Deregulation bill must not compromise regulators’ independence

The duties in the deregulation bill to promote economic growth should not undermine regulators’ primary functions, a committee of MPs and Lords has warned.

The bill proposes a range of measures to reduce ‘burdens’ on businesses and public authorities. Its scope includes health and safety, employment law, company and insolvency law, the use of land, housing, transport, communications, the environment, Child Trust Funds, entertainment, criminal justice and economic growth.

Clause 61 of the bill says that any person exercising a regulatory function must “have regard to the desirability of promoting economic growth”. In performing the duty, the person must consider the importance for economic growth of only taking regulatory action when needed and ensuring that any action taken is proportionate.

The joint committee considering the bill has called on the government to put safeguards in place to ensure that the growth duty does not take precedence over regulation and that the overriding and principal objective of regulators remains the protection of the public interest.

“Given the evidence we have received, we recommend that the Government review with some care the list of organisations to which the growth duty is intended to apply and consult fully with the organisations proposed. There is a risk that there may be, for some regulators, disproportionate and unintended consequences of the duty which need to be identified before the duty is introduced.”

“Furthermore, we recommend that any powers given to Ministers to issue guidance … on how the economic growth duty should be performed must not compromise the independence of regulators. The Government should consider making this clear on the face of the Bill.”

Business representatives have been strongly in favour, but have stated the duty should not undermine regulators’ primary functions. The Trades Union Congress agreed with this and warned that the duty might compromise the independence of some regulators.

In its response to the committee’s report, the government said it “agrees that the guidance on the duty should not compromise the independence of regulators. The role of government is to determine the objectives for regulation, but then stand back.

“The growth duty clarifies that growth is a factor for regulators to consider as they carry out their functions. Regulators will be free to decide how best to incorporate the duty into their decision-making and the growth duty will not affect their independence.”

The duty will apply to regulators across Great Britain, expect for functions, including environment regulation which are devolved to Scotland or Wales.

In Scotland, the separate regulatory reform (Scotland) bill proposes to put a similar duty on the Scottish Environment Protection Agency. But unlike the deregulation bill, the duty will contain an explicit caveat that it must only be carried out to the extent that it is not inconsistent with protecting and improving the environment (including managing natural resources in a sustainable way).

However, the government has accepted the committee’s call to get rid of an order-making power that would allow ministers to make orders to scrap legislation if they consider it ‘no longer of practical use’. The committee said the power was too wide and the safeguards inadequate.

The government said: “Although we believe that an order-making power to disapply legislation that is no longer of practical use would be a useful additional tool for tidying up the statute book, we recognise that there is insufficient appetite for such a measure at this time. We therefore accept the Committee’s recommendation to remove clauses 51 to 57 from the Bill.”