WIDENING OF REGULATORY APPRAISALS (Hansard, 2 February 1998)

§ Mr. Dafis
I beg to move amendment No. 412, in page 31, line 23, leave out 'likely', and insert 'financial, social and environmental'.

§ The Chairman of Ways and Means (Sir Alan Haselhurst)
With this, it will be convenient to discuss amendment No. 413, in page 31, line 36, after 'business', insert 'and other organisations'.

§ Mr. Dafis
Amendment No. 412 relates to costs and benefits. Amendment No. 413 relates to organisations that are concerned with social and environmental issues, rather than confining it to business organisations.
I take it that integrating sustainable development—again that phrase, which means integrating environmental and social equity considerations into all areas of policy—will be a central theme of the National Assembly, as indeed the Government claim it to be their central theme.
The assembly will come into existence at a time when sustainable development, environmental sustainability, will be rising to the top of the agenda—there is not much doubt about that—globally and at the European and United Kingdom levels. It is important that the same 810 should happen at national level. It is already beginning to happen at local level, through the local Agenda 21 process. We may have an opportunity to debate the whole issue of sustainable development more comprehensively when we reach part VI, which concerns the new development agency.
Let me establish straight away that, when we speak of costs and benefits and cost-benefit analysis, we are not just talking in traditional economic terms. I hope that we are talking not merely about financial costs and benefits, but about social and environmental costs and benefits, which are a key component of sustainable development. As it stands, clause 64 seems to refer only to financial and, in the traditional sense of the word, economic costs and benefits. If I am right about that, it is old-fashioned thinking—old-style COBA. That is inappropriate in this day and age: nowadays it is wrong to separate financial considerations from those that are environmental and social. We cannot erode our environmental capital, or indeed our social assets, without imperilling economic welfare.
The amendments make it explicit that any regulatory appraisal and study of cost compliance must be comprehensive in the way that I have outlined. The outcome of an appraisal of that kind could be significantly different from the outcome of the narrow appraisal provided for by clause 64 as it stands.
I do not wish to say any more now, as there will be further opportunities. The amendment is tabled in the same spirit as amendments Nos. 401 and 402 on the Environmental Audit Committee, to which the Minister responded positively. I trust that the amendments will receive a similar response, enabling the assembly to benefit from an up-to-date response to policy.

§ Mr. Win Griffiths
Clause 64 is a significant and radical innovation in itself. It builds on the non-statutory compliance cost assessments that have been part of Government practice for some time when new laws or regulations are to be introduced. It is vital for the assembly to create an economic environment in Wales that promotes healthy and sustainable economic growth, and a more widespread prosperity than Wales has enjoyed in the past. That means an economic policy that respects the environment, and recognises that there is economic as well as social benefit in conserving the beauty and ecological diversity of Wales. It means a policy that works actively to bring greater prosperity to our more socially deprived communities.
All those will overwhelmingly be matters for the policy of the assembly. In the Bill, we aim to create the framework, and, in doing so, we must be careful not to build in procedures that risk becoming excessively bureaucratic. If we attempt to legislate for procedures that try to constrain the assembly's policies, we multiply the opportunities for legal challenges on procedural grounds; we also risk entrenching the status quo, while warring interest groups battle for control of the assembly's procedures as a way of controlling its policies.
We are not opposed to a procedural framework that lays some basic duties on the assembly. Hence, the Bill refers to local government, to regulatory appraisals and to the voluntary sector. We are also committed to tabling an amendment that recognises the importance of the principle of sustainable development.
811 Having said that, the Government cannot accept the amendments, because they would broaden the scope of the regulatory appraisal beyond the specific aspect of the costs that may be added to business. We believe that a social, environmental and financial appraisal of all secondary legislation is not necessary in the context of the clause. The consultation process should only include business.
It is important for the assembly to consider the financial costs that will be laid on business as a result of regulations that it introduces. If there are serious costs, it is right that representatives of business should be consulted.
Placing additional legal constraints on the assembly is going too far. As a democratic body, the assembly will be free to develop its own policies. It will have to account for its success or failure to the people of Wales when the time comes to be re-elected. Its processes will be much more public and open than we have been used to. That, and not more complex statutory provision, however well intentioned, is the best way to ensure that the assembly has proper regard for the social and environmental consequences of its actions.
I ask the hon. Member for Ceredigion (Mr. Dafis) to take account of the fact that we shall table an amendment on sustainable development, which will deal with the concerns that he has expressed. He wants to bolt the provisions in the amendments on to the clause, but it has a specific purpose, so that is not the most appropriate way to achieve his objectives.

§ Mr. Dafis
I am not altogether convinced by the Minister's response. I am glad to hear that the Government intend to table an amendment on sustainable development. It should be worded carefully, and should impose a duty on the assembly to have regard to sustainable development in the formation of its policies: it should not merely have to consider sustainability. It is important to put this issue at the heart of the assembly's activities.
The Minister said that it is not appropriate to broaden the consultation process. I believe that it should be broadened, because organisations concerned with the social and environmental impact should be given parity of esteem with business interests.
Environmental and social appraisals will increasingly be part of policy development. Environmental sustainability issues will be brought into accounting systems. They will be brought to the heart of the way in which the effects of policies are measured. The time is coming when cost compliance and cost-benefit analysis will have to be brought into such matters. I do not propose to press the amendment to a vote, but I look forward to a more thorough debate at a later stage. I beg to ask leave to withdraw the amendment.

§ Mr. Jenkin
I beg to move amendment No. 303, in page 31, leave out lines 27 to 30.

§ The Chairman
With this, it will be convenient to discuss amendment No. 307, in clause 67, page 33, leave out lines 21 to 24.

§ Mr. Jenkin
Clause 64 applies the equivalent of a compliance cost assessment to draft subordinate 812 legislation that is being considered by the assembly and it requires the executive committee to carry out such an assessment. Clause 67(2), to which our amendment No. 307 refers, requires the equivalent of a money resolution. Clause 64(2) can set aside the provision for a regulatory appraisal if in the particular circumstances it is inappropriate". The words used in clause 67(2) are, "may contain an exception". Is it appropriate for Parliament to suggest that those laudable procedures, which we endeavour to apply, should be set aside?

§ Dr. Marek
Surely the provisions to which the hon. Gentleman refers are de minimis. Is the hon. Gentleman serious in suggesting that they should be deleted from the Bill? Amendment No. 307 proposes to delete a reference to small sums but for good and efficient administration that reference ought to remain in the Bill. I urge the hon. Gentleman not to press the amendment to a vote because it would damage the Bill.

§ Mr. Jenkin
The hon. Gentleman may have noticed that votes are not two a penny in our deliberations. These are probing amendments. Our procedures do not allow primary legislation that would be a charge on the Exchequer to proceed without a money resolution, and we do not think that the assembly should be able to set aside analogous procedures because it considers that convenient. It may find that the subordinate legislation which it expected to have minimal cost is expensive. Unless the matter is examined or debated, depending on the assembly's standing orders, there should be a procedure to guard against the setting aside of such procedures.
Perhaps like the hon. Member for Ceredigion (Mr. Dafis), who moved amendment No. 412, I shall be told by the Government that my amendment is a good one and they will ask me to withdraw it, assuring me that they will table an amendment. That would enable them to say that it was their idea in the first place.

§ Mr. Letwin
My hon. Friend has rightly described this as a probing amendment. Perhaps I could use it to probe the Minister on the following chain of logic. It may be false and it would be reassuring to hear that it is. My query arises in relation to the specific issue of regulatory appraisals and more generally to clauses 64, 65 and 67.
The Minister has told us that clause 65(2) in particular limits the nightmare vision of Secretaries and the First Secretary legislating. The Minister has also admitted that that does not prevent the First Secretary and Secretaries from undercutting the need to legislate by using the power of the purse and the method of the circular to achieve results that would otherwise have been achieved by subordinate legislation.
Nevertheless, I and other Opposition Members have to accept that there is a difference between that indirect method of crypto-legislation and genuine subordinate legislation by order or regulation. Therefore, the extent to which the following logic applies is important. Is it true that, in the light of clause 64(2), which amendment No. 303 would remove, and of the phrasing of clause 65(2), which refers to "a resolution" but not necessarily to an affirmative resolution, it would be possible for the 813 First Secretary or the Secretary concerned to bring forward subordinate legislation without regulatory appraisal, to put it before the assembly only in the sense of asking it not to make a negative resolution, and then to carry that proposition into law through subordinate legislation, which, as a result of there not having been a negative resolution prayed, would never have been debated in the assembly?
That is extremely material because, if there is neither a regulatory appraisal nor a debate, but merely legislation that is prepared and, by that means, so to speak, invisibly enacted by the First Secretary and the Secretaries, we indeed have the prospect of a devolution of power upwards to those persons. They will be able to run an unaccountable legislature in the full sense, with merely the theory of accountability.

§ Mr. Win Griffiths
Clause 64 requires that the assembly Standing Orders must contain provision for regulatory appraisals, as we have just debated, and that those must be undertaken before the subordinate legislation is made. The purpose of the appraisals will be to assess the costs and the benefits, particularly as they affect business.
Clause 64(2) provides that, in particular cases, the requirements for a regulatory appraisal can be dispensed with if it would be inappropriate or if it were not reasonably practical to have one. Amendment No. 303 proposes that clause 64(2) be removed so that there should be regulatory appraisal in respect of every proposed order.
I am surprised that the amendment has been proposed because it would subject the assembly to stricter rules than are currently applied in Whitehall. It would involve assembly staff in unnecessary administrative work and take up the assembly's time with examining unnecessary reports.
For example, under the arrangements that exist for Whitehall and Westminster, regulatory appraisals are not required for a range of subordinate legislation: those whose sole impact is on the public sector; regulations that increase a statutory fee by a predetermined formula; changes to the existing regulatory regime that do not impose additional costs or savings on business, charities or voluntary organisations.

§ Mr. Jenkin
Would it not have been helpful to have set out those exemptions in the Bill, so that the assembly could be clear about Parliament's intention, instead of having to divine it from the words that the Minister is now uttering?

§ Mr. Griffiths
Perhaps we had unfairly assumed that the workings of Whitehall in these matters were fairly familiar and that we did not need to prescribe step by step. These exemptions are not found specifically in primary legislation. Similar exemptions are prescribed in secondary legislation.

§ Mr. Ron Davies
The constitutional age for beginners. It is in the book.

§ Mr. Jenkin
The Secretary of State is now getting excited from a sedentary position. The point is that it is assembly Members who will have to understand this legislation and how this is going to work. It is clear what 814 the Government's intention now is, and it should have been spelt out in the Bill. That would have been much clearer. What is the objection to that? There will be many beginners in the assembly, as the Secretary of State refers to them.

§ Mr. Griffiths
Those beginners will be provided with all the briefing and background to those matters when they become Members of the Assembly. If we were to prescribe in detail every little piece of legislation in Westminster and Whitehall that will be applied in principle to the assembly, the Bill would be a thousand times longer.
I am pleased to have brought some enlightenment to the Committee's proceedings. If the amendment were accepted, a situation could easily arise in which a regulatory appraisal of identical subordinate legislation was considered unnecessary in England but had to be carried out in Wales.

§ Mr. Letwin
Who is to be the judge of inappropriateness? If it is to be the assembly, is there any guarantee that it will take the view that the Minister has espoused? Could not the assembly decide that all regulatory appraisal was inappropriate?

§ Mr. Griffiths
The assembly could not decide that. Some matters are in primary legislation; I shall give the hon. Gentleman a few more examples. Under the present arrangements at Whitehall, a regulatory appraisal is not required for road closure orders or for regulations that amend an existing regulatory regime without imposing any additional costs or savings on business, and so on. All those matters are in secondary legislation.
The assembly will not be able to go beyond the constraints that currently apply under legislation enacted at Westminster. It will not be able to say, "We are going to make an exception." The primary legislation will not allow that to happen.

§ Mr. Letwin
Perhaps we are making progress, although I now no longer understand subsections (1) and (2) of the clause. The Minister's line of reasoning seems to be that if, under primary legislation, there is a requirement for regulatory appraisal when the Secretary of State lays an order, that will apply automatically to the assembly. So why on earth are subsections (1) and (2) in the Bill? Why would there be a need to legislate for such procedures that are contained in subsection (1) if they already exist in statute?

§ Mr. Griffiths
The powers are being transferred to the assembly. Under primary legislation, Parliament does not have the power to dispense with regulatory appraisal of everything; it is specified in legislation. In that same way, the assembly's powers will be specified in legislation. The legislation that applies to Westminster and Whitehall will be the same legislation that will apply to the assembly. It will not be able to move outside exactly the same constraints as apply at Westminster and Whitehall.

§ Mr. Jenkin
Will the Minister give us an assurance that no secondary legislation that does not have the appropriate regulatory constraints applied to it will be delegated to the assembly?

§ Mr. Griffiths
Further advice has come my way. The hon. Member for West Dorset (Mr. Letwin) asked whether the assembly could decide not to have any regulatory appraisals at all. The answer is no, it could not adopt an all-embracing policy to set such matters to one side. Primary legislation governs what the assembly will be able to do, just as primary legislation governs what this Parliament is able to do.

§ Mr. John Hayes (South Holland and The Deepings)
Now that we are clear on what the assembly cannot do, will the Minister explain why there is no difference between the clauses and no discretion is provided? That is the point that he has not dealt with. He has dealt with what the assembly cannot do, but he has not said why the clauses are in the Bill, given the complete lack of discretion that they provide.

§ Mr. Griffiths
If the hon. Gentleman had been in the Chamber for the beginning of the debate, he would have heard me say that the Government have included in the Bill a framework for regulatory appraisal, which will make the process much clearer in the National Assembly for Wales. As the hon. Member for North Essex (Mr. Jenkin) said, it is based—