My Lords, we have heard three excellent and very sober speeches on the amendment, for which I thank noble Lords. There is only a small difference between the noble Lord, Lord Tunnicliffe, and myself, on behalf of the Government. We are talking about balance—the balance among a range of factors that we wish regulators to consider.
6 pm
I thank the noble Earl, Lord Lindsay, for his speech. I had forgotten that he was vice-chair of the Better Regulation Commission, on which my wife also served with him. The continuity of the approach which the last Government and the current Government have taken to regulation should be marked. We have not differed very much in the way we approach regulation as such.
Although the noble Lord, Lord Tunnicliffe, recognises that growth should be a factor which we take into account among other factors in considering the balance, he fears that this duty, in spite of what the Bill and the guidance clearly say, will nevertheless come to override other factors. He is suspicious that there may be some underlying hidden motivations behind them when he talks about nuances. I reassure him that nothing in the Bill, the guidance or the draft regulations gives any credence to what he fears.
If a regulator has had regard to growth and can justify its decision, a business cannot expect successfully to challenge that decision. Businesses cannot use the growth duty to escape legitimate compliance costs. I am very familiar with the work of the noble Baroness, Lady Andrews, in English Heritage and I recall with pleasure escorting her on her inspection visit to Saltaire as a world heritage site—it is just possible that one or two noble Lords are not familiar with the fact that Saltaire is a world heritage site, so I rub that in. I say to the noble Baroness that the growth duty is not a higher duty which would trump existing considerations. Therefore, where regulators are required to consider sustainable development or environmental and social concerns, they will continue to do so. It will be for the individual regulator to decide whether, in view of the duty and the guidance, they are striking the appropriate balance between growth and the other factors they are required to take into account.
Clause 88 is clear that the growth duty is a duty to have regard to the desirability of economic growth. It does not provide that the duty should take precedence over a regulator’s existing and other duties. As a result, it does not in any way override or cut across a regulator’s existing powers of protection. The duty sits alongside the other duties and functions of regulators, and it is for each regulator to decide what weight, if any, to
afford to the desirability of economic growth, depending on the decision they are making. It cannot compel a regulator to take action in the interest of growth at the expense of other protections. In some circumstances, these factors will sit well together; in others, the regulator will need to decide how much weight to afford each factor for the best outcome. We are all familiar with the problems of regulation in that regard. The regulators’ expertise means that they are best placed to decide what weight is appropriate to attach to the desirability of economic growth against other factors in the relevant circumstances.
The Opposition Front Bench asked when the orders listing the functions to which the duty will apply, and the guidance for regulators, will be brought into force. They are intended to be brought into force in October this year by whichever Government are then in office.
The draft guidance sets out how regulators can implement the duty alongside their existing functions, and has been well received by the regulators. The noble Earl, Lord Lindsay, has already quoted it, but it also states:
“The duty does not compromise the independence of regulators, nor does it supplant or replace a regulator’s existing duties”.
It further states that the growth duty,
“does not remove or diminish in any way the responsibility of business to comply with the law”.
It is therefore not necessary to state on the face of the Bill that the duty will apply only where it is consistent with a regulator’s existing regulatory functions. As I have said, the draft guidance is quite clear that the duty is simply an additional factor for regulators to take into account as they carry out their existing regulatory functions and ensure regulatory protections, and that the duty does not expect regulators to ignore illegal behaviour. Given the experience of the noble Lord, Lord Tunnicliffe, in the transport field, I particularly note his comments about risk assessment and the large expenditure one sometimes has to make to mitigate the risks involved.
The post-implementation review of the Regulators’ Code showed that it had not gone far enough to incentivise change as the code is trumped by all other statutory duties affecting regulators. The growth duty clause, as drafted, therefore requires that growth is put on the same footing as other duties, enabling regulators to have regard to growth while ensuring that essential protections are maintained.
I hope that that gives the noble Lord sufficient assurance to be willing to withdraw the amendment.