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Regulatory Reform Act 2001

Section 1: Power by order to make provision reforming law which imposes burdens

37.Subsection (1) includes the main order-making power, and sets out the context within which it can be exercised. The governing purpose in this subsection constrains the power in a number of respects. It will be helpful to deal with each of these in turn.

 “…by order make provision for the purpose of reforming legislation…”

38.This means that orders can only be directed at the reform of existing legislation. They cannot make entirely new provision; there has to be some Act or Acts of Parliament already in existence. So an order could not be used, for example, to remove burdens imposed solely by the common law.

39.The Act does not contain an express provision relating to common law, and it is not the intention to use the order-making power to seek to change, for example, the principles of contract law or of tort law. Under it, common law elements can only be dealt with within the context of reform of legislation. The anchor of the reform must be a piece or pieces of burdensome primary legislation (or a previous deregulation order or regulatory reform order), rather than common law. Legislation, whether primary or secondary, frequently affects the common law in this way. Legislation also frequently refers to common law concepts, such as contracts, and makes provision about them. To the extent that there has previously been no statutory provision on a matter, what is done will inevitably displace the common law to that extent. Particularly by virtue of the fact that the Act will enable limits to be removed from statutory powers, orders made under it are more likely to impinge on the common law than those made under the 1994 Act. This is very different from what is occasionally done, namely for a statute to make express provision amending a common law rule (often only capable of being described by reference to a particular case). The Act will not enable the Minister to make free-standing provision of this kind, even though it may be related to something which is covered by statute. Similar considerations apply in relation to Scots Private Law to the extent to which it is not in any case devolved.

40.The reference in this section to reform opens up the order-making power so that it can apply to a whole regulatory regime, addressing a number of different pieces of legislation if necessary. For example, the power could be used to simplify and rationalise the legislation governing fire safety, which is enshrined in approximately 120 Acts of Parliament and a similar number of statutory instruments. Where a burdensome situation results from such a variety of overlapping regimes, perhaps spread over primary legislation and secondary legislation (including different sets of regulations), the order could replace the entire range. The result would be the repeal of the legislation and new provision in what might be known as, for example, the Regulatory Reform (Fire Safety) Order. The confusion created by the variety of different provisions could be removed.

41.The term “reform” is given its natural meaning. Section 3(1) of the Law Commissions Act 1965 describes the systematic development and reform of the law as including “the codification of…law, the elimination of anomalies, the repeal of obsolete and unnecessary enactments, the reduction of the number of separate enactments and generally the simplification and modernisation of the law”. In the Act the term “reform” has a similar meaning (other than in relation to codification) to that which it has in the Law Commissions Act. The key difference is that the concept in the Law Commissions Act is intended to cover the whole of the law while the Act is concerned only with burdensome statute law (as detailed below).

“…make provision for the purpose of reforming legislation which has the effect of imposing burdens…”

42.The concept of “burden” is dealt with below at section 2. Beyond that, the effect of this part of the section is to preclude any order which is not predicated on the reform of burdensome legislation. So, for example, before the enactment of the Limited Liability Partnerships Act 2000, an order could not have been used to make entirely new provision creating a new form of legal entity for the incorporation of limited liability partnerships. But an order could have achieved the same end by amendment of the Limited Partnerships Act 1907. And an order could be used to remove the duplicatory accounting requirements whereby NHS bodies must submit accounts of charitable funds to the Charity Commission under charity law and also to the National Audit Office under health legislation.

“…make provision for the purpose of reforming legislation which has the effect of imposing burdens affecting persons in the carrying on of any activity”.

43.This echo from section 1 of the 1994 Act has the effect of concentrating the power on ongoing activities. In its 15th report of the 1999-2000 session, the Delegated Powers and Deregulation Committee reported that:

Most legislation could be regarded as having such an effect. A considerable proportion of all bills are concerned with the amendment of earlier legislation which imposes burdens on individuals or corporations or which authorises or enables categories of person to act in a particular way.

It is the Government’s policy intention to direct the order-making power to the benefit of business, charities, the voluntary sector, individuals and legal persons and the wider public sector, and consequently these words provide a wide gateway. In order to ensure that the gateway is no wider than necessary to achieve reform to regulatory regimes, the gateway is limited by the requirement that the reform must be “with a view to” the objects set out in section 1(1)(a) to (d) (see paragraph 50 et seq).

44.There is a key policy test not on the face of the Act that further restricts the use of the order-making procedure – that of appropriateness. This will be applied by the Minister when considering whether to propose using the regulatory reform order-making power, and will inform the consultation process. It will also form part of the consideration by the scrutiny Committees.

45.The Delegated Powers and Deregulation Committee, again in their 15th report of the 1999-2000 session, commented:

Lord Falconer readily acknowledged that there is no precise line drawn in the draft bill between matters in respect of which it is appropriate to legislate by way of order and other matters in respect of which it would not be appropriate, nor is it the Government’s intention to try to draw one. It will, he said, be for Ministers to decide whether or not the use of the new power would be ‘appropriate’ (Q.13), likening the task of so deciding to the difficulty of defining an elephant. ‘You cannot describe it but you know it when you see it’ (Q. 13). When asked whether he would ‘be content to rely totally on a successor administration’s definition or interpretation of what was appropriate and what an elephant was’ Lord Falconer replied ‘Yes, I would’ (Q. 16). He also relied on the safeguard that both Committees would be expected to comment if they considered a proposal inappropriate…..

46.During Committee stage, Lord Falconer of Thoroton (House of Lords Hansard, 23 Jan 2001, Col 209) acknowledged concerns over what might constitute appropriate use of the order-making power:

As has been repeatedly stated by everyone involved, the power in the Bill is not suited to large and controversial measures. The entire procedure contained in the Bill would weed out such proposals. A highly contentious issue would come up against serious problems during the consultation period and the Minister, obliged to set all this out in the document he placed before Parliament, would have to reflect that explicitly. The scrutiny procedures in Parliament, involving careful examination by committees and the co-equal status of the two Houses, are such that any Minister would obviously be ill-advised to choose this route.

47.The Government believes that the super-affirmative order-making process, with its thorough consultation and weighing of evidence, is well suited to the objective consideration of complex issues, where the judgement of experts is required, and for issues on which a group of reasonable people, given the relevant facts, would be likely to reach consensus. It may not always be clear at the start of the process that an issue falls into this category. If it were to become clear during the process that it is not suited, then the proposal could be withdrawn as a draft order and returned to the floor of the House in the form of a Bill. It should be noted that:

  • as was the case with the arrangements for deregulation orders, the Parliament Acts will not be available to the Government during the scrutiny and Parliamentary approvals process of draft orders (see paragraphs 13 to 17 above, paragraphs 80 to 105 below and the diagrams at Annexes I and J);

  • the Committees will assess whether the use of delegated legislation is appropriate for any proposal and enjoy an effective veto over individual proposals (see paragraphs 15 and 17 above); and

  • the two Houses are treated as co-equals in the scrutiny process as there is no Commons over-ride.

48.Consequently, while the Government considers large-scale measures such as reform of fire safety legislation to be appropriate for the order-making procedure, politically controversial measures will continue to be reserved for debate on the floor of the House. Clearly it is not possible to draw up in advance a list of politically controversial items. It has to be a case-by-case judgement. For example, the Government contends that the following propositions are ruled out as inappropriate:

  • any proposal aimed at constitutional change, such as amending the law on devolution or representation of the people;

  • any proposal primarily aimed at making changes to the judicial system, such as, for instance, altering the right to trial by jury for certain categories of offence (although lesser changes, such as the setting up of an appeals mechanism, might be made in the context of wider reform of a specific area of law);

  • any proposed changes to the structure or organisation of local government, such as setting up directly-elected mayors (although change might be made in relation to activities such as waste collection or administration of schools);

  • any reform of highly controversial employment law, such as fundamental reform of employment tribunals or the minimum wage.

49.Change in these sorts of areas would be for Parliament to consider as primary legislation. On the other hand, proposals which seek to deal with ongoing activities would be an appropriate use of the regulatory reform order-making power, for example:

  • reform of the legislation governing gambling;

  • removal of the restriction that school crossing patrols can only assist children of school age across the road on their way to school and not, for example, younger siblings of schoolchildren (this proposal has now been delivered under section 270 of the Transport Act 2000);

  • changes to employment law of an uncontroversial nature, such as the changes to Trade Union check-off rules achieved under the 1994 Act (Deregulation (Deduction of Pay of Union Subscriptions) Order 1998).

“…make provision for the purpose of reforming legislation which has the effect of imposing burdens affecting persons in the carrying on of any activity, with a view to one or more of the following objects

50.From the starting point of burdensome legislation, an order must involve the first object in paragraph (a) in subsection (1(1), and may also involve any combination of the three objects in paragraphs (b) to (d). These act as a limitation on use of the order-making power, since it can only be exercised with a view to securing one or more of the objects. Given section 1(3), it is a requirement that every order will take in object (a), and will involve the removal or reduction of burdens.

51.Paragraphs (b) and (c) are concerned with the imposition of burdens. The 1994 Act only allowed burdens to be imposed where they are less onerous than the burden being removed, and only on those affected by the burden being removed. Paragraph (b) allows burdens to be carried over from the legislation under reform but only where they meet the objective of proportionality. Paragraph (c) goes a step further, in allowing an order to increase burdens on those already affected and to impose new burdens on people not previously subject to burdens at all, but again only where they too are proportionate. As with the tests in section 3, the Minister will have to justify his decision about how the order meets the objective of proportionality in the document he lays before Parliament under section 6. While the proportionality test differs from the other three tests because it is not expressed to be dependent on the Minister’s opinion, it is covered by the requirement for the power to be exercised “with a view to” securing one or more of the objects in section 1(1). It also has an objective legal meaning (although, in making a particular order, the application of the concept may be a matter for discussion). It will be of increasing relevance in other contexts given the application of the Human Rights Act 1998, and is now a concept with which the UK legal system is familiar. The decision about what is proportionate will always depend on the individual circumstances of the case. For example, in rationalising a licensing system it might not be considered proportionate to require people who did not previously have to have a licence to obtain one. It might be considered more proportionate (and therefore more appropriate) to set up a new system of negative licensing, class (rather than individual) licensing, or perhaps a registration system instead. Whatever the Minister decides to promote in the proposed order, he will have to explain why in the explanatory document required under section 6.

52.Paragraph (d) provides for orders to remove inconsistencies and anomalies in legislation. This object will be particularly relevant when a Minister is using an order to reform a whole regulatory regime, because problems with burdensome regulatory regimes are often due to overlap between different pieces of legislation. This object is also likely to be relevant in the context of proposals from the Law Commission on reform of the law. The Law Commission’s programme of work results in the production of Bills ready for introduction to Parliament. However, due to the pressure on the legislative programme, these proposals might not reach enactment for several years. The provision at paragraph (d) will assist in enabling Law Commission proposals which fit the other criteria for orders under the Act to be implemented by order. Given section 1(3), it would not be possible for an order solely to remove an anomaly or inconsistency. In any event, most ‘inconsistencies and anomalies’ would already be covered under paragraphs (a) to (c) as removing them would normally entail the levelling up or down of some burden or other. Some instances of anomaly or inconsistency may not readily fit in with the concept of burden. For example, if one statute requires a notice to be given on a Tuesday and another, for no good reason, on a Wednesday, even though both refer to the same category of information, then it is not increasing or decreasing the burden to bring them into line, but it is removing an inconsistency or anomaly. The concepts of anomaly and inconsistency are closely linked. An inconsistency may occur where one provision requires a certain thing to be done and another requires something different without providing any way of reconciling the provisions. An anomaly occurs not so much where two pieces of legislation clash, but where the legislation fails to make the proper provision intended. For example, if a licensing regime treated all business registered before 19 February in one way, and all businesses registered after 19 February in another, the anomalous situation arises as to the status of those businesses registered on 19 February itself.

53.Subsection (2)paragraph (a) provides that an order may have as its subject any Act of Parliament which is more than two years old. This is a change from section 1(5)(c) of the 1994 Act, which limits application of the power to legislation passed before the end of the 1993-4 Parliamentary Session. The term “Act” is defined in Schedule 1 to the Interpretation Act 1978 (as amended by Schedule 8 to the Scotland Act 1998) as meaning an Act of Parliament. Northern Ireland legislation, therefore, is excluded (although consequential amendments to Northern Ireland legislation may be made using the power in section 1(5)(c)). Northern Ireland has in the past made its own provision to mirror deregulation orders.

54.The text in parentheses in paragraph (a) of subsection (2) makes clear that the legislation addressed by the order need not have been commenced. Instances where an order would be used to address uncommenced legislation are not expected to be frequent. However, it would allow the power to address cases such as the Sexual Offences (Protected Material) Act 1997, which creates a statutory scheme for supervising the defendant’s access to victim material in sexual offences cases (with the intention that this material cannot be circulated as a form of pornography). The Act, if commenced, would make it an offence for the defendant to have unsupervised access to the material or for any other person to whom the material is given to breach the requirements of the scheme. It appears, however, that (because of an oversight when preparing the legislation) there are significant problems with even the defence legal team viewing the material. This makes the Act unworkable, and so it has never been commenced. It would be a burden on the defence legal team and others not to be able to handle the material in the normal way. It is also currently a burden on the alleged victim of the sexual offence that she is unable to benefit from the protections intended by Parliament when the legislation was passed. Although cases of uncommenced legislation imposing burdens arise infrequently, the burdens can be significant and the provision in this paragraph will allow them to be addressed by regulatory reform order.

55.Subsection (2)paragraph (b) makes clear that deregulation orders made under section 1 of the 1994 Act and regulatory reform orders, if they fall within the purpose of section 1(1), may themselves be the subject of orders. The 1994 Act and this Act will be excluded because neither imposes burdens affecting persons in the carrying on of an activity. In any case, as the 1994 Act will only be preserved for devolved matters in Scotland (cf. section 12(1)(b)), it would not be a candidate for regulatory reform orders (which will be made at Westminster) as to do so would be at odds with that devolution settlement.

56.The remainder of subsection (2) sets out the arrangements with regard to legislation that has been devolved to Scotland. In order to reflect the Scottish devolution settlement, the power does not extend to legislation which is within the devolved competence of the Scottish Parliament. But, as explained below, section 12(1)(b) preserves the 1994 Act for use by Scottish Ministers, and it would be open to the Scottish Parliament to amend or replace it.

57.Subsection (3) states that any order made under the power contained in the Act must include provision aimed at removing or reducing burdens. This means that the power cannot be used to re-enact burdens, impose new or increased burdens, or remove inconsistencies and anomalies, without also removing or reducing burdens. However, the subsection does not make any numerical linkage between the burdens removed and those imposed, so the former need not necessarily outweigh the latter. But any order must still meet the strict safeguards contained in section 3.

58.The effect of subsection (4) is that the power cannot be used to address any provision in an Act which has been amended in the last two years, other than consequentially or incidentally. However, such legislation can be re-enacted without substantive change as part of a wider reform.

59.Subsection (5) reflects the Welsh devolution settlement. It provides that the consent of the National Assembly for Wales will be required for any order that sought to remove or modify any function of the Assembly. The regulatory reform order-making power itself is not available to the Welsh Assembly (though the Assembly may be given power to make subordinate provisions orders under section 4(6)).

60.Subsection (6)(a) makes clear that an order may amend or repeal any enactment in pursuance of reforming the burdensome legislation referred to in subsection (1). Paragraph (b) makes clear that burdens may be imposed on Ministers (cf. section 2(1), as described in paragraph 69 below, which excludes from the definition of “burden” any burden which affects only Ministers or government departments.) The effect of the two subsections is that, while a burden which falls solely on Ministers or departments may not be removed by regulatory reform order, such a burden may be imposed. Under section 43(1) of the Government of Wales Act 1998, the same applies to the National Assembly for Wales. Paragraph (c) provides a general power to make incidental, consequential, transitional or supplementary provision in standard terms to primary or secondary legislation. This could include amendment or revocation of secondary legislation, although this will normally be done by amending or remaking the instrument concerned under the existing power.

61.Subsection (7) makes clear that a regulatory reform order could vary its provisions from area to area. This means that an order could target a specific geographical location in a way similar to Local Acts.

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