We were there together. The regulations that cleaned up the atmosphere totally changed the city of London. It was worth cleaning the buildings afterwards. Nobody knows about the Clean Air Acts, but they are central to our lives.
When I was young, aeroplanes used to crash quite frequently. Being an airline pilot was a dangerous pastime. People used to go on to aeroplanes wondering whether they would get to their destination. People do not think about that now. They assume that it is safe. What makes it safe is a great feast of regulations that governs every bit of that activity to make it incredibly safe. We do not think about regulation when we go into a restaurant; we go in assuming we are not going
to be poisoned Why can we make that assumption? Because there is a raft of regulation that makes sure food is safe; everything from what varieties are allowed into this country in the first place to how it is handled, how it is checked and so on. Regulation is a crucial part of our lives but most people do not notice it.
I notice it because I have been involved in regulation for 50 years. My initial training was as a pilot, and you immediately realise how regulation contributes to the safety of the operation. Over those 50 years I have been a pilot, an air operator, a railway operator, chairman of the United Kingdom Atomic Energy Authority, chairman of the Rail Safety and Standards Board and involved in safety in the MoD. Finally, as a Whip, I had to explain the failure of regulation that caused the Nimrod crash in Afghanistan and killed servicemen unnecessarily. I am a passionate believer in regulation and its protection.
Let us turn to what the clauses do. One of the most useful documents when looking at legislation is the impact assessment. The reason it is useful is that it is usually written by reasonably junior people and they are, putting it nicely, less nuanced than some of the more superior documents. You frequently get to what people are thinking about when they have the legislation in mind. The relevant part of the impact assessment is pages 16 and 17. It is all relevant, but pages 16 and 17 set out the areas of advantage that the impact assessment envisages these clauses will bring about. They include: reduction in duplication costs for information, £28.17 million; reduction of information requirement costs, best estimate, £41.43 million; reduction in time required for inspections, £7.21 million; reduction in unexplained duplication of inspection, £1.01 million; reduced reliance on external contractors, £12.4 million. I remind the Committee that the range is nought to £240 million and the best estimate is £90 million. Those impacts of these clauses are benign. They are about the process of implementing regulations. They are about being sensible with the regulator and making sure there is no duplication, that regulators talk to each other and that processes are efficient. If all these clauses have impacts like those, they are benign, and we support them.
The problem is the clauses themselves. Clause 83(2) states that,
“the person must … consider the importance for the promotion of economic growth of exercising the regulatory function in a way which ensures that … regulatory action is taken only when it is needed, and … any action is proportionate”.
Those words by themselves seem a pretty high test for a regulator. As I tried to illustrate, our lives are made acceptable and benign by regulators acting pretty well as they do at the moment to protect us. So are these new clauses a licence for regulators to approve regulations that kill people to save money? When you put it like that, I am sure everybody will say, “Of course not”. Nobody could believe that the intention of these regulations is to kill people to save money. The trouble is that in my very long career in regulation I have heard discussions about killing people to save money. Nobody uses terms like that. They will say: “The risk of this event is so low and the costs we are having to put in to prevent it happening are so high that it is
unreasonable. Why are you forcing us to spend this money for this mitigating measure?”. These conversations go on. They go on in more complex circumstances. They go on in situations where a new regulation is being introduced which, as a consequence, mitigates most of the risk in a particular area as well mitigating other risks. Other people can then say, “The residual risk is now so small, surely you do not want that regulation to continue in place, costing money, when people only kill other people very occasionally”. In other words, the risk is small enough to be put to one side. Do we intend praying in aid quite strong words such as necessary and proportionate for those sort of circumstances to be envisaged?
2.15 pm
In a debate in the other place about food safety, there was discussion about regulators having an unnecessarily burdensome process of examination when a simpler one was available. In that debate, the extent to which the process that the inspector was insisting on may have been more effective and have given more protection did not come out. Could these clauses be used to argue that the level of examination should be reduced and more risk introduced into the area of food safety?
These clauses will apply to the CQC, a new regulator. I will say more about that later, but do we want a situation where, when the CQC is contemplating putting a requirement on a failing nursing home that may close it down to protect the residents of that home, the operator of the home can say, “Closing me down is against growth. Please prove that this regulation, which you may have used elsewhere, is both needed and proportionate”.? Do the Government agree—this is crucial—that these are credible consequences of the clauses as they are presently drafted? If they accept that these are credible consequences, are they willing to give a clear indication that such consequences are not their intention? If it is their intention to have such consequences, will they explain how it would be justified to reduce protection for the individual in the interests of growth?
One of the things referred to in the debate was the guidance that the Government have produced, the document which will be used in the enforcement of these clauses. Paragraph 3 of the “Guidance summary” on page 4 says:
“The growth duty does not automatically take precedence over or supplant existing duties held by regulators”.
At first sight, that is reassuring. Then you realise it says “not automatically”, which means that the growth duty may take precedence over or supplant regulators’ existing duties. This is very wide. “Purpose of the duty” on page 5 says at paragraph 2:
“The duty does not oblige the regulator to place a particular weight on growth”,
which means that the regulator may apply a particular weight to growth in his or her decision. The language is not reassuring— it does not have to but, by implication, it may.
On the same page, paragraph 4 has a really worrying attitude and tone. It says:
“In the context of achieving compliance, the growth duty does not legitimise non-compliant or illegal economic activity”.
That is fair enough, but the reason that it gives is,
“as this undermines markets to the detriment of consumers, the environment and legitimate businesses”.
Regulation is not first and foremost about level playing fields—it has a level playing field as a consequence. Regulation is first and foremost about protecting individuals in society both individually and collectively; it is about protection, not about a level playing field. It produces a level playing field as a consequence, but it is not for that purpose.
We are a responsible Opposition and thought that we would probe this issue of whether the regulations could be used in these areas by asking questions of the regulators. We got seven replies with opinions on the clauses from the Equality and Human Rights Commission—we will come on to that—the Groceries Code Adjudicator, the Office for Fair Access, the Office for Nuclear Regulation, the Homes and Communities Agency, the Food Standards Agency and the Intellectual Property Office. We got a slightly lesser reply with general opinions from the Disclosure and Barring Service. The Gangmasters Licensing Authority and the HSE replied with general information, but did not offer an opinion as it said that it could not comment on government policy because it was going through the parliamentary process. Three regulators, British Hallmarks, Ofsted and the Environment Agency, replied that they were looking into it, but they have not looked into it yet. The Care Quality Commission, which is a new and incredibly important regulator—it has not been around for years like the HSE; it is beginning to form its way of doing things—gave us this very depressing reply:
“We have spoken with the Permanent Secretary’s office at the Department of Health who have advised us that it would not be appropriate for the CQC to respond to your query given that we are an arm’s length body of the government and the Deregulation Bill is a government Bill”.
The whole of this area brings us on to the secondary, chilling effect of having these clauses in the Bill; that is the worrying area, over and above the possible direct use of the clauses in the way I have suggested. Already one feels that regulators are thinking about this clause and about how it would limit their actions. Already one worries that regulators will be thinking about whether they are going to be judicially reviewed, and how people and firms are going to come at them equipped with these clauses.
Our amendment is very simple. The essence of it is that any action does not cause significant detriment to individuals being protected. We have produced a list because we could not think of any other way of saying it, but the essence is that the use of these clauses shall not bring significant detriment to the individuals being protected by the regulations. It protects individuals from potentially grave unintended consequences. If the Government are the benign Government they seek to be, they will have no problem in either accepting our amendment or saying, as Governments frequently do, “That is a good idea, but we don’t like the way the amendment is written—we’ll produce one ourselves”. We are particularly concerned about the impact on all areas of regulation and particularly concerned given the attitude that we have had from the Department of Health on the impact on health. We would be very
happy to work with the Government to look at other formulations, but we think that there is a real risk that, if the clauses are passed into law, they could have potentially grave unintended consequences. I beg to move.