My Lords, the code provides a flexible framework that individual regulators can apply in a proportionate manner. It supports and enables regulators to design their service and enforcement policies to best suit the needs of their service users, while allowing resources to be focused on the non-compliant. The Regulators’ Code encourages greater transparency in the way regulation will be delivered, encouraging trust, open dialogue and accountability between regulators and those that they regulate.
The code applies to a wide range of people exercising non-economic regulatory functions, including more than 60 national regulators, from the large regulators, such as the Health and Safety Executive and the Environment Agency, to much smaller regulators, such as the Sports Ground Safety Authority and the assay offices, which happen to be part of my intellectual property portfolio.
The code also applies to a number of regulatory functions exercised by Ministers and those exercised by all 433 United Kingdom local authorities. Such diversity, not only in size and resource but in purpose, has been considered in developing the code, which is flexible in its nature. It does not add burdensome requirements, and regulators can apply the principles in a proportionate manner to suit local demands. Regulators are obliged to have regard to the code, but this duty is subject to any other requirement affecting the exercise of regulatory functions. This means that the duty to comply with the code is a secondary objective. It does not undermine the regulator’s primary protection duties.
This revised code has been produced in response to a post-implementation review carried out in 2012 and an eight-week consultation on a revised code in 2013. Both the review and the consultation found that regulators had generally accepted the code and its principles-based approach. National regulators had by and large adopted the principles into their enforcement policies. The Health and Safety Executive, for example, has a clear explanation on its website detailing how it meets the provisions of the code, including the use of risk assessment to guide its regulatory activity. The Forestry Commission is also a good example of a regulator which has
adopted the code principles. Its enforcement policy details how enforcement activity is carried out in accordance with the code and principles of good regulation.
However, we found that there was nevertheless room for improvement. First, we found that many local authorities had not consistently adopted the principles. For example, enforcement policies could not be located on 15% of the local authority websites reviewed. Where local authorities had published enforcement policies they were not fully compliant with the principles of the code. Secondly, there was a lack of transparency about how regulation would be delivered, and we received feedback that some of the code’s provisions were overly prescriptive and burdensome. Thirdly, business representatives felt that the code had failed to promote open and early dialogue with regulators because visibility of the code among businesses was low. Many businesses had little or no knowledge of the code’s existence.
The updated Regulators’ Code builds on the experience of and lessons learnt from the existing Regulators’ Compliance Code. It adopts five principles which were in the previous code. The first principle is that regulators should carry out their activities in a way that supports those they regulate to comply and to grow. The second principle is that regulators should provide simple and straightforward ways to engage with those they regulate and to hear their views. Thirdly, regulators should use risk assessment methodologies to support their regulatory activities. Fourthly, regulators should share information about compliance and risk, and fifthly, regulators should ensure that clear information, guidance and advice are available to help those they regulate to comply. In response to the feedback we received, the new code also includes a sixth and final principle that regulators must ensure that their approach to their regulatory activities is transparent. The code encourages regulators to do this by publishing service standards which set out what business and the public can expect from their regulators. The other significant difference is that the provisions in the revised code have been simplified so that the code is now clearer in setting out expectations and, as a consequence, it is also much shorter.
The revised code was published in draft in July 2013 and the Better Regulation Delivery Office has organised a series of UK-wide awareness raising events and training sessions since then. This has ensured that regulators have had time to review their existing policies and procedures and they have been assisted to meet the provisions of the code. In addition, the Better Regulation Delivery Office is continuing to work with regulators and bodies such as the Local Government Association to develop tools, including enforcement policy and service standards templates, to help regulators to comply with the code provisions. We have also worked extensively with the business community and trade associations to ensure that they are aware of the new code. As a result, we are confident that regulators will comply with the new code and that businesses will know what they can expect of their regulators when the code comes into force as soon as early April. In the unlikely event that a regulator does not comply with the provisions in the code and it is not able to provide any justification for departing from the principles, the
Better Regulation Delivery Office will work closely with the individual regulator to remedy the non-compliance.
Businesses and their representatives will also be able to hold regulators to account by challenging any non-compliance with the code principles. In the first instance this could be through dialogue with regulators, and if that was insufficient, they could of course seek permission to judicially review any non-compliance. We believe that this will provide a sufficient incentive to encourage regulators to adopt the principles in the code.
I would like to stress that the introduction of this code will not add additional burdens or introduce more bureaucracy for regulators or businesses. As I have stated, the Regulators’ Code shortens and simplifies the provisions contained in the existing Regulators’ Compliance Code to make it easier for regulators to comply. It does not override any existing statutory requirements but sits alongside them. It will enable regulators to direct limited resources to the areas of greatest need, thereby reducing the bureaucracy and burdens on low-risk, compliant businesses.
I turn to the second instrument. The purpose of the regulatory functions order is to update the regulatory functions which are within the scope of the Regulators’ Code. These functions are subject to the statutory principles of good regulation set out in Section 21 of the Legislative and Regulatory Reform Act 2006.
The better regulation principles provide that regulatory activities should be carried out in a way which is transparent, accountable, proportionate and consistent. In addition, regulatory activities should be targeted only at cases where action is needed. The Government believe the better regulation principles and the Regulators’ Code should be applied by the broadest possible range of national regulators, Ministers and local authorities exercising non-economic regulatory functions.
To this end, we have consulted Monitor, the Groceries Code Adjudicator, the Regulator of Community Interest Companies and the claims management unit of the Ministry of Justice, which have agreed that their functions should be in scope of these statutory provisions. The 2014 order therefore adds these bodies to the list of those already in scope.
It is my firm belief that the revised Regulators’ Code and order extending coverage are important parts of the Government’s overall package of better regulation measures. They are an important step in developing modern, open and transparent approaches to regulatory delivery. I therefore commend this order and the Regulators’ Code to the Committee.