New bill will not halt stifling of UK business

Opinion: Alan Jenkins, chairman, Eversheds

UK business is drowning in a sea of regulation that is choking the entrepreneurial spirit which is at the very heart of the nation.

Since the Labour Government came to power in 1997, it is estimated that new legislation has cost UK business £50bn. If the UK is to remain competitive on the world stage, radical action is needed. But is the Government’s latest attempt, in the form of the Legislative and Regulatory Reform Bill, the answer?
The highly contentious bill aims to give ministers sweeping powers to change laws in order to speed up the process of scrapping inappropriate and burdensome legislation. Like barnacles gathering on a ship, there is no doubt that successive layers of regulation are encrusted on the keel of UK business.

But where is the evidence that yet another bill is the answer to this Government-created problem? The bill is the third attempt in 12 years to cut the bureaucracy burden.

The previous one, the 2001 Regulatory Reform Act, has been, by the Government’s own admission, “not fit for purpose”. The fact that after three attempts we have not managed to even scratch the surface of the problem highlights how immensely difficult the issue is to resolve.

But one thing is certain: while the bill has to be welcomed in its broadest sense, it will only serve to plaster over the symptoms, ignoring the root cause, which is hardening the arteries of UK business.

The cause lies at the doors of Westminster and Brussels with their insatiable appetites for legislation. Modern legislation only provides a broad framework. The details are then passed down to various ministries and quangos to debate, fine-tune and implement the legislation. And here lies the problem – there are too many actors on the regulation stage.

Giving ministers powers to cut regulation sounds good. But when you have a government for which the answer to everything is to introduce new legislation, you are left with even more red tape for ministers.

While the possibility of legislation being introduced by one government office, only to be cut by the next, may appear farcical, it will also allow for the creation of even more regulation.

But perhaps more alarming is the process by which the bill itself came into being and  progressed through Parliament.

In its rush to push through the bill without pre-legislative scrutiny, the Government failed to recognise the constitutional impact of its plans. Indeed, the House of Lords Constitution Committee, when it published its report on 8 June, described the consultation process as “lamentable”, and went on to describe the handling of the bill as an “indictment of the processes of policy-making and legislation”. It also criticised the sufficiency of attempts by ministers to give reassurance on constitutional safeguards by offering non-binding undertakings.

The purpose of legislation is to make good law, not quick law. The emphasis must at all times be on quality rather than speed.

The Government has been forced to modify the legislation drastically. It now gives parliamentary committees a statutory veto within certain time frames after ministers lay a draft order.

Nevertheless, the Government has no excuse for not recognising the constitutional importance of the bill. But by doing so, it highlighted the devastating impact the bill could have, with ministers unwittingly introducing constitutional change.

The bill is also designed to give ministers power to accelerate recommendations from the Law Commission. Once again, this has to be broadly welcomed. But the same issues of quality and scrutiny are raised, as well as the law-making process.

If laws are changed by acts of Parliament, then there has been opportunity for proper debate and consultation, which is essential in order to achieve the best possible bill. This does not exist for delegated legislation, which this bill would encourage. There is another potentially explosive point: acts of Parliament changed by ministerial order will be subject to challenges in the courts by the usual processes of judicial review.

While any attempt to ease the regulatory burden is laudable, the Legislative and Regulatory Reform Bill is by no means a panacea.

Legislation exists for a reason and a balance has to be found to boost UK business while at the same time protecting the consumer.

A lot of analysis and consultation is needed to get that balance. But it will definitely not be achieved by passing ill-considered acts of legislation.