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Legislative and Regulatory Reform Act 2006

Section 1: Power to remove or reduce burdens

18.Section 1 confers power on a Minister of the Crown to make any provision by order which he considers would serve the purpose of removing or reducing any burden, or removing or reducing the overall burdens, to which any person is subject as a direct or indirect result of any legislation. Legislation is defined in subsection (6). The power is a broad one, and it is intended to be so. In the first place, it may be noted that the Minister may make “any” provision which would serve the purpose stated, subject only to the restrictions set out in the Act.

19.Subsection (3) defines a “burden” as:

  • a financial cost;

  • an administrative inconvenience;

  • an obstacle to efficiency, productivity or profitability; or

  • a sanction, criminal or otherwise, which affects the carrying on of any lawful activity.

20.A financial cost: this limb of the definition covers any financial costs, including administrative costs and policy or ‘compliance’ costs resulting from understanding and complying with legislation. So, for instance, section 1 could be used to reduce or remove the costs imposed on a business or a charity resulting from filling in health and safety forms required by legislation. It might be used to reduce or remove the costs resulting for a person from legislation of having to apply for a licence or consent. It could also be used to reduce the costs which result from making arrangements to avoid a situation where a criminal offence would be committed. In such a situation, to remove the sanction and repeal the underlying offence would be to reduce those costs.

21.An administrative inconvenience: this limb of the definition covers administrative inconvenience even where it does not result in a financial cost. For example, a requirement on an individual to fill in a form may not result in financial cost, but could be inconvenient for that person.

22.An obstacle to efficiency, productivity or profitability: in some cases legislation may not impose a cost on a person but may prevent them from being as efficient, productive or profitable as they would otherwise be.

23.Obstacle to efficiency” could cover, for example, obstacles to the economically or administratively efficient exercise of a person’s or body's existing statutory functions. This could include provisions in legislation which prevent a regulator from carrying out its functions of inspection or enforcement in a risk-based way, thus requiring the regulator to expend administrative effort and cost on low risk activities or operators, and preventing it targeting its resources at the high risk. (Note however that “efficiency” should be distinguished from “effectiveness”: it cannot be said to be an obstacle to “efficiency” that a person exercising certain statutory functions does not have other functions which might be desirable from a policy perspective, even if those other functions would make them more effective in achieving certain policy objectives.)

24.Obstacle to productivity”: a tenancy restriction preventing farmers diversifying into non-agricultural activities to improve the viability of their business, might be an example of a bar on productivity. So an order could remove or reduce a restriction resulting from legislation that farmers may only use certain land for agricultural purposes.

25.Obstacles to competition, innovation, investment, skills or enterprise can constitute obstacles to productivity. Where a Minister is satisfied, on the basis of relevant evidence that such an obstacle is an obstacle to productivity, then this limb of the definition of burden would cover it. For instance, if legislation currently limits the patenting of goods to certain classes of product, and if the Minister were satisfied that extending those classes to include a new class of goods would remove an obstacle to innovation which was an obstacle to productivity, extending those limits would be possible under this section.

26.Obstacle to profitability”: this limb of the definition could cover the opportunity costs of complying with legislation, for example, where compliance with the legislation means the loss of a financial benefit that could otherwise have been obtained. Restrictions on selling alcohol, or on Sunday trading might in principle be examples of obstacles to profitability. So for example an order could remove or reduce restrictions on the sale of methylated spirits on a Sunday. There are no actual costs imposed upon a business when it is prohibited from trading such spirits on a Sunday, only a loss of profit as a result of the ban.

27.A sanction which affects the carrying on of any lawful activity: this limb of the definition covers sanctions, criminal or otherwise, which affect the carrying on of a lawful activity. This could include a criminal sanction which affects the carrying on of an activity which is itself lawful, such as supplying financial services. It could not include sanctions for activities which are themselves unlawful, such as dealing in class A drugs, or people trafficking. So an order could remove or reduce criminal sanctions which relate to the carrying on of a particular lawful activity, but not sanctions relating to offences under the general criminal law. It is therefore possible by order to reduce the sanction for a particular criminal offence where it is no longer considered to be targeted or appropriate, for example by replacing the sanction of a term of imprisonment with a fine.

28.The reference in subsection (2) to "removing or reducing the overall burdens" is intended to allow for one statutory regime to be replaced by another which is less burdensome overall for a person. This means that existing burdens can be increased, or a new burden could be imposed, where this is for the purpose of reducing the overall burdens resulting from legislation to which a person is subject.

29.The power enables a Minister to make an order which he considers would serve the purpose of removing or reducing a burden for a person. The Minister must therefore consider that there is a person for whom, comparing the position before and after the order has been made, a burden, or the overall burdens, will have been removed or reduced.

30.The burden must result from legislation. So an order cannot make provision to reduce costs, unless those costs result from legislation (as defined in subsection (6)). The power in section 1 can therefore only be used to reform an area where there is already a legislative framework. It could be used to replace one statutory regime with another where this removes or reduces burdens, but it cannot be used to introduce an entirely new regulatory regime. So, for example, it would not be possible to create an entirely new legislative framework relating to a new area of consumer protection, employment rights or environmental protection simply because there are considered to be good policy reasons for doing so.

31.The burden may, however, be the direct or indirect result of legislation. An example of a direct burden resulting from legislation would be the costs incurred directly by a regulated business as a result of complying with legislation. An example of an indirect cost would be the costs such a business were to pass on in the form of higher prices to its customers as a result.

32.It is possible under section 1 to remove or reduce a burden for one person and in so doing impose or increase a burden for another, but only if the increase is the result of the removal or reduction of a burden on a person. So for instance it would be possible by order under section 1 to remove from those being regulated costly requirements to provide information to the regulator, even though this would have the effect of increasing the cost for the regulator of monitoring the sector for which it is responsible.

33.It is also possible to impose or increase a burden for a person where this serves the purpose of a wider change which removes or reduces burdens on them. An order could for example remove obligations in legislation to supply fifty items of information and replace this requirement with an obligation to supply ten others. An order could also remove a custodial sentence from an offence but increase the maximum fine for it, where this is for the purpose of removing or reducing burdens. However, it would not be possible for an order to remove one burden but to impose an entirely unrelated burden.

34.Subsection (4) has the effect that it will not be possible to remove or reduce burdens which only affect a Minister of the Crown or government department, except where the burden affects the Minister or department in the exercise of a regulatory function. ‘Regulatory function’ is defined in section 32.

35.Subsection (5) provides that for the purposes of subsection (2), financial cost or administrative inconvenience may result from the form of legislation, for example where the legislation is hard to understand. This would cover a case in which the meaning of the legislation can in the end be determined, but only as a result of a disproportionate amount of effort. For example, where provisions governing an area are contained in many different pieces of legislation, the order-making power in section 1 could be used to restate and bring together the relevant provisions so that it is less costly or inconvenient to understand them. Similarly, for example, where a provision was obscurely drafted the order-making power in section 1 could be used to restate the provision more clearly so that it is less costly or inconvenient to understand it.

36.This subsection would also cover a case in which the meaning of legislation is unclear, for example because it is ambiguous. If the ambiguity resulted in costs or administrative inconvenience, the order-making power in section 1 could be used to remove it.

37.'Legislation' is defined in subsection (6) and includes local as well as public general Acts, and subordinate legislation as well as primary legislation. Local Acts cover limited areas or particular bodies or institutions, such as particular charities or port authorities: their chapter numbers are small roman numerals. The definition of 'legislation' does not include any instrument which is Northern Ireland legislation within the meaning of section 24 of the 1978 Act (such as Acts of the Parliament of Northern Ireland, or Orders in Council made under section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972).

38.Subsection (7) provides that the provision that can be made by order under this section includes provision which:

  • abolishes, confers or transfers, or provides for the delegation of, functions of any description (which would include functions of legislating);

  • creates or abolishes a body or office;

  • amends or repeals any enactment.

39.An order under this section could transfer regulatory functions from one regulator to another where this was, for example, for the purpose of reducing burdens upon those being regulated by reducing the number of separate inspections or requirements to provide information to which they were subject.

40.Subsection (8) confers power for an order made under this section to make such consequential, supplementary, incidental or transitional provision as the Minister considers appropriate, including provision amending or repealing any enactment or other provision. Although “enactment” does not include an enactment comprised in, or an instrument made under, an Act of the Scottish Parliament (as a result of Schedule 1 to the 1978 Act), subsection (8) enables the amendment or repeal of other provision for consequential, supplementary, incidental or transitional purposes, and this extends to the amendment or repeal of Acts of the Scottish Parliament and instruments made under them. Whilst an order under this section cannot remove or reduce burdens arising from Northern Ireland legislation, provision can be made under this subsection amending or repealing Northern Ireland legislation for consequential, supplementary, incidental or transitional purposes.

41.The effect of this power (and the equivalent power in section 2(7)), taken with the restrictions in sections 9 and 10, is that the only type of provision an order can make amending or repealing legislation which would be within the legislative competence of the Scottish Parliament, or which is Northern Ireland legislation, is provision which is consequential, supplementary, incidental or transitional.

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