible Minister should be required to append his opinion that any new primary legislation meets them, in the same way as they are required to do currently with respect to human rights legislation.

Question – “Do you agree that the simplification and Law Commission powers should be separate from the burdens element?”

As we said above, we are sympathetic to the comments made with regard the Law Commission reports; it is a waste of time and money for all those involved if reports are simply to be left on the shelf gathering dust as they slide in to obsolescence. Ideally, Law Commission reports that will reform and benefit the UK system of law are dealt with expeditiously. We also accept that problems have arisen from trying to implement Law Commission reports under the existing RRA regulations. It seems logical that the powers should be separated from the burdens element. The same can be said, to a lesser degree, for simplification powers.

It is essential that we do not lose focus of the guiding principle of this proposed measure, which is to increase the flow and scale of regulatory reform. It would be regrettable if the majority of the RROs scrutinized and enacted by Parliament were simply Law Commission reports and other measures that did not improve the regulatory environment for businesses and citizens. We would be interested in the adoption of an informal quota, or a target, for burden reduction to ensure that the reformed RROs are achieving what they set out to do. This would tie in with much of reforms suggested by the BRTF in their report ‘Less is more.’

RECOMMENDATION TWO

“The reference to the need for burdens to affect someone in ‘the carrying on of an activity’ unnecessarily limits the ability to remove burdens that affect persons in a passive capacity or that relate to a one-off action. It should be removed.”

Question – “Do you agree that the reference to activity should be removed?”

The removal of the reference to activity is welcomed by the ACCA, in so much as we want to see a more flexible and effective Regulatory Reform Act. It would be lamentable if removal of this reference lends itself to an adoption of an approach which merely reduces the burdens facing civil servants and not the burdens facing business or the wider society.

RECOMMENDATION THREE

“The block on reforms that only remove or reduce burdens on Ministers or government departments is inconsistent with the Government’s desire to improve the efficiency of public services. It should be removed.”

Question – “Do you agree that the block on reforms that only remove burdens on Ministers or government departments should be removed?”

We do not agree that this reform should take place. The Regulatory Reform Act should focus on the needs of those being regulated not the regulators. We feel that the current definition provides for this. Currently RROs are allowed to remove/reduce the burdens faced by Ministers or Government departments providing that they reduce burdens faced by a third party. This is an acceptable situation.

The consultation document argues that sometimes it is timely and complex to identify a third party which will benefit from regulatory reform and therefore the above reform must be enacted. We would argue, that if a benefit to a third party is not immediately obvious than the proposed regulatory reform order should not necessarily be carried out.

The improvement in the efficiency of public services is of paramount importance to the UK economy. However we are unconvinced that this is the correct mechanism to carry out a drive for public sector efficiency. However if, the Government insists on reforming the RRA to enable this, then they must strengthen the safeguards that allow Parliamentary committees to challenge proposals that would only benefit Government ministers or departments, to the detriment of other interests. We would also argue that the Government should allow professional, representative and sectoral bodies the opportunity to challenge the Government on proposals that are detrimental to both themselves and others interests.

The Simplification Power

RECOMMENDATION FOUR

“Recommendation Two above proposes extending the existing powers in the RRA to include the simplification of legislation. Under this we include:

• the removal of unnecessary or obsolete provisions;
• the consolidation of legislation, i.e. the bringing together of disparate pieces of legislation, to remove overlaps and make the whole more accessible and transparent;
• the clarification of legislation, i.e. resolving doubts and ambiguities about its meaning;
• restating the law with a view to improving transparency, coherence or accessibility; and
• The correction of minor errors and omissions, e.g. failure to make necessary consequential provision.

We would like to allow substantive amendments where it can be demonstrated that they are consensus driven/uncontroversial and meet all the safeguards (see below for analysis of safeguards), and where it would inhibit the overall reforms proposed if substantive change was not allowed.”

Question – “Do you agree that proposed simplification powers should be defined in this way?”

We agree with the definition of simplification above, yet it occurs to ACCA that if the legislation process from the start was more rigorous, considered and effective then there would be no need for the definition to include many of the above conditions.

Aside from the consolidation of existing legislation and the removal of obsolete provisions, all of those defined above should have been resolved during primary legislation procedures. Whilst there should be a mechanism to resolve occasional mistakes and oversights surely they should be the exception and not the rule. We believe it should be the priority of Government to strengthen pre-legislative scrutiny so that they need not revisit legislation in such a way.

Question – “Are there additional examples of simplification which we should include in the scope of the powers?”

We feel that the above fulfils the most likely scenarios, with regard to simplification.

Question – “Do you agree that the simplification power should allow for some substantive amendments to legislation? In what circumstances would substantive change be appropriate?”

Substantive legislative amendments may be necessary, occasionally, in order to improve the regulatory environment for businesses. But the reduced level of scrutiny both amongst Parliamentarians, the media and relevant stakeholders of RROs lends itself to serious concerns. However, a method of producing substantial reforms must be found if regulatory reform orders are to be a success.

We would be inclined to favour a system of extensive and visible consultation for the RROs that require substantive legislative amendments. We would also be inclined to adopt a position where if there is a broad consensus of sentiment for reform, that reform should take place via RROs. If not, the reform should be adopted through primary legislation with the additional scrutiny that will ensue.

Question – “Do you agree that the proposals on simplification should be able to deliver substantive change, if appropriate, where data and information sharing is necessary to remove burdens or simplify and improve processes?”

Modern communications and data sharing have simplified the way businesses and individuals carry out their day to day activities. It seems almost anachronistic that Government is not able to benefit from such efficiencies, particularly those which lead to significant burden reduction for businesses and individuals.

There are sensitivities in this area and we suggest that if this proposal is adopted, it must be incumbent on Government to it make clear to Businesses and individuals the extent to which the data they provide to Government will be shared. We would also stress that the data collected by Government must only be what is necessary for the specified task, if this has additional benefits for other activities than it may be shared.

Question – “Are the safeguards proposed adequate or are there specific data sharing issues that would mean additional safeguards would be necessary?”

The consultation document’s willingness to wait for the completion of the DCAs work on Public Sector Data Sharing, whilst understandable, has led to respondees being asked to make an open ended commitment to the safeguards surrounding data sharing. This is inadequate. We suggest that the Government commits to holding further consultation on the data sharing issues arising from the DCA work as it pertains to RROs.

Common Law Proposal

RECOMMENDATION FIVE

“We recommend that it should be possible by Order to implement uncontroversial Law Commission recommendations, including recommendations for the reform of common law, providing that the usual safeguards are maintained.”

Question – “Do you agree that there should be a power to implement Law Commission recommendations by order and that the power should extend to proposals for the reform of common law?”

The proposal to introduce a fast track procedure to encompass changes to the reform of common law appears to intrude into the responsibilities of the courts. We do not see how it could operate technically.

Safeguard Proposals

RECOMMENDATION SIX

• “We recommend that the current safeguards in the RRA should be carried forward; that these safeguards (with appropriate adjustment) should be common to all three types of Order (burdens, simplification and Law Commission recommendations); and that they should be applied across Orders in their entirety.
• We further recommend that the current requirement to detail the savings or increased costs estimated to result from the proposals should be replaced with a wider reference to the need, where appropriate, to provide an assessment of the significant impacts of proposals.”

Question – “Do you agree that current safeguards should be maintained and applied comprehensively across all three types of Order?”

We are broadly in favour of maintaining the safeguards as they stand. Although as mentioned earlier, if the Government insist on removing the block on RROs that only remove burdens on Ministers or government departments, the Government should strengthen and extend the safeguards that allow Parliamentary committees to challenge proposals that would only benefit Government ministers or departments to the detriment of other interests. We would also argue that the Government should allow professional, representative and sectoral bodies the opportunity to challenge the Government on proposals that are detrimental to both themselves and others interests.

Question – “Do you agree that the requirement to provide an estimate of savings or increased costs should be extended to cover a wider impact assessment where appropriate?”

In general we feel that if a Regulatory Reform Order is worthy of enactment then an estimate of costs or savings should be knowable and therefore included in any extended Regulatory Impact Assessment. This is particularly worthwhile for when the Government adopts the standard cost model, as detailed in the BRTF paper ‘Less is more.’

We also believe it desirable for an extension of the costs/savings estimate to resemble a Regulatory Impact Assessment; this is providing the assessment is of high quality.

The quality of Regulatory Impact Assessments has varied wildly, both across departments and within departments. The ACCA have a number of recommendations which we believe should be adopted in order to improve the quality of regulatory assessments. Our recommendations are as follows:

• There should be compulsory retrospective audits of Regulatory Impact Assessments (RIAs), looking at their accuracy, whether the policy achieved its goals, examining the cost the regulation imposes on small businesses and ascertaining if there were any unintended consequences of the regulations introduced. This is already recommended practice, but the fact is that reviews are rarely undertaken.
  
  
• There continues to be need for a significant improvement in Regulatory Impact Assessments (RIAs). There should be standard tests of proportionality and simplicity (with particular regard for the situation of SMEs) which all new legislation should be required to meet before they are passed by Parliament. The respective Parliamentary committees concerned with de-regulation should be required to assess new legislation in the light of these tests, and the responsible Minister should be required to append his opinion that any new primary legislation meets them.

The above recommendations should be adopted for primary legislation and adopted in amended form for Regulatory Reform Orders.

Two-year Rule Proposal

RECOMMENDATION SEVEN

“We recommend that the two-year rule is removed from the Act.”

Question – “Do you agree that the two-year rule should be removed?”

It is proposed to abolish the current two year rule which prevents RROs being used to change legislation which is less than two years old. We do not agree with this. Allowing laws to be materially changed very soon after being first introduced would create problems for businesses rather than help them. It could also be argued that abolishing the two year rule would be against the real interests of deregulation since Parliament would have fewer motives to ensure that new legislation served the interests of business and the wider society from the outset.

Legislative Sub-delegation Proposal

RECOMMENDATION EIGHT

“We recommend that RROs should be able to provide for full legislative sub-delegation provided that it can be demonstrated that proposals are consistent with the safeguards. This means that RROs would be able to create new secondary legislative powers (for example a power to make regulations) and/or extend existing powers. The department responsible for the Order would in the normal way specify whether regulations, rules or Orders made under such a power should be subject to negative or affirmative resolution.”

Question – “Do you agree that RROs should be able to provide for sub-delegation provided that proposals are subject to the usual safeguards?”

We have no specific comments to make on this question.

Parliamentary Scrutiny

Question – “Is it desirable that all RROs should receive the same level of scrutiny, regardless of size or complexity?”

Effective scrutiny, and scrutiny which provides the opportunity for relevant stakeholders to voice their opinion, should continue to be the guiding principal of RROs. However, we have some sympathy with the difficulties that arise from the fact that relatively simple orders must go through the same process as the more complex orders. But we don’t believe this means we should abandon the effective scrutiny of the more simple orders.

We believe that it should be possible for the Regulatory Reform Committee and the Delegated Powers and Regulatory Reform Committee to request more time in order to scrutinise a complex RRO, this would not amount to unlimited power to stall an RRO but would be limited to an appropriate time frame, perhaps one 15 day extension for each stage.

Question – “Is the super-affirmative procedure necessary for all Orders, or could some be delivered by the faster procedures for ordinary statutory instruments?”

We would rather that all RROs go through the super-affirmative procedure, and would be unwilling to accept the principal whereby wide ranging powers may pass by statutory instrument without effective scrutiny.

Question – “If so, could you give examples of the type of proposal that you would like to see delivered by the faster route?”

We would rather no proposal went via the faster route.

Question – “If some proposals were delivered by faster procedures, how would the effectiveness of consultation and the protection of safeguards be maintained? Would it be enough for the explanatory statement laid with Orders to detail (as now) the results of consultation and any changes made as a result of it, and to analyse proposals against the current safeguards?”

We do not believe that safeguards or effective scrutiny will be maintained if RROs are delivered by faster methods and this is why we can not be in favour of RROs being delivered by SI.

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