Legislative and Regulatory Reform Bill

Public Bill Committee, 9 March 2006.

Legislative and Regulatory Reform Bill - Standing Committee A

Clause 19 - principles

Oliver Heald (Conservative, North East Hertfordshire)

Clause 19 takes us into a different area. Conservative Members welcomed the decision in the 2004 budget to ask Philip Hampton to consider the scope for reducing administrative burdens, and particularly to focus on efficiency, regulatory inspections and enforcement. The central tenet in the Hampton report was that excellence in regulation requires entrenchment of the principle of risk assessment. He pointed to the need for better focused inspection activity, more use of advice for business, a reduction in form-filling requirements and more consistent penalties. Philip Hampton rightly praised—as we should—the independence and integrity of British regulators.

One of Philip Hampton’s principal recommendations was that regulators should follow what he described as the principles of regulatory enforcement. He produced a practical list that is easy to understand, that anyone can follow and that is useful to business. I intend to probe the Minister about why the Government did not adopt his list. It covers 10 or 11 points, such as that regulators and the regulatory system as a whole should use complex risk assessment to concentrate resources on the areas that need them most. The whole idea of risk assessment is now well understood in industry and among regulators. As for ensuring accountability, he said that regulators should be accountable and that all regulations should be written so that they are easily understood, implemented and enforced. He said that there should be no inspection without a reason, that businesses should not have to give unnecessary information nor the same information twice, that regulators should provide authoritative accessible advice easily and cheaply, and so on.

The wording under clause 19(2) is much abbreviated from those recommendations. It is vague and woolly in comparison with that detailed checklist. For example, there is no reference to the comprehensive risk assessment nor to accountability. It is arguable that the subsection breaches Hampton’s third principle, which was that regulations should be easily understood, easily implemented and easily enforced.

I understand that the Government’s better regulation commission came up with five principles of good regulation that are based on Hampton’s review. They are set out under subsection (2)(a) and (b). Will the Minister explain why those five principles are recommended under the Bill rather than those contained in the practical list suggested by Philip Hampton and tell us what subsection (3) is about? It is probably designed to exempt the Financial Services Authority from having to follow good regulatory practice. The Association of British Insurers says that it is often supportive of the FSA’s approach, but that there have been occasions when its decisions have not been consistent with the principles of good regulation. It gives the example of detailed rules applying to the sale of general insurance products, such as motor insurance, which it says are disproportionate for highly competitive markets. Although the ABI supports clause 19, in general, it says that subsection (3) may have the effect to some extent of letting the FSA off. I should be grateful if the Minister could tell us whether that is the Government’s intention and, if so, explain why. Is it the Chancellor’s wish or does the law require it?

In his report, Philip Hampton included many other recommendations beyond the application of the principles of regulatory enforcement—for example, that penalties should be based on risk assessment; that the resources released from risk-based assessment should be spent on advice services for business; that there should be consultation about forms; that each time a form is produced, regulators should state how long it would take to complete it; that there should be improved data-sharing between regulators to avoid constantly having to give the same information over and again; that there should be no updates of IT by regulators without scrutiny to ensure that they are not doing incompatible things; that regulatory impact assessments should include practicability of enforcement; and a lot of other recommendations that I shall not read out.

The Hampton report is probably being implemented in three ways: through clause 19, through the code in clause 20 and by upgrading the enforcement concordat, which is the voluntary code that came from local authorities. It was designed to encourage business-friendly enforcement by them, and is a well developed procedure.

Will the Minister put the clause into the context of the three strands, and explain where we should expect Hampton’s recommendations to be found and why he has gone for the five principles rather than the longer but more practical list produced by Philip Hampton?

David Heath (Liberal Democrat, Somerton and Frome)

Good morning, Mr. Caton. As the hon. Member for North-East Hertfordshire (Mr. Heald) said, we are now moving to a part of the Bill on which there is likely to be more consensus than there was on part 1. Indeed, if the Bill consisted only of parts 2 and 3, it would be considered uncontroversial or as something that might have gone through on a statutory instrument, rather than with the examination of the House.

Without wishing to repeat the points made by the hon. Member for North-East Hertfordshire—that would be entirely otiose—I support his contention that there is something extremely odd about subsection (3). A clear duty is laid out in subsections (1) and (2), but it is not expressed in detail; it is very general. It would be hard to argue that the regulator should act in a way that is not transparent, accountable, proportionate and consistent, and it would be hard to suggest that a regulator should target its activities at cases for which action is not needed.

Why do we need an exclusion and exemption that apparently allows some unknown regulator to have a requirement that falls outside those very general and benign categories? That does not make sense, unless there is a specific case that the Minister can tell us about to explain why that exemption is needed. Even then, he would need to persuade us that we should give licence to the Government to give a regulator powers that fall outside the very broad principles encapsulated in subsection (2).

Oliver Heald (Conservative, North East Hertfordshire)

Does the hon. Gentleman agree that quite a number of regulators are set up with statutes that include all sorts of requirements? One of the hopes that clause 19 gives us is that it will lead to regulators acting consistently and in accordance with those promises. If, simply because a statute states that they have to do a particular thing, that does not apply, that will run a coach and horses through the provision. We are talking about the big regulators.

David Heath (Liberal Democrat, Somerton and Frome)

I agree entirely. If we are to set out principles on which we agree, we cannot trim them to meet the statute; if it falls outside them, the statute must be altered to meet the principle, otherwise the Bill and the clause are pointless. I hope that the Minister will explain subsection (3). To save time, I should say that there is a similar provision in subsection (3) of the following clause, and I would not wish us to have exactly the same debate twice. That subsection, again, contains the exception that another requirement may require the regulatory function to fall outside the code of conduct, which, of course, derives from the principles in clause 19.

If we are to have a code of conduct, we cannot have a particular regulator saying, “I read your code of conduct but I am required to act in this untransparent, unaccountable, disproportionate and inconsistent way because the Minister who set up the regulatory function chose to couch our requirements in that way”. The Minister must address that issue. I hope that I have not strayed too far into the next clause stand part debate in suggesting that consolidating the two debates might help the Committee.

Christopher Chope (Conservative, Christchurch)

I would like to follow the same theme as the two hon. Members who have spoken. For the benefit of those who have not read the Hampton report from cover to cover—I plead guilty to that—page 40 of the Library research paper contains a box that sets out Hampton’s principles of inspection and enforcement. As those principles are important and are the result of a detailed review that the Government say was spot on, I expected them to be included in clause 19, but they are not. Will the Minister explain why each recommendation of the Hampton report is not included in the principles set out under clause 19(2)?

The first principle in the Hampton review states:

“Regulators, and the regulatory system as a whole, should use comprehensive risk assessment to concentrate resources on the areas that need them most”.

Why is there no reference to the need to use comprehensive risk assessment in the clause? Why does the only reference in clause 19 to need not include reference to what is needed most? There could be masses of needs, but the essence of Hampton’s recommendations is that there should be prioritisation.

The Parliamentary Under-Secretary of State for the Cabinet Office (Mr. Jim Murphy) indicated assent.

Christopher Chope (Conservative, Christchurch)

I am pleased to see that the Minister is agreeing with that. I hope that he will agree to bring forward on Report a broader version of clause 19 that would include all the principles set out in the Hampton review.

The second of Hampton’s principles states:

“Regulators should be accountable for the efficiency and effectiveness of their activities, while remaining independent in the decisions they take”.

There is no reference to efficiency and effectiveness in the clause. Why is that the case?

The next recommendation stated:

“All regulations should be written so that they are easily understood, easily implemented, and easily enforced, and all interested parties should be consulted when they are being drafted”.

Again, that is not replicated in the clause, nor is Hampton’s next requirement:

“No inspection should take place without a reason”.

That is an important safeguard for those who feel oppressed by the weight of regulation and regulatory enforcement bodies. Effectively, Hampton is recommending that, unless there is a good reason, no business organisation should be subject to a knock on the door in the middle of the night or, indeed, in the middle of the working day, when it could cause much disruption.

Hampton also stated:

“Businesses should not have to give unnecessary information, nor give the same piece of information twice”.

I am sure that all members of the Committee would sign up to that. Why is that safeguard not included in the clause?

The review went on to recommend:

“The few businesses that persistently break regulations should be identified quickly, and face proportionate and meaningful sanctions”.

Although the word “proportionate” is included in clause 19(2)(a), it is not qualified or explained in accordance with what Hampton had in mind:

“Regulators should provide authoritative, accessible advice easily and cheaply”.

There is no requirement on regulators to do so in clause 19.

The Hampton review then said:

“When new policies are being developed, explicit consideration should be given to how they can be enforced using existing systems and data to minimise the administrative burden imposed”.

That is not reflected in the drafting of clause 19, nor is the requirement that

“regulators should be of the right size and scope”

and that

“no new regulator should be created where an existing one can do the work”.

The last of the principles set out in a helpful box on page 40 of the Library research paper is:

“Regulators should recognise that a key element of their activity will be to allow, or even encourage, economic progress and only to intervene when there is a clear case for protection.”

I should have thought that that was the most fundamental of all.

The overarching justification that the Chancellor of the Exchequer articulated when he set up the review and accepted its recommendations was that regulation should not stand in the way of economic progress; regulatory activities should be carried out in a way that encourages and facilitates economic progress. One might link the omission of that requirement or safeguard from clause 19 with something that the Minister said in response to an intervention during an earlier debate in Committee proceedings. He said that the Government had it in mind to introduce minimum penalties for health and safety breaches.

When I had the privilege to serve on the Health and Safety Commission, its ethos and that of the Health and Safety Executive centred on prevention rather than interference and intimidation. When health and safety inspectors made their regular visits to premises, they would often give friendly advice to the management of those businesses. They would not go there with the objective of raising enough money to pay their salaries and imposing a lot of penalties.

It is fair to say that even this august organisation probably has areas with which a health and safety inspector could find fault. If he were required by the Government to impose a minimum penalty every time he found fault, the bill could rise significantly. The Government have admitted that they might bring in minimum penalties for health and safety breaches, removing the discretion of health and safety inspectors. Coupled with the failure to incorporate into the Bill the important safeguard that regulators should recognise that a key element of their activity is to allow or even encourage economic progress, that causes a lot of suspicion—on my part at least.

Some of us argued during debate on part 1 of the Bill that the Government’s wider ambitions did not concern improving the effectiveness of our economy so much as enabling Ministers to get off early at the end of the working week. The absence of key recommendations from the Hampton review from clause 19 bears out our concerns.

I hope that when the Minister responds on clause 19, he will explain why clause 19 does not apply to all the regulatory functions set out in clause 22(5). If the Hampton principles are so valid and important, why are they not to apply to organisations such as the Office of Rail Regulation? You, Mr. Caton, may have seen a report in the press this week saying that the Office of Rail Regulation imposed a penalty of £250,000 on Network Rail for technical breaches involving a failure to update redundant records. The records were handed over and had been replaced, but apparently because the old records were still there, there was an obligation to keep them up to date. It is accepted that it was a technical, rather than a substantive, breach—in other words, just the sort of breach that Hampton would have said should not be subject to regulatory enforcement or result in regulatory penalties. But what happened? A fine of £250,000 was imposed by the Office of Rail Regulation. That is effectively a fine of £250,000 on the travelling public, because it will inevitably end up in the fare box, together with all the costs—from both sides—resulting from Network Rail fighting against that judgment.

This is an important clause and there are important principles at stake. I cannot understand why the Government are taking the power to change those principles, nor why they have not incorporated within those principles the recommendations of the Hampton review, which I thought were accepted as being common ground by Government.

Martin Caton (Labour, Gower)

Order. This is turning into a debate on the whole of part 2. I am happy to go along with that, but would then say that if hon. Members wish to make contributions about any aspect of part 2, it would be appropriate to do it in this common debate.

Oliver Heald (Conservative, North East Hertfordshire)

On a point of order, Mr. Caton. Should we not be able to make points on, for example, the procedure to be followed under the code of practice, and matters of that sort, which are not to do with the general principles of part 2, but which are none the less important? I hope that it is not your ruling that there will be no debate on clauses 20 to 23, because there are important points to be considered.

Martin Caton (Labour, Gower)

I stand corrected by the Committee; I take it that the Committee’s will is to deal with the clauses separately, so we will do exactly that.

Douglas Carswell (Conservative, Harwich)

I welcome the fact that the clause puts emphasis on making the regulators accountable, but I would like to hear from the Minister exactly how the accountability will be delivered. Just saying that

“Any person exercising a regulatory function”

must have regard to the principle of accountability does not deliver proper accountability. Increasingly, there is a tendency for elected parliamentarians to push responsibilities that ought to be exercised by those vulnerable at the ballot box towards regulators and quangos. Increasingly, regulators such as the Food Standards Agency, the Financial Services Authority, the Qualifications and Curriculum Authority and the Health and Safety Executive are making decisions that should be made by those accountable to the people of the country. I am keen to hear how the Minister intends to ensure that the super new regulators are made accountable.

If we create new super regulators, there is an even greater need to make sure that they are accountable, because when regulators are merged into larger regulators, there is a tendency to increase the amount and intrusiveness of their regulation. The need to hold them to account is therefore all the more important.

I am interested in how the Minister envisages these big regulators being truly accountable. There are a number of suggestions on how to do that that I do not believe are in the Bill. One suggestion is to ensure that the heads of the Financial Services Authority or other super regulators are appointed by House of Commons Committees in open, televised confirmation hearings. That is the sort of mechanism through which to deliver real accountability. I will be interested to hear how the Minister intends to deliver on the principle of accountability in the clause.

Jim Murphy (Labour, East Renfrewshire)

Good morning, Mr. Caton. It is the last morning of these proceedings and I am relieved—

Andrew Love (Labour, Edmonton)

We are all relieved.

Jim Murphy (Labour, East Renfrewshire)

I am relieved that we are not having a stand part debate on one part of the Bill, but instead we have the opportunity to have clause stand part debates so that we can discuss the details within this important part of the Bill. Perhaps it is not highly controversial, but it is important nevertheless. I shall make some comments and in so doing respond to the entirely reasonable questions asked by Opposition Members.

As has rightly been said, clause 19 provides that any person exercising specified regulatory functions must have regard to the five principles in the exercise of those functions. The principles provide that regulatory functions should be carried out in a way that is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed. Given the variety of functions regulators have and the variety of contexts in which they operate, inconsistency of approach is a real risk and can cause difficulties for those regulated. I heard comments and responses regarding inconsistency regularly when we consulted on the Bill last summer, and during the past couple of weeks when I met business organisations and companies, particularly in relation to the way in which regulators in different parts of the country operate their proceedings and fulfil their responsibilities.

Therefore, we would like to set a baseline standard for regulatory work, and those principles support the Government’s aim of bringing about risk-based, proportionate and targeted regulation. The establishment of the principles on a statutory basis is not unprecedented, as hon. Members will be aware. They already exist on a statutory footing in section 3 of the Communications Act 2003 and derive from the Better Regulation Task Force’s five principles of good regulation. The principles already exist in the 2003 Act and they are widely regarded as the gold standard for judging regulation, not only by Departments, regulators and organisations in the UK, but also in several other countries including Ireland and Germany.

Clause 19 requires anyone exercising specified regulatory functions to have regard to the principles, which means that they are under a statutory duty to consider the principles when exercising their regulatory functions. Failure to comply with this statutory duty could, of course, be challenged by way of judicial review in the usual way.

The hon. Member for North-East Hertfordshire and others made specific points about the effect of subsection (3). Its effect is that the statutory duty to have regard to the principles will be subject to any other requirement affecting the exercise of the regulatory function, such as another statutory duty or European Community law requirements. This means that, in the event of overlapping obligations, any other requirement affecting the exercise of the regulatory function to which clause 19 applies takes priority over the duty to have regard to the principles. That ensures legal certainty for those exercising—

Oliver Heald (Conservative, North East Hertfordshire)

The effect of it is of course is to let off the big boys—the Financial Services Authority and the other big regulators that have been set up by statute—and often they are the ones that people are most worried about. Does the Minister have any plans on that? What is the idea longer term as regards the big regulators? Is he happy that they can just go on acting in an excessive way, not following the principles that he believes in? Are we not going to do anything about it?

Jim Murphy (Labour, East Renfrewshire)

Clause 19(3) is intended to ensure that the code does not accidentally rewrite other legislative requirements or put us, for example, in infraction regarding EU directives. An example of the purpose of subsection (3) is that the Rural Payments Agency is required to inspect 5 per cent. of farms’ subsidies under the common agricultural policy. That, of course, is not risk-based and to allow the principles of clause 19 to override that directive would put us in infraction procedures.

Andrew Love (Labour, Edmonton)

The Financial Services Authority has been mentioned on several occasions, yet the Financial Services Markets Act 2000 was subject not only to pre-legislative scrutiny, but perhaps to the greatest amount of scrutiny that this House has shown—certainly since this Government came to power. Such scrutiny is subject to review, and to change it through this Bill would be contrary to everything that we had done to scrutinise the Bill in the first place.

Jim Murphy (Labour, East Renfrewshire)

My hon. Friend is absolutely right. Regulators such as the FSA have specific statutory obligations, to which he has alluded. The regulators were empowered through strenuous scrutiny, and their statutory obligations are fit for their specific purpose, as my hon. Friend the Member for Edmonton (Mr. Love) again alluded. We do not seek to rewrite or override them in this clause; it is about establishing principles that are regarded as effective.

David Heath (Liberal Democrat, Somerton and Frome)

I just want to be clear in what respect the regulations that apply to the FSA fall outside those broad principles.

Jim Murphy (Labour, East Renfrewshire)

I am not in a position to talk about the different regulatory principles or responsibilities of each regulator—whether or not they are covered by this clause. Its purpose is to establish those principles, put them on a statutory basis and, in so doing, not to override the responsibilities and activities of other regulators that are formed by other Acts.

Paragraph (3) is about enabling legal certainty for regulators and the regulated, so it is clear that although the principles would apply and should be followed, where they clash with the existing principles and practices of some regulators, their existing statutory responsibilities will override the principles in the clause. It is important that we do that.

Oliver Heald (Conservative, North East Hertfordshire)

I understand that in this provision, it may be difficult for the Minister to tackle the big boys. However, it would be helpful if he were able to say, “We do have a plan. We are going to sort out the big boys—the substantial regulators set up by statute—and make sure that they do follow these principles.” If some provision about the FSA or some other regulatory body clashes with the Hampton principles or the five principles, surely it is the job of the Cabinet Office to find out and sort them out.

Jim Murphy (Labour, East Renfrewshire)

It is not our intention to erode the independence from the Government of those regulators set up by statute.

I shall turn to additional questions that have been asked about the Hampton principles. The hon. Member for Christchurch (Mr. Chope) in particular quite rightly talked about them at some length, alluding to 11 or 12 of the Hampton principles of inspection and enforcement. We tried to put in legal terms the Hampton principles, but the wording was not easily transferable to legal language. The five principles set out in the clause are the principles of the Better Regulation Task Force.

The code will cover the specific points about which the hon. Gentleman asked. The principles will exist on a statutory basis, and the code would then expand on and deal with the specifics dealt with in the Hampton principles of inspection and enforcement. We will consult about the code later in the year. That is the purpose of having the principles and then enabling the code so that it can pick up on some of the Hampton principles of inspection and enforcement. That is the right way to do it.

Christopher Chope (Conservative, Christchurch)

The Minister says that because of a drafting difficulty, he is not putting the Hampton principles in the Bill. Surely, if a legally enforceable code is to be drawn up instead, exactly the same drafting difficulties will arise.

Jim Murphy (Labour, East Renfrewshire)

Our intention is to consult later this year on the specific nature of the code. If we had placed a prescriptive code in the Bill, Opposition Members would understandably and rightly ask why we had not consulted, why we had not sought and listened to opinions. The intention is to consult the regulators and the regulated on the specific nature and content of the code, which will be guided by the principles of inspection and enforcement set out by Philip Hampton.

Of course, not all the recommendations in the report require legislation. Some are about good practice, so not all of them would be appropriate for inclusion on a statutory basis. Nevertheless, the change in culture behind the Hampton principles and the suggestions included in them will find a place in the code. The issue is partly about drafting to include the Hampton principles and partly about a determination to consult.

Christopher Chope (Conservative, Christchurch)

In the past, it has been the practice of Ministers when debating Bills like this one, which refers to a code, to produce for our benefit a copy of a draft code. Will the Minister undertake to produce a draft code before we reach Report so that we can determine exactly what the Government have in mind and to what extent we may wish to incorporate in the Bill provisions from the Hampton recommendations that are not included in the draft code?

Jim Murphy (Labour, East Renfrewshire)

I am not certain that I will be able to do that. However, to reassure the hon. Gentleman, I can say that the Minister must seek to ensure that the draft code is consistent with the principles in clause 19, and that we will carry out a wide consultation throughout the country about the content and the specifics of any draft code. We are listening to business and to others to ensure that we get it absolutely right.

The hon. Gentleman discussed specifics of the Hampton principles and asked whether regulation would be risk-based. The risk-based issue is dealt with by the principle of targets. The idea would be to target those companies that have had a less than illuminating track record of compliance. The inclusion of targets would incorporate the risk-based element.

Christopher Chope (Conservative, Christchurch)

But would it? If the Hampton suggestion is that regulation should be targeted on those cases where action is needed most, the Minister’s point would be covered, but subsection (2)(b) states that

“regulatory activities should be targeted only at cases in which action is needed.”

Why is not the word “most” included there?

Jim Murphy (Labour, East Renfrewshire)

The targets would be based on an assessment by the regulator, who has a knowledge of the field in which they regulate. He will target only those cases that he believes it is appropriate to target according to the principles. There is some flexibility for the regulator to apply targeting.

As Philip Hampton discovered, the problem is that fewer than half of the regulators in his review used a risk assessment to reduce enforcement activity on high-performing businesses. For example, according to figures from the Hampton review, in 2002-03, trading standards officers inspected 60 per cent. of high-risk premises and 10 per cent. of businesses classified as low risk, but that resulted in 35,000 inspections of high-risk companies and 71,000 inspections of low-risk companies. That is not the appropriate way for regulators to carry out their duties.

Possibly we all have experience from our constituencies of businesses that may have been operating for two decades with a clean bill of health but that are continually inspected. We are moving towards inspectors targeting their resources more effectively.

Oliver Heald (Conservative, North East Hertfordshire)

Surely the absolute key is the comprehensive risk assessment. If one asked any of the regulators, they would say, “Oh yes, we’re certainly aiming at the cases where some regulation is needed.” The point, however, is that many of them have not done a comprehensive risk assessment—as the Minister just said—so they are not doing that. What is needed is for the concept of the comprehensive risk assessment to be brought right to the centre of the Bill.

Jim Murphy (Labour, East Renfrewshire)

I do not share that assessment. The combination of the principles of targeting and of proportionate activity means that regulators will be expected, on a statutory basis, to carry out their activity in a way that is risk based. The specific way that that approach operates will be in the code, on which we shall consult. To be a little more generous to the hon. Member for Christchurch, I shall take up his suggestion of trying to have a draft code available in time for the Report stage, which he may find helpful.

David Heath (Liberal Democrat, Somerton and Frome)

I am not convinced by the earlier part of the Minister’s response. There was a lengthy explanation of why there are some large and complicated regulators that are set up by statute. The hon. Member for Edmonton intervened to point out the care with which Parliament had scrutinised the power and functions of the Financial Services Authority, and I entirely understand that. I would even understand it if—were the code of conduct written in sufficiently explicit terms—instances arose when the way in which a specific regulator was required to act by statute fell outwith the specific requirements of the code of conduct. In such a case there might be some form of tension between the two, and that might–though I do not think that it should—require an exemption.

I cannot understand, however—nor can I find an argument to support it—why any regulatory body should fall outside the very broad principles that we are considering, whatever the statute says in setting up that body. If the statute allows a regulator to act in a way that is not transparent, or in a way that is unaccountable, disproportionate, or inconsistent, that is intolerable. Surely we cannot accept a regulator that works in that way—if this Committee is to mean anything, or if the Minister’s intentions are to mean anything. If that is the case, then whatever the statute may say, it should be amended to bring it into compliance with those very broad terms.

The Minister is asking us to accept that because a regulator has a very complicated function, it is all right for that regulator to act in an intolerable way. I do not accept that, and I hope that a court would not accept it. By accepting clause 19(3) we would be giving a get-out clause.

I am willing to argue the case with the Minister on clause 20(3), when we come to it, because he may have a better argument—though it depends on how the explicit the code of conduct will be. He would also have more of a case had he given a longer list of principles and had he provided for much more complex requirements under clause 19; but given how simple and self-evidently proper the principles are under clause 19(2), I do not think that he has a case for any exemption if we are to have proper governance.

Oliver Heald (Conservative, North East Hertfordshire)

If we deleted clause 19(3) as an amendment on Report, the effect would be that if any of the bodies set up by statute did not act in accordance with the five principles, the law of implied repeal would mean that their statutes were, by implication, repealed. I do not know whether the parts that were necessary to bring the five principles into force would actually apply. Is the hon. Gentleman’s view the same?

David Heath (Liberal Democrat, Somerton and Frome)

Had I sufficient legal knowledge, I am sure that I would agree with the hon. Gentleman. [Interruption.] My hon. Friend the Member for Cambridge (David Howarth) is muttering from a sedentary position, and the hon. Member for North-East Hertfordshire is right. My hon. Friend is the guru in this matter.

I hope that hon. Gentleman agrees that, unless we have a much more satisfactory explanation than we have had today, we will have to return to this matter on Report and get rid of subsection (3). I am willing to entertain an argument on the details of the code of conduct. It would be wrong to invalidate the actions of a regulator, simply because a specific requirement in the code of conduct was at variance with the practice required by statute. We can return to that matter and debate it sensibly. However, I hope that the Minister will consider the point that he is asking the Committee to accept—that regulators can act in a wholly improper way. I do not accept that and I do not think that the Committee should.

Oliver Heald (Conservative, North East Hertfordshire)

Mr. Caton, this has been a useful debate that has covered the points that I was thinking of raising under clause 20, as well as those under clause 19, so perhaps your earlier ruling was, to that extent, prescient and forward thinking.

I welcome the Minister’s offering to produce a draft code of practice to give us an idea of where, between the Bill and the code, he is to place the Hampton recommendations. I thank him for that, but I am concerned about two points. First, in subsection (2), the five principles set out are those that the Better Regulation Commission has been promoting, rather than the more detailed checklist that Philip Hampton came up with in his report and called “principles of inspection and enforcement”. His list is a much more practical and useful checklist.

Douglas Carswell (Conservative, Harwich)

Does my hon. Friend share my disappointment that the Minister has yet to explain how the principle of accountability will be delivered? How will the regulators be made democratically accountable? I suggested, somewhat impertinently perhaps, that the Minister might like to consider televised parliamentary hearings for appointments to these new super-quangos. There are other suggestions. Perhaps annual budgets for the regulators—

Martin Caton (Labour, Gower)

Order. This is turning into a speech.

Oliver Heald (Conservative, North East Hertfordshire)

On a very good point, Mr. Caton, which is that accountability was one of the key principles that Philip Hampton referred to when he said:

“Regulators should be accountable for the efficiency and effectiveness of their activities, while remaining independent in the decisions they take”.

I think that we would all agree that their independence is important. None the less, most of the big regulators were set up by Parliament and we are entitled to review their activities and change them if we wish.

On the individual activities of regulators, there is a lot to be said, particularly in respect of the major ones, for having confirmation hearings to ensure that the people who take on such roles at the top level are fit for purpose. Certainly, there have been examples in the past—none of which I am going to recount, because I am fully aware of your requirements, Mr. Caton—where regulators have been either over-officious or slack. Having said that, the question for the Minister is why not include the Hampton principles of inspection and enforcement in the Bill.

I recognise the Minister’s point that there may be some drafting difficulties or areas where it is not possible to fully put those principles into force in the Bill, but if he is producing a statutory code, it must be possible to put a lot of that into the sort of language we use in Parliament. If that is so, why not include it in the Bill?

Andrew Love (Labour, Edmonton)

There would be some concern if all the additional issues were included in clause 19(2); the Government would no doubt be accused of being too prescriptive. The Minister made a point about consultation. If this were included in the Bill, it would not be subject to consultation, whereas if it is in the codes that go along with the Bill, there will be a real opportunity to consult widely to ensure that we get it absolutely right.

Oliver Heald (Conservative, North East Hertfordshire)

I am all in favour of consultation; I think it is important to consult on such matters. It is entirely up to the Government to decide when they will introduce legislation and what will be the time scale for the Bill. However, the parliamentary Session is likely to go on until later in the year, so it is not beyond the wit of man to have consultation on a code and still be in time to include it in the Bill.

I take on board the hon. Gentleman’s point. This should probably be a schedule, rather than part of clause 19. However, what is being asked for could be achieved. It would help us, because I want to be sure that every one of the principles of inspection and enforcement that Philip Hampton came up with is implemented. If a law is needed to do that, I want that to be in the Bill.

Christopher Chope (Conservative, Christchurch)

Does my hon. Friend share my pleasure that the Minister has agreed to produce a draft code in time for Report? Does he also agree that it would be desirable for that draft code to be produced sufficiently far in advance of the Report stage for us to be able to table new clauses or amendments in light of its contents?

Oliver Heald (Conservative, North East Hertfordshire)

That would obviously be very helpful. It is likely that there will be some delay between the end of the Committee stage and Report, and I share my hon. Friend’s hope that the time scale would allow for that.

Jim Murphy (Labour, East Renfrewshire)

I have not sought to encourage hon. Members to give way in Committee, but let me say that I will undertake to do what has perfectly reasonably been asked for, which is to produce a draft of the code in good time so that Committee members, and other Members, can consider it and table amendments if they so wish.

Oliver Heald (Conservative, North East Hertfordshire)

That is exactly what my hon. Friend the Member for Christchurch requested, so I thank the Minister very much for that.

Christopher Chope (Conservative, Christchurch)

That is an excellent suggestion. The Government Whip has now returned. In light of the fact that there may now be a much more extensive debate on this issue on Report than was previously expected, I hope that he will accept that it might be appropriate for that stage to last for two days, rather than one.

Oliver Heald (Conservative, North East Hertfordshire)

I would not dream of trespassing on the work of the usual channels, but I certainly think that my hon. Friend is right on that.

I shall now move on to my second point about clause 19. The exclusion in subsection (3) that lets the big boys off is not acceptable. Regulators such as the Financial Services Authority and some of the other “Ofs” should behave reasonably. That is all that subsection (2) asks them to do. Surely they would want to be “transparent”—or maybe they would not? Surely they would want to be “accountable”—in fact, I do not think they would like that much—and “proportionate and consistent”? Possibly, they would also like to target what they are doing. They should be setting an example. The regulators should not be let off; they ought to be the pioneer corps and the trailblazers, not the ones letting the side down. Will the Minister just have a think about subsection (3)? I am tempted to seek to remove it on Report, because that would force them to behave.

Clause 20 - Code of practice

Christopher Chope (Conservative, Christchurch)

May I ask the Minister to expand on the effectiveness of the sanctions described in the clause for breaches of the code of practice? It seems that breaches of the code of practice that result in additional costs on business will not enable businesses to claim for the consequential damages arising from breaches of the code. The most that they can hope for is that any breaches of the code could be used as mitigation of penalties imposed. I understand that quite often the Office of Fair Trading will put forward proposals and if they are not accepted by the parties involved, it will say, “If you do not accept these, we will insist on higher penalties.” So it will effectively exercise a process of extortion on the people whom it is investigating.

If we are to have regulators who will operate outwith this code of practice, surely there should be an effective sanction. When I studied jurisprudence, one of the principles that we looked at was that there is no point having a command without a sanction. If the Minister accepts that principle, can he point out where the effective sanctions are for breaches of the code of practice under the clause?

Jim Murphy (Labour, East Renfrewshire)

Very briefly, under the clause, regulators who fail to comply with the statutory duty to have regard to the code of practice in circumstances where they are required to do so could be challenged through judicial review in the usual way. Subsection (4) states that

“a court or tribunal finds that a person has failed to comply with any requirement, restriction or condition”.

That subsection derives from the 2001 Act. It seems to have operated pretty effectively in that Act. If the hon. Gentleman has evidence to the contrary, he is entirely free to bring it to the attention of the Committee or of the House on Report. Failure to act in the proper way by regulators is judicially reviewable and it is within the 2001 Act.

Christopher Chope (Conservative, Christchurch)

Will the Minister accept that the process of going to judicial review is incredible expensive? Does he expect a corner shop or a small manufacturing business that is subject to oppressive behaviour by a regulator in breach of the code of practice to employ expensive lawyers and to go through the process of judicial review to get an effective sanction for the breaches of the code?

Jim Murphy (Labour, East Renfrewshire)

I do not think that I am advocating that, but this provision is lifted directly from the 2001 Act. I am willing to be corrected, but I understand that it was not identified during the consultation and the deliberations on the Bill as an inherent weakness in the 2001 Act. If he has evidence that it is and that it has prevented the better regulation agenda, he is entirely free to bring it to the attention of the Committee and the House.

Oliver Heald (Conservative, North East Hertfordshire)

I have been listening to the point that the Minister was making. I wonder whether subsection (4) does not provide some sort of remedy. It seems to be saying that the court or tribunal dealing with a breach of duty by a company would be able to take account of the way in which the regulatory function had been exercised in deciding how to deal with the case. Does that not mean that it would be possible for the court to make a quite penal decision on costs against the regulator? If so—if the regulator had to pay not just his own costs but those of the person victimised or treated in the wrong way—that would be at least some movement in the right direction. Is that what the Minister had in mind?

Jim Murphy (Labour, East Renfrewshire)

That is entirely the case. I should also like to reassure the hon. Member for Christchurch that non-legal sanctions exist on regulators, including National Audit Office and Audit Commission reports. Those are additional pressures and areas of accountability and respect for regulators. If the hon. Gentleman has evidence that that aspect of the 2001 Act has not worked and has been a deterrent, he is entirely at liberty to bring that evidence to the House’s attention before Report.

Clause 21 - Code of practice: procedure

Oliver Heald (Conservative, North East Hertfordshire)

Clause 21 sets out the procedure for introducing the draft code and making it law. It provides for consultation and the laying of the draft. It was not clear to me, however, whether what is proposed in subsection (5) is the negative procedure. I think that it is. If so, perhaps the Minister might explain why.

The Minister knows that many in the House are keen that all the principles of inspection and enforcement in the Hampton report should become part either of the code or of the statute. Given that they may need to be in the code, those of us in the House who are interested in regulatory reform will want to check that everything that should be in there is in there. If it is not, we might want to complain about it, debate it and ensure that the code goes as far as it should.

My experience of the negative procedure is that we do not get a debate every time we pray against an order. The last time that I looked at the statistics, it was something like 35 times out of 2,000. I may be wrong—it may be slightly different—but it is something like that. What can the Minister say to us about the procedure in subsection (5)? Is it negative, and if so, why? Surely it should be affirmative. Will he think about that or at least guarantee that if we did pray against it, there would be a debate?

David Heath (Liberal Democrat, Somerton and Frome)

The hon. Gentleman is absolutely right that prayers are seldom answered in this place, although I must say as a matter of information that next week I have a prayer against an order on the civil courts and full recovery of costs, which will be debated. Unfortunately, since then I have been reshuffled in my responsibilities, so it will fall to someone else to do it. However, that is a different matter.

Oliver Heald (Conservative, North East Hertfordshire)

I am sure that the Committee would like to congratulate the hon. Gentleman on his appointment as Liberal Democrat shadow Leader of the House. I understand that he is running for the deputy leadership, and I am sure that we all give him our best wishes for good luck.

David Heath (Liberal Democrat, Somerton and Frome)

I am grateful, although I am not sure that that will actually assist my candidacy.

The negative procedure is less appropriate than the affirmative when bringing the code of practice into effect; that is absolutely right. I shall go back a stage, however, because there is also the issue of the consultation process. The only specific consultees allowed for under the Bill are the regulators, who may be considered to have a rather partial view of how they carry out their functions. Of course we need to talk to the regulators about how the code of practice affects them, but there is a much wider range of bodies among the deregulated, and they have a much more material interest in the code of practice being right. In preparing for the Bill, the Minister gained quite a broad database of consultees; I hope that they will be

“such other persons as he considers appropriate”

for the purposes of subsection (3), and that they will have the opportunity to respond to the draft code of practice when it is published.

I also hope that, whatever procedure we eventually arrive at for the consideration of the code of practice, we will follow the process suggested for part 1 of the Bill, by which consultation responses are made available to the relevant Members of the House that will consider it. That way, we can be clear about whether the code of practice meets the concerns of those who are regulated. That seems a critical part of the process.

Mr. Murphyindicated assent.

David Heath (Liberal Democrat, Somerton and Frome)

The Minister is nodding, so I am hopeful of a positive response; all is sweetness and light this morning.

It is desperately important that we hear what the effect will be, particularly on small businesses. For many of us they are the prime concern, because it is they who carry the greatest burden of regulation. We need an effective way of knowing how the provisions will affect them, and whether it meets their requirements in reducing the burden on them.

Jim Murphy (Labour, East Renfrewshire)

I, too, congratulate the hon. Gentleman on becoming shadow Leader of the House. I was not aware that he was standing for deputy leadership of his party, but that explains why he did not publicly support any of the leadership candidates; that way he could say, “I was on your side all the time; congratulations”, or, “It’s a shame you didn’t win, but I was with you.” Perhaps I am being too cynical. All Committee members have seen how the hon. Gentleman applies his politics and how he approaches things, and we wish him luck in his deputy leadership ambitions.

Clause 21 sets out the procedural requirements that a Minister must follow when proposing to issue or revise a code of practice under clause 20. I assure the hon. Member for Somerton and Frome (Mr. Heath) that consultation on the code of conduct will, of course, be guided by best practice on the code of conduct, which we discussed earlier. It is my understanding that responses to the consultation on the code of conduct will be made public, in the way that I have already mentioned. There is a responsibility to publish them, so, yes, the process will be conducted openly and transparently.

The hon. Member for North-East Hertfordshire is absolutely correct: first, the Minister must consult on the draft code of conduct, and then, following consultation, if the Minister decides to proceed with the draft, in its original form or in a modified one, the draft must be laid before Parliament and is subject to the negative procedure. That is consistent with the procedure set out in clause 10(4) of the Regulatory Reform Act 2001. However, I hear what both Front Benchers say about prayers never being answered—although I thought that our attendance here was in answer to our prayers, and that we had all sought divine intervention to be allowed membership of this Committee. The hon. Member for North-East Hertfordshire reasonably asked whether it would not be more appropriate for such a code of practice to be laid under the affirmative procedure, and I will reflect on whether that would be appropriate as a means of strengthening what was in the 2001 Act and placing a more onerous procedural responsibility in the Bill. I hope that that reassures and heartens him in some way.

Oliver Heald (Conservative, North East Hertfordshire)

Yes, that is welcome.

Clause 22 - Functions to which sections 19 and 22 apply

David Heath (Liberal Democrat, Somerton and Frome)

I shall be brief. I simply want an explanation of the list in subsection (5). We have already gone through the process iteratively with clauses 19 and 20 with regard to the need to exempt some of our most important regulators from provisions that are supposed to regulate the regulators. We now have a new group of “off-limits” that are not to be regulated. I looked for further guidance in the explanatory notes and in paragraph 70 it says that the reason why the order may not specify regulatory functions on these five bodies is:

“The Minister cannot specify in the order the regulatory functions”

of those five bodies, which, as an explanation, falls a little short of what is required. I would be grateful if the Minister expanded on that a little.

Oliver Heald (Conservative, North East Hertfordshire)

I was going to ask why the “Ofs” have been let off. Perhaps I might also ask the Minister why it is necessary to specify the functions in this way. Clause 23 defines regulatory functions; why is it not the case that anyone who exercises one of them is caught under clauses 19 and 20? What is the point of the Minister interfering to say who is specified as a regulator in this way? Why not just say that all regulators are covered?

The overall scheme of the provisions introduces absolutely classic, sensible and proportionate principles on which regulators are supposed to act, so why does the Minister need to say which regulatory functions they apply to? Why can the provisions not apply to all of them? Is there a point that we are missing here? The big boys of the “Ofs”, such as the Gas and Electricity Markets Authority, Ofcom, and Ofrail—what is it called? [Laughter.] Something like that. The Postal Services Commission is known as something; I do not think it is Ofpost. I know that the Water Services Regulation Authority is popularly known and not loved as Ofwat. Why are the “Ofs” being let off?

Christopher Chope (Conservative, Christchurch)

I want to follow on from that point. Surely, every body that exercises a regulatory function under the definition of clause 23 should be included unless specifically excluded. The Government are saying, “Only those regulatory bodies that exercise particular regulatory functions that we think should be subject to this code are to be included.”

I want to ask the Minister about some specific examples. Her Majesty’s Revenue and Customs is carrying out regulatory functions in accordance with clause 23. Does the Minister have it in mind that those functions should be subject to the principles and code of practice set out in part 2 of the Bill? The Department for Work and Pensions carries out functions as defined in clause 23 and we know that it has caused an enormous amount of angst for many of our constituents in the process of carrying out those functions. Will its activities be subject to the principles set out in part 2? Will the Department for Environment, Food and Rural Affairs, or the Child Support Agency, for example, be subject to the regulatory controls set out in part 2?

I congratulate the hon. Member for Somerton and Frome on his well-deserved elevation. He mentioned the specific bodies set out in subsection (5). Does the Minister accept my point on clause 19, that the Office of Rail Regulation has recently been guilty of a gross breach of the Hampton principles in imposing a fine of £250,000 on Network Rail for technical breaches of regulatory requirements? If he accepts that, does he not think that, in the context of the Bill, we should be doing something to ensure that that cannot happen again?

Similarly, the Postal Services Commission is now actively engaging in imposing substantial financial penalties on Royal Mail, with the consequence that the cost to Royal Mail users increases. Does the Minister not think that the Postal Services Commission should have to comply with the principles set out in part 2? I hope that the Minister will address each of those important examples.

Jim Murphy (Labour, East Renfrewshire)

Rather than make a speech, I shall respond to the points made by Opposition Members. Those bodies were listed in clause 22(5) for two reasons. First, they were not covered by the Hampton review, because their work is so different in its nature and scope from the general business regulators that Hampton dealt with. They are not intended to be caught by the Hampton recommendations and the principles and code cannot automatically be applied to them. Secondly, those regulators are operating in areas of market security and sensitivity, so it is important to avoid creating uncertainty about the rules governing the exercise of their powers.

On the point about regulatory functions, we would all have difficulty in dealing with specific aspects of part 2, particularly the definition of a regulator. The obvious initial approach is to list the organisations and come up with a definition of a regulator, rather than make a list or a definition of a regulatory function. In attempting to draft an appropriate definition of a regulator, it became apparent that definition would inadvertently capture a wide range of bodies outside the scope of the Hampton review. It may help Committee members to know that the Government’s assessment was that the best attempt at defining a regulator ended up capturing organisations such as MI5, which I am not certain would need to be transparent in all its dealings, the General Medical Council, the British Medical Association and others. That is why we set out to define a regulatory function, rather than a regulator.

David Heath (Liberal Democrat, Somerton and Frome)

The Minister is in danger of exempting so many genuine regulators from his list that it brings into disrepute the whole concept. I wonder whether he considered the alternative, most obvious, route of having a schedule of regulatory bodies that are included, to avoid the difficulty in respect of the MI5s of this world, which I accept might have difficulties following the principles. However, I do not accept that the five bodies in subsection (5) should have any problem following the principles; if they are not following them, they should not be doing the job.

Jim Murphy (Labour, East Renfrewshire)

I give way to the hon. Member for Harwich (Mr. Carswell).

Douglas Carswell (Conservative, Harwich)

I am surprised that the Minister dismisses the idea that our security services should be made more transparent and accountable. Perhaps if they had been made more so, they might have a slightly better, more successful record of spotting threats to this country. Accountability and transparency are good things for all institutions.

Jim Murphy (Labour, East Renfrewshire)

The hon. Gentleman’s point is entirely spurious and ill judged. However, it is for him to make his own points in his own way about the security services and the Bill. Such issues are, of course, outwith the scope of the Bill, and I do not think you would encourage us to debate them, Mr. Caton.

Oliver Heald (Conservative, North East Hertfordshire)

Does the Minister have any thoughts about which regulators he does or does not want to cover? If so, will he let us know? It would be helpful to have some idea. We are committed to the idea that the principles, which we agree are important, should cover regulators generally. The Minister is right to say that an infelicitous definition might drag in somebody whom we would all agree should not be covered. However, we do not want to let off the most important regulators in the country; as I said, we would like to see them as the trailblazers that set the standard.

Jim Murphy (Labour, East Renfrewshire)

The regulators that we have in mind are listed in annexe B of the Hampton report; that may help the hon. Gentleman. He can reflect on whether that list is appropriate between now and Report.

Christopher Chope (Conservative, Christchurch)

I do not have annexe B of the Hampton report with me, so can the Minister confirm that it includes Her Majesty’s Revenue and Customs, the Department for Work and Pensions, the Child Support Agency and the other examples to which I referred? If it does not, why not?

Jim Murphy (Labour, East Renfrewshire)

I confirm that the list does not include the organisations mentioned by the hon. Gentleman. However, this very afternoon I shall post him, for his information, a copy of the report with annexe B. A Minister would have to consult those whose functions will be listed, and the affirmative procedure for orders would be followed.

As we know, the aspect of part 2 that we are discussing is highly technical. Clauses 19 and 20 set out the regulatory principles and code of practice, which are defined and described in clause 23; clause 22(2) specifies a regulatory function

“to which sections 19 and 20 apply.”

As I say, the Minister must consult and lay an order—that will be done through the affirmative procedure, so must be agreed by both Houses—and specify any exemption and how it affects the devolution settlement throughout the United Kingdom. We think that more appropriate than providing an extensive list of regulators, as suggested by the hon. Member for Somerton and Frome. I hope that that helps to illustrate clause 22(2) in particular and the interrelationship between the different clauses.

Christopher Chope (Conservative, Christchurch)

That does not answer the point about why, to take one specific example, Her Majesty’s Revenue and Customs, which exercises significant regulatory functions over business, is not covered by those principles. It is no good the Minister just asserting that it is not covered—why is it not?

Jim Murphy (Labour, East Renfrewshire)

I do not have to wait for this afternoon’s post to send the hon. Gentleman a copy of annexe B; page 84 of the report is on national regulators. The hon. Gentleman will be relieved—or angered; I am not sure—to see that Her Majesty’s Revenue and Customs is the first on the list of notable UK regulators.

It is considered that the principles in clause 19 and the code of practice in clause 20 should be covered by those regulators for which a Minister of the Crown may specify regulatory functions under clause 22(2)—as described in clause 23, which is about regulatory functions.

Christopher Chope (Conservative, Christchurch)

We shall resume this afternoon. Will the Minister guarantee that he will then be able to explain why Her Majesty’s Revenue and Customs is not to be subject to the provision? Simply saying that it is not included in annexe B does not deal with the substantive question of why that very important body, which exercises regulatory functions over business, is not to be included under the provisions of part 2.

Jim Murphy (Labour, East Renfrewshire)

Part 2 is about giving effect to the recommendations of the Hampton review, and Her Majesty’s Revenue and Customs was not part of our agenda on that review in respect of the regulators. That is my answer to the hon. Gentleman.

Legislative and Regulatory Reform Bill - Standing Committee A

Clause 22 - Functions to which sections 19 and 20 apply

Nicholas Winterton (Conservative, Macclesfield)

The Minister advises me that just prior to the adjournment at 10.25 am, he was in the process of sitting down at the end of his remarks.

Christopher Chope (Conservative, Christchurch)

On a point of order, Sir Nicholas.

Nicholas Winterton (Conservative, Macclesfield)

On what I have said?

Christopher Chope (Conservative, Christchurch)

On what you have reported, Sir Nicholas. The Minister had not sat down, and I had asked him in an intervention to return this afternoon with details on why the provisions of part 2 of the Bill did not apply to Her Majesty’s Revenue and Customs. I understood that he had given an undertaking that he would come back and respond to that question.

Nicholas Winterton (Conservative, Macclesfield)

I am not sure that that is entirely a point of order, but it is certainly a point. The Minister will no doubt have heard it, and if wishes to rise to his feet to respond, I shall most certainly call him. He is not rising, but the debate can continue, so if the hon. Gentleman is now seeking to catch my eye to contribute to it, I am more than happy to call him.

Christopher Chope (Conservative, Christchurch)

I had thought that it would not be necessary for me to contribute further. This is an important debate about the scope of part 2 of the Bill. It is accepted that the work of Her Majesty’s Revenue and Customs has a major impact on small business and businesses generally in this country and falls squarely within the definition of regulatory function in clause 23. However the Minister has told us that, for some reason that I am trying to get to the bottom of, HMRC will not be subject to the important provisions of part 2. I have asked why on several occasions, and I ask again in the hope that it will encourage him to get to his feet rather than play for the 4 o’clock end. I hope that he will also be able to respond to points that were made about other bodies that could be covered by these provisions, but perhaps will not be.

Andrew Love (Labour, Edmonton)

I clearly heard from the Minister that this part of the Bill was based on the recommendations of the Hampton review, and that annexe B of that review did not include the organisations that the hon. Gentleman has mentioned. That might not be acceptable to him, but it has been explained on two occasions in Committee.

Christopher Chope (Conservative, Christchurch)

The hon. Gentleman tries to come to the Minister’s defence, but unfortunately if he looks at the long title of the Bill and at its scope, he will see that there is no reference to the Hampton review. The Bill will facilitate deregulation and reduce burdens on business—that is to take it at its face value and is how the Government have been promoting it.

The Hampton review refers to HMRC, and I am pointing out that that body has a major impact on businesses through its regulatory function and that it should surely be subject to the same regime, set out in part 2, as other regulators and bodies exercising regulatory functions within the meaning set out in clause 23. HMRC is clearly within the scope of the Bill; part 2 does not say “some regulators.”

Oliver Heald (Conservative, North East Hertfordshire)

Does my hon. Friend agree that small business organisations such as the Forum of Private Business are particularly concerned about the administrative burdens that are the result of tax? It would be a pity if the tax authorities did not have to comply with such obvious points as acting in

“a way which is transparent, accountable, proportionate and consistent”

and targeting

“cases in which action is needed”.

That is what we would like them to do.

Christopher Chope (Conservative, Christchurch)

My hon. Friend is absolutely right. Does he share my frustration that the Minister’s stonewalling threatens to thwart what was quite a constructive discussion on part 2? We thought that we had got some common ground with the Government, on the basis that we are all in favour of deregulation and reducing the administrative and regulatory burden on business.

Andrew Love (Labour, Edmonton)

As the chairman of the all-party small business group, I am not aware that the Forum of Private Business has the policy proposal that the hon. Member for Christchurch (Mr. Chope) suggests. Is he speaking on behalf of those on the Conservative Front Bench? Is it their position that we should include Her Majesty’s Customs and Revenue in the Bill?

Christopher Chope (Conservative, Christchurch)

I certainly hope that it will be, but I do not speak from the Front Bench. That is why I am as far back as I can get without going through the wall.

I have every confidence in my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), and I am sure that when we come to Government, he will want to ensure a level playing field for all regulators, including Her Majesty’s Revenue and Customs. We might make it one of the most important elements of our manifesto to seek fair play with regard to HMRC, whereas the present Government do not seem to want to. I hope that we will provoke a response from the Minister, and an explanation and justification for the exclusion of HMRC from the proposals. It was not included in detail in the Hampton review, because the Chancellor of the Exchequer, who set up the Hampton review, did not want to include it—surprise, surprise.

That does not address the substantive point, however. The Government are saying with the Bill, “The burden on business is too great. We are on the side of business and we want to help business.” A letter from the deputy director-general of the CBI appeared in one of the newspapers recently in which he says that the Bill is a great Bill but would be much better if it extended part 2 to organisations such as HMRC.

While the Minister prepares to respond to that point, I also ask him whether it is proposed that clause 22 should apply to the Standards Board for England. He might have seen during our break today, as I did, a report on page 6 of today’s Evening Standard that said that a watchdog, namely the Standards Board for England, caused the leader of an Islington local authority and four of his colleagues to be

“subjected to the longest-ever probe”.

They were left with a legal bill for £350,000, and the total costs of the proceedings topped £1.1 million. The Standards Board has apologised now, but it does not have any proposals for compensating those individuals who were on the wrong end of maladministration and abuse of regulatory power. I should like the Minister to assure us that the Government intend to include the Standards Board in the provisions and ensure that it must comply with the regulatory regime like other regulatory bodies.

David Heath (Liberal Democrat, Somerton and Frome)

I do not want to repeat the arguments already made by the hon. Member for Christchurch, but the more I think about it, the more I think that we need some sort of list of regulators that the Government intend to include. I agree with him about the Standards Board, which some of us feel should be abolished in any case. Setting that aside, however, his is a well made point. The direct application of regulatory functions by Ministers happens in various Committees, and it is instructive that the Treasury is most resistant to any overview from outside of its functions. The question arises, for instance, of whether the new equalities commission will be a regulator under this Bill. I do not know what the answer to that is, but perhaps the Minister can tell us.

My conclusion is that although the Minister has been at pains to suggest that having considered the difficulty of providing a schedule of inclusion, he has effectively gone for a schedule of exclusion either specifically under clause 22 or by implication under earlier parts of the Bill. Nevertheless, we will have to have some sort of idea of which bodies, set up under statute or otherwise, are considered to have regulatory functions that are relevant to the Bill.

Nicholas Winterton (Conservative, Macclesfield)

I invite the Minister to reply.

Jim Murphy (Labour, East Renfrewshire)

I accept your kind invitation, Sir Nicholas, and welcome you again to your position as co-Chairman for our deliberations in our final sitting of this Committee.

I was under the impression that we had brought our deliberations on this clause to a conclusion, but I am happy to respond to some of the specific points that have been raised. The hon. Member for Christchurch referred to a report in the Evening Standard. I am more of a Glasgow Evening Times man myself. I do not regularly read the Evening Standard, so I cannot comment on the specifics of the report. I am sure that it is of high quality. I have no idea whether the hon. Gentleman quoted from the story; he did not share that fact with us. We do not envisage that the regulatory function would apply to the Standards Board.

There will be an opportunity for Ministers to extend the sense of “regulatory functions” after consultation under clause 22(2). Although the Government have no intention to do so, the enabling power would be there. The hon. Gentleman also asked about the list in clause 22(5). I know that that was not his main point, but I think he mentioned a list. I can do no more—I do not think he would wish me to—than repeat verbatim the answer I gave earlier. Those bodies were outside the scope of the Hampton review, and their operation is an area of market security and sensitivity. It would not be appropriate for the clause to apply to them. As for the question of whether we should have a list of regulators, and whether it is better to have a list of regulators or regulatory functions, we will come to that discussion in our debate on clause 23, which is about regulatory functions.

I remind the Committee, as I said earlier, that there has been an attempt to define “regulator” rather than “regulatory function”. It has proven extraordinarily difficult to do that in any legal sense. We spoke about that this morning. An attempt to define “regulator” and to draw in all sorts of people would not be appropriate. The British Medical Association and MI5 were mentioned—MI5 cannot in any sense be considered a regulator—but it was difficult to draw a definition of a regulator.

David Heath (Liberal Democrat, Somerton and Frome)

That was a difficulty that we also encountered when we were dealing with the Freedom of Information Act 2000, when discussing what constituted a public body. It was extremely difficult to identify what constituted a public body and, in the end, there was a capacity to list public bodies, or organisations and individuals who were to be treated as public bodies, and the capacity to amend that list by subsequent order. There is an analogy in this case.

Jim Murphy (Labour, East Renfrewshire)

I accept the hon. Gentleman’s argument because of his previous experience. As I say, we will discuss that in clause 23 and he will have the opportunity to tease out that point a little more.

Christopher Chope (Conservative, Christchurch)

The Minister still has not addressed the issue about Her Majesty’s Revenue and Customs, and I hope that he will before he finally sits down.

Jim Murphy (Labour, East Renfrewshire)

I was going to turn to hon. Gentleman’s point, which is a reasonable one, in my next sentence. He is right to say that, this morning, we had quite a productive debate, and the tone of the debate has been very constructive.

In relation to the Bill, Her Majesty’s Revenue and Customs is considered to be a tax authority, rather than a regulator. That is the explanation, even if it is not one that people like. The hon. Gentleman is also right that the Hampton report referred to HMRC, but as far as I am aware it referred to the HMRC only as being outside of its scope, rather than within its responsibility or aegis.

Christopher Chope (Conservative, Christchurch)

The Minister says that he is defining HMRC as a tax authority, but does he accept that it carries out regulatory functions within the definition in clause 23, and that therefore it could and should be covered by the Bill?

Jim Murphy (Labour, East Renfrewshire)

The hon. Gentleman makes a bid for the Bill to be extended to HMRC, and he is entitled to do so. To reassure both him and the Chancellor, I am not seeking to redefine, as part of our discussions on clause 22, the purpose or the aim of HMRC. We view the Customs as a tax authority rather than a regulator. That does not deal with one of his specific points, but that is the definition that we are using for the Bill, including for regulatory functions under clause 23.

We shall discuss the point further when we reach clause 23. I do not know, Sir Nicholas, whether you are encouraging us to have a stand part debate on clauses 22 and 23 but I shall be happy to address this further during the debate on clause 23, if the hon. Gentleman so wishes.

Clause 23 - “Regulatory functions”

Christopher Chope (Conservative, Christchurch)

Following the Minister’s invitation to continue, in relation to clause 23, the debate that we were having on clause 22, does he agree that the functions described in clause 23 are very wide ranging, and that that is a big advantage? However, it is disappointing for the Government to indicate that when it is embarrassing to include the regulatory functions defined in clause 23 for some Departments in the scope of the requirements of clause 19 and in the code of practice in clause 20, they will not play ball.

Obviously, HMRC raises tax—that may be its primary responsibility—but it also exercises regulatory functions, because within the meaning of subsection (1), it imposes “requirements, restrictions or conditions” in relation to activities. Does the Minister concede that HMRC has regulatory functions within the scope of clause 23, and can he explain why, notwithstanding that, it will not be subject to the same regime of common-sense reduction in the burden of regulation as other regulators?

Andrew Love (Labour, Edmonton)

Using the criteria that the hon. Gentleman has just outlined, will he say why he has focused on HMRC? Surely the point applies to a considerable number of Departments. Why does he not include those in relation to the Bill?

Christopher Chope (Conservative, Christchurch)

Because I know that we have to finish our deliberations by 4 pm and I thought that it would be better to give a representative example, rather than going through an exhaustive list. To answer the hon. Gentleman’s point directly, if he looks at annexe B of the Hampton report, he will see that paragraph 20 contains a list of what it describes as “Notable UK Regulators”. First on that list is none other than the HMRC. I concede that the Standards Board is not on the list—it certainly is not so high up, anyway—but the HMRC is right at the top, which is why I have tended to dwell on that organisation.

Jim Murphy (Labour, East Renfrewshire)

I do not want to make a habit of intervening on the hon. Gentleman, but he referred to page 84 of the Hampton report and said that there was a list of notable UK regulators, the first of which was HMRC. It would have been helpful to the Committee had he given the full title on that page, which is

“Notable UK Regulators out of scope”.

He did not provide the Committee with that fact.

Christopher Chope (Conservative, Christchurch)

Of course those regulators are out of scope: the Chancellor of the Exchequer said that they must be. That is the only reason for their being out of scope. The intervention from the hon. Member for Edmonton (Mr. Love) was about why I picked on HMRC as an important regulator. The Hampton report considers it to be a notable UK regulator but, as the Minister has said, the Chancellor said that the Hampton report could not consider the regulatory functions of the HMRC. That is why it has not been included and is out of scope.

Interestingly, there is a justification in annexe A as to why Ofgem, the Office of Rail Regulation, Ofwat, the Civil Aviation Authority and so on are excluded: they are “economic regulators”. The Minister has referred to that. However, no justification is contained or recorded in the Hampton report as to why the HMRC is excluded. That seems to be a supreme example of Treasury double standards: “Let’s set a regime for everyone else but not for our own home team.”

As the Minister does not come from the Treasury, I hoped that he would be more upbeat and say that he hopes that, in so far as the HMRC has regulatory functions that impact on the administrative and other burdens on business, it will be happy to comply with the spirit and the letter of the code of practice that will be drawn up under part 2 of the Bill. Repetition will make no difference, but I hope that he will be able to exercise some flexibility and respond to the challenge that if the HMRC exercises regulatory functions, it should be subject to the same controls as other regulators.

Oliver Heald (Conservative, North East Hertfordshire)

I want to consider my hon. Friend’s point about the HMRC being a major regulator and a body that is potentially covered by part 2. It is well known that small businesses in particular feel very burdened by the requirements of the HMRC. Earlier this week, I spoke to representatives of the Forum of Private Business, who said that they had just completed a survey of small business about the tax burden and that there was a great groundswell of concern about the administrative burdens imposed on small business. I am sure that the hon. Member for Edmonton will look forward to seeing the report when it is published.

I hope that when the Minister considers his list of who is to be included and who is not, he will not just go for the easy targets and will consider dealing with all these various bodies that are now “Of” something or other—Ofgas, Ofwat and the rest of them. It would be wrong to let off the “Ofs”. We need to have a system where the main regulators in this country set the standard, trailblazing for good principles of the sort set out in clause 19—transparency, accountability, proportionate behaviour, consistency—and targeting their actions. They should not be the ones who lag behind. It is a point that I have made before, but I hope that the Minister will at least consider it.

Jim Murphy (Labour, East Renfrewshire)

I will respond briefly. I congratulate the hon. Gentleman on using the same joke in two consecutive sittings of our Committee. I do not know why he chose to do it, although I could hazard a guess.

Oliver Heald (Conservative, North East Hertfordshire)

It is a different Chairman.

Jim Murphy (Labour, East Renfrewshire)

It is a different Chairman, Sir Nicholas. That is the purpose of it.

I simply remind the hon. Gentleman of the point that I made when he made a similar remark. Those regulators listed in clause 22(5) were not within the scope of the Hampton review because their work is different in nature and scope from the general business regulators that Hampton dealt with. Secondly, they operate in areas of market security and sensitivity and it is important to avoid the uncertainty that that may create.

David Heath (Liberal Democrat, Somerton and Frome)

I wonder whether the suspicion that a regulator may be acting in a non-transparent, unaccountable, disproportionate or inconsistent way might affect the markets in any way as well.

Jim Murphy (Labour, East Renfrewshire)

What we are setting out is that regulators, with the exceptions that are a statutory responsibility, must adhere to the principles within clause 19 and any code of practice in clause 20, which we will consult on. It is certainly my understanding that the regulators listed in clause 22(5) will have a challenge instead of regulatory functions, but also parameters within which they must operate in respect of how they interact with business and others. It may be helpful before Report to examine the specific areas in which those five operators function as a matter of information for the hon. Member for Somerton and Frome (Mr. Heath). If he wishes we can discuss that, so that he can analyse the way in which they operate and their sensitivity to the better regulation agenda, which I know he cares about.

I absolutely agree with the hon. Member for North-East Hertfordshire about small businesses. He made a reasonable and important point about the need to lighten the load of bureaucratic burdens on them. Some important steps have been taken in that regard in recent times, but we need to go much further. Without wishing to stray on to other clauses, he rightly supports the fact that one of the aims of the Bill is to remove unnecessary bureaucracy, outdated regulations and unnecessary burdens.

On the point about the HMRC, obviously the definitions in the clause are designed to be broad enough to capture the wide-ranging functions carried out by those regulators covered by the Hampton review. Their purpose is to enact the findings of the Hampton review. That is an additional reason why the Bill does not cover the HMRC, which is top of the list on page 84 in annexe B of notable UK regulators that are out of scope of the review. The HMRC has its own ambitious better regulation agenda, which my right hon. Friend the Chancellor published in an action plan at the time of the last Budget. That action plan, which is a publicly available document, sets out how the HMRC carries out the better regulation agenda in a way that matches its responsibilities. I hope that that reassures hon. Members, but of course they can draw on that specific document if they seek additional information on the way in which the HMRC is regulated in that respect.

Clause 24 - References to Community instruments

Oliver Heald (Conservative, North East Hertfordshire)

We are on to a different area—changes to the way in which legislation from the Europe Union is dealt with in this place.

Clause 24, if one reads the notes, is a provision that when a Community instrument—a directive or regulation—is mentioned in a Bill, it should not be necessary to recite all the various amendments that have been made to it over the years. That is thought to be a straightforward improvement to the way in which legislation is drafted. However, I am worried about the wording. If the EU makes a directive or a regulation and then we in the UK pass a Bill, in which the EU legislation is referred to, to give it effect, but then the instrument is changed, the courts in this country would be forced, by that change, to treat the new instrument as though it were the one referred to in the Bill. In other words, are we creating an automatic change to our law every time the EU changes its provisions? That seems to go beyond the description in the notes.

I should be grateful if the Minister would confirm that the situation is as described in the notes, and that there will be no automatic change in the law in this country, every time the Community changes its law, without reference back to the House.

David Heath (Liberal Democrat, Somerton and Frome)

I concur entirely with the point made by the hon. Member for North-East Hertfordshire—it is important that we understand the context.

As we move to this part of the Bill, may I have permission, Sir Nicholas, to ask the Minister a more general question? Clearly, there is an interrelationship between the changes that the Minister is introducing, in terms of the way in which European legislation is translated into British—I should say English—law, and the way in which the House scrutinises those matters in order to ensure that Parliament has proper control over what is enacted, either directly or indirectly.

We have been waiting a long time to hear substantial plans from the Leader of the House for improved European scrutiny. We are told constantly that they will arise soon, but “soon” never actually arrives. Will the Minister tell us what discussions his Department has had with the Leader of the House, because those two things are clearly linked? The legislative process cannot be treated in isolation from the process of European scrutiny, or vice versa. I hope that the Minister will confirm that there is joined-up government in that area and that there has been debate between the two, and I hope that he can give us an indication of whether any conclusions have been reached that ought to be brought before the House at the appropriate moment.

Nicholas Winterton (Conservative, Macclesfield)

Before I call the next speaker, I think that the last point made by the hon. Gentleman is slightly wide of this legislation. Although I am happy for the Minister to make a passing reference to it, I hope that his response will not take too long.

Christopher Chope (Conservative, Christchurch)

I hope that when the Minister responds to our introductory debate on part 3, he will enlighten us about where we stand in relation to what has been described as a period of reflection following the rejection in a referendum by two member states of the European constitution. We are in the extraordinary position that the European Union Bill, which had its First Reading on 24 May 2005, has not been withdrawn.

Nicholas Winterton (Conservative, Macclesfield)

Order. I always enjoy the hon. Gentleman’s contributions. If he refers only briefly—very briefly—to the matter, I shall allow him to continue, but he is rather wide of the subject.

Christopher Chope (Conservative, Christchurch)

I will be very brief. The point is that the provisions of clause 24 are almost identical to provisions in the European Union Bill. The long title of that Bill is:

“To make provision in connection with the Treaty signed at Rome on 29th October 2004 establishing a Constitution for Europe; and to require a referendum to be held about it.”

Those matters are no longer part of the Government’s agenda. Notwithstanding that, provisions in the European Union Bill are to be found in part 3 of the Bill before us.

As I understand it, the purpose of the equivalent provisions in the European Union Bill was to streamline the way in which European legislation was brought before the House—in light of the confirmation of the treaty. As the treaty has not been confirmed, and as we are still in a period of reflection—it continues under the present Austrian presidency and expires at the end of it—can the Minister explain why we seem to be jumping the gun? Part 3 is legislating for purposes that, in May 2005, were expressly being made to facilitate the implementation of the European constitution. The constitution is not being implemented, so why is it still necessary to include those provisions in this Bill?

Jim Murphy (Labour, East Renfrewshire)

I will try to stay in order.

Andrew Love (Labour, Edmonton)

Can the Minister tell us when the referendum will be? It is the only question that he has not yet been asked.

Nicholas Winterton (Conservative, Macclesfield)

Order. The hon. Member for Christchurch ultimately and accurately clarified that the point he was making was closely associated with the Bill. I call Mr. Murphy.

Jim Murphy (Labour, East Renfrewshire)

Thank you, Sir Nicholas—and I congratulate the hon. Member for Christchurch on being able to do so.

I shall try to remain in order as I respond to the points raised. The hon. Member for Somerton and Frome asked earlier how we scrutinise EU legislation. All I can say is that I sat on European Standing Committee A, European Standing Committee B and European Standing Committee C for more than two years. On average, those Committees met once a week. They were pretty lonely gatherings—none the less enjoyable, of course.

The hon. Gentleman asked how the scrutiny of EU business could be enhanced. It is important that all who consider themselves to have a positive view of our relationship with Europe should grapple with that question. We need to heighten the level of interest in the scrutiny of European legislation through those Committees and their successors. That is something that should be dealt with across parties. I am not acting as a politician today, Sir Nicholas, nor should I be under your stricture to answer the point. The hon. Gentleman says that all parties are seeking more effective ways to scrutinise and to engage in the European debate and how it interrelates with Parliament.

The other points made about the provisions of clause 24 do not relate to the constitutional treaty. The hon. Member for Christchurch was right to say that in paragraph 8, the explanatory notes say that the provisions were and would remain included in the European Union Bill that would have provided for a referendum on the EU constitutional treaty. Notwithstanding the fact that that Bill has been postponed until a date yet to be determined, the new clause will enable us more effectively to implement technically the provisions already made in Europe.

I shall give an example of that. I shall not bore the Committee; we have only until 4 pm, so I will not read out all of this one statutory instrument. However, the Producer Responsibility Obligations (Packaging Waste) Regulations 2005 define the waste directive as

“Council Directive 75/442/EEC on waste as amended by—”

and then lists a series of directives. The clause seeks to ensure that we do not have to go through that ineffective way of technically implementing decisions agreed in Europe. That way is cumbersome, but that is not the most important thing.

David Howarth (Liberal Democrat, Cambridge)

I believe that the Minister is answering the question put to him by two hon. Members about whether the new clause would effect changes to Community instruments that took place after the Act in question came into force. As there will be, I hope, a long period of reflection after Committee and before Report, I suggest to the Minister that he and his officials try to clarify the clause slightly by inserting something like, “at the time of the passing of that Act” after the word “has” in the second line. That would make it absolutely clear that what was being considered was what had happened before that Act came into being and had nothing whatever to do with what might happen after that point.

Jim Murphy (Labour, East Renfrewshire)

The hon. Gentleman makes a sensible suggestion in a sensible way, and I shall reflect with officials on whether that would be a necessary and effective thing to do. A second clause 24 would not automatically change our law every time that a Community instrument was updated. That is not the effect of the clause. I shall reflect on the hon. Gentleman’s point, because of his experience and the way that he made it.

As I mentioned to the hon. Member for North-East Hertfordshire, the amendments are extraordinarily complicated and technical. They are about how we implement decisions that have already been taken. They do not in any way affect, influence or take a view of those decisions, but simply implement them in a more coherent way.

There is already one explanatory memorandum, but it may be helpful to offer an additional technical one, not only for Committee members but for other Members of the House who may not have paid close attention to some of the details of part 3. In that way, before Report, hon. Members on both sides of the House—those on this Committee and those who have not had the good fortune to be invited to serve on it—will be able to make their own observations about the technical aspects of clause 3. That would certainly be worth doing.

I shall bring my comments to a conclusion. Clause 24 will not make any changes to policies made in Europe and will not change what can be legislated for in Europe. It will not lead to more regulation from Europe; it simply provides that a reference in UK legislation to a Community instrument such as an EC directive or regulation will have effect as a reference to that instrument, as amended, at the date on which the UK legislation is passed. I hope that that reassures hon. Members, who have asked entirely reasonable questions.

Nicholas Winterton (Conservative, Macclesfield)

Perhaps it would be appropriate for me to remind Committee members that our proceedings have to come to an end at 4 o’clock. I hope that that fact will be borne in mind, because we still have a number of other clauses, amendments and new clauses to deal with.

Clause 25 - EEA agreement and EEA state

Oliver Heald (Conservative, North East Hertfordshire)

I only have a brief point to make. At the end of the clause there is a provision relating to Scotland and Acts of the Scottish Parliament. I want to check whether that has been discussed with the Scottish Parliament and it is content.

David Heath (Liberal Democrat, Somerton and Frome)

I want to make a rather pedantic point, unfortunately, which is also rather complicated, about whether the European economic area agreement, or any modifications to it, are Community treaties. We know that the EEA agreement was entered into by member states of the European Union, the European Coal and Steel Community and the European Free Trade Association, but unlike sovereign states there is no legal persona that is the European Union. Had the referendum gone ahead and the constitution been proceeded with, the EU would be a legal personality; but it is not. Therefore, we have an agreement of member states.

Under the provision, with which I have no basic quarrel other than this technically that I am looking into, there is a definition of the EEA agreement:

“the European Economic Area signed at Oporto on 2nd May 1992, together with the Protocol adjusting that Agreement signed at Brussels—

fair enough—

“as from time to time modified or supplemented by or under the Community Treaties.”

The difficulty is that amendments to that are not Community treaties per se, in that they are entered into by the European Union as such, because it cannot do so—only member states can do that—and amendments to the EEA are, by definition in British law, not defined as Community treaties under section 1(2) of the European Communities Act 1972. How do I know that? I have in my hand the European Communities (Definition of Treaties) (Agreement on Enlargement of the European Economic Area) Order 2004, which was necessary to allow the participation of the Czech Republic and the republics of Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and the Slovak Republic within the EEA at a time when they were not member states of the European Union.

The second provision of the 2004 order is:

“The treaty specified in the Schedule to this Order is to be regarded as a Community Treaty.”

In other words, it was not, but the order put to Parliament was to allow it to be regarded as such. That is a rather technical point, but there is a circular definition of Community treaties that is perhaps to be avoided. I do not expect the Minister to give me a chapter-and-verse response without notice, but I ask him to consider the matter and ensure that he is satisfied that the legal definitions are in order and we do not have a circular argument about what comprises a Community treaty. I think that the Minister gets the point that I am trying to make and may, indeed, have an answer.

Jim Murphy (Labour, East Renfrewshire)

To the extent that the hon. Gentleman gets the point, I think that I also get it, but it is, as he says, a complicated and potentially circular argument. The only information that I can offer him—his research may have made him aware of this—is that section 1 of the European Economic Area Act 1993 made the EEA agreement a Community treaty for the purposes of the European Communities Act 1972. I shall analyse the hon. Gentleman’s additional comments.

David Heath (Liberal Democrat, Somerton and Frome)

The principal point is that the EEA agreement was made into a Community treaty by virtue of the 1993 Act, but subsequent changes to it are not, unless there is another bit of primary legislation or an Order in Council that enables them to be.

Jim Murphy (Labour, East Renfrewshire)

The whole Committee accepts the point that the hon. Gentleman has made. The clause amends the Interpretation Act 1978 to provide that references in domestic legislation to the “EEA agreement” will automatically refer to the current version of that agreement. There is no need to have a prolonged discussion on the clause unless hon. Members wish to do so.

The hon. Member for North-East Hertfordshire made the point about the devolution settlement. My understanding is that the Scottish Executive are content with the approach in clause 25 and how it affects the devolution settlement. As a Scot, I am continuously sensitive to ensuring that our deliberations respect the devolution settlement.

As has been said, the EEA agreement was signed in 1992 and was adjusted by the protocol signed in Brussels on 17 March 1993. References to the “EEA state” and “EEA agreement” are made thousands of times in primary and secondary legislation. Although changes to membership, and therefore to the agreement, do not happen often, when they do, updating thousands of references is an extraordinarily time-consuming and resource-intensive effort. The clause seeks to ensure that such a process is no longer necessary and that we refer to the EEA in its current form. We should not need to replace all those thousands of different references. Given those comments, I move that clause 25 stands part of the Bill.

Clause 26 - Power to make orders, rules and schemes

Oliver Heald (Conservative, North East Hertfordshire)

Clause 26 adds to the ways in which the law in the European Union can be brought into English law under section 2 of the European Communities Act 1972. Currently, that has to be done by regulations, but the clause would add orders, rules and schemes to that provision.

What sort of changes does the Minister envisage being made by “orders, rules and schemes”—those are the words that will be added—rather than by regulations? Will he explain what orders, rules and schemes are in this context? What procedures would be used to introduce them? Can he give examples of a particular change that would be best made by an order, rule or scheme? In other words, what is this all about?

The 1972 Act refers to regulations. The Minister now wants to add these other categories, and we should probe him as to what he has in mind. Subsection (5) gives Ministers powers to change Acts or subordinate legislation to include references to orders, rules and schemes. Did such things exist at the time that such Acts were made? In other words, to what extent is this provision retrospective as regards orders, rules and schemes? For example, if we wanted to change Acts that were introduced in 1995, 1996 or 1997, were orders, schemes and rules in place at the time? Are such terms known specifically under the English law?

Jim Murphy (Labour, East Renfrewshire)

Sir Nicholas, what is it about? I have already offered to supply an explanatory memorandum. Obviously, all members of the Committee have followed every detail of the specific clauses under part 3, but those hon. Members who have not had the benefit of serving on the Committee might not have so acquainted themselves.

As for rules, regulations, orders and schemes, paragraph 1500 in volume 6 of “Halsbury’s Laws of England” states that the

“contents of rules, regulations and orders are, in fact, often indistinguishable in nature”.

If that were the case under English law, to put it flippantly it is mostly the case in some aspects of European law. I reassure the hon. Gentleman that the provision will not affect policy made in Europe or what can be legislated for in Europe. It will not lead to more regulation from Europe but, when we have already agreed to European legislation, clause 26 will help to streamline the process of transposing those EC obligations into United Kingdom legislation.

I shall illustrate matters further to inform and enlighten the Committee. As a general rule, it is possible for statutory instruments of the same type—two orders or two sets of regulations—that are subject to the same parliamentary procedure, both affirmative resolution for example, to be combined into a single instrument to avoid having to make two separate statutory instruments. Section 2(2) of the European Communities Act 1972 provides a power to implement European Community obligations into UK law by statutory instrument.

When a Minister is exercising the power to implement Community obligations, he can in general currently do so only by making regulations, not other types of secondary legislation. Regulations made under the power of section 2(2) of the 1972 Act can be combined into a single instrument with regulations made under the power in another Act, but cannot be combined with another type of statutory instrument such as orders, rules or schemes. Instead, two separate instruments would have to be made even if they were intended to create a single, seamless regulatory framework governing one particular area.

If the clause were not in place, the people being regulated would need to refer to both instruments. It is much more convenient and accessible to include all the provisions that made up a single regime or cover a particular area in one instrument in such a manner. The clause addresses the problem. It provides that the power under section 2(2) of the European Communities Act can be exercised by a Minister making orders, rules or schemes as well as regulations. The clause sets out the procedure.

Christopher Chope (Conservative, Christchurch)

A provision under clause 3 of the European Union Bill of the current session ensured that, when such an instrument was coming forward, the Minister would have to make a statement about whether it complied with the principle of subsidiarity. Can the hon. Gentleman assure us that that will still remain the Government’s policy and that such powers will not be used unless they are accompanied by a principle of subsidiarity compliance statement, which is not referred to under this Bill?

Jim Murphy (Labour, East Renfrewshire)

I sense that I am testing the Committee’s patience by going into the technical details, but I can confirm the hon. Gentleman’s point. I hope that I have reassured him. The clause is another example of a sensible tidy up of the way in which decisions made in Europe are implemented into UK law.

Oliver Heald (Conservative, North East Hertfordshire)

I am grateful to the Minister. Now that he has explained his view of the meaning of regulations, rules and orders, we are on familiar territory.

However, what about the schemes? Anyone who hears the expression “schemes”—[Interruption.]—is automatically a little worried and possibly wants to frustrate them, as the hon. Member for Somerton and Frome said. I am aware of only one reference under the law to schemes. The Fisheries Act 1981 brought in a scheme that was not popular universally. However, it was described under that Act as a scheme. Is that the only one of which he is aware, or is it a term that is used more widely than in the Fisheries Act?

Jim Murphy (Labour, East Renfrewshire)

By way of information for the hon. Gentleman, schemes normally prescribe overall plans for the attainment of objectives described in general terms. I accept that that is very technical, and I know that the hon. Gentleman accepts that. Rules usually deal more with procedural matters, such as the procedures of a court of tribunal. Volume 6, paragraph 1500 of “Halsbury’s Laws of England”says:

“the contents of rules, regulations and orders are, in fact, often indistinguishable in nature.”

Oliver Heald (Conservative, North East Hertfordshire)

I think “Halsbury” is totally wrong about that. In 1932, the report of the Committee on Ministers’ powers—the Donoughmore Committee—made it clear that regulations, rules and orders have distinct meanings. The report said that they

“should not be used indiscriminately ... The expression ‘regulation’ should be used to describe an instrument by which the power to make substantive law is exercised, and the expression ‘rule’ to describe the instrument by which the power to make law about procedure is exercised. The expression ‘order’ should be used to describe the instrument of the exercise of (A) executive power or (B) the power to take judicial and quasi-judicial decisions.”

So it seems to me that “Halsbury” is actually being rather sloppy.

Jim Murphy (Labour, East Renfrewshire)

I am not in a position to assess whether “Halsbury” was being sloppy, I am simply here to inform the Committee about the specifics in the clause. As I understand it, any power in an Act to make secondary legislation will specify the type of instrument that can be made, and there is not a completely clear distinction between the different types of instrument, as I said earlier about the distinction between schemes and rules.

I do not wish to pass judgment on “Halsbury” or anyone else, including the hon. Gentleman, whose legal background we have already heard about in some detail. I have offered to provide the Committee with an additional explanatory memorandum dealing with some of the specifics that everyone acknowledges are detailed and complicated. It may also be helpful to place copies in the Libraries of both Houses.

David Heath (Liberal Democrat, Somerton and Frome)

Sir Nicholas, I suppose it is excessively pedantic to ask why the spelling of byelaw has changed in last couple of years, and why we now have an extraneous “e” in it which never used to be there.

Nicholas Winterton (Conservative, Macclesfield)

I am sure that the Minister will wish to respond to that highly relevant and important matter.

Jim Murphy (Labour, East Renfrewshire)

The hon. Gentleman is right—it is an extremely pedantic point.

Clause 27 - Power to make ambulatory references to Community instruments

Jim Murphy (Labour, East Renfrewshire)

I beg to move amendment No. 56, in clause 27, page 15, line 24, after ‘instrument’ insert:

‘or any provision of a Community instrument’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss Government amendments Nos. 57 to 60.

I give notice that I shall seek the Committee’s permission to put amendments Nos. 57 to 60 together, and I hope that the Committee will give me that permission if it will speed up proceedings.

Jim Murphy (Labour, East Renfrewshire)

Forgive me for not following the detail of your strictures, Sir Nicholas; do you wish me to move all the amendments simultaneously?

Nicholas Winterton (Conservative, Macclesfield)

The Minister can move Government amendment No. 56 and speak to the other amendments as well.

Jim Murphy (Labour, East Renfrewshire)

Thank you; that is very helpful.

Oliver Heald (Conservative, North East Hertfordshire)

It seems to me that the amendments are just drafting improvements. Does the Minister agree?

Nicholas Winterton (Conservative, Macclesfield)

I am sure that the Minister is just about to say that.

Jim Murphy (Labour, East Renfrewshire)

The first sentence of my notes says:

“Sir Nicholas, these are drafting amendments.”

In making that helpful point, the hon. Gentleman has unexpectedly delayed the Committee for 15 seconds or so. However, we have time; we have another two hours.

These are technical drafting amendments that are aimed at improving a technical clause to make it more precise. I could, if hon. Members wish—[Hon. Members: “No.”] I could, if hon. Members wish, sit down and make no further comment; or I could of course go through every amendment in great detail. I sense that the Committee, which has been in a good mood all day, is in the mood for me not to speak to the amendments in great detail. I do so formally, therefore, on the basis that they are drafting amendments to make the provisions in the clause more precise.

Nicholas Winterton (Conservative, Macclesfield)

I have to carry out my duties strictly in accordance with the appropriate procedure. I therefore put the question.

Clause 31 - Commencement

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss the following:

New clause 6—Expiry—

‘Part 1 of this Act shall cease to have effect at the end of the period of five years beginning with the day on which it is brought into force.’.

Oliver Heald (Conservative, North East Hertfordshire)

New clause 6 fulfils a promise that I made in my speech on Second Reading, when I said that I should propose a sunset clause for the order-making part—part 1—of the Bill. Many hon. Members in Committee agree that we make inadequate use of post-legislative scrutiny in this country. In circumstances where a Minister puts forward a Bill and there is considerable controversy about it, it may be appropriate to introduce a period after which post-legislative scrutiny should take place.

We in Parliament are getting better at considering Bills in advance, and I am a strong supporter of pre-legislative scrutiny. To be fair to the Government, they have published more than 40 bills in draft form, many of which have been considered by Committees in advance. A sunset clause is for the other end: the consideration of matters afterwards. The Minister knows that great concern is developing about part 1, particularly because there are no adequate safeguards for such a wide, general order-making power.

The latest of many submissions that I have seen from people and organisations that are worried about the Bill comes from the Maranatha community. It says that the Bill has been presented as a low-key, tidying-up measure, but in any other European country a proposal with such far-reaching effects would require an amendment to the constitution. It goes on to say that the Bill as proposed threatens to undermine what remains of parliamentary democracy, and that it could be used to endanger the liberty or freedom of speech of any individual, group or organisation. The Maranatha community submits that the Bill should not continue in its present form.

Members of a gentle Christian community have put forward that view because they are worried that some future Minister—not this particular Minister—might have the power to affect the protections available to individuals or ethnic or religious groups. They do not want that sort of change to be made unless the traditional full procedures of the House and all the protections that those involve are available to them as individuals and to us as parliamentarians.

As we have discussed, the background to the Bill is that the Government consulted on a deregulatory Bill with non-controversial changes. The Bill that has followed that consultation does not meet the terms on which the consultation was taken. What we have now is the wide, fast-track power to amend, repeal or introduce primary or secondary legislation by order for any purpose. The Bill does not refer to using the power for deregulation. Indeed, clause 12(2) openly contemplates the use of the fast-track power to increase costs to business or to cause disbenefits, and requires the Minister to assess them in a statement to be filed with the draft order. That is not what business expected. As John Cridland of the CBI commented recently, the intended outcome should be

“to deliver more and swifter deregulatory measures for the benefit of business and society”.

The Bill is controversial because that wide order-making power is not being given for a clear or well-defined purpose such as deregulation. It is being given for any purpose. That must be changed.

Clause 4 gives that fast-track power not just to a Minister but to any person. I assumed that that proposed mechanism was designed to build on the suggestion in the Hampton review that regulators’ regulation-making powers should be merged, a suggestion which I support. However, when I suggested that the Bill should say that, the Minister replied, “The Bill doesn’t say that partly because our ambitions are wider than that.” What are those wider ambitions?

The Bill needs three kinds of safeguard, and I have tabled amendments on three things. First, purpose: it should only be possible for the fast track to be used to deregulate or make non-controversial simplifications or pass Law Commission Bills. Secondly, reserved matters: it should not be possible to use the fast track for constitutional, important or controversial changes. Those should be reserved for our usual procedures. Thirdly, procedural veto: there should be a procedure whereby a Committee or the Houses of Parliament can simply veto use of the fast track for inappropriate measures.

Until the Bill is amended to provide safeguards, it is unlikely to be passed. During Committee debate, the Minister has promised to make changes, but so far we have not seen those amendments, although a meeting has been arranged. He has welcomed the Select Committee report suggesting changes, but it is worth noting that many of my amendments—there have been dozens of them—have been based on the Select Committee’s findings and have followed its wording almost exactly, and those amendments have not found favour with him. Unless proper protections are put in place, the Bill will have profound implications for democracy and will be a move towards government by ministerial fiat.

We have bent over backwards in Committee to provide the Minister with opportunities to put things right. It is not just me; the Liberal Democrats have tabled amendments on the same themes, and all parties on the Opposition Benches have supported them.

There is a need for a Bill to help with deregulation, and the Government’s own consultation showed support for the sort of Bill for which we are arguing. But concern is growing on both sides of the business world, with business organisations pressing for the necessary safeguards and not wishing to lose a Bill that could help with deregulation, and the TUC expressing concern that the Bill should not be too widely drawn in case another Government with a different political perspective were to remove valuable protections that it holds dear.

I am not saying that a sunset clause is my preferred option. I would prefer to see amendments of the sort that I have tabled being accepted by the Minister. Maybe he will want to redraft them, but I want those safeguards in the Bill. As a last resort, if we go ahead and have a Bill, it must be limited in time so that we can reflect on whether the order-making powers have created the sort of problems that many think they will create, myself included.

Nicholas Winterton (Conservative, Macclesfield)

Definitely, yes.

Oliver Heald (Conservative, North East Hertfordshire)

I even hear the Chairman saying, “Definitely, yes.”

Nicholas Winterton (Conservative, Macclesfield)

That was a slightly different question.

Oliver Heald (Conservative, North East Hertfordshire)

I realise that you would be unable to comment, Sir Nicholas.

A sunset clause is a last-ditch attempt to put at least some protection or roadblock in place. The real answer would be for the Minister to come back on Report with the strong safeguards that everybody wants.

David Howarth (Liberal Democrat, Cambridge)

I agree with everything that the hon. Member for North-East Hertfordshire said. I am glad that he is following the threefold exposition of the types of protection that we are looking for that I proposed in my speech on the programme motion, which now seems a very long time ago. He is correct that concern about the Bill is growing. The Government have staunchly resisted any suggestion that the purposes for which the Bill can be used should be restricted in any way. They have also resisted any suggestion that its subject-matter should be restricted. The only matter on which they have given way is the possibility of procedural protections, and the only protection that they favour, or at least are willing to examine, is not as great as it should be because the Government hold a majority in the Committees of the House.

The alternative method of procedural protection that I put forward, whereby a certain number of Members of the House could block the use of the Bill, has not been accepted. It seems that we are in the last ditch in our attempt to insert a sunset clause, although I should like to make a couple of comments when we come to clause 33 on the short title of the Bill.

The hon. Member for North-East Hertfordshire made a good point. We need to ask the Government, “Why do you want these powers, and why do you want them for so long?” The Minister has given a number of reasons that refer to quite short-term problems. He referred constantly to firefighters’ pensions and to the Hampton review. Why do the Government want to hold such wide-ranging powers beyond the time that they would need to bring in the sort of changes to the regulatory regime that they propose? The sunset clause would give the Government those powers but only for a limited time.

The Committee should realise that the sunset clause has a defect: the limit applies to the power to make the orders, but not to the orders made under it. If orders were passed that were inappropriate or highly controversial—or even subversive of the constitution—they would still be valid even once the powers of the Bill to make such orders had lapsed under the sunset clause. Nevertheless, it would be worth withdrawing that power after a limited time—in other words, it would give the Government five years to subvert the constitution, and if they had not done it by then the power to do so would cease.

I am worried that the Government want to be able to exercise those powers for such a long period. My feeling is that they want them not for specific purposes but just in case something crops up for which they need a wider power. However, the wider ambitions are not specified at this point. Opposition Members sometimes wonder whether the Government have some specific wider ambitions but are not telling us about them. I am coming to the view that that is not so—that they do not know what their wider ambitions are, and that they are asking for those powers just in case they need them, or want them. In addition, the Cabinet Office does not get all that many opportunities to bring Bills before the House, and it does not know what sort of problems it will be required to address in future. Just in case, it has brought us a Bill that is drafted as broadly as possible.

I offer my support and that of my hon. Friend the Member for Somerton and Frome for the sunset clause in the knowledge that it is not a perfect solution. It is the last ditch, and I hope that the Government take the opportunity at least to offer some hope to those of us who feel that the Bill is dangerous.

Christopher Chope (Conservative, Christchurch)

I, too, support new clause 6. The Bill is part of a pattern. Sir Nicholas, you were in the Chamber during business questions today and heard the Leader of the House tell me that proposals are circulating in Government that are designed to restrict the power of Members to ask ordinary written questions. The Leader of the House admitted as much today. Why are the Government seeking to rein back on the power of Members of the House to legislate, ask questions and try to hold the Executive to account? We are debating the Bill in a very unhealthy atmosphere.

Oliver Heald (Conservative, North East Hertfordshire)

The hon. Member for Cambridge (David Howarth) was quite charitable about what the Government’s aims might be. Does my hon. Friend share my concern that at the end of his period of tenure, the Prime Minister will become frustrated with all the fuss and bother of Parliament—a place for which he has not had much respect—and that this is his last throw of the dice? He wants to get rid of all this fuss and nonsense—

Nicholas Winterton (Conservative, Macclesfield)

Order. Will the hon. Gentleman address the Chair, as my age has made me slightly hard of hearing?

Oliver Heald (Conservative, North East Hertfordshire)

Yes, Sir Nicholas.

The Prime Minister wants to get rid of the fuss and nonsense that gets in the way of the Napoleonic vision of the “great leader”.

Christopher Chope (Conservative, Christchurch)

One could almost sum up the attitude of the Prime Minister as follows: it is unfortunate that Members of Parliament, and particularly Labour Members, are a legal necessity. He would like to do away with all that. My hon. Friend is too charitable in saying that it is simply frustration on the part of the Prime Minister. I suspect that he finds the whole process too burdensome and that he would like to spend more time with his family—or less time in the House, answering for the Government’s failures.

Oliver Heald (Conservative, North East Hertfordshire)

Does my hon. Friend agree that the Prime Minister often says that every time he has made a change he always wished that he had gone further? Under the Bill, he will be able to go as far as he can see and then go further still using the order-making power of the Bill to build on that platform. If the Education Bill is slightly damaged by the rebels, when it comes to the crunch once it is in statute, he could just use one of those orders to get in all the rest of it.

Nicholas Winterton (Conservative, Macclesfield)

I have allowed that intervention, but I do not think that we should pursue that line of argument.

Christopher Chope (Conservative, Christchurch)

New clause 6 would introduce a sunset after five years. I wonder whether that might still be during the course of this Parliament if the powers in the Bill are used. It has the power to extend Parliament beyond five years. That may be for the convenience of the Prime Minister.

New clause 6 is generous, because it offers five years. If the Bill goes through in anything like its present form—I am sure that it will encounter much difficulty during its remaining stages in this House and the other place—I hope that he will be able to persuade the incoming Conservative Government that, in a period of much less than five years, part 1 of the Bill should be scrapped in toto. I hope that it will be an early undertaking for the Leader of the Opposition in his quest for power.

David Heath (Liberal Democrat, Somerton and Frome)

Setting aside the hon. Gentleman’s optimistic view of the chances of the Conservative party forming another Administration, will he accept—this is not a party political point—that no Government of any hue shall dispense lightly with those extraordinary powers? That is precisely our problem. Any Government would be tempted to keep rules that allow them to do almost what they want with their parliamentary majority without the threat of parliamentary scrutiny.

Christopher Chope (Conservative, Christchurch)

The hon. Gentleman is absolutely right. I shall explain why I concede his point. When I was first on Wandsworth council, in 1977, we as an opposition so provoked the incumbent Labour majority that it brought in a guillotine. It introduced the guillotine just before the May 1978 elections, and ever since, that guillotine has been used very effectively by the Conservative majority on the council. That is what happens. That is why it is essential that with powers as great as those in the Bill, we should have a clear and collective undertaking from the Opposition parties that they intend to repeal the legislation within—I hope—five years.

Jim Murphy (Labour, East Renfrewshire)

I have enjoyed listening to some of the debate and conjecture from Opposition Members. To some extent, it was a rerun of parts of the debate that we had in our part 1 deliberations. I shall seek not to rehearse all aspects of part 1, because we had that debate at length for four sittings. You will keep me in order if I wander from the debate, Sir Nicholas.

Clause 31 sets out when the provisions of this legislation come into effect, which is at the end of the period of two months beginning the day on which the Bill is enacted. Technically, that means two months after Royal Assent. That follows the general rule that Acts should not come into force until two months after they have been passed.

New clause 6, moved by the hon. Member for North-East Hertfordshire, draws on the suggestion that we should have a sunset clause. Hon. Members on both sides will not be surprised to hear that I am firmly against the idea of sunsetting part 1. To set an arbitrary date for the expiry of part 1 would, for the reasons that I am about to give, be wholly inappropriate.

I spoke at our first sitting about the need to change the culture across Whitehall in terms of the better regulation agenda, the need to build a momentum, and the need for an enormous amount of work, energy and effort, to alter the way in which Whitehall and others approach better regulation. Having a sunset clause for part 1 of the Bill would greatly undermine our ability to do that and create uncertainty about the longevity of part 1.

Mark Harper (Conservative, Forest of Dean)

There is an alternative way in which the Minister could look at the situation. If civil servants knew that the Bill was only going to be enforced for five years, it could be looked upon as a spur to get them to introduce deregulatory matters more speedily, knowing that that opportunity would end after five years. It could act as a spur to efficiency.

Jim Murphy (Labour, East Renfrewshire)

That would be a fair point if the better regulation agenda was temporary and only lasted five years. Our intention of course is to ensure that we deliver on simplification, better regulation—

Mark Harper (Conservative, Forest of Dean)

For ever.

Jim Murphy (Labour, East Renfrewshire)

Well, last week we joked about the right hon. and learned Member for North-East Fife (Sir Menzies Campbell) and a Ming dynasty, which I think lasted for 276 years.

The point made by the hon. Gentleman would be fair, if our ambition and determination to deliver on better regulation had a time limit. We want to deliver a change in culture and in the way in which Whitehall regulates, and to maintain a momentum. Our assessment is that a sunset clause would affect our ability to deliver that change in culture, to get the investment and prioritisation across Whitehall, to invest resources, time and energy, and to engage senior people with the agenda. A sunset clause would create uncertainty in our ability to deliver and would stall our momentum.

Of course, our intention immediately after this legislation is enacted will be to start to deliver on the Government’s simplification plans. We expect that as we implement the first set of plans that come out of Departments, we will challenge those Departments to come up with additional plans to remove unnecessary bureaucracy, outdated regulations and unnecessary burdens.

Mark Harper (Conservative, Forest of Dean)

Taking that point further, what the Minister seems to be saying is that the Bill will create a perpetual motion machine in which, on one hand, half of the Government and civil service will be busy creating complicated Bills that are difficult to understand and that will impose burdens, and on the other hand there will be a diligent Minister with a team of civil servants creating orders to sweep away the complexity created by the other part of Government. If he can implement a culture change, surely the Government’s legislative measures will be more simple and straight forward, and less burdensome in the first place, so the necessity, once the step change has been made, for powers to sweep away that complexity will end.

Jim Murphy (Labour, East Renfrewshire)

In addition to the simplification plans, when the Government introduce a new proposal, we will seek to identify offsetting measures. That will be part of the culture change within Government.

Oliver Heald (Conservative, North East Hertfordshire)

But only a month or so a go, the Department of Trade and Industry set out its list of new proposed regulations. The list ran to 40 pages. Why was there not a similar list of measures that were going to be scrapped?

Jim Murphy (Labour, East Renfrewshire)

The DTI has published its simplification plan. I think that it is a publicly available document, but I will undertake to send the hon. Gentleman a copy of the DTI’s simplification plan in which it identified ways in which they could introduce offsetting measures, simplify legislation and reduce unnecessary bureaucracy and burdens.

Oliver Heald (Conservative, North East Hertfordshire)

I think that the Minister might have misunderstood my point. The DTI publishes a list of all Government regulations proposed for the two dates that there are for regulations to be made. This year, that list runs to 30 pages—it is not just for the DTI. I welcome any plans, of the sort that he described, that the DTI might have, but the question that I ask is this: why does not the DTI or the Cabinet Office publish a list of what will be scrapped at the same time so that one in, one out works?

Jim Murphy (Labour, East Renfrewshire)

It might be helpful to explain to the hon. Gentleman what is happening. I come to the point mentioned by the hon. Member for Forest of Dean (Mr. Harper). Instead of one Minister at the centre of Government coming up with better proposals for regulation and simplification, every Department is now being challenged. With the creation of the panel for regulatory accountability, chaired by the Prime Minister, every Department must pursue simplification plans. Not just one Minister in one Department but every Department is doing that work.

Many of the documents respecting those specific proposals are already publicly available, and that must be welcomed. I am not aware that it has happened before. I do not seek to make a party political point; that is just part of the wider agenda of implementing simplification. It is welcomed by business, and Departments seem to be taking up the process enthusiastically. The Bill will enable the delivery of many of those simplification proposals and plans.

It might help the hon. Member for North-East Hertfordshire if I provided him with the Department of Trade and Industry plan, as he referred to the DTI in particular. I shall ensure that the publicly available DTI simplification plan is sent to him, so that he is aware of the specifics.

I strongly believe that having a sunset clause of the nature advocated by the hon. Member for North-East Hertfordshire would undermine our ability to drive the better regulation agenda throughout Government in a determined way. I am happy to make an undertaking that, as with the 2001 Act, a Minister of the Crown will report to the House no less than five years after enactment on the operation of the proposed Legislative and Regulatory Reform Act. A similar undertaking was given after the 2001 Act was passed, which led in part to the review of the Act and discussions about its effectiveness.

The hon. Member for Cambridge mentioned this general point, and I do not know whether it undermines his ability to vote for his own amendment: he accepts that under the Bill we would be implementing simplification proposals and lightening the burden on business. The way that his sunset clause is drafted, with no savings provision, means that anything delivered by the 2005 Act would be lost. He referred to that—in a different manner, of course.

David Howarth (Liberal Democrat, Cambridge)

That is not my interpretation of the new clause, although what the Minister says is of course a possible interpretation. If he is now engaged in discussing drafting points, perhaps he will accept the point of the clause and come back to it on Report.

Jim Murphy (Labour, East Renfrewshire)

No. As I said, that is not the significant point that I wished to make; it is a matter of the way that it is drafted. If the hon. Gentleman wishes to, he may check that I said that. It was a specific point about the way that he drafted the new clause, and I wondered whether he was aware of it.

For example, clause 28(4) of the Bill is a savings provision respecting the 27 orders delivered under the 2001 Act. Those orders would be saved by virtue of clause 28(4), but in the absence of a similar savings provision in his new clause, any meaningful simplification plans delivered or burdens lightened—even those that the hon. Gentleman might support—would be lost as a consequence of his new clause.

Christopher Chope (Conservative, Christchurch)

The Minister has attacked my hon. Friend’s new clause, but can he address whether he believes as a matter of principle that sunsetting is a good way of restricting the burden of regulation?

Jim Murphy (Labour, East Renfrewshire)

I do not think that the comments that I made about the drafting of the new clause tabled by the hon. Member for North-East Hertfordshire could be misconstrued in any way as an attack. They were a gentle probe. The new clause is technically inefficient in its drafting. The Bill has a savings provision—

Christopher Chope (Conservative, Christchurch)

I think that the Minister has misunderstood my intervention. I wanted to find out whether the Minister believes in the principle that an effective way of reducing the burden of regulation is to ensure that any regulations that are made are subject to sunset clauses. Does the Minister agree that that is a useful proposition or not?

Jim Murphy (Labour, East Renfrewshire)

In general I do not. One of the things that we all hear from the business community and others about regulation is that common commencement dates for regulations are needed. We are moving on that, which is generally welcome. Hon. Members on both sides will find that small businesses in their constituencies welcome common commencement dates and we may wish to go further than that. But to have as a norm a sunset clause on simplification and better regulation proposals would create an enormous degree of uncertainty.

In the past we had situations where businesses quite rightly said that we had to seek legal advice about when proposals were coming into force and that has been dealt with in some part by common commencement dates. With automatic sunsetting clauses businesses would have to seek advice from accountants and others about the date on which those simplification and better regulation proposals are sunsetted.

Oliver Heald (Conservative, North East Hertfordshire)

But is it not the Cabinet Office that has asked Sir Roger Toulson and the Law Commission to engage in a consultation on post-legislative scrutiny, which includes ideas such as sunsetting and the like? Can the Minister really set his face against that, particularly when the consultation has only just started? There was an excellent seminar last week in which the Law Commission explained that it was looking at those points and asking for evidence. It seems rather wrong just to cut off sunsetting as a principle in this way.

Jim Murphy (Labour, East Renfrewshire)

As I said in response to the hon. Member for Christchurch, in general I am not attracted to sunsetting clauses in the way he suggests. One area where a greater degree of post-legislative scrutiny is needed is regulatory impact assessments. I have no idea whether we are within the scope of the new clause, Sir Nicholas, but one of the things about regulatory impact assessment is that an assessment is made when a proposal is brought forward by Government identifying costs, benefits and likely impacts. My sense is that there is not often enough a retrospective analysis of whether those impact assessments were accurate, whether the expected benefits were delivered, the expected costs were accurately assessed and the predictions in the proposal, which partly in a sense justified the proposal, were accurate. There is in a general sense a great case to be made for much stronger and more consistent retrospective assessment of whether impact assessments were effective predictors of likely outcomes. We are trying to move to that across Government.

The hon. Member for North-East Hertfordshire spoke about a sunset clause being a necessary protection. I do not feel that that is the case. In addition to the points that I made about changing the culture across Whitehall, the Government assert that the preconditions within 3(2) and, without wishing to rehash the debate about necessary protections and continuing to exercise any right or freedoms, the need for statutory public consultation with those who would be affected—

Nicholas Winterton (Conservative, Macclesfield)

Order. May I remind the Minister that we are dealing with clause 31, which is about the commencement date, and new clause 6 which relates to a sunset clause? He is going a little wide and unnecessarily so. Perhaps he can direct his remarks to clause 31 and new clause 6?

Jim Murphy (Labour, East Renfrewshire)

Of course I will obey your strictures, Sir Nicholas. The hon. Member for North-East Hertfordshire said that a sunset clause was a necessary safeguard. I am making the point that there are other safeguards and protections in the Bill and in our procedure. Not least among them is that under the 2001 Act there is a ministerial undertaking not to press ahead with proposals that the relevant Select Committees oppose. The additional protection that we have conceded in Committee is that we will have conversations with Conservative and Liberal Democrat Front Benchers—I think that it will be the week after next—about the specific shape of the principle of a veto. That is a substantial and significant additional protection that we are now committed to putting into the Bill as a consequence of points raised by hon. Members, particularly those opposite, and by the relevant Select Committees. In our opinion, that and the other reasons given mean that the sunset clause is not necessary.

Nicholas Winterton (Conservative, Macclesfield)

I feel that I should give notice to the Committee that the Opposition have indicated that they may wish to press new clause 6 to a Division, in which case I shall put the question only after we have disposed of new clause 2, which is also for Division only.

Clause 32 - Extent

David Heath (Liberal Democrat, Somerton and Frome)

Will the Minister explain what legislation he has in mind that extends outside England and Wales, Scotland and Northern Ireland? Are we dealing with the British overseas territories or is there another interpretation? [Interruption.] As my hon. Friend the Member for Cambridge says, wider still and wider.

Jim Murphy (Labour, East Renfrewshire)

Of course the Government do not intend to legislate beyond their territorial integrity. If that is the hon. Gentleman’s reading of clause 32, we will seek to clarify the point before Report.

David Heath (Liberal Democrat, Somerton and Frome)

He does not know, does he? No.

Clause 33 - Short title

David Howarth (Liberal Democrat, Cambridge)

We have reached the end of the Bill and the clause that describes its short title. Is the Minister still satisfied with the short title that is being offered in clause 33? Throughout the debate he has referred so many times to the Hampton review that he might perhaps be prepared to offer the Hampton review Bill in place of the present name. He has also referred so many times to firefighters’ pensions that perhaps that ought to form the title.

The Bill has a popular alternative short title, which I think should be attributed to Professor John Spencer; the abolition of Parliament Bill.

Nicholas Winterton (Conservative, Macclesfield)

I am tempted to allow the hon. Gentleman to continue, but what he has said so far does not encourage me to do so. If anything had happened in Committee to lead us to believe that the short title needed to be changed, there would have had to be a substantial change to the Bill. I therefore do not believe that there are any grounds for suggesting that the short title be amended. If the hon. Gentleman wishes to continue—but very briefly—then I shall show flexibility.

David Howarth (Liberal Democrat, Cambridge)

My point was almost the opposite of yours, Sir Nicholas. Since there had been no change to the Bill, I wondered whether the Minister would consider changing the title to the abolition of Parliament Bill, since that is still possible under the Bill.

Nicholas Winterton (Conservative, Macclesfield)

The Minister has no comment to make. I therefore put the question.

New Clause 17 - Combination of powers

Jim Murphy (Labour, East Renfrewshire)

I beg to move, That the clause be read a Second time.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss new clause 18—Combination with powers under European Communities Act 1972.

Jim Murphy (Labour, East Renfrewshire)

As we come towards the end of our proceedings, I wish to talk to new clauses 17 and 18. They are technical, and I hope that members of the Committee found the note that I circulated last week to be helpful. I shall reiterate some of its points. Currently, it is not possible for a statutory instrument made under an enabling power in one Act to be combined with a statutory instrument made under an enabling power in another Act if parliamentary procedures require that the two Acts differ. However, it is possible for statutory instruments of same type, for example when both are orders or regulations, that are made under different enabling powers and go through the same parliamentary procedure, to be combined into one instrument.

New clause 17 would enable provisions under section 2(2) of the European Communities Act 1972 and those under another Act to be contained in a single instrument when the provision under the Act is subject to a different procedure. Broadly put, the instrument as a whole will have to follow whichever procedure under either Act is the more onerous. Section 2(2) of the European Communities Act enables the use of either affirmative or negative resolution procedure when the appropriate procedure for an instrument made under the section was affirmative. The instrument could also include provision made under another power.

New clause 18 will similarly make it possible to combine statutory instruments made under section 2(2) of the European Communities Act with an order made under clause 1, provided that the order as a whole is subject to the procedure required under part 1 of the Bill. That will enable a single order to implement Community law—section 2(2) of the ECA—while also using clause 1 to remove pre-existing domestic statutory regulatory requirements that are no longer thought appropriate, as a result.

I reassure hon. Members that the purpose of new clause 17 is not to enable Ministers to make provisions and subordinate instruments that they could not already have made, but to reduce the number of instruments needed to make provisions that could already be made. I hope that I have been helpful in a technical sense. The amendment is minor. As I have illustrated, it is about simplification.

Oliver Heald (Conservative, North East Hertfordshire)

I have a question, but I shall have to set the scene to get to it because it concerns such a complicated provision. I understand that, under section 2(2) of the European Communities Act, Ministers can implement European Community instruments by regulations. Section 2(2) refers to powers exercisable by statutory instrument, either affirmative or negative.

New clause 17 inserts new paragraphs 2A, 2B and 2C. Paragraph 2A applies when the statutory instrument being used to implement an EC instrument is affirmative resolution procedure and when the statutory instrument also includes provisions made under powers granted under another Act. Irrespective of whether the powers under the second Act were exercisable by statutory instrument subject to affirmative or negative procedure, or by a statutory instrument that did not have to be laid before Parliament, the statutory instrument made under the powers of both Acts would be affirmative.

Jim Murphy (Labour, East Renfrewshire)

Was that it?

Oliver Heald (Conservative, North East Hertfordshire)

No. Under the hon. Gentleman’s proposed clause 2B, if the statutory instrument is subject to the negative resolution procedure, but also includes provisions from a different Act that are not subject to either affirmative or negative procedures, overall the procedure is negative. Section 2C deals with Scotland. The question, however, is why there are no provisions for a statutory instrument that is used to implement an EC measure and which, while being subject to the negative procedure, also contains provisions under a second Act which are subject to either affirmative or negative procedures. All the other permutations are covered, but not that one, and I wondered why.

Jim Murphy (Labour, East Renfrewshire)

I wonder if the hon. Gentleman could offer to write to me with his question.

David Howarth (Liberal Democrat, Cambridge)

I have only one comment on the new clause. I asked an academic colleague what it meant, and his conclusion was that it is a rigmarole, but it does make some sense. I think I shall stop there.

New Clause 18 - Combination with powers under European Communities Act 1972

New Clause 2 - RESERVED AREAS OF COMPETENCE

New Clause 6 - Expiry

New Clause 7 - Excepted Acts

New Clause 8 - Judicial tenure

Oliver Heald (Conservative, North East Hertfordshire)

We have been as well guided by you, Sir Nicholas, and your brother Chairman, Mr. Caton, as we predicted that we would be. On behalf of those on the Opposition side of the Committee, thank you for all that you did to keep us in order and ensure that we behaved ourselves, although I do not think that we were too bad.

I also thank the Clerks, who have been extremely helpful with drafting and with the inquiries that the Opposition Members often have, so I thank Mr. Cranmer and Mr. Farrar for what they have done for us. I thank the Minister for the courteous way in which has dealt with matters. Although we would hope for more to come in terms of concessions, he has been helpful and offered us a meeting. I thank all the other members of the Committee for the way in which the Committee has been conducted, and I thank the Doorkeepers and the police. Finally, I hope that the Bill will go forward and be improved.

David Heath (Liberal Democrat, Somerton and Frome)

I associate myself with the thanks that have already been offered by the hon. Member for North-East Hertfordshire to you, Sir Nicholas, and to Mr. Caton, for your chairmanship, and to the Officers of the House who have assisted us with the Committee.

We have had a very positive Committee in many ways. The arguments that have been adduced by the Opposition have been extremely cogent and well argued. I single out for thanks my hon. Friend the Member for Cambridge, who has done a very good job in presenting arguments that are very relevant to the Committee. I should also like in passing to note the contributions of the hon. Members for Plymouth, Devonport (Alison Seabeck) and for Edmonton, who were prepared to engage in debate on some of the issues. We had a degree of engagement from the Minister too. I am not entirely convinced that I have to thank him a great deal for the one concession on the veto, because it is what he thought was in the Bill originally when he appeared before the Committee. We are now back to where we were before the Committee started.

My hon. Friend the Member for Cambridge had some fun suggesting a name for the Bill. To me it is quite clear. It is the Parliamentary Scrutiny (Abolition or Avoidance) Bill. Part 1 will not do. It will not pass unless we have substantial amendments on Report. I am quite sure that my noble Friends and others will fillet the Bill unless the Minister has some substantial amendments to make on Report.

Jim Murphy (Labour, East Renfrewshire)

It is noticeable that we have finished, perhaps a little unpredictably, almost an hour early, which is testimony to the usual channels and the fact that we have a had a good debate on the different clauses without any knives. You were in the Chair at our first Programming Sub-Committee meeting, Sir Nicholas, and you were keen to ensure that we had no knives. Your guidance has been helpful because we have had ample opportunity to debate matters and there has been some good humour on occasion.

As the hon. Member for Somerton and Frome said, the Government have agreed to reflect on a number of areas including the commitment to a veto and nine of the amendments about the procedures recommended by the Regulatory Reform Committee. We have given a commitment to come back on Report with specifics on that. We will consult the Opposition Front Benches and others about the nature of that veto. I thank you, Sir Nicholas. In addition to your duties here you had duties at “Question Time”. I know that it may have been difficult that morning to keep your mind on the discussions in Committee when you were preparing for that engagement.

I thank the Bill team, who have been of great assistance, the Clerks, and the Officers of the House. I thank the hon. Member for Somerton and Frome for announcing his deputy leadership bid during our proceedings. While the hon. Member for Cambridge deserves the compliment, he should be wary about why it is offered; he has a vote. He could have adopted the same approach as his hon. Friend and refused to commit to anyone.

I see from my notes that the hon. Member for Cambridge married a Murphy.

The rest of the debate is in Hansard.