Better Regulation — House of Lords, 2017-12-07
Topic: Government Operations
Rosalind Altmann (Conservative, Centre-right): My Lords, I congratulate my noble friend Lady Neville-Rolfe on securing this important debate. The Government are right to want to reduce regulatory burdens and I commend their intention to do so. I also agree that if we are to have mountains of statutory instruments placed before Parliament as a result of Brexit, somehow the time devoted to new regulatory legislation will need to be controlled. There are only a limited number of hours available. I support the Government’s aim to introduce a more proportionate and efficient system. A somewhat more permissive and hopefully simplified regime is understandable. However, we must be concerned to ensure that we do not then allow all departments a free-for-all to certify measures as having an impact on business of below £5 million and thus bypass scrutiny As the noble Baroness, Lady Andrews, rightly outlined, there is concern if the impact assessments coming before the Regulatory Policy Committee are truly going to fall from around 700 to around 18. We must surely not reduce our efforts to protect the public, so random assessments of departments’ measures that are not put before the Regulatory Policy Committee are surely absolutely essential. Indeed, rather than diluting the RPC, I wonder whether we should beef up its powers and whether now is the time to consider putting it on a statutory footing, as I believe happens in other countries such as Germany, Norway and the Netherlands, or awarding it independent verification body status. Will my noble friend let us know whether such measures might be under consideration In addition, will my noble friend reassure the House that, when making impact assessments, the impact on the public will be more carefully assessed than appears often to have been the case in the past? Additionally, I believe that although there is a laudable intention to ensure that regulation is regularly scrutinised to ensure that it is working as intended, the promised post-implementation reviews have been relatively few and far between. The purpose of regulation is largely to protect the public and wider society, so the absence of sufficient checks is surely of concern when deciding about the impact of regulation I am particularly concerned that departments may pay too little attention to the wider impacts on the general public. The department’s answer to Question HL3424, asked by the noble Baroness, Lady Andrews, states that, "societal impacts … are agreed by senior civil service analysts and … signed off by Chief Economists" Is that really good enough? Surely the impacts on the wider public are crucial and require more independent input from user groups and others who are perhaps better placed, and certainly well placed, to judge the impact of those regulations. Perhaps we need to find ways to ensure that departments are incentivised to consider and produce such reports Regulations should also bear in mind the people who are using them and who are supposed to benefit from them. For example, it turned out that product warnings that something could be fatal were not well understood by the public and that changing the wording to "Solvent abuse can kill suddenly" was rather more effective The original idea was that we need regulation, but it would wither away in most sectors to be replaced by competition. However, in many cases there is just too much asymmetry between the parties involved and the public, so ordinary consumers need the protection of well-designed regulation to ensure that they are treated fairly An excellent example of such asymmetry in both information and power is, of course, in my area of pensions. Failure of regulation has too often had dire consequences. For example, it is almost 10 years to the day since the Labour Government, thanks to the noble Lord, Lord Hain, who was then Secretary of State at DWP, agreed to compensate steelworkers and 150,000 others who had lost their entire occupational pensions. Despite years of contributions and assurances that they were protected by legislation, it was discovered that those regulations designed to protect them had actually stripped them of their pensions entirely. The regulations were well-meaning, but failed. There are, of course, many other examples Too often, it seems that provider companies may have captured the regulators or the regulatory thinking. It is also important to listen to small firms, as my noble friend Lady Neville-Rolfe rightly said, and the impact on wider society must not be ignored. In that context, excessive complexity not only hinders economic activity and creates unnecessary burdens but also prevents consumers understanding what is going on and what regulations are meant to achieve. However, there is little incentive to ensure simplicity or to avoid adding further to our already complicated web of legislation. A good example of how complexity can be damaging, particularly to small businesses, is in the area of automatic enrolment, where the rules are unbelievably complicated. For a large firm that can pay consultants to manage it all, it is fine, but for a small firm the complexities often cause enormous cost and concern. Simplification is an aim that I hope many departments will follow as we move forward, but there are too many examples in the pensions arena of where complexity has been introduced. I hope that departments will take note of that need for simplification Governments must ensure effective oversight of regulated industry, whether energy, nuclear, infrastructure and so on, and there are bound to be some interactions between political considerations and the regulations. Indeed, the complexities of competition and technological advances mean that it is important that Governments ensure regulated industries are operating to achieve the desired policy objectives. But for this to work well, transparency is vital, and transparency can be hindered by that complexity—or, indeed, by the frequent changes that so often occur Another example is in the residential landlord sector, where I must declare an interest as a private landlord. There are many important regulations—on gas, electricity and furniture safety, for example—but, despite this, there is inadequate enforcement by local authorities, as has been highlighted by other noble Lords. It is true that many councils have introduced licensing schemes to try to enforce the regulatory requirements, but the unscrupulous landlords do not join in In legal services, again the Treasury rightly says that independent regulation is important to make sure markets for essential services work fairly. However, the legal services profession is calling for regulation to be independent of the profession, in order to address not only any possible conflicts of interest but even the perception of such conflicts. The Competition and Markets Authority looked into the legal profession and confirmed that the independence of a regulator from the providers is a key principle that should be taken into account in any review of the framework. Can my noble friend the Minister say when the promised consultation on regulatory independence will be published Finally, we have skilled drafters and a professional Civil Service committed to reform and innovation and to effective regulation. But a note for civil servants raised a wry smile when I came across it the other day. After saying, rightly, that regulations should always be, "transparent, targeted, consistent, and in proportion to the risk"— absolutely correct—and calling for, "incentives to encourage those causing the risk to change their behaviour", it goes on to say: "Watch out, by the way, for the implications for middle class journalists. For instance, when designing policies affecting employees, think carefully about their impact on au pairs. Or when changing education policy, how will it affect Montessori schools? You attack the freedom of the press at your peril!" I hope, in the context of Brexit, that if we do proceed with this enormous task, the interests of the public will be paramount, rather than us just worrying about the media.