deregulation bill -...
TRANSCRIPT
Deregulation Bill Bill 162 of 2013-14
RESEARCH PAPER 14/06 30 January 2014
This wide-ranging Bill will receive its Second Reading in the House of Commons on 3 February 2014. The Bill proposes a range of measures in line with the Government’s aim 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. It involves input from ten ministerial departments, coordinated by the Cabinet Office. The Government has indicated that it intends for the Bill to be carried over to the next session of Parliament
Doug Pyper; Nerys Roberts; James Mirza-Davies; Louise Butcher; Ed White; Elena
Ares; Lorraine Conway; Timothy Edmonds; Emma Downing; Wendy Wilson; Philip Ward;
Susan Hubble; John Woodhouse; Jacqueline Beard; Pat Strickland; Manjit Gheera; Mark
Sandford
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ISSN 1368-8456
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Research Paper 14/06
Contributing Authors: Doug Pyper (employment; gangmasters; economic growth duty), Business & Transport Section; Nerys Roberts (health and safety; education), Social Policy Section; James Mirza-Davies (apprenticeships), Economic Policy & Statistics Section; Louise Butcher (transport), Business & Transport Section; Ed White (energy), Science & Environment Section; Elena Ares (environment) Science & Environment Section; Lorraine Conway (insolvency; street traders), Home Affairs Section; Timothy Edmonds (companies; Child Trust Funds), Business & Transport Section; Emma Downing (use of land), Science & Environment Section; Wendy Wilson (housing), Home Affairs Section; Philip Ward (communications), Home Affairs Section; John Woodhouse (entertainment), Home Affairs Section; Susan Hubble (education), Social Policy Section; Jacqueline Beard (criminal procedure), Home Affairs Section; Pat Strickland (prisons), Home Affairs Section; Manjit Gheera (social work), Social Policy Section; Mark Sandford (local authorities), Parliament and Constitution Centre.
Contents
Summary 1
1 Introduction 4
1.1 Pre-legislative scrutiny 4
1.2 Extent 5
1.3 Structure of the research paper 5
2 Measures affecting business: general 6
2.1 Health and safety: limitation of general duty of the self-employed (clause 1) 6
Background 6
The Bill 7
Comment 7
2.2 Employment tribunals’ power to make wider recommendations (clause 2) 8
Background 8
The Bill 10
Comment 10
2.3 Apprenticeship simplification (clause 3 and Schedule 1) 12
Background 12
The Bill 12
Comment 13
2.4 English apprenticeships: funding arrangements (clause 4) 13
The Bill 13
Comment 13
3 Measures affecting business: particular areas 13
3.1 Driving instructors (clause 5 and Schedule 2) 13
3.2 Motor insurers (clause 6 and Schedule 3) 14
3.3 Shippers etc of gas (clause 7) 14
Background 14
The Bill 15
3.4 Suppliers of fuels and fireplaces (clause 8) 15
3.5 Sellers of knitting yarn (clause 9) 15
4 Companies and insolvency 15
4.1 Authorisation of insolvency practitioners (clause 10) 15
Background 15
The Bill 16
Comment 17
4.2 Auditors ceasing to hold office (clause 11 and Schedule 4) 19
Background 19
The Bill 20
4.3 Insolvency and company law: miscellaneous (clause 12) 22
4.4 Insolvency and company law (Schedule 5) 22
Deeds of Arrangement (Schedule 5, Part 1) 22
Administration of companies (Schedule 5, Part 2) 22
Winding up of companies (Schedule 5, Part 3) 24
Disqualification of unfit directors of insolvent companies (Schedule 5, Part 4) 25
Bankruptcy (Schedule 5, Part 5) 27
Authorisation of insolvency practitioners (Schedule 5, Part 6) 29
Liabilities of administrators and administrative receivers of companies and
preferential debts of companies and individuals (Schedule 5, Part 7) 29
Comment 30
5 Use of Land 30
5.1 Rights of Way (clauses 13-19 and Schedule 6) 30
Background 30
The Bill 33
Amending the Highways Act 1980 regarding extinguishing or diverting a right of
way 33
Changing the procedures for ascertaining rights of way in England 34
Comment 35
Support for wider reforms 35
5.2 Erection of public statues (London) (clause 20) 36
6 Housing 36
6.1 Right to buy qualifying period (clause 21) 36
Background 36
The Bill 37
Comment 37
6.2 Removal of requirement to prepare housing strategies (clause 22) 39
Background 39
The Bill 40
Comment 40
7 Transport 40
7.1 Removal of restrictions on provision of passenger rail services (clause 23 and
Schedule 7) 41
7.2 Reduction of burdens relating to the use of roads and railways (clause 24 and
Schedule 8) 41
7.3 Reduction of burdens relating to enforcement of transport legislation (clause 25
and Schedule 9) 42
7.4 Removal of duty: re-hearings of marine accident investigations (clause 26) 43
8 Communications 44
8.1 Online copyright infringement (clause 27) 44
Background 44
The Bill 47
Comment 47
9 The environment 47
9.1 Reduction of duties relating to energy and climate change (clause 28) 47
Comment 48
9.2 Household waste: decriminalisation (clause 29; Schedules 10 and 11) 48
Background 48
The Bill 49
Comment 50
9.3 Other measures (clause 30 and Schedule 11) 51
10 Child Trust Funds 53
Child trust funds: transfers (clause 33) 53
Background 53
The Bill 55
10.1 Child Trust Funds: other clauses (clauses 31, 32 and 34) 56
11 Education and training 57
11.1 Abolition of the Office of the Chief Executive of Skills Funding (clause 35 and
Schedule 12) 57
Background 57
The Bill 57
Comment 57
11.2 Further and higher education sectors: reduction of burdens (clause 36 and
Schedule 13) 58
Background 58
The Bill 58
Comment 59
11.3 Schools: reduction of burdens (clause 37 and Schedule 14) 59
Background 59
The Bill 60
Comment 61
12 Alcohol and entertainment licensing 62
12.1 Legislative framework: the Licensing Act 2003 62
12.2 Temporary event notices: increase in maximum number of events (clause 38) 63
Background 63
The Bill 64
12.3 Personal licences: no requirement to renew (clause 39) 64
Background 64
The Bill 65
12.4 Sale of liqueur confectionary to children: abolition of offence (clause 40) 65
The Bill 65
12.5 Late night refreshment (clause 41) 65
Background 65
The Bill 66
12.6 Removal of requirement to report loss or theft etc of licence (clause 42) 66
The Bill 66
12.7 Exhibition of films in community premises (clause 43) 66
The Bill 67
13 Administration of justice 68
13.1 Repeal of Senior President of Tribunals duty to report (clause 44) 68
13.2 Criminal procedure (clauses 45-47) 69
Written witness statements (clause 45) 69
Written guilty pleas (clause 46) 70
Criminal Procedure Rules (clause 47) 70
13.3 Multi-Agency Public Protection Arrangements (clause 48) 71
13.4 Prison closures (clause 49) 72
14 Measures to reduce burdens on public authorities 72
14.1 London street trading appeals (clause 50) 72
14.2 Gangmasters (Licensing Act) 2004 enforcement (clause 51) 73
Background 73
The Bill 73
14.3 Reduction in the regulation of providers of social work services (clause 52) 73
Background 73
The Bill 75
Comment 76
14.4 Access to registers kept by Gas and Electricity Markets Authority (clause 53) 76
Background 76
The Bill 76
Comment 76
15 Repeal of local authority duties 76
15.1 Sustainable community strategies (clause 54) 77
Background 77
The Bill 77
15.2 Local area agreements (clause 55) 77
Background 77
The Bill 77
15.3 Multi-Area Agreements (clause 56) 78
Background 78
The Bill 78
15.4 Repeal of duties relating to consultation or involvement (clause 57) 78
Background 78
The Bill 79
16 Legislative reform 79
16.1 Power to spell out dates in described legislation (clause 58) 79
16.2 Ambulatory references to international shipping instruments (clause 59) 79
16.3 Legislation no longer of practical use (clause 60) 80
17 Exercise of regulatory functions 81
17.1 The economic growth duty (clauses 61-64) 81
Background 81
The Bill 85
Comment 85
RESEARCH PAPER 14/06
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Summary
The Deregulation Bill will receive its Second Reading in the House of Commons on Monday 3 February 2014. A draft version was published on 26 July 2013 and considered by a joint committee of both Houses (see below). The Joint Committee on the Draft Deregulation Bill referred to the draft Bill as a “portmanteau Bill”, described by the Minister without Portfolio as “a slight mountain of a Bill”.1 It covers a wide range of policy areas, summarised below.
The Bill would make a number of changes which would affect business generally. It would amend the general duty, in section 3 of the Health and Safety at Work etc Act 1974, to avoid health and safety risks, limiting its scope to only those self-employed persons who have no employees and who conduct an “undertaking of a prescribed description”. On employment, it would limit employment tribunals’ power to make recommendations in discrimination cases. It would make a number of changes to apprenticeships, in line with the recommendations of the 2012 Richard Review of Apprenticeships. It would also separate the statutory requirements of English and Welsh apprenticeships.
In addition to the proposed changes affecting business generally, the Bill proposes a number of measures that would affect business in particular areas. On driving instructors and insurance, it would unify the driving instructor registration system so there is no longer a differentiation between disabled and other instructors, and would effectively remove the legal requirement that a motor insurance policy is not in force until the insurer delivers to the policy holder a certificate. The Bill would make changes that would affect shippers of gas. Third parties who wish to make use of an offshore gas unloading facility operated by another person who has a licence for that facility will no longer be required to have a licence themselves. On fuel and fireplaces, the Bill would simplify the process for publishing lists of authorised fuels and approving fireplaces for use in smoke control areas. The Bill would also remove unnecessary regulations affecting sellers of knitting yarn.
The Bill’s proposed company law reforms would limit the occasions when either an auditor, or the company it audits, needs to deposit formal returns if the auditor ceases to hold office. The Bill also contains a number of substantive amendments to the Insolvency Act 1986, including changes to the regime authorising insolvency practitioners and the appointment of administrators.
The provisions of the Bill that relate to rights of way seek to untangle and speed-up the processes for determining and recording rights of way. The Joint Committee’s report on the Bill noted that this set of clauses had attracted the most interest and "passion", and had featured in half the 300 responses received. The “rights of way clauses” would implement a range of measures put forward by a Natural England stakeholder working group on unrecorded rights of way in March 2010, further backed by a Defra consultation in 2012.
On housing, the Bill would reduce the qualification period for the Right to Buy in England to three years as a public sector tenant, from the current five years. The position in Wales would remain unchanged. The Bill would also remove, in relation to England, the Secretary of State’s power to require local authorities to prepare a housing strategy; a power which has never been exercised. The National Assembly for Wales would retain the power.
There is no overall theme to the transport changes made by the Bill. They cover areas as diverse as passenger rail services, drink driving and maritime investigations. In some cases the proposals would introduce reforms; for example, making the evidential breath test the primary method of testing for alcohol impairment. In other cases the Bill would make administrative changes; for example, removing the requirement for local authorities to seek
1 Ibid, p9
RESEARCH PAPER 14/06
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approval for road works permit schemes from the Secretary of State or inform him of changes to pedestrian crossings. Additionally, the Bill proposes changes with legislative implications, including the introduction of new ambulatory measures affecting international shipping agreements.
On communications, the Bill would repeal sections 17 and 18 of the Digital Economy Act 2010. Those sections allow the Secretary of State to make regulations granting courts the power to order internet service providers to block access to websites that infringe copyright. No such regulations have been laid and the Government, having received advice that the measure may not be effective, has indicated that it does not intend to use this power; alternative legal avenues exist.
On the environment and related areas, the Bill would remove, in England only, the current criminal offence of not complying with local authority requirements for collection of household waste. It would be replaced with a new scheme of fixed penalties which could be applied to occupiers who do not present their household waste for collection in the way specified by the waste collection authority. The Bill would remove the requirement for local authorities to have regard for any energy measures, reports or targets published by government. It would remove the requirement for government to set microgeneration targets and the requirement for government to report on measures taken to ensure compliance with the energy conservation requirements of the building regulations. The Bill would also remove the requirement for local authorities to carry out further assessments when designating Air Quality Management Areas, and abolishes Noise Abatement Zones.
Various reforms would be made to the Child Trust Fund Regime. The most widely anticipated is the proposed facility to transfer Child Trust Fund accounts to Junior ISAs. New provisions would allow funds which have matured to be ‘rolled over’ into further tax advantaged accounts, and provide greater flexibility in the management of funds of ‘looked after’ children.
Provisions in the Bill would abolish the Office of the Chief Executive of Skills Funding and reduce regulatory burdens on the further and higher education sectors; one provision of note is the proposed removal of the Secretary of State’s power to impose qualification requirements for teaching staff and principals in further education institutions.
The Bill would make a number of amendments to the Licensing Act 2003. The proposals include changes to the licensing of temporary events, the exhibition of films in community premises, the supply of late night refreshments, and the system of personal licences.
The Bill proposes a number of changes to the administration of justice. It would remove the duty on the Senior President of Tribunals to report each year to the Secretary of State on the standards of decision making by the Secretary of State based on cases which are appealed to the First-tier Tribunal. It would provide for the Criminal Procedure Rule Committee to make rules regarding certain procedures in the criminal courts, including written witness statements, written guilty pleas and various types of application to the court. It would provide that Multi-Agency Public Protection Arrangements would not apply automatically solely because an offender has received a disqualification order. Lastly, it would allow the Secretary of State to close a prison without the need for an order.
The Bill makes a diverse range of proposals grouped under the heading “measures to reduce burdens on public authorities”. On street trading, it would ensure that all street trading appeals are made to the Magistrates Court. It would make changes to the requirement for the Gas and Electricity Markets Authority to maintain a physical public register of documents relating to licensed gas and electricity operators. On gangmasters, the Bill would clarify the relationship between the Crown Prosecution Service and the Gangmasters Licensing Agency
RESEARCH PAPER 14/06
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in relation to prosecution decisions. On social work services, it would remove ‘providers of social work services’ from the list of agencies required to register and be inspected by Her Majesty's Chief Inspector of Education, Children's Services and Skills under the Care Standards Act 2000. The Bill would also repeal the duty on local authorities to produce a sustainable community strategy and to consult in the exercise of its functions. It would repeal the powers to develop Local Area Agreements and Multi-Area Agreements between local authorities and other local public bodies, and the power to set and monitor targets within those agreements.
The final part of the Bill, and one of its core proposals, would impose a statutory duty on non-economic regulators to “have regard to the desirability of promoting economic growth”. Although this proposal was broadly welcomed by the Joint Committee on the Draft Deregulation Bill, the Committee, the Joint Committee on Human Rights and a number of organisations voiced concern about its application to certain regulators, notably, the Equality and Human Rights Commission.
RESEARCH PAPER 14/06
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1 Introduction
The Deregulation Bill (Bill 162 of 2013-14) was introduced in the House of Commons on 23 January 2014 and is due to receive its Second Reading on 3 February 2014. The Bill, together with its Explanatory Notes, are available from the Parliament website, on which the progress of the Bill can be followed. It was announced during the Queen’s Speech on 8 May 2013, described as a Bill “to reduce the burden of excessive regulation on businesses”.2 It is the second substantial piece of regulatory reform legislation proposed by the current government, the first of which became the Enterprise and Regulatory Reform Act 2013.
The Draft Deregulation Bill was presented to Parliament on 26 July 2013 by the Minister for Government Policy, Rt Hon Oliver Letwin MP, and the Minister without Portfolio, Rt Hon Kenneth Clarke QC MP.3 In their joint foreword to the draft, the Ministers stated that the key measures in the Bill worked towards three ends: “freeing business from red tape”; “making life easier for individuals in civil society”; and “reducing bureaucratic requirements on public bodies”. The Ministers described the Bill as:
the latest step in the Government’s ongoing drive to remove unnecessary bureaucracy
that costs British businesses millions, slows down public services like schools and
hospitals, and hinders millions of individuals in their daily lives.4
Other measures which form part of the Government’s deregulatory agenda5 include the Red Tape Challenge, which seeks to reduce the overall burden of regulation, and the ‘One-In, Two-Out’ rule which, from January 2013, required that for every pound of additional cost imposed on business by new regulations, Government departments must save businesses two pounds by removing or modifying existing regulations.
The Bill contains 64 substantive clauses and 17 Schedules, covering a wide range or areas, including 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. It involves input from ten ministerial departments, coordinated by the Cabinet Office. The Minister for Government Policy has indicated that the Government intends for the Bill to be carried over to the next session of Parliament.6
1.1 Pre-legislative scrutiny
A Joint Committee of both Houses was appointed in July 2013 to consider the draft Bill. The Committee gathered oral evidence from 16 October to 6 November 2013, and published both oral and written evidence in two volumes, available from the Joint Committee’s page on the Parliament website.7 Its call for evidence received over 300 written submissions.
The Committee concluded its inquiry on 16 December 2013 and published its report on 19 December 2013.8 In view of the range of issues covered in by the Bill, the Committee was critical of the 12-week timetable to which it was required to work, and stated:
We take the view that, whilst the 12 week timetable may be regarded as a minimum
starting point, a longer deadline should be agreed if, on a case by case basis, it is
2 The Queen’s Speech 2013, Gov.uk, 8 May 2013 [accessed 24 January 2014] 3 Draft Deregulation Bill, Cm 8642, 26 July 2013 4 Ibid, pp3-4 5 Reducing the impact of regulation on business, Gov.uk [accessed 29 January 2014] 6 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Report – Session 2013-14, HL Paper
101, HC 925, 19 December 2013, p11 7 Draft Deregulation Bill - Evidence Volume 1; Draft Deregulation Bill - Evidence Volume 2, 19 December 2013 8 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Report – Session 2013-14, HL Paper
101, HC 925, 19 December 2013
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judged necessary in order to allow a committee to carry out its pre-legislative functions
effectively. A deadline longer than the minimum would have been appropriate with
regard to the draft Deregulation Bill given the range of issues covered by the draft Bill
and the number of Government departments involved.9
The Committee’s findings are summarised on pages 5-7 of its report. Rather than scrutinising the Bill line-by-line, the Committee restricted its comments to what it regarded “as the principal points of contention”.10 Perhaps the main point of contention in the draft Bill, criticised by the Committee, was a proposed power that would have enabled a Minister to disapply by order primary or secondary legislation “if the Minister considers that it is no longer of practical use”. This proposal does not feature in the Bill presented for Second Reading.
The conclusions of the Joint Committee on the individual clauses in the draft Bill are considered in the relevant sections of this research paper. In addition to those particular conclusions, the Committee’s report contained a broader “reflection on future deregulation”:
It was surprising to us that the evidence submitted to our inquiry appeared to express
disappointment that the draft Bill did not have more meaningful proposals to really
tackle the challenges of deregulation which we all recognise are at the heart of many of
the problems facing the UK economy. We would hope that this is the first of several
Bills because deregulation can be achieved without jeopardising key issues such as
health and safety, human rights and equality of opportunity—all of which reflect the
true values of our society.11
On 30 January 2014, the Government published its response to the Joint Committee’s report.12
1.2 Extent
Given its wide scope, the Bill’s territorial extent is somewhat complex. Clause 67 provides that except as provided otherwise, a repeal, revocation or other amendment or modification made by the Bill would have the same extent as the affected provision. The exceptions mentioned in clause 67 are:
Paragraph 26 of Schedule 17 extends only to England and Wales and Northern Ireland;
section 8, Parts 4 and 5 of Schedule 11 and paragraphs 27 and 29 of Schedule 17 extend only to England and Wales.
The territorial extent of individual clauses in the Bill are dealt with in the relevant sections of this research paper.
1.3 Structure of the research paper
This paper follows the structure of the Bill and deals individually with each of its clauses. The Schedules are considered alongside the associated clauses.
9 Ibid, p11 10 Ibid 11 Ibid, p7 12 Government Response to the Report of the Joint Committee on the Draft Deregulation Bill, Cm 8808, January
2014
RESEARCH PAPER 14/06
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2 Measures affecting business: general
2.1 Health and safety: limitation of general duty of the self-employed (clause 1)
Background
Clause 1 would amend section 3 of the Health and Safety at Work etc. Act 1974 to limit the scope of the general duty under that section to only certain self-employed persons.
Section 3 of the Health and Safety at Work etc Act 1974 places general duties on everyone “at work” including the self-employed, to ensure, so far as is reasonably practicable, that they do not expose themselves and others (including non-employees) to health and safety risks. Section 53 of the Act gives a broad definition of “a self-employed person” and ultimately it is a matter for case law to determine who does or does not have this status.
In addition to the general duties conferred by section 3 of the 1974 Act, other secondary legislation confers various requirements on self-employed persons, including: the need to make and keep up-to-date risk assessments and put in place measures to mitigate these risks, so far as is reasonably practicable.13
The Government has instigated two major reviews of workplace health and safety regulation since taking office. In June 2010, the Prime Minister commissioned Lord Young to undertake a review, and his report was published in October 2010.14 In March 2011, Rt. Hon Chris Grayling MP, then Minister for Employment, asked Professor Ragnar Löfstedt to conduct an independent review to identify opportunities to simplify current rules. Prof. Löfstedt’s report was published in November 2011. Among other things, it recommended that self-employed people with no employees and whose work activities posed no potential risk of harm to others be exempted from health and safety law.15 The report explains the reasoning:
There is a case for following a similar approach to other countries and exempting from
health and safety law those self-employed people (i.e. those who do not have any
employees) whose workplace activities pose no potential risk of harm to others.
This would benefit approximately 1m people. The actual burden that the regulations
currently place upon these self-employed may not be particularly significant due to
existing exceptions in some regulations and the limited prospect of these being
enforced but it will help reduce the perception that health and safety law is
inappropriately applied. This will complement HSE’s recently revised guidance on
homeworkers.
I therefore recommend exempting from health and safety law those self-
employed whose work activities pose no potential risk of harm to others.16
Following this recommendation, the Health and Safety Executive (HSE) ran a consultation between August and October 2012. The HSE said the ‘preferred option’ was to remove the duty from self-employed persons who posed no risk to others and who did not work in a high-risk sector. A summary of responses, and a final impact assessment, were published on the HSE website in March and May 2013 respectively.17
13 One example is the Management of Health and Safety at Work Regulations 1999, SI 1999/3242, as amended 14 Lord Young of Graffham, Common Sense, Common Safety, 15 October 2010 15 Professor Ragnar E Löfstedt, Reclaiming health and safety for all: An independent review of health and safety
legislation, November 2011 16 Ibid, pp39 17 HSE, Summary of responses to the proposals to exempt from health and safety law those self-employed
whose work activities pose no potential risk of harm to others, March 2013; HSE, Final impact assessment, May 2013
RESEARCH PAPER 14/06
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The Bill
Clause 1 would amend section 3 of the Health and Safety at Work etc. Act 1974. Specifically, clause 1(2) would amend section 3(2) of the 1974 Act, with the intention of limiting the scope of the general duty under that section to only those self-employed persons who have no employees and conduct an “undertaking of a prescribed description”. Such people would have an obligation to ensure that, so far as is reasonably practicable, they and other persons affected by their work are not exposed to health and safety risks. Under the 1974 Act, “prescribed” means prescribed by regulation made by the Secretary of State. The wording of clause 1(2) as presented for Second Reading has been changed slightly from that which was included in the draft Bill. The rewording appears at first glance to be an attempt to specify more clearly which groups of self-employed people the general duty might apply to. One criticism of the draft Bill (see ‘commentary’ below) was that there was potential for confusion on this issue, with self-employed individuals not being sure whether they were or were not likely to be subject to the duty.
Clause 1(3) would make amendments to other provisions in the 1974 Act which, as they currently stand, prevent the Health and Safety Executive (HSE) from making recommendations to the Secretary of State about ‘prescribed undertakings’ for railway safety purposes. Clause 1(4) concerns the application of amended section 3 and 11 of the 1974 Act to undertakings outside of Great Britain.
Health and safety at work is a reserved matter; this clause extends to England and Wales Scotland.
Comment
There has been little or no commentary on the provisions in the Bill as presented at the time of writing. The clause as included in the Draft Bill prompted a mixed response. The Joint Committee did not make any recommendations in respect of clause 1, but observed that the evidence they received suggested “no clear consensus of opinion”.18
The Federation of Small Businesses (FSB) and several other business organisations have expressed support for the measures in principle.19 The FSB argues that although the monetary benefits were likely to be small, “this change will be one less consideration that a start -up business has to think about and this is welcome. The more significant benefit is the message that it sends about how health and safety regulation operates in the UK.” It went on to say, however, that it would await the draft guidance on this power before passing full judgement.20
Others have raised a number of concerns. In its evidence to the Joint Committee, The Institution of Occupational Safety and Health (IOSH) foresaw the potential for a lowering of standards and an increased risk of injury, with confusion about who was subject to the duty and who was not. IOSH described the decision to exempt certain self-employed individuals as “unnecessary, unhelpful and unwise”.21 The Trades Union Congress said it had campaigned against the proposals because “it would create confusion and uncertainty in a sector which already has a much higher fatality, injury and ill-health rate.”22 More generally,
18 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Report - Session 2013-14, 19
December 2013, HL Paper 101, HC 925, pp59 19 FSB, Written evidence to the Joint Committee on the Draft Deregulation Bill, published in Evidence Volume 1,
19 December 2013, pp517. See also British Chambers of Commerce and Industry written evidence, pp118 20 Ibid, pp517 21 IOSH, Written Evidence to the Joint Committee on the Draft Deregulation Bill, published in Evidence Volume
1, 19 December 2013, pp693 22 TUC briefing for affiliates, Self employed and the Health and Safety at Work Act, July 2013. Retrieved 26
January 2014
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some commentators have expressed doubts as to whether the proposals will, in practice, remove significant burdens from the self-employed, with the Royal Society for the Prevention of Accidents arguing that many ‘low risk’ self-employed individuals are “de-facto, already exempt [...] They will never be routinely inspected. And they are not going to sue themselves if they have an accident!”23
2.2 Employment tribunals’ power to make wider recommendations (clause 2)
Background
Clause 2 would remove employment tribunals’ power to make recommendations in discrimination cases which affect the employers’ dealings with persons other than the claimant.
The Equality Act 2010 extended employment tribunals’ power to make recommendations in discriminations cases. Section 124 of the Act provides that if an employment tribunal finds that there has been a contravention of a relevant provision of the Act, the tribunal may make “an appropriate recommendation”. An appropriate recommendation is one which requires the respondent (the defending party) to take specified steps within a specified period “for the purpose of obviating or reducing the adverse effect of any matter to which the proceedings relate”:
on the claimant;
on any other person (the power to make wider recommendations).24
Prior to the Equality Act, the power of tribunals to make recommendations was limited to ones obviating or reducing the adverse effect of conduct on only the claimant.25 By extending the scope of recommendations to include persons other than the claimant, the recommendations may affect, for example, fellow or future employees. The Explanatory Notes to section 124 of the 2010 Act describe the power:
Where a tribunal makes a recommendation it does not have to be aimed only at
reducing the negative impact on the individual claimant(s) of the respondent’s actions
which gave rise to the successful claim, but can be aimed at reducing that impact on
the wider workforce. The recommendation must state that the respondent should take
specific action within a specified period of time.26
And provide the following examples:
A tribunal could recommend that the respondent:
introduces an equal opportunities policy;
ensures its harassment policy is more effectively implemented;
sets up a review panel to deal with equal opportunities and harassment/grievance
procedures;
re-trains staff; or
23 RoSPA, Written Evidence to the Joint Committee on the Draft Deregulation Bill, published in Evidence Volume
2, 19 December 2013, pp1133 24 Equality Act 2010, sections 124(2)-(3) 25 See, for example, Sex Discrimination Act 1975, section 65(1)(c) 26 Equality Act 2010 Explanatory Notes, para 404
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makes public the selection criteria used for transfer or promotion of staff.27
The recommendations are advisory only; the tribunal has no power to sanction employers for non-compliance with wider recommendations. Case law has established that the power confers “an extremely wide discretion”28 on tribunals, and that the Employment Appeal Tribunal will intervene with a tribunal’s exercise of this discretion “only if the discretion has been exercised wholly wrongly, taking account of an irrelevant factor, or failing to take account of a relevant one”.29
Government consultation
The Government consultation on removing the power to make wider recommendations ran from 15 May to 7 August 2012. The consultation document is available on the Gov.uk website, alongside the impact assessment and records of individual responses.30 The Government set out in the impact assessment its reasons for the proposal, the policy objective and its intended effects:
We understand that employers continue to have fears about inappropriate or excessive
recommendations although we are only aware of a handful of such recommendations
(in 4 employment tribunal cases) since this provision came into force in October 2010.
Given that many employers will make changes following a tribunal anyway, and
because recommendations are non-binding, we feel that these provisions are not
having a significant impact on employer behaviour.
….
The policy objective is to reduce any regulatory burden on employers that the power of
employment tribunals to make wider recommendations may impose. The intended
effect, in line with the outcome of the consultation, which shows that this power has not
been used as often as anticipated, is to repeal this power, so as to ensure that it does
not become an unnecessary burden on business. The power to make
recommendations relating to individual claimants will however remain.31
In terms of the monetised costs, the impact assessment said “a cost to repealing these provisions is a possible rise in future cases” with an estimated annual cost of “£0-0.02million, including £0-0.01million to private and voluntary sector employers”.32 The assessment estimated the annual benefit to employers of no longer receiving wider recommendations at “£0-0.08million, including £0-0.01m to private and voluntary sector employers”.33
Although the Government’s response to the consultation noted that “all business representative organisations supported repeal”34 it also revealed widespread opposition to the proposal:
We received a total of 157 responses to this joint consultation. Of those, 18 (12%)
were in favour of repealing the wider recommendations provisions and 125 (79%) were
opposed.35
27 Ibid, para 406 28 West Yorkshire Police v Vento [2004] UKEAT 522_01_0412, para 49(1) 29 Lycee Francais Charles De Gaulle v Delambre [2011] UKEAT 0563_10_0504, para 27 30 Equality Act 2010: consultation on repeal of two enforcement provisions, Gov.uk [accessed 24 January 2014] 31 Government Equalities Office, Impact Assessment of removing the provisions in the Equality Act 2010 which
give employment tribunals the power to make wider recommendations, 16 August 2012, p1 32 Ibid, p2 33 Ibid 34 Ibid
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The Government summarised examples of tribunals making wider recommendations in four cases it was aware of in which recommendations had been made:
an employer to provide equal opportunities training for sections of its HR and senior management staff in mental health issues;
a senior management team and heads of department to have training on equal opportunities law within six months;
recommendations, first, to update discrimination policies to take account of the Equality Act 2010, and second, for directors and managers to receive diversity training from a reputable provider - both to be complied with within six months;
an employer to provide training for its managers and HR team on maternity rights.36
On the basis of the evidence and consultation responses the Government concluded:
Wider recommendations are discretionary on employers. In our view, the types of
recommendations made in the tribunal cases so far show that in practice, wider
recommendations have tended to be obvious and non-technical – in particular that an
employer’s human resource practices should be improved or that staff be given
equality training.
The Government considers that whilst the types of recommendations made highlight
wider issues around lack of awareness and knowledge by employers of equality and
employment law, the wider recommendations provision is not the right way to address
this issue. We think a better approach is through the practical non-legislative
measures…37
The Bill
Clause 2 of the Bill would remove tribunals’ power to make wider recommendations. It would achieve this by repealing section 124(3)(a)-(b) of the Equality Act 2010, making consequential amendments to other parts of section 124 and repealing section 125 (which limited the power to make wider recommendations in circumstances where this would affect national security, and would be unnecessary if the power is removed). The removal of the power would leave unaffected a tribunal’s power to recommend that a respondent take steps to obviate or reduce the adverse effect of conduct on the claimant.
Clause 2 would extend to England, Wales and Scotland.38
Comment
Responses to the proposal have been mixed, with business representatives broadly in favour and employee representatives broadly opposed. In its report, the Joint Committee did not express a view on the equivalent clause in the draft Bill, although it did summarise the evidence gathered by the inquiry:
We received a large amount of evidence on this clause, much of which indicated the
power had been rarely used in the short time it has been in existence.
35 Government Equalities Office, Equality Act 2010: employment tribunals’ power to make wider
recommendations in discrimination cases and obtaining information procedure – Government response to the consultation, October 2012, p4
36 Ibid, pp6-7 37 Ibid, p20 38 Clause 67(1); Equality Act 2010, section 217
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Evidence from business groups supported the clause. The BCC told us it was a
welcome change, saying that the measure extended the tribunals' jurisdiction beyond
the "time, information and expertise of the panel". The CBI agreed that tribunals could
not be expected to have the information and understanding of an individual company to
make the recommendations meaningful. The FSB welcomed the clause, although it did
not anticipate a significant tangible effect as the power is rarely used. The BCC
recognised that there was an issue of proportionality in that there had only been a
small number of cases, but they suggested that the reputational risk of a wider
recommendation is something an employer would take into account when making a
decision whether or not to settle out of court. They argued that this was a reason for
removing the power.
Other witnesses believed that the repeal of the power was unnecessary, premature
and the case for it not evidence-based. The EDF believed that the power remaining
would "lead to less litigation rather than more" and that if recommendations are
implemented properly it could save employers future costs. We were told that the
number of cases could not point to the power being "onerous", and the TUC described
the removal of the power as "completely disproportionate".
….
The National Union of Journalists (NUJ) told us they were "very concerned" at the
proposal and believed it was "far too early in the life of the Equality Act to repeal this
provision". They pointed to the fact that there had been 19 cases where Tribunals had
issued wider recommendations in 2012 and suggested that this was neither
inappropriate nor excessive and that the power had been used in a "careful and
reasonable manner" by tribunals. The EHRC saw the power as being useful, for both
the company to whom a recommendation is made and to the Commission in following
up tribunal decisions. It did not think that sufficient evidence had been collected to
decide whether or not the power should be abolished and suggested instead that it be
reviewed. The absence of evidence in favour of this clause was raised by the National
Aids Trust, the Discriminatory Law Association, EDF, UNISON and the Public and
Commercial Services Union.
The Equal Rights Trust suggested that the removal of the power would leave the UK in
"clear violation of its obligations" under the International Covenant on Civil and Political
Rights, which states that there should be measures "beyond a victim-specific remedy
to be taken to avoid recurrence of the type of violation in question".39
As noted above, the Government’s consultation revealed that all business representative organisations supported the repeal.40 Of the responses to the consultation, 12 were in favour of repealing the power, while 125 opposed its repeal.41 Those responses that opposed the repeal were “mainly on behalf of unions, equality lobby groups, staff associations, the judiciary and members of the public”.42
39 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Session 2013-14, HL Paper 101, HC
925, 19 December 2013, pp60-61 40 Government Equalities Office, Equality Act 2010: employment tribunals’ power to make wider
recommendations in discrimination cases and obtaining information procedure – Government response to the consultation, October 2012, p4
41 Ibid 42 Ibid
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In its submission to the Joint Committee on the Draft Deregulation Bill, the Joint Committee on Human Rights said the following:
The draft Bill would remove the power conferred on employment tribunals by the
Equality Act to make wider recommendations in discrimination cases (clause 2,
amending s. 124 Equality Act 2010). The Government does not appear to have carried
out any assessment of the recommendations which have so far been made by
tribunals under this power since it came into force, nor does it appear to have provided
evidence that it imposes unjustified burdens on employers. The power to make wider
recommendations in cases which reveal systemic problems has recently been
conferred on coroners, in order to prevent future deaths and to provide greater
protection for the right to life. My Committee considers the same reasoning to apply in
the context of discrimination cases which raise systemic issues: it will help to prevent
further discrimination and so enhances the law’s protection for equality.
In the absence of any clear evidence that such recommendations have proved
disproportionately burdensome on employers, and provided tribunal procedures ensure
that employers always get an opportunity to be heard on the substance and form of
any proposed recommendation before it is made, clause 2 of the draft Bill should be
deleted.43
2.3 Apprenticeship simplification (clause 3 and Schedule 1)
Background
An apprenticeship is a combination of paid employment and training towards the achievement of a recognised standard. There has been a significant increase in the number of apprenticeship starts in recent years. In England 510,200 people started an apprenticeship in the 2012/13 academic year, compared to 279,700 people starting an apprenticeship in 2009/10. Much of the increase has been down to the more people aged 25 and over starting apprenticeships.
Apprenticeships are a devolved area with Part 1 of the Apprenticeships, Skills, Children and Leaning Act 2009 covering apprenticeships in England and Wales. The Act set out a statutory requirement for the Specification of Apprenticeship Standards for England (SASE) setting out the minimum requirements to be included in a recognised English apprenticeship framework.
Recommendations were made for the Government to improve the quality of apprenticeships and increase the focus on the needs of employers in the Richard Review, a 2012 review of apprenticeships.44
The Bill
Clause 3 introduces changes recommended by the Richard Review to simplify English apprenticeships. Minimum standards set out in SASE are removed and The Draft Deregulation Bill allows the Secretary of State to “prepare and publish standards for such sectors of work as the Secretary of State thinks appropriate”. It is also proposed that “Employers, or representatives of employers, may make proposals to the Secretary of State as to the content of a standard” which is in line with the Richard Review’s recommendations to focus apprenticeships on the needs of employers.
43 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Report – Session 2013-14, HL Paper
101, HC 925, 19 December 2013, p103 44 Doug Richard, The Richard Review of Apprenticeships, November 2012
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The draft Bill also proposes to give the Secretary of State powers to issue apprenticeship certificates or delegate the function as he/she wishes. The role has been carried out by Apprenticeship Certificates England since the authority was created by the Apprenticeships, Skills, Children and Leaning Act 2009. Prior to 2009 apprenticeship certificates were issued by Sector Skills Councils.
Clause 3 also separates the statutory requirements of English and Welsh apprenticeships. Apprenticeships in Wales remain otherwise unaffected by the Bill.
Comment
There is some concern that the removal of SASE will lead to a drop in the quality of apprenticeships. The Association of Employment and Learning Providers (AELP) believed removing all restrictions and standards could undermine the quality of some apprenticeships and “seriously damage [the] reputation of the programme”.45 Other organisations were more in favour of the changes with The Federation for Industry Sector Skills and Standards (FISSS) describing SASE as “incredibly complicated, very detailed, but also at the same time very vague”. The FISSS also welcomed greater flexibility that would be brought by Apprenticeship Standards defined by employers.46
Other concerns were raised about the prospects for Welsh young people with issues surrounding the transferability of apprenticeships gained in Wales. Additionally national employers employing apprenticeships across the United Kingdom are likely to face reservations about operating three different apprenticeship systems in England, Scotland and Wales.
2.4 English apprenticeships: funding arrangements (clause 4)
Apprenticeship funding is currently delivered by the Skills Funding Agency who fund apprenticeship training through direct payments to the organisations providing training to apprentices.
The Bill
Clause 4 refers only to English apprenticeships and allows payments to employers of apprentices, funded by the Secretary of State. These payments are intended to reimburse employers for money they have spent on training apprentices.
Comment
The Federation of Small Businesses’ (FSB) written evidence supported the principle of employers being put in control of funding but expressed concerns about the proposals as they stand:
Small businesses cannot absorb a significant or sudden increase in the cost of
Apprenticeships and will suffer cash flow difficulties if there are required to pay the full cost of
the external training upfront before they receive the Government contribution – this will put
them off engaging.47
3 Measures affecting business: particular areas
3.1 Driving instructors (clause 5 and Schedule 2)
The changes made to the relevant legislation by clause 5 and Schedule 2 would have the effect of introducing a common qualification process for all driving instructors, including 45 AELP’s Written Evidence to the Joint Committee on the draft Deregulation Bill, October 2013, paras 5 46 FISSS’s Written Evidence to the Joint Committee on the draft Deregulation Bill, October 2013 47 FSB’s Written Evidence to the Joint Committee on the draft Deregulation Bill, October 2013, paras 17
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disabled ADIs (Approved Driving Instructors).48 The Government is proposing this change to relieve the current burdens on disabled drivers applying to become ADIs. The Driving Standards Agency (DSA) explains the current qualification process for disabled drivers as follows:
Potential ‘Disabled ADIs’ must, in addition to the qualifying tests, pass an emergency
control assessment (ECA). The ECA assesses whether applicants could take control of
a car in an emergency - with adaptations fitted where necessary. Upon successful
completion of an ECA applicants are issued with an emergency control certificate
(ECC) which specifies any car modifications needed while instruction is being given.
Potential ADIs with unrestricted driving licences are not required to undergo an ECA.
Current legislation also makes it an offence for a ‘Disabled ADI’ to provide paid
instruction in any motor car other than one fitted with automatic transmission and any
adaptations specified in their ECC. The legislation does not differentiate between
instruction given to learner drivers and that given to full licence holders. The restriction
imposed by the offence, which is hard to justify, has been challenged on the grounds of
disability discrimination. Restricting the offence, so that it would only apply where
instruction was being provided to learner drivers, would allow disabled instructors
access to a wider instruction market.49
The proposed changes would remove the requirement for holders of medically restricted licences to take an ECA before qualifying, so creating a common qualification process for all driving instructors. It would become a condition of registration that instructors ensure that they deliver instruction only in a vehicle where they can take control in an emergency, where it is reasonably foreseeable that they might have to do so, for example when instructing a novice driver. These changes extend to England and Wales and Scotland.
3.2 Motor insurers (clause 6 and Schedule 3)
The changes in clause 6 and Schedule 3 would effectively remove the legal requirement that a motor insurance policy is not in force until the insurer delivers to the policy holder a certificate of that policy. However, it will still be a requirement for insurers or givers of securities to issue certificates, as the insurance industry wants to retain the certificates, in particular because they are valuable for certain types of policies, such as for fleets where individual vehicles are not entered on the MID.
The change is largely intended to reflect current practice where many organisations, in particular the police, no longer rely on the insurance certificate and use information held on the Motor Insurance Database (MID) as evidence that a vehicle has an insurance policy in force.50 These changes extend to England and Wales and Scotland.
3.3 Shippers etc of gas (clause 7)
Background
Part 1 of the Energy Act 2008 makes provision for the licensing of gas importation and storage. The Offshore Gas Storage and Unloading (Licensing) Regulations 2009, under the 2008 Act, came into force on the 13 November 2009 and set out the existing system. The regime applies to activities within the offshore area comprising both the UK territorial sea and
48 Background information on driving instruction is provided in HC Library note SN2844 49 DSA, Changes to disabled ADI rules – have your say, 2013 50 The MID, maintained by the Motor Insurance Bureau, is the UK repository of details of all motor insurance
policies and insurers are required by law to enter details of all motor insurance policies onto the MID; background information on motor insurance can be found in HC Library note SN6061
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the area extending beyond the territorial sea that has been designated as a Gas Importation and Storage Zone (“GISZ”).
The Government’s proposal for change, announced following the Red Tape Challenge,51 was to alter the regulations which currently prohibit the use of an offshore installation for the unloading of gas without a licence. Under the proposals, a third party wishing to unload their gas at an installation owned and licensed to another party would not need to be covered by a licence.
The Bill
Clause 7 would amend Part 1 of the 2008 Act. Third parties who wish to make use of an offshore gas unloading facility operated by another person who has a licence for that facility will no longer be required to have a licence themselves.
3.4 Suppliers of fuels and fireplaces (clause 8)
Clause 8 amends Part 3 the Clean Air Act 1993 (smoke control areas) relating to smoke control areas. The Act provides for the Secretary of State to publish lists of authorised fuels and exempted fireplaces that can be used in smoke control areas. Currently, this is done through regulations, which are updated every six months. This clause removes the need to issue regulations, replacing them with an online list to be published by the Secretary of State that will be revised “as soon as is reasonably practicable after any change is made”.
3.5 Sellers of knitting yarn (clause 9)
Clause 9 would revoke the Weights and Measures (Knitting Yarns) Order 1988 which, although described in Parliament prior to its promulgation as an “important development about knitting yarns”, is now unnecessary in light of changes in EU and domestic law.52
4 Companies and insolvency
4.1 Authorisation of insolvency practitioners (clause 10)
Background
Under the current system of authorisation, Insolvency Practitioners (IPs) are granted an insolvency licence, which allows them to act as an IP in relation to both corporate and personal insolvency cases. This licence is granted on passing the Joint Insolvency Exam (JIE) and having gained practical insolvency experience (approximately 600 hours for most licensing bodies).53 The JIE incorporates both personal and corporate insolvency law. Individuals who are authorised to act as an IP are authorised in relation to all categories of appointment – there is no partial authorisation.
The Bill would introduce a system whereby IPs could choose to qualify in either or both personal or corporate insolvency. Those partially qualified would only be able to practise in their chosen specialist area. The Explanatory Notes to the Bill state that these changes are designed to ‘increase accessibility to the profession and improve competition” and that a partial licensing regime would ‘reduce the cost of training and ongoing regulation for Insolvency Practitioners who specialise’.54
Before considering the technical aspects of Clause 10 of the Bill, it should be noted that different laws operate in Scotland in respect of personal insolvency (but not corporate 51 Gov.uk website: Red Tape Challenge Energy Theme’s proposed “scraps” and “improves” 52 HL Deb 12 May 1988 vol 496 c1280; see Draft Deregulation Bill, Explanatory Notes, paras 42-43 53 R3, the Insolvency Trade Body – Written Evidence to the Joint Committee on the Draft Deregulation Bill, 16
September 2013, [online] (accessed 29 January 2014) 54 Deregulation Bill – Explanatory Notes, Bill 162-EN
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insolvency). The term ‘bankruptcy’ is used in respect of England and Wales, and bankruptcy procedures are governed by the Insolvency Act 1986 (IA 1986). In contrast, ‘sequestration’ is the Scottish legal term for bankruptcy, and sequestration procedures are governed by the Bankruptcy (Scotland) Act 1985 (as amended).
The Bill
Clause 10 of the Bill would amend Part 13 of the IA 1986. The amendments would be made by clause 10(2) and (3). A new section 390A would be inserted to provide that an IP who is partially authorised will be authorised to act only in relation to companies, or only in relation to individuals. It would also provide for a person to be fully authorised to act as an IP and practise in all categories of appointment. Individuals who are already authorised to act as an IP will be fully authorised.
In respect of Scotland, the definition of an individual would be extended by section 388(3) of the IA 1986. The effect is that an IP who acts as a permanent or interim trustee in the sequestration of the estate of a Scottish partnership or another entity by virtue of section 6 of the Bankruptcy (Scotland) Act 1985 is acting as an IP in relation to an individual. This means that an IP who is partially authorised in relation to individuals will be able to take appointments in relation to the sequestration of a Scottish partnership, whereas an individual who is partially authorised in relation to companies will not. No partially authorised IP would be able to accept an appointment in relation to a partnership which is not a Scottish partnership. This type of insolvency would require an individual to be fully authorised as they may need to have knowledge of both company and individual insolvency law.
Under Clause 10, a new section 390B would be inserted to deal with the question of whether IPs who are partially authorised may accept appointments to act in relation to a company which is or was a member of a partnership and has outstanding liabilities in relation to the partnership. An IP who is partially authorised in relation to companies would not be able to accept such an appointment. Neither would an IP who is partially authorised in relation to individuals unless the partnership is a Scottish partnership. If a partially authorised IP became aware that they had been wrongly appointed to act, they would commit an offence if they continued to act in that insolvency without the court’s permission. The same would apply to an IP who is partially authorised in relation to individuals unless the partnership is a Scottish partnership. There is provision for the IP to be able to continue to act for a limited period without committing an offence whilst the court’s permission is obtained. There is also provision for the IP to be able to continue to act for a limited period (without committing an offence) whilst applying for a court order appointing a fully authorised person to act in his or her place.
Clause 10(4) of the Bill would amend the IA 1986, to enable the Secretary of State to recognise a professional body for the purposes of granting either full or partial authorisations to its insolvency specialist members. The Secretary of State may revoke this recognition where it appears that the body no longer meets the relevant regulatory requirements; or revoke recognition to provide both full and partial authorisations and replace it with recognition to provide partial authorisations only.55 Under Clause 10(6), bodies already recognised under existing provisions would be recognised as if capable of providing their members with full and partial authorisation.
Currently, section 415A of the IA 1986 empowers the Secretary of State to charge professional bodies a fee in connection with granting or maintaining recognition of the body. Clause 10(5) would amend section 415A to enable the Secretary of State to vary the fee
55 The Secretary of State would be able to make transitional provisions to treat the body’s IPs as fully or partially
authorised, as the case may be, for a specified period after recognition is revoked, or revoked and replaced
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depending on whether a body is recognised to provide full and partial authorisations or partial authorisations only.
Clause 10 would come into force on a day to be appointed by the Secretary of State in a commencement order. It has generated a great deal of commentary from stakeholders.
Comment
In written evidence submitted to the Joint Committee on the draft Deregulation Bill, the Insolvency Service said that the aim of partial authorisation was to enhance competition in the insolvency profession, following a report by the Office of Fair Trading (OFT) in 201056 which demonstrated that the market in corporate insolvency did not always function effectively. Clause 10 is designed to lower barriers to entry to the profession, and thus encourage downward pressure on the fees charged.57 In its written and oral evidence to the Joint Committee, R3 did not accept that Clause 10 was deregulatory. It argued that there was no evidence to suggest that partial authorisation of IPs would increase competition within the sector:
They [the amendments] are unlikely to increase competition within the sector and risk
adding complexity to a licensing regime that currently works well. In addition, R3 has
serious concerns that the proposed changes will have a disproportionate impact on
smaller IPs and may reduce overall standards. The changes would therefore appear to
make the current regime unnecessarily complex, with little tangible benefit. [....], we
would caution the Government against introducing these measures.
R3 do not believe the proposed partial licences will be widely taken up by practitioners
as an overwhelming majority of the profession practise in both corporate and personal
insolvency and as such would not be suitable for a partial licence.
In addition, the Bill prevents partial licence holders from acting in relation to
partnerships. Whilst some large firms may have a limited practising scope and only
deal with insolvent companies, they will often act in relation to partnerships; which
means they will not take up partial licensing exclusively as this would fetter their ability
to act in the full range of cases they wish to cover. As such, it is reasonably likely that
firms such as these will require their employees to have full authorisation, despite the
firm’s focus on corporate insolvency.58
R3 also argued that since an estimated 75% of small firms undertake both corporate and personal insolvency procedures for commercial reasons, it is likely to be only the very large firms who are able to adopt partial licences. It said:
Whilst we do not believe that partial licences will be taken up widely, it is more likely to
be the very large firms who are able to adopt partial licences (as their business models
are more likely to have a limited practising scope). As such, there is a risk that partial
licences will create an unlevel playing field across the industry, making it relatively
more costly for smaller IPs to compete in an already difficult market.59
56 Office of Fair Trading, ‘The market for corporate insolvency practitioners- A market study’, OFT 1245, June
2010, [online] (accessed 29 January 2014) 57 The Insolvency Service – Written evidence to the Joint Committee on the Draft Deregulation Bill, 30 October
2013, online (accessed 29 January 2014) 58 R3, the Insolvency Trade Body – Written Evidence to the Joint Committee on the Draft Deregulation Bill, 16
September 2013, [online] (accessed 29 January 2014) 59 Ibid
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R3 also thought that a move to introduce a partial licensing regime had risks which had not been fully considered by the Government:
To provide proper advice to individuals and corporate entities, R3 believes it is
necessary to have knowledge of insolvency legislation in its entirety. Insolvency is
already a narrow specialism and reducing it further could impact on the quality of
advice provided to individuals or companies.
If the standard of qualification for IPs is reduced there could be a wider impact on the
reputation of the industry as a whole. For the insolvency regime to work properly,
creditors and the wider public must have confidence in the profession. The level of
knowledge and extensive experience required to become a qualified IP plays a
significant role in ensuring that the profession is held in high regard.60
The Insolvency Lawyers’ Association (ILA) also submitted written evidence to the Joint Committee.61 Commenting on Clause 10, the ILA questioned the logistics of operating a three tier system (i.e. partial authorisation in either personal or corporate insolvency or full authorisation) and whether this would, in fact, add to rather than remove unnecessary burdens. The ILA made the following observations:
by introducing a tiered system of authorisations, it may in fact be more expensive for those regulating insolvency practitioners to operate and monitor;
it may also make it more difficult for those entering into the market, who will have to specify at an early stage which aspects they are to focus on, putting them at a disadvantage to those IPs who are already authorised to act and will be fully authorised; and
it may also have the effect of discouraging competition, for example, in that corporate insolvency work remains the preserve of very large practices
The ILA concluded that “it would be unfortunate if that narrowing of expertise could also potentially result in a lowering of standards at the entry level, which would not benefit the industry”.62
The Institute of Chartered Accountants of Scotland (ICAS) also expressed concern that, because of the complexity of insolvency legislation, there was “a real risk that potentially detrimental changes may slip through unnoticed”.63
A number of witnesses gave evidence to the Joint Committee of the possible impact of Clause 10 on the IP profession in Scotland. For example, the Law Society of Scotland explained, in England bankruptcy and corporate insolvency legislation is separate but in Scotland significant parts of corporate insolvency are linked to bankruptcy legislation. It questioned whether “anyone could be an effective corporate IP in Scotland if they possessed little or no knowledge of bankruptcy legislation”.64
60 Ibid 61 ‘Insolvency Lawyers’ Association – Written Evidence to the Joint Committee on the Draft Deregulation Bill’,16
September 2013, [online] (accessed 29 January 2014) 62 ‘Insolvency Lawyers’ Association – Written Evidence to the Joint Committee on the Draft Deregulation Bill’,16
September 2013, [online] (accessed 29 January 2014) 63 Institute of Chartered Accounts of Scotland – Written Evidence to the Joint Committee on the Draft
Deregulation Bill, September 2013, p.4, [online] (accessed 29 January 2014) 64 The Law Society of Scotland - Written evidence, to the Joint Committee on the Draft Deregulation Bill,
September 2013, paragraph 12, [online] (accessed 29 January 2014)
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In its report, the Joint Committee considered the adequacy of Government consultation on Clause 10. It said:
The informal consultation process on clause 9 [now clause 10], which deals with the
authorisation of insolvency practitioners, was also criticised by witnesses. We were told
by R3, an organisation which represents 97% of UK insolvency practitioners, that there
had been no formal consultation and that they had not seen the proposal in the
consultations that had been issued.65 We were told that the clause had “come into the
Bill without a great deal of discussion beforehand”.66
The Consultation Table indicates that there was only informal consultation on this
clause. However, the Insolvency Service told us that they believed there had been a
‘proper consultation process’ in 2010, which included a consultation letter to all key
stakeholders inviting views on the authorisation proposals and a stakeholder
meeting.67. The Insolvency Service confirmed that R3 had raised concerns as part of
the consultation and that these views were taken into account by Ministers.68
The Joint Committee concluded that the consultation carried out by the Government for a number of provisions in this Bill was inadequate, and specifically recommended that further consultation is carried out on its proposal for partial authorisation of IPs (clause 9 of the draft Bill, now clause 10).69
4.2 Auditors ceasing to hold office (clause 11 and Schedule 4)
Background
The quid pro quo for the creation of the limited company – a legal entity that divorced management from ownership – was the requirement that the entity would have to be audited by independent, professionally recognised auditors. Company law has therefore included provisions for the appointment of; the role and duties of, and the replacement, resignation or dismissal of auditors.
The recurring policy issues surrounding auditors are the concentration of work amongst very few firms amongst the largest companies; their independence from the companies they are auditing – a feature raised in respect of banks post financial crisis; and the extent to which audit firms should also be allowed to carry out non-audit work for their clients.
Current law
The current law on the appointment, conduct and removal or resignation of auditors, is contained in Part 16 of the Companies Act 2006. Chapter 2 deals with the appointment of auditors, Chapter 3 their functions and Chapter 4 the “Removal, resignation, etc of auditors”.
The provisions put into practice the original safeguarding principles enshrined in the auditor role. Since the auditor represents the company owners’ interests by verifying the actions of management, removal of an auditor requires shareholder approval. If an auditor has a fundamental disagreement with the management and resigns, such a fact, and the reasons why, have to be communicated to shareholders. Chapter 4 sets out these procedures and it is these which would be amended by clause 11 of the Bill. In particular it is the procedures
65 Q 340 66 Q 339 67 The Insolvency Service – Written evidence to the Joint Committee on the Draft Deregulation Bill, 30 October
2013, online (accessed 29 January 2014) 68 The Insolvency Service – Written evidence to the Joint Committee on the Draft Deregulation Bill, 30 October
2013, online, paras 161-162 (accessed 29 January 2014) 69 Report of the House of Lords and House of Commons Joint Committee on the Draft Deregulation Bill, Session
2013-14, HL Paper 101, HC 925, 19 December 2013,Paragraph 170, [online] (accessed 28 January 2014)
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surrounding the public statements of when an auditor ceases holding office which would be changed.
The Bill would make changes to two sections of the Act:
section 519, which sets out the requirements for an auditor to produce a statement
explaining the circumstances why he is no longer to be the auditor; and
section 523, which requires a company to notify the appropriate audit authority70 that
its auditor has ceased to act for it before its office was due to end.
The proposals follow a consultation conducted by the Department of Business, Innovation &
Skills in 2009 – Notice of auditors leaving office – consultation on simplification for
companies and auditors. The Department gave as a reason for setting up the consultation:
The present arrangements are a combination of measures put in place under the
successive Companies Acts to provide information to shareholders and Companies
House, and measures introduced in 2006 to meet the requirements of the EU Audit
Directive for the provision of similar information to the audit regulatory bodies.
In the Government’s view, after 18 months of operation of the current system, the
arrangements may be more complex than necessary and are potentially duplicatory.
This document identifies areas for possible simplification and streamlining while still
meeting the UK’s obligations under the Directive and the underlying policy goals.71
The Bill
The Bill would substantially increase the volume of legislation in this area. This is because it would introduce and then has to outline and define, exemptions from the current compulsory obligation. It also defines what a public interest company is – one which is listed on a recognised stock exchange, and a non-public interest company.
The clause provides circumstances when auditors of non-public interest companies will not have to deposit statements explaining why they are ceasing to hold office. The obligation will persist for public interest companies. The exemptions are:
the auditor’s term of office has come to an end when he, she or it leaves; or
the auditor’s reasons for leaving (before the end of the term of office) are all “exempt
reasons” as defined in the list at new section 519A(3), and there is no information that
the auditor thinks should be brought to the attention of the company’s shareholders or
creditors.72
The “exempt reasons” mentioned above include:
that the auditor is ceasing to practise as an auditor (this could be because an individual
auditor is retiring or changing career or because an audit firm is ceasing to be in
business);
that the company the auditor is ceasing to act for qualifies for one of the exemptions
from audit under Chapter 1 of Part 16 (applicable to certain small companies, dormant
companies and subsidiaries) and intends to rely on one of these exemptions;
70 This will either be the Financial Reporting Council or the professional body with which the auditor is registered 71 BIS website 72 Deregulation Bill Explanatory Notes, para 55
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that (broadly speaking) the auditor is ceasing to act for a “subsidiary” company (i.e. a
company completely or partly owned or controlled by another, “parent”, company or
other entity) because the accounts of the subsidiary are to be audited as part of the
audit of the group accounts by the parent’s auditor; and
that the company the auditor is ceasing to act for is being liquidated through an
insolvency procedure.73
The written evidence from the accountancy professional bodies did not include comments on these proposals. Schedule 4 would make further changes to the notification rules (applying either to the company or to the auditor) which are effective when an auditor ceases to hold office with a company. The provisions would reduce the circumstances when notifications are required. The Explanatory Notes outline the details:
Paragraphs 2 and 4 omit sections 512 and 517 respectively of the 2006 Act and, in
doing so, remove the requirements for a company to notify the registrar of companies if
its auditor is removed from office by the company or resigns from office.
Paragraph 3 amends subsection (2) of section 516 of the 2006 Act. […] The effect of
the amendment is that an auditor’s notice of resignation will only be ineffective if the
auditor is resigning from a public interest company and that notice is not accompanied
by a statement pursuant to the amended section 519.
Paragraph s 5, 7 and 8 make amendments to sections 518, 520 and 521 (respectively)
of the 2006 Act consistent with the changes to section 519 made by clause 11. […] for
a non-public interest company, a resigning auditor’s rights (to call a shareholders’
meeting to explain his or her (or its) reasons for resigning) do not apply where […] the
auditor considers that none of his or her (or its) reasons for leaving, and no connected
matters, need to be brought to the attention of shareholders or creditors.
Paragraphs 7 and 8 […] where the auditor’s statement includes the declaration
pursuant to new section 519(3B) described above, a non-public interest company does
not need to circulate a copy of the auditor’s statement under new section 519(1) to its
shareholders and creditors, and the auditor does not need to send a copy to the
registrar of companies.
Currently section 522 provides that an auditor must in many cases notify the audit
authority of his or her (or its) reasons for leaving office. Paragraph 9 amends this
requirement such that only an auditor who must send a statement to the company in
accordance with new section 519(1) must send a copy of that statement to the
appropriate audit authority.
Paragraph 10 removes the mandatory duty in section 524 for an audit authority to
inform the accounting authorities (the Financial Reporting Council’s conduct committee
and the Secretary of State) about an auditor’s departure. However, the amending
provision makes it clear that the audit authority has a discretion to pass on to the
accounting authorities a copy of the auditor’s statement or any other relevant
information connected to the auditor’s departure.74
The measures would apply to the whole country.
73 Deregulation Bill Explanatory Notes, para 59 74 Deregulation Bill Explanatory Notes, paras 312-317
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4.3 Insolvency and company law: miscellaneous (clause 12)
This clause simply refers to the operative provisions which are set out in Schedule 5 and, in respect of the insolvency provisions, are divided into 7 parts.
4.4 Insolvency and company law (Schedule 5)
Deeds of Arrangement (Schedule 5, Part 1)
A deed of arrangement is an alternative to bankruptcy. It is a legally binding agreement between a debtor and those creditors who choose to participate which provides for satisfaction of the debts (usually for a lesser sum than is owed). Creditors who do not choose to participate are free to pursue their debts in the normal way and the deed does not provide any protection against bankruptcy action.
The Deeds of Arrangement Act 1914 (DOAA) sets out the statutory scheme whereby an individual can execute a deed or other instrument. However, according to the Explanatory Notes, there is only one deed of arrangement still in existence, which was registered in 2004.
In June 1982 ‘The Report of the Review Committee’ (known as ‘the Cork Committee’) recommended that the DOAA 1914 be repealed and replaced by the introduction of a formal voluntary arrangement. The recommendation was based on the grounds that deeds of arrangement were legally complex, unreliable in practice, and did not bind those creditors who chose not to participate. Individual Voluntary Arrangements (IVAs) were subsequently introduced by the IA 1986, but the DOAA 1914 was not repealed.
According to the Explanatory Notes, IVAs have steadily increased in popularity and in 2011/2012 there were 49,932 such arrangements. In large part, this is because IVAs are legally binding on all creditors, even where a creditor was unaware of the IVA proposal at the time it was approved.
Paragraphs 1 and 2 of Part 1 would repeal the DOAA 1914 and make consequential arrangements to other legislation. In effect, the Bill belatedly implements the recommendation in the Cork Report, and recognises that deeds of arrangement have been replaced by IVAs. In respect of the one remaining deed of arrangement, this would benefit from the saving provision at paragraph 3.
Administration of companies (Schedule 5, Part 2)
Appointment of administrator
In brief, administration is a legal process that requires the appointment of an IP as administrator to manage the affairs, business and property of the company. The purpose of administration is to intervene in the running and management of a company that is deemed ‘unable to pay its debts as and when they fall due’, within the meaning of section 123 of the IA 1986. The Enterprise Act 2002 (EA 2002) sets out a hierarchy of statutory objectives of a company administration:
The first objective is to rescue the company as a going concern (i.e. with as much of its business as possible). The procedure is designed to hold a business together while plans are formed to put in place a financial restructuring to rescue the company.
If the business cannot reasonably be saved, the second objective is for the administrator to perform his functions with the aim of achieving a better return for creditors than would be achieved in liquidation. For example, a better return may result from trading on for a period whilst seeking to sell off the business and or assets.
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Where neither of these objectives can be achieved, administration can also be used simply as a mechanism to liquidate assets and distribute the proceeds to secured or preferential creditors.
In all cases, the administrator is required to act in the best interests of the general body of creditors.
A company put into administration is protected by a ‘moratorium’ (the so-called ‘protective cloak’), whilst a survival plan or an orderly wind down of the company’s affairs is sought. This means that while proposals are being prepared, no insolvency or other legal proceedings can be taken against it (without the court’s permission). This provides a ‘breathing space’ during which time the administrator is expected to assess the company’s financial standing, arrange for the valuation of assets, and produce a proposal either for the continuation of trading or the sale of assets, the business, or the company as a whole.
An administrator may be appointed by the company; the directors; or a qualifying floating charge holder by giving notice and filing prescribed documents at court. Alternatively, an administrator may be appointed by the court on application by the company, directors or creditors. The act of filing with the court notice of intent to appoint an administrator under paragraph 27 of Schedule B1 to the IA 1986 commences an ‘interim’ moratorium in respect of the company.75
Paragraph 5 of Part 2 would insert a new paragraph 25A into Schedule B1 to the IA 1986 to enable a company or the directors of a company to appoint an administrator despite the presentation of a winding-up petition, if the petition was presented during an interim moratorium. In effect, this new paragraph 25A would clarify that the prohibition (under paragraph 25(a) of Schedule B1) on appointing an administrator when a winding-up petition has been presented and not yet disposed of applies only to a petition presented before an interim moratorium comes into effect.
If implemented, paragraph 5 of Part 2 would apply to England and Wales and Scotland.
Notice to prescribed persons
At present, pursuant to 26(2) of Schedule B1 to the IA 1986, a company or its directors intending to appoint an administrator must give notice of the intention to appoint to anyone entitled to appoint an administrative receiver of the company, to any holder of a qualifying floating charge entitled to appoint an administrator, and to other prescribed persons.
The prescribed persons are set out in rule 2.20 of the Insolvency Rules 1986, and include the company (if the company is not intending to make the appointment), and a supervisor of a company voluntary arrangement (CVA).76 Unlike those entitled to appoint a receiver or administrator, the prescribed persons cannot block the appointment of an administrator. According to the Bill’s Explanatory Notes, the requirement to give notice to these prescribed persons can lead to unnecessary delays in the administrator’s appointment where there is no one else to whom notice of intention to appoint must be given. The prescribed persons will in any event receive notice of the appointment when it is made.
It should also be noted that the paragraph 26(2) of Schedule B1 has also been the subject of a number of cases relating to the validity of appointment for out of court administrators.77
75 Paragraph 44(4) of Schedule B1 of the Insolvency Act 1986
76 Part 1 of the Insolvency Act 1986
77 See Hill v Stokes Plc [2010] EWHC 3726 and Minmar (929) Ltd v Khalatschi [2011] EWHC 1159 (Ch)
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Paragraph 6 of Schedule 5 of the Bill would remove this requirement to give notice to prescribed persons. It would form part of the law of England and Wales and Scotland. Release of administrator
The formal release of an administrator from office is legally significant. It represents the release of an administrator from liability in respect of his or her acts and omissions as an office-holder.
In some administration cases, the company in financial difficulty will have insufficient property to enable the administrator to make a distribution to unsecured creditors (other than in respect of any ‘prescribed part’78) and the unsecured creditors will have no financial interest in the administration.
Currently, paragraph 98(2)(b) of Schedule B1 to the IA 1986 provides that an administrator obtains his release by a resolution of a creditors' committee or by a resolution of the creditors. Paragraph 98(3) provides that where an administrator makes a statement under paragraph 52(1)(b) of Schedule B1, that the company has insufficient property to make a distribution to unsecured creditors, a resolution requires the approval of every secured creditor and (where distributions to preferential creditors have been or may be made) the approval of at least 50% of the preferential creditors by value. The implication is that a normal resolution of all the creditors is required plus a resolution of all of the secured creditors. This situation gives rise to unnecessary (and costly) creditors’ meetings, arranged with the sole purpose of giving the administrator their release.
Paragraph 7 of Part 2 would amend paragraph 98 of Schedule B1 to the IA 1986. The amendment makes it clear that where unsecured creditors have no interest in the administration, by virtue of the fact they will not receive a dividend, they are not involved in the administrator’s release, which can instead be resolved by (all of) the secured creditors (together with at least 50% of the preferential creditors if relevant) and is effective from the time they decide.
Paragraph 7 would come into force on a day to be appointed by the Secretary of State in a commencement order.
Winding up of companies (Schedule 5, Part 3)
Removal of power of court to order payment into Bank of England
Paragraph 9 of Part 3 repeals section 151 of the IA 1986. This removes the court’s power to order payment into the Bank of England of money due to a company. This power is no longer necessary and dates back to the Companies Act 1862, when the insolvency profession was largely unregulated. According to the Explanatory Notes, the last recorded use of the power was in 1991.
The repeal of the section would form part of the laws of England and Wales and Scotland.
78 With the implementation of the corporate insolvency provisions of the Enterprise Act 2002 in September 2003,
the Crown gave up the right to be preferential creditors. Consequently, in any subsequent insolvencies liabilities such as VAT and PAYE are now unsecured claims. The Government’s intention in giving up its right of priority was to level the playing field between the different types of creditors. Had only that aspect of the law been changed, in most instances, the additional funds made available would have gone to the company’s floating charge holders (e.g. a bank with a debenture secured on unspecified (‘floating’) company assets). However, under the Insolvency Act 1986 (Prescribed Part) Order 2003 a ‘prescribed part’ of those funds is to be distributed to unsecured creditors.
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Release of liquidator where winding-up order rescinded
When an IP is appointed liquidator of a company, his main functions are to secure the assets, realise them and distribute the proceeds to the company’s creditors. While he is liquidator, the IP is liable for his acts and omissions in the liquidation. It follows from this, that the formal release of a liquidator is legally significant because it represents their release from liability as an office holder.
Currently, section 174 of the IA 1986, sets out when a liquidator will be released from office in most circumstances. However, there is no specific statutory provision concerning the release of a liquidator when a winding-up order is rescinded by the court. A winding-up order may be rescinded where, for instance, it is shown that the company’s prospects have significantly improved since the winding-up order was made or where the court did not have the full facts when it made the order.
Paragraph 10 of Part 2 is designed to remedy this omission. It would insert a new subsection into section 174 of the IA 1986 which provides that when a winding-up order is rescinded, the liquidator has his or her release with effect from the time the court may determine. In effect, this would allow the liquidator’s release to be addressed by the court at the same time the as the application to rescind a winding-up order. It should avoid the need for the liquidator to make a subsequent, separate application to court.
According to the Explanatory Notes, the amendment proposed by paragraph 10 would come into force on a day to be appointed by the Secretary of State in a commencement order. It should be noted, that this amendment, would only apply to England and Wales – it would not apply to Scotland. This is because the amendment concerns a liquidator’s release upon the rescission of a winding-up order and in Scotland the courts do not rescind winding-up orders.
Disqualification of unfit directors of insolvent companies (Schedule 5, Part 4)
Background
Under the Company Directors Disqualification Act 1986 (CDDA 1986), a person can be disqualified from being a director of a company. The Act applies not only to a person who has been formally appointed as a director but also to those people who have carried out the functions of a director and to shadow directors. An order for disqualification can be made under a number of different sections of the Act and will specify the period of disqualification. For orders made against an unfit director of an insolvent company, there is a minimum period of 2 years and a maximum of 15 years.
When a company has failed, the official receiver has to send the Secretary of State a report on the conduct of all directors who were office in the last 3 years’ of the company’s trading. The Secretary of State has to decide whether it is in the public interest to seek a disqualification order. Any application is heard and decided by the court. Examples of unfit conduct include:
continuing to trade to the detriment of creditors at a time when the company was insolvent
failure to keep proper accounting records
failure to prepare and file accounts or make returns to Companies House
failure to submit tax returns or pay over to the Crown tax or other money due
failure to cooperate with the Official receiver or insolvency practitioner
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In April 2001, disqualification undertakings were introduced, which are an administrative equivalent of a disqualification order. An undertaking may be given to the Secretary of State which has the same effect as a disqualification order, but do not involve court proceedings.
Currently, when considering whether to make an application for a disqualification order against a director, the Secretary of State or the official receiver may require only office-holders of a company (a liquidator, administrator or administrative receiver) to provide information or books, papers etc. about any person’s conduct as a director.
According to the Bill’s Explanatory Notes, this approach creates an administrative burden on the office-holder and can give rise to delays in information and document provision. In addition, officeholders may sometimes refuse or delay requests for information as they do not think it is relevant to the person’s conduct as director.79 This can delay the Secretary of State’s or the official receiver’s decision as to whether to make a disqualification application.
The Bill
Paragraph 11 of Part 4 would amend section 7(4) of the CDDA 1986. The amendment would permit the Secretary of State or official receiver to obtain information in relation to a person’s conduct as a director directly from ‘any person’, including officers of the company. The amendments would also ensure that all relevant documents are produced to the Secretary of State or official receiver on demand. The stated aim of these changes is to reduce the administrative burden on the IP and assist the Government with the disqualification of unfit directors.
If implemented, paragraph 11 would come into force on a day to be appointed by the Secretary of State in a commencement order and will apply to England and Wales and Scotland.
It should be noted that this amendment also generated some commentary from stakeholders (see below).
Comment
In written evidence submitted to the Joint Committee, the Insolvency Lawyers’ Association (ILA) raised concerns about Paragraph 11 of Part 4 of Schedule 5. As outlined above, this amendment would permit the Secretary of State to obtain information in relation to a person’s conduct as a director from ‘any person’, including officers of the company.
The ILA said that it appreciated the importance of obtaining relevant and timely information in relation to directors’ disqualification proceedings. It also recognised that the aim of the changes is to reduce the administrative burden on the IP and allow the secretary of State to conduct a more efficient investigation of unfit directors. However, it was concerned that Paragraph 11 represented a significant change to the usual approach taken in civil proceedings. It said:
[...] we are concerned that it is a significant change to the usual approach in the
context of civil proceedings where ordering disclosure against (potentially non-parties)
is determined on a ‘by exception’ basis and is not something that the court orders
routinely. The Secretary of State has the ability to seek information from ‘any person’ at
present pursuant to Civil Procedure Rule 31.17(3) and we cannot see how a wider
power as ensilaged in the Bill can be justified.
We note that there is a discussion paper ‘Transparency & Trust: Enhancing the
transparency of UK company ownership and increasing trust in UK business’ issued by 7979 Section 7(4)(b) Company Directors Disqualification Act 1986
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the Department for Business Innovation and Skills dated July 2013 which is also
seeking views on further changes to the directors’ disqualification regime, including a
possible extension of the time period for pursuing directors from 2 to 5 years, and we
query whether the investigatory powers of the Secretary of State would be more
properly be dealt with in that context rather than as a matter of ‘deregulation’.
We also note that in the context of the “Red Tape Challenge’ – changes to insolvency
law to reduce unnecessary regulation and ‘simply if procedures” consultation issued on
18 July 2013, there are also proposals for changes in the reporting provisions in
relation to directors’ conduct to address some of the administrative burdens in this
regard. We make also a general comment that considering the different aspects of the
disqualification regime on a piecemeal basis in the various consultations appears to be
less than an efficient way of proceeding.80
Bankruptcy (Schedule 5, Part 5)
The Bill also makes some changes in relation to personal insolvency.
Appointment of insolvency practitioner as interim receiver
An interim receiver is someone appointed by the court to preserve the assets of a debtor in the period between a bankruptcy petition being presented and a bankruptcy order being made.
At present, both the official receiver (an officer of the court) and IPs (who operate in the private sector) can act as trustee of a bankrupt estate. However, except in limited circumstances, only the official receiver can be appointed interim receiver by the court. These limited circumstances are where, following a debtor’s petition for his or her own bankruptcy81, the court has appointed an IP to prepare a report stating whether the debtor is willing to make a proposal for a voluntary arrangement.82 In such a case, the court may appoint as interim receiver the IP who prepared the report.
Paragraph 13 of Part 5 would amend section 286 of the IA 1986 to permit the court to appoint the official receiver or any IP as interim receiver in all circumstances. Paragraph 14 makes consequential amendments. If implemented paragraphs 13 and 14 would apply only to the law in England and Wales (but not Scotland), and would come into force on a day to be appointed by the Secretary of State in a commencement order.
According to the Explanatory Notes, the effect of the amendment is deregulatory because it would allow a wider choice of persons to act as an interim receiver.
Statement of affairs
A ‘statement of affairs’ is a document which accurately sets out a person’s total assets and liabilities. At present, there is a requirement for a statement of affairs to be submitted in every bankruptcy. A debtor who petitions for their own bankruptcy is required to submit a statement of affairs with their petition. When a creditor petitions, the debtor is required to submit a statement of affairs within 21 days of the bankruptcy order, unless either the official receiver or the court releases him from doing so or extends the 21 day period. Failure (without reasonable excuse) to comply with the requirement constitutes contempt of court.83
80 ‘Insolvency Lawyers’ Association – Written Evidence to the Joint Committee on the Draft Deregulation Bill’,16
September 2013, [online] (accessed 29 January 2014) 81 Pursuant to section 272 of the Insolvency Act 1986 82 Pursuant to section 273 of the Insolvency Act 1986 83 Section 288(4) of the Insolvency Act 1986
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In practice, in the majority of cases, a person made bankrupt on a creditor’s petition does not submit a statement of affairs. Individuals are often unaware of their duty to provide this information, as they have already submitted a Personal Insolvency Questionnaire, which contains the same information. They are only likely to submit a statement of affairs when the official receiver requests it, for example if he is carrying out further investigations. The official receiver often obtains the required information by other means but may not release the bankrupt from the requirement.
Paragraph 15 of Part 5 would amend section 288 of the IA 1986 and remove this requirement for a bankrupt to submit a statement of affairs in creditor petition cases, unless requested to do so by the official receiver. The proposed amendment seeks to reduce the burden on bankrupt individuals and puts creditor petition bankruptcies on the same footing as companies wound up by the court, where the directors only submit a statement of affairs if required to do so by the official receiver.
The measure would come into force on a day to be appointed by the Secretary of State in a commencement order.
After-acquired property of bankrupt
Currently, there is some uncertainty about the way in which section 307 of the IA 1986 operates in respect of ‘after-acquired’ property and bank accounts. Part 5 of Schedule 5 seeks to remove that uncertainty. It would also facilitate banks providing bank accounts to undischarged bankrupts.
‘After-acquired’ property is any property (but not income) which has been acquired by or devolved upon the bankrupt since the commencement of the bankruptcy proceedings but before discharge (usually 12 months after the bankruptcy order was made). The bankrupt must declare all after-acquired property to his/her trustee in bankruptcy. Section 307 of the IA 1986 allows the trustee to formally claim such property by notice in writing for the benefit of the creditors. The trustee may claim such property even if the trustee only becomes aware of the property after the bankrupt’s discharge, providing it was acquired during the bankruptcy period.
At present, in circumstances where after-acquired property is (or becomes) money that passes through a bank account and the trustee is unable to recover it from the bankrupt or ultimate recipient, the trustee may claim against the bank for its loss to the bankrupt’s estate. The rationale for this is that the bank would have been aware of the bankruptcy order. Section 307(4) of the IA 1986 prevents the trustee from taking action against certain persons who have dealt with after-acquired property in good faith and without notice of the bankruptcy (namely persons acquiring property for value and bankers entering into transactions).
Paragraph 16 of Part 5 of schedule 5 would amend section 307 of the IA 1986. The amendment would take bankers outside the scope of section 307(4) of the IA 1986 and instead provide protection for them by means of a new subsection (4A) inserted into section 307. This proposed new subsection 4(A) is designed to prevent a trustee making a claim against a bank in circumstances where the bank has not been served with notice by the trustee specifically regarding the after-acquired property he wishes to claim, regardless of whether the bank has notice of the bankruptcy.
Paragraph 16, like section 307 of the IA 1986, would form part of the law of England and Wales only.
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Authorisation of insolvency practitioners (Schedule 5, Part 6)
Repeal of provision for authorisation of nominees and supervisors in voluntary arrangements
Under the current system, sections 389(1A) and 389A of the IA 1986, individuals can be authorised to act solely as nominees or supervisors in voluntary arrangements (i.e. individual or company voluntary arrangements). The Government considers that this will no longer be necessary if the partial authorisation regime for IPs is implemented (as set-out in Clause 10 of the Bill). It is of the view that there would be no demand for authorisation to act in voluntary arrangements alone, and the provisions would become obsolete.
Paragraphs 18 and 19 of Part 6 would repeal sections 389(1A) and 389A of the IA 1986.
Repeal of provision for authorisation of insolvency practitioners to be granted by competent authority
The current regulatory regime for Insolvency Practitioners is complex. The vast majority of IPs are authorised by one of seven Recognised Professional Bodies (RPBs). The Insolvency Service84 ensures that each of the professional bodies has a proper complaints procedure in place and that it complies with it. However, some IPs are authorised directly by the Secretary of State (as currently the only designated competent authority). In contrast to the RPBs, the Secretary of State does not have the power to establish a disciplinary regime, which would enable it to impose a range of sanctions for regulatory breaches. The only power available to the Secretary of State is to withdraw a practitioner’s authorisation, which is rarely used.
Paragraph 20 of Part 6 would repeal sections 392 to 398 of, and Schedule 7 to, the IA 1986 which provides for a competent authority to grant, refuse and withdraw authorisation to act as an IP. The effect of the repeal would be that the Secretary of State would no longer be able to authorise individuals to act as an IP. Individuals would only be able to obtain authorisation from one of the 7 professional bodies recognised by the Secretary of State for that purpose.
The main aim of these changes is to ensure that all practitioners are regulated to the same standard and there is consistency and commonality across the regulatory regime. The Secretary of State also acts as an oversight regulator for the RPBs. This provision would therefore remove the conflict of interest with the Secretary of State’s role as both a regulator of RPBs and a direct regulator of IPs.
The main amendments made by Part 6 of the Schedule form part of the law of England and Wales and Scotland. Part 6 will come into force on a day to be appointed by the Secretary of State in a commencement order.
Liabilities of administrators and administrative receivers of companies and preferential debts of companies and individuals (Schedule 5, Part 7)
Treatment of liabilities relating to contracts of employment
In a nutshell, paragraphs 23 to 27 of Part 7 of Schedule 5 would repeal one element of priority given to employees’ wages in certain insolvency proceedings, as this type of employee contract no longer exists.
The situation is highly technical, involving both insolvency and employment law, and is best explained in the Explanatory Notes. The relevant extract is reproduced below:
In administration and administrative receiverships a company can continue to trade
under the direction of the administrator (usually pending a sale of the business or
assets). All debts incurred by the company after entry into such insolvency
proceedings are classified as an expense of the insolvency proceeding and are 84 An executive agency of the Department for Business, Innovation and Skills (BIS)
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payable ahead of the fees of the insolvency practitioner. For an employee to become
entitled to have their wages paid as an expense, the insolvency practitioner needs to
adopt their contract. As well as including salary for actual days worked, the definition of
wages extends to cover payment for holiday entitlement, absence and payment in lieu
of holiday. Certain employment contracts (‘year-in-hand’ schemes) earned an
employee holiday entitlement for the year ahead. Social security legislation provides
that this holiday is counted as being accrued in the year it was earned.
In order not to discriminate against employees on these schemes, section 19(10) (pre-
Schedule B1 administration which continues in force for some purposes) and section
44(2D) of (administrative receiverships), and paragraph 99(6)(d) of Schedule B1
(administration) and paragraph 15 of Schedule 6 (categories of preferential debts) to,
the Insolvency Act 1986 provide that "wages or salary" includes, in respect of a period,
a sum which would be treated as earnings for that period for the purposes of an
enactment about social security. This enables a claim for this earned holiday
entitlement to be made after entry into an insolvency proceeding. However, such
provision is now redundant as ‘year in hand’ schemes are no longer legally possible
since the Working Time Regulations 1998. Removing unnecessary provision from the
statute book reduces a burden.
If implemented, paragraphs 23 to 27 of part 7 would apply to the laws of England and Wales and Scotland. However, the change made by paragraph 25 would apply only to administrative receivers appointed in England and Wales. The paragraphs would come into force at the end of the period of two months beginning with the day on which the Bill becomes an Act.
Comment
Most commentators appear to regard the insolvency provisions contained in Schedule 5 of the Bill as being sensible amendments, largely clearing up points of practice. For example, R3 (a trade body which represents 97% of IPs in the UK) has said that the changes contained within Schedule 5 are likely to improve efficiency and remove unnecessary burdens, both on the insolvency profession and the Government. This in turn should help to save costs, which will benefit creditors more generally.85 However, one controversial area has been clause 10 and the introduction of partial authorisation of IPs.
5 Use of Land
5.1 Rights of Way (clauses 13-19 and Schedule 6)
Background
Clauses 13-19 (and Schedule 6) of the Bill relate to rights of way and generally seek to untangle and speed-up the processes for determining and recording rights of way. These processes have become complicated by a succession of legislative changes in classification criteria and cut-off dates. The provisions relate to the law of England and Wales but the amendments they make will only make changes that affect public rights of way in England, coming into force as appointed by the Secretary of State in a commencement order.86
Clauses 13-19 particularly implement a range of measures put forward by a Natural England stakeholder working group on unrecorded rights of way in March 2010, further backed by a Defra consultation in 2012.
85 R3, the Insolvency Trade Body – Written Evidence to the Joint Committee on the Draft Deregulation Bill, 16
September 2013, [online] (accessed 29 January 2014) 86 Bill 162 - EN, para 72
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The pre-legislative scrutiny report on the Bill noted that this set of clauses had attracted the most interest and "passion" and had featured in half of the 300 responses received. A number of concerns and additional reforms were expressed which the Joint Committee has urged the Government to note because of this level of public interest. These are highlighted in the comment section below.
The problem of unrecorded rights of way pre-1949
Rights of way (footpaths, bridleways etc) have to be recorded by local authorities in England and Wales on a Definitive Map and Statement. This proper recording of routes was started via a duty included in the National Parks and Access to the Countryside Act 1949. It was originally expected that this work would be completed in five years or so but that was not the case and several attempts at improving the legislative framework followed.87 For example, Part 3 of the Wildlife and Countryside Act 1981 now sets out how the Definitive Maps and Statement should be maintained, reviewed and how changes can be made. If adequate evidence is presented regarding the use of a route then the Definitive Map has to be modified.
Today, these requirements form part of a complicated and inter-dependent series of legislation on rights of way and their recording which span over 60 years. This has lead to a slow process of recording previously unclaimed routes or reclassifying existing ones building up vast backlogs - estimated at some 4,000 applications.88 Commons Library Standard note, Establishing a Right of Way (SN06026 July 2011) explains the system of Definitive Maps and provides a timeline of key legislation.
The Countryside and Rights of Way Act 2000 (CROW 2000 s.53) sought to resolve the recording issue and remove uncertainty for landowners who risked having rights of way "discovered" on their land in the future. It set a statutory cut-off date (1 January 2026) for making claims for pre-1949 highways where there was only documentary evidence for the existence of such a highway. After the cut off any rights of way already in existence in 1949 but not recorded on the definitive map and statement would be extinguished (subject to certain exceptions). However, despite the cut-off incentive, a structured, well-funded exercise to claim routes did not emerge.89 Natural England therefore established an independently-chaired Stakeholder Working Group to develop a consensus on the way forward.
The Stakeholder Working Group
A Stakeholder Working Group (SWG) on unrecorded rights of way (landowners, local authorities and users) was appointed by Natural England and Defra to make recommendations for changes in the law to enable unrecorded rights of way to be recorded more swiftly. The resultant report, Stepping Forward, set out measures to address the situation to be implemented as a whole package.90 The General Election interrupted any adoption of the measures but they were further backed by a Defra consultation in 2012 and are now incorporated in Schedule 6 of the Bill.
Members of the SWG re-emphasised the necessity of implementing this whole package approach in their oral and written evidence to the Joint Committee in order to maintain the hard won consensus on these issues across a range of interest groups. The support of The
87 Defra, Improvements to the policy and legal framework for public rights of way: A public consultation: Summary
of responses, July 2013 p. 88 Q299 Oral Evidence to the Joint Committee from Kate Ashbrook, Open Spaces Society 89 Open Space, Autumn 2013, vol 30 No 8, p.13 90 Natural England, Stepping Forward: The Stakeholder Working Group on Unrecorded Public Rights of Way:
Report to Natural England, 25 March 2010
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Ramblers, Local Government Association, Open Spaces Society and Natural England is dependent on this.91 The Joint Committee acknowledged this in its final recommendations.92
Defra Consultation May – August 2012
In May 2012, the Government launched a public consultation on “Improvements to the policy and legal framework for public rights of way”. This set out how the Government proposed to respond to the Stakeholder Working Group’s report, but also set out proposals for a wider
package of improvements in three key areas:93
Considering whether improvements should be applied to procedures creating rights of way and for diverting or extinguishing them.
Looking at how it could be made easier for landowners to progress proposals for the diversion or extinguishment of rights of way affecting their land (subject to the current public interest tests); and
addressing barriers to growth which result from non-planning consents, as highlighted in the 2010 Penfold Review.
The consultation was supported by a Defra-commissioned survey to get more information to support the consultation in September 2012. Over 300 responses from a wide variety of stakeholders were received.
According to Defra’s consultation response document:94
Most respondents supported the Stakeholder Working Group proposals as a whole.
There was broad acceptance of the Group’s basic tenet that the proposals needed to be implemented as a package, because of the importance of maintaining consensus reached between access, environmental, land owner and local authority representatives.
There was some feeling that the opportunity to make more radical changes had been missed, but also recognition that it was not an easy task to produce a series of proposals that could gain agreement from all parties.
A minority of respondents criticised the Stakeholder Working Group process as being unrepresentative and some expressed concern that there had been no opportunity for the wider rights of way stakeholder community to evaluate the Stakeholder Working Group proposals before they were published.
There was strong support for national guidance for local authorities, applicants and landowners and backing for more flexibility for informal consultation and negotiated
91 HC 925, HL Paper 101, House of Lords and House of Commons Joint Committee on the Draft Deregulation
Bill:
Deregulation Bill (Session 2013 -14), Vol 1, December 2013 Q273, Oral Evidence to the Joint Committee on the
Draft Deregulation Committee, 28 October 2013 92 HC 925, HL Paper 101, House of Lords and House of Commons Joint Committee on the Draft Deregulation
Bill:
Deregulation Bill (Session 2013 -14), December 2013, para 130 93 Defra, Improvements to the policy and legal framework for public rights of way: A public consultation: Summary
of responses, July 2013
94 Defra, Improvements to the policy and legal framework for public rights of way: A public consultation: Summary
of responses, July 2013
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settlements in advance of formal legal proceeding and for improving the relationship between the parties involved in rights of way procedures.
A strong message from respondents was the need to avoid introducing extra bureaucracy, with the associated costs. There were concerns that where any new any legal criteria were introduced, they need to be clearly defined and that the processes should be transparent.
There was strong support across all sectors for a higher burden of proof for definitive map modification order applications.
The Bill
The Government has summarised the rights of way elements of the Bill as “devolving decisions on public rights of way to a local level, which will cut the time for recording a right of way by several years and save almost £20 million a year through needless bureaucracy.”95
Mitigating the 2026 cut-off date implications
Although the 2026 cut-off date (see section 1.1 above) was introduced to try and resolve recording issues, it generates a new set of legal complications itself. Clauses 13-15 seek to address these.
Clause 13 is intended to lower the number of applications to delete a right of way from the Definitive Map. It would insert a new Section 55 A into the CROW Act which means that a surveying authority (the local authority) cannot modify the Definitive Map and Statement if a right of way shown on it would be affected solely on the basis of evidence that pre-1949 no right of way existed. The authority therefore would not have to consider an application for modifications which require a time-consuming investigation of historical evidence.
Clause 14 would empower the Secretary of State to make regulations (via a new section 56A in the CROW 2000 Act) which specify how surveying authorities might delay or otherwise mitigate the effect of the cut-off provisions. Such measures could include surveying authorities "saving" a right of way within a year of the cut-off date having considered the applications and evidence submitted by the public. They could also make provision for requiring surveying authorities to make decisions within certain timeframes and with recourse to a Magistrates Court if such timescales are not met.
Clause 15 would amend the CROW Act to allow for those who rely on a public right of way for access to their property to retain a private right of way over it even if it is extinguished under CROW 2000.
Amending the Highways Act 1980 regarding extinguishing or diverting a right of way
The Highways Act 1980 allows applications to be made, in certain circumstances, to extinguish or divert a public right of way via an order (Sections 118ZA and 119ZA). Clauses 15-17 of the Bill amend these provisions. The Good Practice Guide from the Institute of Public Rights of Way and Access Management (IPROW) explains how these orders are currently managed.
Clause 16 would allow the Secretary of State to extend the type of land in England in respect of which it is possible to apply for an order to extinguish or divert a right of way. It would also modify how the Secretary of State determines appeals (s.121E of the 1980 Act) but would not affect the current right to object.
95 Cabinet Office press release, Government unveils Deregulation Bill, 1 July 2013
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Clause 17 would extend the powers to erect stiles, gates or other works on a right of way. This is intended to improve access for most people because at present gates and stiles can only be erected on certain rights of way to contain livestock. This means that landowners often oppose other classifications offering wider public use because a gate would not be permitted.96
Clause 18 would empower full cost recovery by the authority making a public path order. It would enable the Secretary of State to authorise charges to be imposed via s.150 of the Local Government and Housing Act 1989. This would allow the introduction of some discretion by the local authority provided that the charge does not exceed the actual cost incurred. At present if the centrally prescribed limit may not enable the local authority to recover all of its costs. It also includes provisions for the Secretary of State to recover costs when dealing with contested applications.
Changing the procedures for ascertaining rights of way in England
Clause 19 (introducing Schedule 6) would make changes to the procedures for ascertaining rights of way in England amending the Wildlife and Countryside Act 1981 and allow for regulations setting out transitional arrangements. Overall, the measures seek to pass responsibilities from the Secretary of State to local authorities and give greater flexibility in dealing with applications.97 For example:98
raising of the threshold at which an authority must make an order. The burden on an
authority of having to make orders in respect of applications which contain reasonable
allegations but do not satisfy the ordinary civil standard of proof is removed.99
(Schedule 6 Para 2)
a simplified and shorter procedure for dealing with obvious administrative errors in the
definitive map and statement (Schedule 6 Para 3)
special diversions for ways which have fallen into disuse whose existence has been
proven by documentary evidence so that these can be realigned by agreement,
subject to certain conditions.
a new system for determining applications for definitive map modification orders, in
which appeals to the Secretary of State against decisions by a surveying authority not
to make an order can involve a full public inquiry into the entire matter
a right to apply to the magistrates court where the surveying authority is slow
determining an application
a means of transferring applications for definitive map modification orders from one
person to another to assist the voluntary sector so that work on an application does
not have to start from scratch if an applicant is unable to proceed. 100
96 Cm 8642, Deregulation Bill, Explanatory Notes section, paras 79-80 97 A detailed assessment of the draft provisions is provided in an article by Aaron Nelson, Senior Associate at
Bircham, Dyson, Bell, Rights of Way and draft deregulation bill, 3 July 2013 98 Drawing on work by The Ramblers, A brief summary of the effects in England of the draft Deregulation Bill on
rights of way as on 27 January 2014 99 See Bill 162 - EN, para 370 100 Bill 162 - EN, para 72
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Comment
The pre-legislative scrutiny report on the Bill noted that this set of clauses had attracted the most interest and "passion" and had featured in half of the 300 responses received. A number of concerns were expressed about the pressures that the reform may place on local authorities with the inevitable rise in applications to process as the cut-off point is approached, despite the simplification measures of the Bill. The Joint Committee has urged the Government to note and fully assess these impacts.
The Joint Committee also pointed to a number of additions to the Bill that were suggested highlighting wider issues such as vehicular access (see section on wider reforms below). The Committee felt that the large level of public interest in these areas warranted Government action to address the concerns.
Although a number of the measures are based on the Stakeholder Working Group's recommendations, in some cases they go a little further e.g. Schedule 6 (Para 2) regarding the burden of proof and so discussions are still ongoing among the various interest groups to ascertain whether they still agree. However, the Joint Committee conveyed a sense that there was still broad support behind the provisions (e.g. National Farmers’ Union, Open Spaces Society, and Council for the Protection of Rural England) despite some criticisms and also evidence from the "Alternative Stakeholder Working Group". This Group, made up of individuals who have been adversely affected by rights of way legislation (e.g. paths going through their homes and gardens etc), have questioned whether the provisions are in fact deregulatory and makes a number of useful legal points to be explored around the working of the measures proposed.101 Overall, the Joint Committee called for the Government to “show leadership and balance” to take unrecorded rights of way reform to a successful conclusion.102
Support for wider reforms
As with Defra's 2012 consultation, many providing evidence to the Joint Committee suggested specific additions to the provisions or used it as an opportunity to continue to call for root and branch reform. The issue being that the underlying classifications and systems of rights of way legislation which have evolved are inherent to the process of recording which has become a "red tape" issue.
The issue of mechanically propelled vehicles on certain rights of way continues to be a live issue despite the Natural Environment and Rural Communities Act 2006 which, in the light of public concern about off-road damage and intimidation of other users, extinguished many rights for modern vehicles on footpaths, bridleways or restricted byways that had developed from historic rights for horse drawn vehicles etc. A specific addition to the Bill (supported by a third of respondents to the Joint Committee) was a new provision to re-classify unsealed Byways Open to All Traffic (BOATs) and unsealed, Unclassified County Roads (UCRs) as Restricted Byways and closed to vehicular traffic.103 Such a provision is intended to minimise the environmental damage to these lanes and the conflicts in use between vehicles and other users. This is supported for example by the Green Lanes Environment Action Movement (GLEAM), the Peak District Green Lanes Alliance but not the Motoring Organisations Land Access and Recreation Association (LARA). LARA supports the current
101 HC 925 and HL 101 Oral and Written Evidence, para 1 p.20 102 HC 925, HL Paper 101, House of Lords and House of Commons Joint Committee on the Draft Deregulation
Bill: Deregulation Bill (Session 2013 -14), December 2013, p.6 103 HC 925, HL Paper 101, House of Lords and House of Commons Joint Committee on the Draft Deregulation
Bill: Deregulation Bill (Session 2013 -14), December 2013, para 147
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provisions of the Bill (which do not affect its members) but does not support further restrictions on vehicle use on rights of way.104
The National Farmers’ Union broadly supports the rights of way clauses in the Bill but is also recommending a number of additions – for example a presumption against routing rights of way through farmyards and other areas on the grounds of safety, security and nuisance. 105 The Ramblers, who were in the original stakeholder group, are not proposing further amendments so as not to dilute their push for implementation of the original package which they recommended which is broadly included in the draft Bill. The Country Landowners Association (CLA) and Natural England have also said that their support is dependent on adoption of the whole package with no cherry picking.106
It would seem that whilst many would like to see wider reform, they accept that a Deregulation Bill is not the appropriate vehicle for it – despite the attraction that an opportunity for primary legislation presents. However, the Bill can perhaps be a useful vehicle to seek to address some of the well-known tangles in the system and see how far that experience informs a wider shake-up.
5.2 Erection of public statues (London) (clause 20)
Clause 20 would remove historic controls on erecting public statues in London, which are now covered by the planning system. It is a straightforward simplification measure.
6 Housing
6.1 Right to buy qualifying period (clause 21)
Background
Since its introduction in 1980 almost two million secure tenants have exercised their Right to Buy (RTB). Prior to changes to maximum discount levels introduced in 2012 RTB sales were running at around 2,600 a year, representing an all-time low in take-up. Various factors had influenced this decline, including: the economic downturn; the challenge of obtaining mortgage finance; and the introduction of regional caps on the maximum discount available by the previous Labour Government.
In Laying the foundations: a housing strategy for England (November 2011) the Government set out its intention to “reinvigorate” the Right to Buy. The various steps taken to achieve this are explained in Library note SN/SP/6251 Incentivising the Right to Buy. The key changes have involved the reintroduction of a national maximum discount level (£75,000) from 2 April 2012 – this was subsequently increased to £100,000 for secure tenants in London from 25 March 2013.107 RTB sales have risen. Figures published by the Department for Communities and Local Government (DCLG) in November 2013 show 2,839 homes were sold in the second quarter of 2013/14 (London accounted for 25% of these sales); an increase of almost three times the 1,041 homes sold in the same period of 2012/13.108
Your Right to Buy Your Home: A guide (DCLG, April 2012) provides an overview of the key eligibility requirements and rules around exercising the RTB. As part of Budget 2013 the
104 HC 925, HL Paper 101, House of Lords and House of Commons Joint Committee on the Draft Deregulation
Bill: Deregulation Bill (Session 2013 -14), December 2013, para 152 105 NFU Online, Draft Deregulation Bill – Diverting historic rights, 13 January 2014 106 HC 925, HL Paper 101, House of Lords and House of Commons Joint Committee on the Draft Deregulation
Bill: Deregulation Bill (Session 2013 -14), Vol 1, December 2013 Q273, Oral Evidence to the Joint Committee on the Draft Deregulation Committee, 28 October 2013
107 Labour had replaced the national maximum discount of £50,000 with regional discount caps ranging from £16,000 to £38,000. The aim of regional caps had been to improve value for money under the RTB.
108 DCLG, Right to Buy sales in England: 2013 to 2014, quarter 2, November 2013
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Government announced further changes to the RTB including an intention to “reduce the qualifying period before tenants become eligible for Right to Buy from five years to three years.”109 The Government expects that reducing the qualification period will extend the possibility of home ownership to an additional 200,000 households in the social rented sector.110
The Bill
Clause 21 of the Bill would amend section 119 of the 1985 Housing Act to reduce the qualification period for the RTB in England to three years as a public sector tenant from the current five years. The position in Wales would remain unchanged.
Assured tenants of housing associations do not, as a general rule, have the Right to Buy their homes on the same terms as secure council tenants. However, if they live in properties built or acquired using public subsidy since 1 April 1997 they may have the statutory Right to Acquire their home.111 Tenants exercising the Right to Acquire must meet the eligibility requirements set out in Part 5 of the 1985 Act112 (which governs the RTB) – thus the reduced qualification period will also apply to assured tenants in respect of the Right to Acquire.
Comment
This change would effectively reverse the amendment introduced by the Labour Government under the 2004 Housing Act to extend the qualification period for the RTB to five years (previously three years).113
The National Housing Federation (NHF) submitted written evidence to the Joint Committee’s pre-legislative scrutiny of the draft Deregulation Bill in which it called for measures to be included to mitigate the impact of the RTB on housing associations. The NHF has particular concerns around the impact of increased RTB take-up by housing association tenants with a “preserved RTB.” Following a transfer of a local authority’s stock to a housing association, the existing secure tenants of the authority become assured tenants of the new landlord; these tenants retain a preserved RTB. The right can persist if the tenant moves to another property owned by the new landlord but it is lost if the landlord changes again.
Alongside implementing measures to reinvigorate the RTB the Government is committed to one-to-one replacement of the properties sold. The approach to achieving this is explained in the Library note: Incentivising the Right to Buy. The NHF thinks that “there is no effective plan in place” to replace affordable homes sold under the preserved RTB:
The receipt is shared according to the terms of the transfer agreement. When
social housing is transferred from a local authority into a housing association, a
transfer agreement is drawn up. Each agreement sets out how any sales receipts will
be split. In many cases, the agreement allocates the majority share of the receipt to the
local authority with the housing association receiving a smaller share to cover their
foregone rental income.
PRtB sales receipts are unprotected. Once the local authority receives its share,
they are under no legal obligation to spend the receipts on funding new homes.
Government does not monitor the spending of these sales receipts.114
109 HM Treasury, HC 1033, Budget 2013, March 2013, para 1.105 110 Draft Deregulation Bill, Cm 8642, July 2013, p3 111 The Right to Acquire was introduced by the 1996 Housing Act. 112 Section 180(1)(e) of the Housing and Regeneration Act 2008. 113 Section 180 of the 2004 Act applied only to new tenancies entered into on or after the day on which the
provision came into effect (18 January 2005).
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The NHF called on the Joint Committee to recommend amendments to the Bill to:
Protect Preserved Right to Buy Receipts (PRtB) so that local authorities are
required to spend their receipts on funding new affordable homes.
Incorporate debt within the cost floor so the right to buy discount will be reduced if
the sales receipt does not cover debt secured against a property.115
It also asked the Committee to call on the Government to:
Carry out an independent right to buy review that takes into account recent
evidence and develops more effective ways to build replacement affordable homes.
Put in place an effective system for regularly monitoring the preserved right to
buy sales and the number of homes being replaced.116
There is some unease within the social housing sector around the delivery of one-to-one replacement of homes sold under the RTB. The DCLG figures published in November 2013, in addition to showing an increase in RTB sales, also show that 753 replacement homes were started on site or acquired during the second quarter of 2013/14 compared with 236 in the same quarter of 2012/13. Over the whole of 2012/13, 844 replacement homes were started on site or acquired.117
The November 2013 statistical release Inside Housing reported that one council property is being built for every seven sold through the right to buy:
The government promised that a new council house or flat would be built to replace
every one sold to tenants when it announced the new drive for the scheme by
increasing discounts.
However, in 2012/13 and in the year to date, 10,954 council homes have been sold
through the right to buy scheme, but only 1,662 replacements were started in the same
period.118
The Housing Minister, Kris Hopkins, has emphasised the time-lag between the sale of a home under the RTB and its replacement as well as the role of local authorities in ensuring the use of capital receipts raised from sales:
Since the reinvigoration, local authorities have sold 10,953 homes, approximately
6,400 of which are additional. Since April 2012, 1,662 dwellings have been started on
site or acquired.
There will invariably be a certain time lag between the right to buy sale and the
construction of the new build home, but the replacement timetable is in control of the
local authority. If a council were to fail to spend the receipts within three years, it would
be required to return the unspent money to government with interest. This provides a
strong financial incentive for any slow-coach councils to use this new funding and get
on with building more homes for local people.119
114 NHF Written Evidence to the Joint Committee on the draft Deregulation Bill, September 2013 115115 ibid 116 ibid 117 DCLG, Right to Buy sales in England: 2013 to 2014, quarter 2, November 2013 118 Inside Housing, “Just one home built for every seven sold through right to buy,” 2 December 2013 119 HC Deb 20 January 2014 cc55-6W
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The Local Government Association’s (LGA) written evidence to the Joint Committee called for increased local flexibility over RTB discount levels “to reflect local housing markets” and drew attention to the operation of the cost floor. The LGA called for the Bill to amend the rules over the retention and use of capital receipts:
Many councils have reported increased pressure on their stock of one and two
bedroom properties. However, the current approach contains an inbuilt disincentive to
reinvest in one and two bedroom flats. This is because the current system is structured
so as to limit the ability for local authorities to reclaim their outstanding debt on new
properties – until a property is 15 years old the law limits the Right to Buy discount to
ensure that the purchase price of the property does not fall below what has been spent
on building, buying, repairing or maintaining it. After a property is 15 years old, this
‘cost floor’ does not apply. Sales after this time period can leave the authority operating
at a loss. Extending the cost floor (i.e. the period that exists before the debt on the
property is paid off) on new builds and flats from 15 to 25 years would remove this
disincentive by ensuring that sales even at the maximum discount level would not incur
a loss for the authority.
Under the current system, the amount of receipts kept by the Treasury is based on the
predicted amount of Right to Buy sales in each authority. This means that only when
the Treasury has received the predicted amount does money become available to be
retained locally. The restrictive criteria which accompany Homes and Communities
Agency agreements to retain receipts locally also restrict the ability of local authorities
to invest in housing. For example, the agreements limit councils to funding only 30 per
cent of new build costs from Right to Buy receipts, as well as limiting the use of other
housing revenue account receipts as funding. The draft Deregulation Bill should allow
for full retention of receipts and greater flexibility over how they are used. This would
incentivise councils to use their assets, such as land, for replacement housing and
could allow councils to bring development sites forward that may not be attractive or
viable to other providers.120
The Centre for Housing Policy at the University of York submitted an assessment of the impact of the reduction in the RTB qualifying period to the Joint Committee.121 The report of the Joint Committee on the draft Deregulation Bill contains no specific recommendations on the RTB.
6.2 Removal of requirement to prepare housing strategies (clause 22)
Background
The power to require local authorities to prepare a housing strategy is contained in section 87(1) of the Local Government Act 2003. The power is exercisable by the Secretary of State in relation to local authorities in England and the National Assembly for Wales. The Explanatory Notes to the 2003 Act describe a local housing strategy as:
…the local housing authority’s vision for housing in its area, its objectives and targets
and policies on how it intends to manage and deliver its strategic housing role. It forms
the overarching framework against which the authority considers and formulates other
policies on more specific housing issues.122
120 LGA’s Written Evidence to the Joint Committee on the draft Deregulation Bill, September 2013, paras 11-12 121 Centre for Housing Policy at the University of York Written Evidence to the Joint Committee on the draft
Deregulation Bill, September 2013 122 Explanatory notes to the Local Government Act 2003, para 215
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The purpose of section 87 was to put the preparation of local housing strategies on a statutory footing in order “to reflect the Government’s belief that a robust strategy is essential to the delivery of local authorities’ housing functions.”123
Section 88 of the 2003 Act made it clear that the Secretary of State (England) or the National Assembly for Wales could, when imposing requirements as to the content of any document prepared for the purposes of section 87, require the inclusion of material relating to property in the authority’s Housing Revenue Account (HRA). This was to be designated as the authority’s Housing Revenue Account business plan.
The Bill
Clause 22 of the Bill would amend sections 87 and 88 of the Local Government Act 2003 to limit their application to Wales. The Government’s rationale is that the Secretary of State’s power under section 87(1) “has never been exercised, and there is no intention for it to be exercised in the future.”124
Comment
This proposed change has not generated comment from within the housing industry. It will not prevent authorities from preparing housing strategies as they see fit. The move to a self-financing regime in April 2012 (for stock-retaining local authorities in England) has prompted authorities, as a matter of good practice, to develop 30 year Housing Revenue Account business plans.
7 Transport
There is no overall theme to the transport changes proposed by the Bill. They cover areas as diverse as driving instruction (clause 5; see above), passenger rail services (clause 23); drink driving (clause 25) and maritime investigations (clause 26). In some cases it would introduce reforms – for example unifying the driving instructor registration system so there is no longer a differentiation between disabled and other instructors, and making the evidential breath test the primary method of testing for alcohol impairment. In other cases it would make administrative changes – for example removing the requirement for local authorities to seek approval for road works permit schemes from the Secretary of State or inform him of changes to pedestrian crossings (clause 24). And in other cases it would make changes with legislative implications – for example it would introduces two new ambulatory measures affecting international shipping agreements and alcohol offences at sea and in the air (clause 59 and clause 25).
The proposals that have elicited the most comment are those to do with removing the duty to order re-hearing of marine accident investigations (clause 26) and the ambulatory measures affecting international shipping agreements. In the first instance there are concerns that justice for the victims of shipping accidents might be impeded and in the second that the Secretary of State was given too wider powers in the draft Bill to bypass Parliament; this specific concern has been addressed in the Bill proper and that reference has been removed.
Finally, the change of potentially the most long term political interest is the extension of the powers of passenger transport executives (PTEs) to run passenger rail services anywhere in Great Britain. This might mean, for example, that in the future two or three PTEs across the north of England could specify and let a northern rail franchise providing local services set by local people.
123 ibid, para 217 124 Bill 162-EN, para 109
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7.1 Removal of restrictions on provision of passenger rail services (clause 23 and Schedule 7)
Clause 23 and Schedule 7 would permit Passenger Transport Executives (PTEs)125 to carry passengers by rail outside their geographic limits (PTEs cover the main metropolitan areas in England outside London). This proposal has been well trailed by the Government and subject to public consultation;126 it has been welcomed by PTEs themselves127 and by the House of Commons Transport Committee.128 Background information on devolving rail franchise responsibilities can be found in section 5.1 of HC Library note SN6521.
The Bill would remove a restriction. In order for a PTE to become the franchising authority for an area would still require a de-designation order made by the Secretary of State. Several PTEs have expressed interest in assuming devolved responsibility for letting rail franchises in their areas; the only devolved let in England at present is Merseyrail.
This change would apply to England and Wales, Scotland and Northern Ireland. However it would only affect PTEs which are in England, albeit it will enable those PTEs to carry passengers by railway anywhere in Great Britain.
7.2 Reduction of burdens relating to the use of roads and railways (clause 24 and Schedule 8)
Clause 24 would introduce Schedule 8, which would make changes to the regulation of the use of roads and railways. These proposed changes, though they cover six different areas, have a common theme in that they remove an administrative burden, e.g. a requirement to seek approval from or notify the Secretary of State of a scheme or simplify how the Secretary of State makes charges or exemptions. Specifically this part of the Bill:
would remove the requirement to obtain approval from the Secretary of State to
implement a permit scheme (for road works) in England (the Secretary of State will
retain powers to make regulations with respect to permit schemes, including, e.g., the
fee structure for permits) (Part 1 of the schedule);129
would remove the Secretary of State’s power to construct road humps in England
and Wales (in view of the fact that in practice the construction of road humps is
undertaken by local authorities, this power is no longer required) (Part 2 of the
schedule);130
would remove the requirement that the Secretary of State in England or, in relation to
Wales, the Welsh Ministers are informed in writing before zebra, pelican or puffin
crossings are established or removed (in practice few local authorities do this in any
case so the removal of this requirement will bring practice into line with e.g. installing
other facilities such as traffic signal junctions or toucan crossings which so not require
notification to be given) (Part 3 of the schedule);
125 PTEs carry out the work of Integrated Transport Authorities (ITAs), which are made up of representatives of
the councils in the areas in which they serve; for more information see section 1.2 of HC Library note SN5835 126 DfT, Rail Decentralisation: Devolving decision-making on passenger rail services in England, March 2012;
responses published November 2012 127 PTEG, Rail Decentralisation, June 2013, para 7.2 128 Transport Committee written evidence to the Joint Committee on the draft Deregulation Bill, Ev Vol 1,
December 2013, p624 129 for background information on permit schemes and prior consultation on this proposal, see section 2.2 of HC
Library note SN739 130 for background information on road humps and traffic calming, see HC Library note SN3437
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would disapply the offence of causing death by careless driving in the case of
participants in authorised off-road motor events in England and Wales and Scotland
(there is already a disapplication for other offences under the Road Traffic Act 1988
for persons driving in accordance with an authorisation for a motoring event, e.g.
dangerous or careless driving, causing death by dangerous driving) (Part 4 of the
schedule);
would permit the Secretary of State to charge the occupier of premises at which
annual roadworthiness testing of lorries, buses and coaches is carried out for
testing services provided or to charge in respect of the issue of test certificates in
England and Wales and Scotland (this replaces the current charging structure, which
is ‘administratively complex’) (Part 5 of the schedule);131 and
would provide for exemptions from the Rail Vehicle Accessibility Regulations to
be made and amended by administrative order rather than by statutory instrument in
England and Wales and Scotland (to bring it into line with exemption orders granted
for buses and coaches; for rail these tend to be limited to Underground metro
vehicles) (Part 6 of the schedule) .132
7.3 Reduction of burdens relating to enforcement of transport legislation (clause 25 and Schedule 9)
Clause 25 would introduce Schedule 9, which would make changes to the enforcement of certain aspects of transport legislation, specifically to do with drink and drug driving (paras 1-13 of the schedule), alcohol offences (paras 14-16 of the schedule) and bus lane contraventions (paras 17-19 of the schedule).
On drink and drug driving relating to road or rail transport, the Bill would:133
remove the option for individuals to opt for a replacement blood or urine specimen
and means that the evidential breath test is now the primary means of testing unless
there are particular reasons (e.g. medical) why breath specimens cannot be obtained
(applies to road and rail);
allow a police officer to proceed directly to evidential breath testing at the roadside in
those instances where a portable evidential breath test device is available. This does
not remove the ability to require a preliminary breath test;
for railway offences, allow a constable to require an evidential breath test at a police
station or hospital or, if the constable is in uniform, anywhere else;
extend to registered healthcare professionals the ability to advise the police as to
whether a suspected drug driver who has been arrested and brought to the police
station might be in their condition due to a drug, permitting further investigation by
obtaining a specimen of blood or urine for analysis (applies to road and rail);
131 this proposal was subject to consultation in 2011; for details see: DfT, Fees for HGV and PSV testing and
operator licensing for 2011, June 2011; consultation report published in April 2013 132 for background information on rail accessibility, see section 2 of HC Library note SN601 133 the Government consulted on the changes below in 2012; for further information see HC Library note SN788;
see also SN2884 for information on drug driving offences
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provide that, in addition to medical practitioners, a registered healthcare professional
may, in the course of an investigation, take a blood specimen from a person who may
be incapable of consenting to that specimen being taken (applies to road and rail);
These changes would apply to England and Wales and Scotland.
On drink and drug offences relating to maritime and aviation transport, the Bill would effectively apply the alcohol and drug enforcement provisions of the Road Traffic Act 1988, as amended, and the Road Traffic Offenders Act 1988, as amended, to professional maritime and aviation staff on and off duty and to non-professionals.134 In effect this would apply the evidentiary and testing regime in the 1988 Acts to maritime and aviation, including the new regime provided for above. It is an ‘ambulatory’ provision, meaning that as the 1988 Acts are amended in future, the relevant changes will be read across automatically to maritime and aviation.
The changes would apply to England and Wales, Scotland and Northern Ireland. The maritime provisions would apply to United Kingdom ships everywhere, foreign ships in United Kingdom waters and unregistered ships in United Kingdom waters. The aviation provisions apply in relation to aviation functions and activity performed or carried out in the United Kingdom (with some limitations in relation to Scotland), and in relation to certain functions carried out on a United Kingdom aircraft.
On bus lane contraventions, the Bill would effectively remove the requirement for the Secretary of State to specify a local authority as an ‘approved local authority’ for the purposes for bus lane enforcement by way of an order (statutory instrument) and would instead allow that designation to be made by a notice in writing. This change would apply to England and Wales but will only affect England.135
7.4 Removal of duty: re-hearings of marine accident investigations (clause 26)
Clause 26 would repeal that part of section 269(1) of the Merchant Shipping Act 1995, as amended, which requires the Secretary of State to order the rehearing of a formal investigation into a marine accident if new and important evidence which could not be produced at the investigation has been discovered. The Explanatory Notes to the Bill state:
The Secretary of State would retain the discretionary power in that subsection to
reopen any formal investigation and would continue to be subject to the subsection’s
requirement to reopen such an investigation where there are grounds for suspecting a
miscarriage of justice.
Consequently, in the event of new and important evidence relating to a marine
accident being discovered, the Secretary of State would be able to evaluate the likely
benefits of reopening an inquiry in the light of the particular circumstances. For
example, where a considerable period of time has elapsed since the accident, there
may be little of practical value that could be learned from the evidence that would
enhance current maritime safety.136
There have been several concerns expressed about this change. Nautilus, the RMT and the UK Maritime Pilots Association all expressed reservations to the Joint Committee that considered the draft Bill. Both Nautilus International and the RMT used the example of the MV Derbyshire to illustrate their point. The RMT said:
134 background on the introduction of the alcohol offences in maritime and aviation can be found in Part IV of HC
Library research paper RP 03/06 135 for background information on bus lane enforcement, see HC Library note SN32 136 Bill 162 EN 2013-14, paras 117-118
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RMT strongly opposes the Draft Bill’s proposal at Clause 25 to abolish the duty in
Section 269 of the Merchant Shipping Act 1995 on the Secretary of State to re-open
maritime accident investigations in the event of new and important evidence.
The duty under section 269 of the 1995 Act proposed for deletion in the Draft Bill was
used in 1998 to re-open the formal investigation into the loss of the MV Derbyshire in
September 1980. The UK flagged, owned and crewed MV Derbyshire disappeared
almost without trace south of Japan after it was engulfed by Typhoon Orchid. All on
board, 42 crew and two passengers (wives of crew members), lost their lives.
[…] The original investigation, reported in January 1989, was largely inconclusive and
lacked any useful, rigorous insight into the causes, so much so that it was described by
the Attorney General, Lord Williams of Mostyn on the first day of the re-opened
investigation on 5th April 2000 as:
“...self-confessed speculation in large measure, an exercise in surmise, constrained by
the lack of evidence.”
The UK Government consistently refused to re-open the initial investigation into the
causes of the loss of the Derbyshire and it was only a union-funded search for the
vessel in the 1990s, combined with the introduction of the Duty in the 1995 Act that
established the necessary evidence and the legal obligation on Government to re-open
the investigation.
The subsequent investigation not only absolved the crew from any blame for the loss
of the vessel but led to significant improvements in the safe operation of bulk carrier
class ships, as well as vital developments in the understanding of the mechanics of
destructive waves generated under typhoon conditions.137
Nautilus argued that “given that this is an extremely rare event, it would seem pointless in removing this flexibility from the Secretary of State that could be extremely beneficial in both allaying public anxiety following a marine incident and addressing the concerns of those directly or indirectly involved”.138
These changes would affect England and Wales, Scotland and Northern Ireland.
8 Communications
8.1 Online copyright infringement (clause 27)
Background
An industry survey published in 2010 found that 29% of a sampled population of internet users were engaged in some form of unauthorised music downloading. The music industry estimates that 1.2bn tracks are downloaded unlawfully in the UK each year, compared to legitimate online sales of 370m tracks.139 Studies by the film and television industries indicate that over 10% of UK adults consume infringing content online and that piracy costs these industries over £535m per year in the UK.140
137 RMT written evidence to the Joint Committee on the draft Deregulation Bill, Ev Vol 2, December 2013, pp118-
119 138 ibid., p963 139 BPI press release, New BPI report shows illegal downloading remains serious threat to Britain’s digital music
future, 16 December 2010 140 Ipsos Media CAT (2009) GB Movie and TV Piracy 2009, quoted in Dept for Culture, Media and Sport (DCMS),
Next steps for implementation of the Digital Economy Act, August 2011, p4
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In response to this, the Digital Economy Bill 2009-10, introduced towards the end of the last Parliament, included measures to tackle internet piracy. These survived the “wash-up” process at the end of the last Parliament, although several other measures in the Bill did not. Although one clause (“Preventing access to specified online locations for the prevention of online copyright infringement”) was removed in the House of Commons committee stage, it was replaced by two new clauses, which now form sections 17 and 18 of the Digital Economy Act 2010.141
Section 17 provides a power for the Secretary of State to bring forward regulations about the granting by courts of injunctions requiring service providers to block access to sites, for the purpose of preventing online infringement of copyright. Before making such regulations the Secretary of State must be satisfied that the infringement is having a serious adverse effect on businesses or consumers and that making regulations would be a proportionate way to address that effect. The regulations
have to provide that a court may only grant an injunction if the internet location is, or
is likely to be, used to host or access a substantial amount of material in infringement
of copyright;
must also require a court to take into account the extent to which the operator of the
site and the service provider have taken steps to prevent infringement of copyright in
the material;
must further require the court to consider what efforts the copyright owner has made
to facilitate legal access to content and require the court to consider the effect on
legitimate uses or users of the online location and the importance of freedom of
expression; and they
must require the service provider and operators of the location in question to be given
notice of an application for an injunction.
They may also provide that a court should not make a cost order against a service provider.
Section 18 specifies that any such regulations would be subject to the “super-affirmative procedure”. This means that the Secretary of State must have regard to representations, House of Commons and House of Lords resolutions, and Committee recommendations that are made within 60 days of laying, before deciding whether to proceed with the order and (if so) whether to do so as presented or in an amended form. An order dealt with under this procedure must be expressly approved by both Houses of Parliament before it can be made.
The current Government has not brought forward any regulations on website blocking. Following concerns raised in the Your Freedom exercise in 2010, the then Culture Secretary, Jeremy Hunt, asked Ofcom to review the potential efficacy and practicability of the website-blocking provisions in the 2010 Act.142 Ofcom’s report is available online.143 The report surveyed the various techniques available for blocking access to internet sites and noted that:
None of these techniques is 100% effective; each carries different costs and has a
different impact on network performance and the risk of over-blocking.
141 See HC Library Standard Note 5515, Digital Economy Act 2010: copyright, June 2013; and, for the earlier
history, HC Library Standard Note 5439, Digital Economy Bill: amendments, April 2010 142 DCMS news, Ofcom to review sections of Digital Economy Act, 8 February 2011 143 Ofcom, “Site blocking” to reduce online copyright infringement: a review of sections 17 and 18 of the Digital
Economy Act, 27 May 2010
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All techniques can be circumvented to some degree by users and site owners who are
willing to make the additional effort.
The location of infringing sites can be changed relatively easily in response to site
blocking measures, therefore site blocking can only make a contribution if the process
is predictable, low cost and fast to implement.
To be successful, any process also needs to acknowledge and seek to address
concerns from citizens and legitimate users, for example that site blocking could
ultimately have an adverse impact on privacy and freedom of expression.
Ofcom acknowledged that site-blocking could contribute to an overall reduction in copyright infringement but concluded that sections 17 and 18 of the 2010 Act would not be effective for generating lists of sites to be blocked:
We do not think that sections 17 and 18 of the Act would meet the requirements of the
copyright owners, as set out above. Specifically, we do not think that using the DEA
would sufficiently speed up the process of securing a blocking injunction, when
compared to using section 97A of the Copyright Designs and Patents Act, which
already provides a route to securing blocking injunctions. As a consequence we are
sceptical as to whether copyright owners would make sufficient use of any new
process.144
Responding to the Ofcom report, the Government stated that:
We will not bring forward site blocking regulations under the DEA at this time. We will
do more work on what other measures can be pursued to tackle online copyright
infringement.145
Since the passage of the 2010 Act, copyright holders have found that pre-existing laws enable them to take blocking action against piracy sites: in particular, by using section 97A of the Copyright, Designs and Patents Act 1988. This enables the High Court to grant an injunction preventing internet service providers (ISPs) from providing access to particular websites where the ISP has “actual knowledge” that the service is being used to infringe copyright.146 Several cases have already been brought successfully under this provision. A court ruling in 2012 forced ISPs to block access to The Pirate Bay.147 The Pirate Bay case followed a similar case in February 2011 where BT was ordered to block the file-sharing site Newzbin2.148 Another High Court ruling in 2013 ordered the UK’s six biggest internet service providers to prevent their customers from visiting Kickass Torrents, H33T and Fenopy.149
Speaking to the BBC in August 2011, the Business Secretary, Vince Cable, confirmed that cases such as that of Newzbin2 had opened up other legal avenues, making it unnecessary to implement the site-blocking measures under the 2010 Act:
"We've discovered that the drafting of the original laws, which took place a year or so
ago, were [sic] not tight.
144 Ibid, p6 145 DCMS, Next steps for implementation of the Digital Economy Act, August 2011, p3 146 This section was added to the 1988 Act by the Copyright and Related Rights Regulations 2003 (SI 2003/2498) 147 “The Pirate Bay must be blocked by UK ISPs, court rules”, BBC News, 30 April 2012 148 “BT ordered to block Newzbin2 filesharing site within 14 days”, Guardian, 26 October 2011 149 “Court orders access ban on music and film piracy sites”, Financial Times, 1 March 2013
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"There are test cases being fought in the courts, so we're looking at other ways of
achieving the same objective, the blocking objective to protect intellectual property in
those cases, but in a way that's legally sound."150
The Bill
Clause 27 of the present Bill would repeal sections 17 and 18 of the Digital Economy Act 2010. This is consistent with the Government’s statement in August 2011 (see above) that they do not intend to bring forward site-blocking regulations under the 2010 Act.
Comment
Identical wording was contained in the corresponding clause (26) of the draft Bill. The Joint Committee which scrutinised the draft Bill did not make any comment on this clause. However, the House of Lords Communications Committee, invited by the Joint Committee to comment, noted the Government’s undertaking in 2011 to do “more work on what measures can be pursued to tackle online copyright infringement”. The Communications Committee elaborated:
Whilst we make no comment on the merits of sections 17 and 18 of the Digital
Economy Act 2010, we are not aware of any further work which the Government has
done to identify other measures which could be pursued to tackle online copyright
infringement. It seems to us that there might be merit in the Joint Committee on the
draft bill firstly ascertaining what further research the Government has carried out on
this issue and second exploring with witnesses the merits or otherwise of dropping
sections 17 and 18 of the Digital Economy Act 2010.151
Clause 27 would apply to the whole of the United Kingdom.
9 The environment
9.1 Reduction of duties relating to energy and climate change (clause 28)
Clause 28 would remove the requirement for local authorities to have regard to energy measures, report and targets published by the Secretary of State under the Climate Change and Sustainable Energy Act 2006. The Government states in the Explanatory Notes that the last report was published in 2007 and it does not intend to publish any further reports. The Government considers existing informal arrangements and section 19(1A) of the Planning and Compulsory Purchase Act 2004 are sufficient to “enable the relevant objectives to be pursued in other ways”. Section 19(1A) states that “in preparing a local development document the local planning authority must have regard to national policies and advice contained in guidance issued by the Secretary of State”.152
This clause would also repeal the sections of the 2006 Act which require the Secretary of State to set targets for microgeneration, exercise functions to increase the sale of electricity from microgeneration and facilitate the installation of microgeneration in dwellings. It also removes the requirements on the Sectary of State to promote renewable heat. The Government’s view is that these have now been superseded by financial incentives such as Feed-in Tariffs and the Renewables Heat Incentives.153 The Government also published a Microgeneration Strategy in 2011 which set out “actions to address the non-financial barriers to realising the deployment of microgeneration technologies”.
150 “Government drops website blocking”, BBC News, 3 August 2011 151 Letter from the Communications Committee (HL), dated 22 October 2013, in Joint Committee on the Draft
Deregulation Bill, Report, HL 101/HC 925 2013-14, 11 December 2013, p102 152 Planning and Compulsory Purchase Act 2004 153 Deregulation Bill, Explanatory Notes
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The clause would also repeal section 14 in England only, which requires the Secretary of State to lay down reports – from time to time - on steps taken to ensure compliance with building regulations’ energy requirements.
The territorial extent of 2006 Act varied according to each section, and the repeal has the same extent as the original provisions.
Comment
This proposal was criticised by witnesses to the Joint Committee, such as the UK Environmental Law Association. It thought there “may be value in preserving this requirement as a target for microgeneration helps reinforce the aims of incentive schemes like FITs and RHI”.154 Friends of the Earth interpreted it as a “perception that essentially microgeneration is being downgraded”155 particular in the context of the review of the Sustainable Home Code being undertaken by DCLG.
9.2 Household waste: decriminalisation (clause 29; Schedules 10 and 11)
Background
The Environmental Protection Act 1990 sets out duties and powers of local authorities in relation to the collection of household waste. Section 46 of the 1990 Act allows ‘waste collection authorities’ (WCAs) to specify the kinds and numbers of receptacles to be used by householders, the place where such receptacles must be left (such as at the kerbside) and what waste may be put in them. A person who fails, without reasonable excuse, to comply with any requirements imposed under these provisions can be liable on summary conviction to a fine not exceeding level 3 on the standard scale (currently £1,000). Authorities can also currently issue civil penalties (fines) as an alternative to prosecution.
In its Waste Policy Review, published on 14 June 2011, Defra stated that it intended to “remove the prospect of criminal sanctions ... [and] replace these with civil sanctions”. It would “ensure that level of fines are appropriate, and are in line with penalties for similar offences.”156 Between January and March 2012, Defra ran a detailed consultation on the options for reform, and reiterated its intention to introduce what it described as a “fairer system of penalties that respects individuals’ civil liberties while dealing effectively with behaviours that have a negative impact on residents’ local neighbourhoods.”157
It outlined the case for change:
Under Section 46 of the Environmental Protection Act 1990, Local Authorities may
instruct householders how to present their rubbish for collection. Where these
instructions are not followed, Local Authorities may prosecute and apply a fine of up to
£1000. As an alternative, they may apply a fixed monetary penalty of £75 to £110.
While we understand that few local authorities use their current powers to bring a
criminal prosecution, we do know that many write to householders pointing out that
they face criminal conviction and a fine of £1,000 if they fail to comply.
The Government believes that this is inappropriate, particularly as there is no
differentiation made between genuine mistakes and those who persistently cause
problems for their neighbours. They would like to see local authority powers in this
154 Joint Select Committee, Draft Deregulation Bill, Oral and written evidence, Vol 2 155 Ibid 156 Defra, Waste Policy Review, June 2011, pp44 157 Defra, Consultation on amending the powers of Local Authorities regarding presentation of household waste
for collection, January 2012, pp4
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area to be made more proportionate, and better targeted, with fixed penalties no higher
than those for shoplifting or parking offences...
“Harm to local amenity” will be introduced as a test before a civil penalty can be
imposed. This test fundamentally changes the basis under which local authorities can
issue fixed penalties. The test aims to ensure that penalties are targeted at those who
behave in a way which reduces the quality of their neighbours’ surroundings. In other
words, penalties might be appropriate when bin bags are left on the street for days on
end, for example, but not when someone does not close their bin lid properly, leaves it
out for an hour too long, or mistakenly puts something in the wrong bin.158
From 30 May 2012 the following interim changes to current civil sanctions were made:
The level of fixed penalties applying in relation to section 46 Environmental Protection
Act 1990 (EPA) has been reduced from £75 – £110 to £60 – £80;
The amount paid after early payment discounts has been reduced from £60 to £40;
The default amount (if the local authority does not specify the amount of the penalty)
has been reduced from £100 to £60.
In June 2012, a summary of responses to the Defra consultation was published.159 This confirmed that the Government intended to amend section 46 of the 1990 Act, thereby abolishing the criminal offence under that section. These measures, and others to formalise a new fixed penalty scheme, were included as clause 29 in the Draft Deregulation Bill.
On the Draft Bill’s publication, Secretary of State for Communities and Local Government, Eric Pickles, commented:
For too long barmy bin rules have allowed local authorities to slap fines on law-abiding
people who make innocent mistakes.
Putting out your rubbish should be a simple process and it is ludicrous that we have a
system where a milk carton in the wrong bin, or a wheelie bin a few inches out of place
can lead to people facing bigger fines than shoplifters.
We’re bringing common sense back and reining in the town hall bin bullies.160
The Bill
Clause 29(2) of the Bill would remove, in England, the criminal offence which currently applies under section 46 of the 1990 Act. It would remain in relation to Wales and Scotland.
Clause 29(3) would insert new sections 46A – D into the Environmental Protection Act 1990. It would introduce, in England, a new scheme of fixed penalties which could be applied to occupiers who do not present their household waste for collection in the way specified by the WCA.
The proposed new sections 46A – D, which would be inserted by clause 29(3), are complex, making detailed provision about the operation of the penalty scheme. They provide that a fine can only be issued when the failure to comply “has caused, or is or was likely to cause, a nuisance, or ... has been, or is or was likely to be, detrimental to any amenities of the 158 Ibid 159 Defra, Summary of responses to the consultation on amending the powers of local authorities regarding
presentation of household waste for collection, July 2012 160 DCLG/ Cabinet Office press release, Eric Pickles hails end of heavy handed bin fines, 1 July 2013.
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locality”.161 The new sections would prescribe the written warnings and notices of intent that must be given; what must be included in any warning or notice of intent; rights of appeal; the timeframes for payment, and the conditions in which repeat fines may be issued. They would also make limited provisions about the level of the fine. WCAs would be able to set the level of the fine, provided this fell between minimum and maximum amounts made in any regulation by the Secretary of State. A default fine level of £60 would apply where a WCA has not specified a penalty amount; the Secretary of State would be able vary the default penalty amount via regulations.
Clause 29(5) would make a consequential amendment to section 73A(2) of the 1990 Act, to determine how WCAs could use receipts from any fines.
Under the London Local Authorities Act 2007, London borough councils are currently able to make regulations about the presentation of waste for collection in a similar way to councils in the rest of England. However, failure to comply is not a criminal offence although penalty charges may be issued. Schedule 10 to the Bill would make amendments to the London Local Authorities Act 2007 which would correspond to those made by clause 29(3) in respect of other local authorities in England.
A fuller account of the effects of clause 29 can be found in the Explanatory Notes to the Bill.162
Part 3 of Schedule 11 would omit sections 205-208 of the Local Government and Public Involvement in Health Act 2007. This would remove the power to establish joint waste authorities in England, none of which have been established under the 2007 Act. The Explanatory Notes indicate that the practical effect of the repeal is limited to England only.163
Comment
The measures in the draft Bill to remove the criminal sanction and introduce a new fixed penalty scheme received a mixed response. In evidence to the Joint Committee, the organisation Big Brother Watch welcomed the move. They believed:
[T]he creation of a two tier process, a written warning followed by a letter of intent, will
ultimately reduce the administrative burden on councils and will provide a proportionate
response to individuals, removing a dangerous incentive towards increased
surveillance and monitoring.164
The UK Environmental Law Association (UKELA) told the Committee that it welcomed the proposals to decriminalise household waste offences and said this appeared to be “consistent with the Hampton and Macrory principles in terms of reducing regulatory burdens and maintaining or improving regulatory outcomes.”165
The Local Government Association (LGA), however, appeared to disagree and implied that the reforms were not necessary because existing powers were generally used proportionately in any case; changes could make it harder to enforce rules about, for example, recycling:
161 Clause 29(3) 162 Deregulation Bill, Explanatory Notes, pp24-26. 163 Ibid, pp92 164 Big Brother Watch, Written evidence to the House of Lords/ House of Commons Joint Committee on the Draft
Deregulation Bill, published in Evidence Volume 1, 19 December 2013, pp 104 165 UKELA, Written Evidence to the House of Lords/ House of Commons Joint Committee on the Draft
Deregulation Bill, published in Evidence Volume 2, 19 December 2013, Pp 1250.
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The current system functions well and existing powers are used only in extreme
circumstances. Their predominant value is as a deterrent. There is no evidence that
these powers are being used disproportionately and the LGA does not therefore see
an evidence-based reason to change the system.
Removing the ultimate sanction of criminal prosecution will make enforcement more
difficult for councils and undermine the effectiveness of the deterrent, as well as a
council’s ability to tackle persistent misuse ...
The changes will also mean councils no longer have any enforcement powers in
circumstances where residents persistently fail to comply with arrangements for
separation of waste for recycling.166
The Chartered Institution of Wastes Management (CIWM) has also stressed that, in its view, “evidence strongly suggests that most councils have used fines as a very last resort, if at all”.167
One issue that has been repeatedly raised is whether the new regime would provide sufficient powers to deal with serious persistent offenders. Essex County Council (ECC), for example, told the Joint Committee that “[t]he key concern is whether removing the underpinning criminal offence and replacement with a civil offence will leave council without an appropriate recourse in cases of severe and repeated abuse.”168 ECC also stressed the importance of clarity as to what constitutes ‘nuisance’ for the issuing fixed penalties and that “further guidance should be provided to ensure the Act is consistently applied”.169
UKELA raised the issue of what would happen to receipts from fines. It suggested to the Joint Committee that the Government should monitor the scheme to ensure that it “is not used as a revenue-raising mechanism by local authorities, in a similar way to what has happened following the de-criminalisation of parking offences under the Road Traffic Act 1991.”170
9.3 Other measures (clause 30 and Schedule 11)
Clause 30 would bring into force Schedule 11 of the Bill.
Part 1 of the Schedule, which would apply in England and Wales, would amend the Destructive Imported Animals Act 1932. The Act originally applied to musk rats but includes powers to extend it to other animals. For example, it now also covers grey squirrels. The amendments would remove the presumption that the aim is to destroy animals that are covered by the Act, and instead allows the Secretary of State to keep the matter under review. The requirement for landowners to report grey squirrels on their land, under the Grey Squirrels (Prohibition of Importation and Keeping) Order 1937 is would also be removed as it is not complied with or enforced. This extends to England and Wales.
Part 2 of the Schedule would transfer to Defra the powers of the Council for Small Industries in Rural Areas (CoSIRA), which no longer exists, to appoint lay members of the Farriers Registration Council. This would extends to England and Wales and Scotland.
166 LGA, Written Evidence to the House of Lords/ House of Commons Joint Committee on the Draft Deregulation
Bill, published in Evidence Volume 2, 19 December 2013, pp 835 167 “New bill rules out ‘heavy handed bin fines’”, Resource [Online}, 3 July 2013. Accessed 27 January 2014. 168 Essex County Council, Written evidence to the House of Lords/ House of Commons Joint Committee on the
Draft Deregulation Bill, published in Evidence Volume 1, 19 December 2013, Pp 487. 169 Ibid. 170 UKELA, Written Evidence to the Joint Committee on the Draft Deregulation Bill, published in Evidence Volume
2, 19 December 2013, pp1250
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Part 3 of the Schedule would repeal Part 11 of the Local Government and Public Involvement in Health Act 2007. Part 11 provided powers for the Secretary of State to create Joint Waste Authorities at the request of the relevant local authorities. The powers have never been used, and according to the Government the option exists for local authorities to make the arrangements without the need for regulation. This would extends to England and Wales
Part 4 of the Schedule would repeal the requirement, in the Environment Act 1995, for a Further Assessment of air quality to be carried out by local authorities for areas that are not meeting air quality standards and are subsequently designated Air Quality Management Areas. The concern is that this unnecessarily delays the implementation of measures to improve air quality. The Government carried out a Local Air Quality Management Review in July 2013. This stated that “Defra research and feedback from local authorities makes clear that very few authorities see the Further Assessment as helpful for preparing plans to improve air quality” and included the removal of the requirement to carry out further assessments in all options proposed.171 Evidence to the Joint Committee made a similar point:
There is already a provision in there for us to do assessments and for us to be mindful
of the impact of air quality on our residents in a number of other areas, including
additional ones coming in as our role in public health has changed. The relaxation of
having to do further assessments when that information is already held within the
council is a reduction in the burden. That is what we are looking forward to.172
The Impact Assessment estimated this measure would result in an annual saving to Local Authorities from no longer carrying out further assessments of £1.8m. This is based on the assumption of around 50 further assessments being carried out a year at a cost of £5,500 per assessment. This extends to England and Wales.173
Part 5 of the Schedule would remove the power of local authorities to designate areas as noise abatement zones (NAZ) by amending Part 3 of the Control of Pollution Act 1974. Defra consulted on noise abatement zones in December 2012. The reason for the review was the limited use of NAZs:
Desk-based analysis in 2011 and recent informal contact with local authorities
suggests that a total of 86 NAZs have been established since the legislation was
introduced nearly 40 years ago, of which only 2 remain in active use. Our initial
analysis also suggested that only 5 NAZs have been revoked and the residual 79
NAZs (76 in England and 3 in Wales) remain in existence but it appears enforcement
powers are not being used (for brevity, these are described in this document as
‘inactive’ NAZs).
The feedback also indicated that ‘inactive’ NAZs are not a significant ongoing burden
for local authorities. However, they are flagged in property transaction searches,
thereby potentially triggering queries to the local authority.
171 Defra, Review of Local Air Quality Management in England, July 2013 172 Q232 , Robert Overall, Deputy Chief Executive and Executive Director for Place Commissioning, Essex
County Council, Draft Deregulation Bill, Oral and Written Evidence Volume 2 173 Defra, Review of Local Air Quality Management in England, Impact Assessment, July 2013
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NAZs may be revoked under sections 63 of the Control of Pollution Act 1974 but no
provision is made for ‘inactive’ NAZs. Local authorities delay formally revoking
‘inactive’ NAZs by the costs and personnel resource it would absorb.174
The Impact Assessment published at the same time concluded that repeal could save local authorities approximately £0.3m by avoiding the need to individually revoke inactive NAZs.175 The consultation received six responses, all of which supported the abolition of NAZ’s.176 This provision would apply to England and Wales only.
10 Child Trust Funds
Child trust funds: transfers (clause 33)
Background
The Bill includes several clauses to do with aspects of the Child Trust Fund (CTF) regime. Of these, the one that has had the greatest public interest is clause 33 which provides for new opportunities to transfer existing CTF accounts to other tax advantaged accounts – especially the new Junior ISAs.
Child Trust Funds: Junior ISA transfers.
CTFs were created by the Child Trust Fund Act 2004 in the form of a financial endowment
from government payable to every child at birth. The invested endowment, plus later
government ‘top-ups’ and additional contributions from parents and relatives would build up
into a sum which the child could use at 18. The idea was first announced in April 2001 and
formally launched in the 2003 Budget.
As part of its deficit reduction plans, in 2010, the Coalition Government announced that it
would end CTF payments.177 The Government announced that:
from August 2010 government payments at birth would be reduced and payments at age seven would stop, and
from January 2011, all payments would stop.
Abolition was effected by both secondary legislation (the Child Trust Funds (Amendment No
3) Regulations 2010178 and primary legislation in the Savings Accounts and Health in
Pregnancy Grant Act 2010. The Act removed eligibility to a CTF from children born after 2
January 2011 and from certain children who would otherwise become eligible on or after that
date.
During the Commons Second Reading debate on the Savings Accounts and Health in
Pregnancy Bill the then Minister, Mark Hoban, indicated that a new account, the Junior ISA
(JISA) would be brought forward to provide a tax free savings vehicle for children who might
otherwise have had a CTF.179
174 Defra, Consultation on Repeal of sections 63 to 67 of the Control of Pollution Act 1974: Abolishing Noise
Abatement Zones, December 2012 175 Defra, Consultation on Repeal of sections 63 to 67 of the Control of Pollution Act 1974: Abolishing Noise
Abatement Zones, Impact Assessment, December 2012 176 Defra, Consultation on Repeal of sections 63 to 67 of the Control of Pollution Act 1974: Abolishing Noise
Abatement Zones, Consultation Responses, December 2012 177 HM Treasury press release 24 May 2010 178 SI 2010/1894 179 HC Deb 26 October 2010, c212
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Provisions for JISAs were included as section 40 of Finance Act 2011. Quite soon after this,
questions were asked about whether an existing CTF could be transferred into one of the
new JISAs. There was a perception that somehow the CTFs would ‘wither’, financial
providers would not put any effort into providing good services to them (particularly the non-
stakeholder (share based) CTFs. Subsequently, as more JISAs became available, parents
and other adult contributors noted that interest rates on ‘captive’ CTFs were generally lower
than those offered on the new JISAs.
What compounded the unease for people who had made voluntary additional contributions to
a CTF, was that because, under the CTF rules money was (with some exceptions) locked in
to the account until the child was 18, their money was basically trapped long term, in a poorly
performing financial product. Further, once a child qualified for a CTF, even if an account
had not been opened yet, it could not also have a JISA. Hence the frequent calls for the CTF
funds to be capable of being transferred into the new JISAs.
There followed a long period during which the Government indicated that it was considering
the possibility of CTF/JISA transferability.180
The 2013 Budget Red Book said “The Government will consult on options for transferring
savings held in Child Trust Funds into Junior ISAs”. It indicated that such a measure might
be included in the 2014 Finance Bill.181 The consultation was published in May 2013. It
noted in its introduction:
the Government is aware that some parents and guardians of CTF holders would like
the opportunity to open a Junior ISA for their child, and to transfer funds held in their
child’s CTF to that account. The Government believes such transfers should be
possible if CTF account holders would be better served in the Junior ISA market.
However, given the relatively short period in which Junior ISAs have been in existence,
and the long-term nature of the saving that it promotes, it is not possible at this time to
make detailed comparisons between the performance of CTF and Junior ISA
investments over the long term. This is particularly the case for non-cash accounts,
which form a significant majority of both markets.
A further difference between the CTF and Junior ISA concerns the treatment of funds
on account maturity. Funds held in a Junior ISA can be automatically rolled into an
‘adult ISA’ on maturity, outside the normal ISA subscription limits. While this is not
currently the case for CTFs, the Government intends to legislate, in good time before
the first accounts mature, to provide that funds held in a CTF on maturity can remain
tax advantaged after maturity, and may be rolled into an ISA outside the normal
subscription limits – as is the case for Junior ISA funds.
The Government acknowledges that any changes to the current rules on transferability
of funds from CTF to Junior ISA must take into account the impact upon all CTF
holders, and any potential impact upon the viability of the wider CTF market. In
particular, the Government wishes to consider any potential impact upon the
availability of suitable CTF accounts for children at all household income levels,
including those children whose parents are not in a position to make regular
180 HC Deb 24 October 2011 18W 181 HM Treasury, Budget 2013, p75
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contributions to their child’s account, consistent with its objectives to promote savings
through attractive, accessible savings products.182
The consultation paper also included the following:
The Government acknowledges that in the interest of fairness, children with CTFs
should not be prohibited from holding a Junior ISA if this account would better suit their
long-term interests than a CTF. However, it recognises that there are a range of factors
to be considered before making any changes to the current rules, including any impact
on the viability of the CTF market as a whole, and the interest of the wider CTF holding
population.183
The response to the consultation was published in December 2013.184 It decided that:
On balance, the Government believes that on the principle of fairness, the proposal
laid out in the consultation document should be implemented. Therefore, the transfer of
savings from a CTF to a Junior ISA should be permitted at the request of the registered
contact for the CTF. Given the uncertainty about the impact that this change will have
on the wider CTF market, the Government also believes, as outlined in the consultation
document, that when taking legislative powers to allow voluntary transfers, it should
also provide scope for further intervention in the CTF market in case this is required at
a later date.
The Government therefore intends to take this forward at the earliest opportunity
subject to finding a suitable legislative vehicle. The timetable for implementation of the
change will be determined by the legislative process and it is difficult at present to
estimate when this legislation will come into effect. However we hope that the first
transfers will be possible by April 2015.185
The Bill
Clause 33 of the Bill is the key provision dealing with CTF to JISA transferability, it would amend the 2004 Act:
(2) After section 7 insert—
“7A 35Transfers to other accounts for children (1) Regulations may make provision
requiring an account provider, at the request of a person who has the authority to
manage a child trust fund, to—
(a) transfer all the investments under the fund, or an amount representing their value in
cash, to a protected child account that is provided by a person chosen by the person
making the request, and
(b) when all the investments have been transferred, close the child trust fund.
(2) An account is a protected child account if—
(a) there is relief from income tax and capital gains tax in respect of investments under
it,
(b) it may be held only by a child, and
182 HM Treasury, Child Trust Fund: consultation on allowing the transfer of savings from a Child Trust Fund to a
Junior ISA, May 2013, p7, paras 2.3-2.7 183 Ibid, p4, para 1.11 184 HM Treasury, Child Trust Fund: Response to consultation, December 2013 185 Ibid, pp4-5, paras 1.17-1.18
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(c) it satisfies any other conditions prescribed in regulations under this section.”
The other issue addressed by the clause is the destination of funds at maturity. The Explanatory Notes state:
The government also considers that individuals with a maturing CTF account should be
able to transfer their CTF funds into an ISA if they choose to do so, without this
counting against the ISA subscription limit for the relevant year. The clause will allow
for regulations to be made enabling investments held in a CTF to be transferred to
another tax advantaged account on maturity of the CTF, once the account holder
reaches 18 years old. The government intends to amend, separately, the ISA rules to
make it possible for funds transferred in this way to be paid into an ISA outside the
normal annual subscription limits.
Subsection (2) inserts a new section 7A into the CTFA concerning the transfer of CTF
investments to other accounts for children. It allows for regulations to be made which
would require a CTF account provider to transfer all the investments held in a CTF
account to a ‘protected child account’ held by the child (such as a Junior ISA) and to
close that account following the transfer. Any such direction would be given by the
person with authority to manage that CTF. This new section 7A of the CTFA also
contains a definition of ‘protected child account.186
10.1 Child Trust Funds: other clauses (clauses 31, 32 and 34)
Other clauses in the Bill deal with different aspects of the rules in cases where the CTF is not administered within the normal parent/child framework. Clause 31 would allow for regulations which would permit a wider range of organisations to manage accounts of ‘looked after’ children – typically those in care. The Explanatory Notes state:
This clause will make it possible for a wider range of organisations to be authorised to
manage the CTFs of certain looked after children - including, where appropriate, third
sector organisations. It is proposed that any such authorisation will be subject to
safeguards and other detail set out in regulations and formal agreements with the
appointed body. This is currently the case for Junior ISA children’s savings accounts
held by certain looked after children, which are managed on the account holder’s
behalf by a third sector organisation under a contract agreed with the Department for
Education.187
Clause 32 has a similar aim for children over the age of 16. The Explanatory Notes state:
The clause will provide for greater flexibility in the rules concerning management of
CTFs after the account holder reaches 16, and will enable the rules in this area to be
aligned with those already in place for the management of Junior ISA accounts. While
a child will be able to assume management of their CTF when they reach 16 if they
choose to do so, they may also permit a responsible person to manage the account on
their behalf.188
Clause 34 would provide new powers for the Treasury to safeguard the interests of children with CTFs given that the new option for JISAs introduces an element of uncertainty over how CTFs will develop. The Explanatory Notes outline the potential problems and safeguards:
The first CTF accounts are due to mature in 2020, and the final CTF is scheduled to
mature in 2029. The Bill contains provisions which will allow the transfer of CTF 186 Deregulation Bill Explanatory Notes, para 171-172 187 Deregulation Bill Explanatory Notes, para 151 188 Deregulation Bill Explanatory Notes, para 162
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investments to a Junior ISA in certain circumstances. In view of the uncertainty around
the potential impact of this change on the wider CTF market in the period running up to
the scheduled maturity of the final CTF in 2029, the government considers it
appropriate to seek new powers that would allow it, should the need arise, to intervene
to protect the interests of CTF account holders.
This clause inserts a new section 7C into the CTFA which will enable HM Treasury, by
regulations, to specify a number of different requirements or permissions in relation to
some or all CTF accounts, where it considers this to be appropriate or necessary to
safeguard the financial interests of account holders, for example by ensuring that they
can access suitable tax advantaged accounts. It also enables HM Treasury, by
regulations, to specify that CTFs will become protected child accounts. In the event of
that happening the providers of such CTFs will be authorised as providers of protected
child accounts.189
The measures would apply to the whole country.
11 Education and training
11.1 Abolition of the Office of the Chief Executive of Skills Funding (clause 35 and Schedule 12)
Background
The office of the Chief Executive of Skills Funding was established under provisions in the Apprenticeships, Skills, Children and Learning Act 2009 (ASCLA 2009), information on the role of the Chief Executive is given in library briefing paper RP 09/15 Apprenticeships, Skills, Children and Learning Bill: provisions for children, education and learners, 18 February 2009.
The Bill
Clause 35 would abolishes the Office of the Chief Executive of Skills Funding and transfer
certain powers and duties in respect of apprenticeship training, and further education and
training for adults, to the Secretary of State. The changes would enable the Skills Funding
Agency – the executive agency set up in April 2010 to support the Chief Executive exercise
its functions – to operate through the powers and duties of the Secretary of State, rather than
the Chief Executive. Schedule 12 would make consequential amendments to ASCLA 2009.
Schedule 12 would amend Part 4 of ASCLA 2009 in consequence of the repeal of the post of
the Chief Executive of Skills Funding by clause 35. The Schedule would have the same
territorial extent as the provisions it would amend and in the main it forms part of the law in
England and Wales only.
Comment
The Association of Colleges voiced support for this measure in its evidence to the Joint
Committee, calling it ‘a useful simplification of the current system’,190 but the Association of
Teachers and Lecturers191 in their evidence opposed the measure in the belief that the
transfer of responsibilities to the Secretary of State could undermine the independence of the
Skills Funding Agency.
189 Deregulation Bill Explanatory Notes, para 179-180 190 Association of Colleges, written evidence Joint Committee on Deregulation Bill 191 Association of Teachers and Lecturers written evidence Joint Committee on Deregulation Bill
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11.2 Further and higher education sectors: reduction of burdens (clause 36 and Schedule 13)
Background
Clause 36 would enact various provisions to reduce burdens on further education providers,
details of the provisions are set out in Schedule 13. The provisions are largely
uncontroversial, the only contentious provision being the removal of the Secretary of State’s
power relating to the qualification of teaching staff and principals in further education
institutions, which is contained in Schedule 13 Part 2 paragraph 8.
Regulation of qualification requirements for teaching staff and principals.
In 2007 the Further Education Teachers’ Qualifications (England) Regulations 2007 were
introduced as part of the Government’s strategy to professionalise the further education
workforce. These regulations required individuals to gain some type of teacher training
qualification within one year of employment in a teaching or training position in a further
education institution and a full level 5 (PGCE equivalent) teacher training qualification within
5 years. Several different teaching qualifications were available to learners at various
different levels, such as the Preparing to Teach in the Lifelong Learning Sector (PTLLS)
award and the Certificate in Teaching in the Lifelong Learning Sector (CTLLS). The
regulations proved to be controversial and the Government subsequently commissioned an
inquiry into further education teaching under the chairmanship of Lord Lingfield. The report
of the commission, Professionalism in Further Education, was published in 2012; the report
was critical of the confusing array of teaching qualifications and questioned the effectiveness
of qualification requirements in improving the standard of teaching in further education
institutions. Following the report most of the 2007 regulations were revoked. Commentators
from the further education sector192 however have said that the introduction of the 2007
Regulations led to an increase in the overall proportion of teaching staff in FE colleges
holding a recognised teaching qualification.
The Bill
Schedule 13 Part 1 paragraph 1 would remove the powers of the Secretary of State and
the Welsh Ministers with regard to setting interest rates on loans by local authorities to
certain education providers. Paragraph 2, removes provisions relating to the governance of
further education institutions which are maintained by local authorities and brings these
institutions into line with governance in other further education institutions. Paragraphs 4
would remove powers of the Secretary of State and the Welsh Ministers with regard to
transferring property; this provision and the provision in paragraph 1 have either never been
used or are considered obsolete. The provisions in Part 1 would apply in England and
Wales.
Schedule 13 paragraphs 5 and 7 relate to the governance of local authority institutions and
designated institutions conducted by companies, and brings them into line with other further
education institutions. Part 2 paragraph 6 would remove the power of the Secretary of State
unilaterally to convert sixth form college corporations into further education corporations if
this is deemed appropriate; sixth form corporations will still be able to apply to change to
further education corporations. Paragraph 8 contains provisions for the removal of the
Secretary of State’s power under clauses in the Education Act 2002 to impose qualification
requirements in respect of staff and principals at further education institutions in England.
The provisions in Part 2 would apply to England only.
192 City and Guilds written evidence to Joint Committee on Deregulation Bill
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Comment
The requirement for FE teachers to be qualified has split opinion among FE bodies. In evidence given to the Joint Committee on the Deregulation Bill the Institute for Learning193, the University and College Union194 and the Association of Teachers and Lecturers195 said that they supported retaining the requirement for qualification, but the Association of Colleges said in their evidence that ‘colleges can be trusted to appoint the right staff and
support their professional development without the need for statutory regulation’.196 City and Guilds made the following comment in their evidence:
The majority of teaching staff in FE colleges are either qualified or on the way to
becoming qualified according to the most recent data (from late 2010, but including
earlier returns for 25% of providers). The Deregulation Bill now puts responsibility on
the FE sector to consolidate and improve this momentum, so the sector will need to
define and establish clear direction on how it will sustain and enhance its
professionalism.197
The Association of Colleges has also said that it supports the repeal of the Secretary of State’s power to change a sixth form college into an FE College.198
11.3 Schools: reduction of burdens (clause 37 and Schedule 14)
Background
Term dates
The powers of maintained school governing bodies and local authorities in England and Wales to set term and holiday dates are currently laid out in section 32 of the Education Act 2002, as amended.199 In voluntary controlled, community, maintained special schools, and maintained nursery schools, term dates are set by the local authority. The school governing body is responsible for setting term dates in foundation, voluntary aided, and foundation special schools. Academies and free schools, which are types of ‘independent’ state school, set their own term dates.200
Ministers have stated that they want to increase the flexibilities that schools have when setting term dates, and have argued this could bring a number of potential benefits – such as increasing standards and helping working families. The Secretary of State for Education, Michael Gove, has been quoted in the press praising the approach of some East Asian countries where “school days are longer, holidays are shorter”. 201
The Cabinet Office estimated in its written evidence to the Joint Committee on the Draft Deregulation Bill that 70 per cent of secondary schools and 30 per cent of primary schools are currently able to set their own term dates; however, it notes that “many” schools have chosen not to make changes.202
193 Institute for Learning written evidence to Joint Committee on Deregulation Bill 194 University and College Union written evidence to Joint Committee on Deregulation Bill 195 Association of Teachers and Lecturers written evidence to Joint Committee on Deregulation Bill 196 Association of Colleges, written evidence to Joint Committee on Deregulation Bill 197 City and Guilds Draft Deregulation Bill response September 2013 198 Association of Colleges Response to the Draft Deregulation Bill September 2013 199 The Education (Wales) Bill, currently being considered by the National Assembly for Wales, would confine the
application of s32 to England. 200 See also: Department for Education, Governors’ Handbook, January 2014, pp 53 201 “Gove urges longer days and shorter holidays for pupils”, BBC News (online), 19 April 2013. Retrieved
24/1/2014. See also: “Greater flexibility on school holidays”, BBC News (online), 2 July 2013. 202 Cabinet Office Further supplementary written evidence to House of Lords/ House of Commons Joint
Committee on the Draft Deregulation Bill, Evidence Volume 1, 19 December 2013, Pp 255.
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Also of note are recent amendments to the Education (Pupil Registration) (England) Regulations 2006.203 These have tightened up the rules on when term-time ‘authorised absence’ can be granted for pupils. To summarise, head teachers are now only able to grant permission for absence in term time in ‘exceptional circumstances’ – there is no longer any reference in the Regulations to the granting of leave for a ‘family holiday’. Parents of children taking ‘unauthorised absence’ may be subject to a fine. Further details are available in Section 7 of Library note SN 5379 Constituency work: school-related matters.204
Staffing, behaviour policies, and home school-agreements
Key requirements on the recruitment and management of leadership, teaching and some other staff in maintained schools in England are laid out in the School Staffing (England) Regulations 2009, as amended, and elsewhere.205 There is DfE statutory Guidance on managing staff employment in schools, to which maintained school governing bodies, head teachers and local authorities in England must currently have regard.206 Academies and free schools are not required to have regard to the guidance.
In line with sections 88 and 89 of the Education and Inspections Act 2006, as amended, governing bodies of maintained schools and some other settings are required to make and keep under review a “written statement of general principles” on behaviour.207 The head teacher, in setting out measures in the behaviour policy, is required to have regard to the governing body’s statement.
Maintained schools, academies and some other types of state school in England and Wales are also required, under section 110 of the School Standards and Framework Act 1998 as amended, to adopt a ‘home-school agreement’ (HSA) and an associated ‘parental declaration’ which schools must take ‘reasonable steps’ to encourage parents to sign. HSAs are statements of a school’s aims and values, and expectations of parents and pupils. HSAs may cover areas such as behaviour, school ethos, and attendance.
The Bill
The school provisions in the Bill as introduced do not differ substantially from those included in the Draft Bill. The Government described the Draft Bill’s aims in this area as “freeing schools from pointless paperwork and prescriptive central government requirements”.208
Clause 37 would amend sections 19 and 102 of the Education Act 1997, to remove the power of the Secretary of State to make regulations requiring maintained school governing bodies and local authorities in England to set annual pupil performance targets. The power would remain in relation to Welsh Ministers in Wales. Regulations made under section 19 and which apply to England have already been repealed.
Clause 37 would also introduce Schedule 14, which contains measures extending to England. Para 1 of the Schedule would amend sections 88 and 89 of the Education and Inspections Act 2006 to remove the requirement on governing bodies of relevant schools in England to make and review a statement of general principles on behaviour policy. Head
203 SI 2006/1751, as amended by the Education (Pupil Registration) (England) (Amendment) Regulations 2013,
SI 2013/756. 204 House of Commons Library Standard Note, SN05396, Constituency work: school-related matters, updated 16
July 2013. S 7 revised 13 September 2013. 205 SI 2009/2680, as amended. 206 Department for Children, Schools and Families, Guidance on managing staff employment in schools, originally
published in 2009. 207 This requirement also extends to non-maintained special schools, maintained nursery schools, pupil referral
units and non-maintained special schools. 208 See: Cabinet Office press release, “Government unveils Deregulation Bill”, 1 July 2013.
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teachers would consequently no longer be required to act in accordance with such a statement. Governing bodies of relevant schools would be required to ensure the head teacher determines the behaviour policy. In Wales, the current arrangements would continue to apply. Para 2 amends sections 110 and 111 of the School Standards and Framework Act 1998 so that school governing bodies in England would no longer be required to produce ‘home school agreements’ (HSAs). Again, the requirements would remain for Wales.
Para 3 would amend section 32 of the Education Act to give responsibility for determining term dates at community, voluntary controlled, community special schools and maintained nursery schools in England to school governing bodies. These schools currently have their term dates set by the local authority.209
Paras 4 and 5 would remove provisions in the Education Act 2002 so that governing bodies and heads of maintained schools in England are no longer required to have regard to statutory guidance on certain staffing matters. The current position would remain in Wales. Para 6 of Schedule 14 would amend current provisions requiring the publication or supply, by schools and local authorities in England, of various types of report to parents and other interested parties. These reports include inspection reports and reports on school complaints.
Comment
There has been limited commentary on the schools provisions in the Bill as introduced. Commentary on the Draft Bill focused largely on the term-setting proposals and staffing matters. The Joint Committee reported that the proposals on home school agreements garnered support.210 Opinions were more mixed on the Bill’s other schools provisions – with some commentators questioning whether aspects the reforms were necessary or indeed likely to have the intended deregulatory and ‘burden-lifting’ effect.
The proposals in relation to setting term-times seem to have perhaps attracted the most public interest. The Association for School and College Leaders (ASCL) thought the issue of term dates was a “difficult one”. It broadly supported the extension of freedoms already enjoyed by academies to more maintained schools. However, it felt it would be best for LAs to retain an ‘advisory’ role in setting term dates.211
Others – for example, the charity 4Children – highlighted the potential for childcare problems, particularly where families had children at more than one school and if those schools chose to set different holiday dates from one another.212 The National Governor’s Association argued that the effect would be to shift the organisational ‘burden’ of co-ordinating term dates onto school governing bodies. There could also, they argued, be problems for parents around arranging family holidays – particularly in light of the tightening-up of the rules on ‘authorised absence’ from schools.213
The Cabinet Office, in evidence to the Joint Committee, argued that the staffing provisions were justified and brought maintained schools more into line with academies:
209 The position in relation to Wales is complicated by the passage of the Education (Wales) Bill currently going
through the NAW. The Explanatory Notes to the Deregulation Bill state that Para 3 will affect England only. 210 House of Lords/ House of Commons Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill,
Report, 2013-14, Pp 95 211 ASCL, Written evidence to the House of Lords/ House of Commons Joint Committee on the Draft Deregulation
Bill, Evidence Volume 2, 19 December 2013, pp 67. 212 4Children, Written evidence to the House of Lords/ House of Commons Joint Committee on the Draft
Deregulation Bill, Evidence Volume 1, 19 December 2013, Pp 6. See also: “Parents fear childcare chaos if schools set term dates”, BBC News (Online), 20 August 2013. Retrieved 24 January 2014.
213 National Governors’ Association, Written evidence to the Joint Committee on the Draft Deregulation Bill, Evidence Volume 2, 19 December 2013, Pp 906-7
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A key element of the Government’s education policy is to review and remove
unnecessary bureaucracy in schools and in doing so to promote increased autonomy.
As academies and free schools are not required to ‘have regard to’ statutory guidance
on staffing matters, this repeal provides maintained schools with similar freedoms in
respect of staffing matters.214
It also described the existing statutory staffing guidance as “superfluous”.215
However, the National Association of Schoolmasters Union of Women Teachers (NASUWT) disagreed, casting doubt on whether measure would in fact lift any burdens, and suggesting that, in the absence of statutory guidance, schools would have to spend time and money seeking out other specialist guidance.216
Some concern was also express about the proposals relating to behaviour. The National Governors’ Association questioned the sense in transferring responsibility for the formulation of the policy to school heads, saying it was “not convinced that adequate thought has gone into the removal of all governing body responsibility for behaviour policy. As drafted the [draft] Bill removes all responsibility for behaviour from the governing body. We strongly believe that this responsibility should continue to sit with governing bodies.”217 The Joint Committee report on the Draft Bill includes a selection of commentary from organisations on the schools provisions at pages 66-67. The Committee observed that “neither the staffing matters nor the behaviour policy proposals received support in the evidence [they] ... received.”218 More generally, it also queried whether the provisions on schools were in fact deregulatory and ‘burden-lifting’, or, as some commentators have argued, merely ‘burden shifting’.219
12 Alcohol and entertainment licensing
12.1 Legislative framework: the Licensing Act 2003
Under the Licensing Act 2003, there are four 'licensable activities':
the sale of alcohol
the supply of alcohol
the provision of regulated entertainment
the provision of late-night refreshment220
Licensing authorities are responsible for issuing and enforcing licences, and must do so to promote the four statutory licensing objectives:
preventing crime and disorder
214 Cabinet Office, Written evidence to the House of Lords/ House of Commons Joint Committee on the Draft
Deregulation Bill, Evidence Volume 1, 19 December 2013, Pp 259 215 Ibid. 216 NASUWT, oral evidence to the Joint Committee on the Draft Deregulation Bill, Evidence Volume 2, 19
December 2013 Pp 923-924 217 National Governors’ Association, Written evidence to the Joint Committee on the Draft Deregulation Bill,
Evidence Volume 2, 19 December 2013, Pp 905 218 House of Lords/ House of Commons Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill,
Report, 2013-14, Pp 95 219 Ibid., Pp 56 220 Licensing Act 2003 s1
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preventing public nuisance
public safety
preventing children from harm221
The 2003 Act extends to England and Wales only. The key document on which local authorities rely, in their role as licensing authorities, is Guidance issued under section 182 of the Licensing Act 2003.222
12.2 Temporary event notices: increase in maximum number of events (clause 38)
Background
A temporary event notice (TEN) is a form sent to the licensing authority, police and environmental health officer, where the organiser of an event wishes to serve or sell alcohol, provide late-night refreshment, or put on regulated entertainment. The event must be for less than 500 people and last no more than 168 hours (indoors or outdoors). Any individual premises can be used for 12 temporary events per year, up to a total maximum of 21 days. Once the TEN has been received, the police or environmental health officers have three working days to make any objections to it; these must be based on the four licensing objectives (set out above). If objections are raised, the council will organise a hearing to consider the evidence and decide whether the event can go ahead.223
The Government’s November 2012 alcohol strategy consultation included a number of suggestions for 'freeing up responsible businesses'.224 One of these was a proposal to increase the number of TENs from the current limit of 12 per year to either 15 or 18.225
The responses to the consultation, a final impact assessment (IA) on TENs and the Government's ‘next steps’ were published in July 2013. The IA stated that 52% of respondents were against increasing the number of TENs, with 40% in favour. Of those who responded to the question of what any new limit should be, 66% favoured 18, with 14% favouring a limit of 15.226 A particular concern, raised by local residents, was that an increase in temporary events could lead to more noise and public nuisance.227 Despite this, the Government's response said that the annual limit for TENs would be raised to 15.228 The Government believes that any risks to local communities from increased noise and disruption can be dealt with through existing safeguards in the licensing regime for TENs229 while an increase in TENs would benefit local businesses as they would be able to extend their licensed activities on a more regular basis than at present.230
221 Licensing Act 2003 s4 222 Home Office, Amended guidance issued under section 182 of the Licensing Act 2003, June 2013 223 Further detail on TENs is available in chapter 7 of the Home Office guidance, June 2013 224 Home Office, A consultation on delivering the Government's policies to cut alcohol fuelled crime and anti-
social behaviour, November 2012 225 Ibid, p37 226 Home Office, Temporary Event Notices (TENs): reducing the burdens of the Licensing Act 2003 – final impact
assessment, May 2013, p7 227 Ibid, p8 228 Home Office, Next steps following the consultation on delivering the Government’s alcohol strategy, July 2013,
p17 229 Ibid, p17 230 Home Office, Temporary Event Notices (TENs): reducing the burdens of the Licensing Act 2003 – final impact
assessment, p8
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The Bill
Clause 38 of the Bill would amend section 107 of the 2003 Act and increase the maximum number of TENs per year to 15. This would take effect from 2016.
12.3 Personal licences: no requirement to renew (clause 39)
Background
All alcohol sales have to be made or authorised by a personal licence holder.231 This is to ensure that anyone running or managing a business that sells alcohol does so in a professional manner:
personal licences may be denied to, or forfeited from, those who have criminal
convictions for certain offences set out in schedule 4 of the 2003 Act; and
applicants for personal licences must be trained through a course accredited by the
Secretary of State
Personal licence holders may act as the designated premises supervisor (DPS) for any business selling or supplying alcohol. The DPS has day-to-day responsibility for running the business, must be named in the operating schedule that is completed when applying for a premises licence, and acts as the main contact for the licensing authority and the police. All personal licences have to be renewed after ten years. The original intention behind this requirement was to provide a mechanism for identifying licence holders who had got criminal convictions for offences which could result in their licence being revoked but who had not declared them.
The November 2012 alcohol strategy consultation sought views on whether the requirement to renew a personal licence should be "removed or simplified to reduce the burden on responsible businesses".232 The document noted that licence holders would still be required to ensure their personal details were up-to-date and to declare any relevant criminal convictions; that there were existing criminal offences for failing to make these declarations; and that the police have powers to check personal licences.233 An impact assessment gave an estimated saving to licence holders of not having to renew their licences of between £30.8m and £34.7m from 2015 to 2025 as well as licensing authorities not having to process routine renewals (over 200,000 in 2015).234 The main risk identified was the possible undermining of the 'public protection' licensing objective if unscrupulous licence holders continued to operate when they should have declared criminal convictions to the licensing authority.235
The summary of responses to the consultation noted that 55% of respondents opposed removing or simplifying the system for renewing personal licences with 37% in favour.236 However the Government argued that the requirement to renew was not 'effective and
231 The system for personal licences is set out in part 6 of the Licensing Act 2003 232 Home Office, A consultation on delivering the Government's policies to cut alcohol fuelled crime and anti-
social behaviour, November 2012, p40 233 Ibid, p40 234 Home Office, Consultation on simplifying the duties of personal licence holders under the Licensing Act 2003
to renew their licences – impact assessment, July 2012, p2 235 Ibid, p2 236 Home Office, Analysis of responses to the consultation on delivering the Government’s policies to cut alcohol
fuelled crime and anti-social behaviour, July 2013, p41
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proportionate' given 'the other safeguards within the premises licences regime'. The requirement to renew personal licences would therefore be abolished.237
A separate consultation on whether personal licences should be abolished closed in November 2013.238
The Bill
Clause 39 of the Bill would amend section 115 of the 2003 Act so that a personal licence continues indefinitely.
12.4 Sale of liqueur confectionary to children: abolition of offence (clause 40)
It is an offence, under section 148 of the 2003 Act, to sell liqueur confectionary to children aged under 16.
The Bill
Clause 40 of the Bill would repeal section 148 of the 2003 Act.
12.5 Late night refreshment (clause 41)
Background
For the purposes of the 2003 Act, late night refreshment is defined as the supply of hot food or hot drink to the public, for consumption on or off the premises, between 11.00pm and 5.00am.239 The provision of such refreshment is a licensable activity because of its potential link with alcohol-related crime and disorder. A number of exemptions are set out in schedule 2 to the 2003 Act (for example, hot food or hot drink supplied to hotel and bed and breakfast guests; hot drinks from vending machines; and the supply of hot food and hot drink from workplace canteens).
The Government's alcohol strategy consultation claimed there was scope to reduce the burdens of licensing requirements for businesses that provide late night refreshment but do not sell alcohol and are not connected with the alcohol-related late night economy.240 It therefore sought views on two proposals:
introducing local discretion on whether late night refreshment should be licensable.
This could be done either by giving licensing authorities powers to determine that
premises providing only late night refreshment should be exempt from the licensing
requirements of the 2003 Act in certain parts of their area, or by allowing licensing
authorities to exempt certain types of premises in their area
adding new centrally prescribed exemptions to those already contained in schedule 2
of the 2003 Act241
Just over half of respondents did not support either of the above proposals.242 A final impact assessment said the Government would not be pursuing the option of adding centrally
237 Home Office, Next steps following the consultation on delivering the Government’s alcohol strategy, July 2013,
p17 238 Home Office, Personal alcohol licences: enabling targeted, local alternatives, September 2013 239 Licensing Act 2003 schedule 2 240 Home Office, A consultation on delivering the Government's policies to cut alcohol fuelled crime and anti-
social behaviour, November 2012, p38 241 Ibid, p38 242 Home Office, Analysis of responses to the consultation on delivering the Government’s policies to cut alcohol
fuelled crime and anti-social behaviour, July 2013, p38
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prescribed exemptions to the 2003 Act.243 However licensing authorities would be given local discretionary powers to lift the requirement to have authorisation for the supply of late night refreshment where they were satisfied there was no link between the supply of such refreshments and the late-night economy. The IA claimed this would help the hospitality sector to grow as well as providing greater choice for consumers.244
The Bill
Clause 41 of the Bill would insert new paragraph 2A into schedule 2 of the 2003 Act to give licensing authorities the powers to exempt a supply of hot food and hot drink from the licensing requirements if it takes place:
on or from premises which are wholly situated in an area designated by the licensing
authority
on or from premises of a description designated by the licensing authority
during a period (beginning on or after 11pm and ending on or before 5am) designated
by the licensing authority
The licensing authority can make one or more of the above designations to apply simultaneously but not in conjunction with one another. The licensing authority can vary or revoke a designation and it must publish the designation, variation, or revocation.
12.6 Removal of requirement to report loss or theft etc of licence (clause 42)
If a document such as a premises licence, temporary event notice, club premises certificate or personal licence is lost, stolen, damaged or destroyed, the licence holder must report this to the police before a copy can be issued.
The Bill
Clause 42 of the Bill would amend the 2003 Act to remove the requirement to report a loss or theft etc to the police before a copy of the document could be issued.
12.7 Exhibition of films in community premises (clause 43)
The exhibition of a film for public performance is, with certain exemptions, one of the forms of 'regulated entertainment' set out in Schedule 1 to the 2003 Act. The Act requires that a licence to exhibit film must include a mandatory condition that age classification restrictions are complied with.
In September 2011, the Department for Culture, Media and Sport (DCMS) consulted on removing licensing requirements on most forms of 'regulated entertainment'.245 In relation to the exhibition of film, the DCMS said the licensing of film was 'largely unnecessary and disproportionate', citing activities such as pre-school nurseries requiring a licence to show children's DVDs, or clubs being unable to host 'tribute nights' showing a recording of the 1966 World Cup final because they did not have a licence.246 The consultation sought views on removing the exhibition of film as a form of 'regulated entertainment' for events with
243 Home Office, Late night refreshment: reducing the burdens of the Licensing Act 2003 – final impact
assessment, August 2013, p1 244 Ibid, p7 245 DCMS, Regulated entertainment: a consultation proposal to examine the deregulation of schedule one of the
Licensing Act 2003, September 2011 246 Ibid, p26
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audiences of less than 5,000 people, providing that age classification safeguards could be retained.247
The DCMS published its response to the consultation in January 2013.248 This noted the 'near universal agreement' that age classification restrictions had to be retained, but that there was little in the way of 'new creative thinking' about how this could be done if film exhibition were to be completely deregulated.249 For this reason, the Government said there would be no blanket deregulation but it would examine opportunities for deregulating low risk community-based film exhibition in suitable circumstances.250 A consultation document on community film exhibition was subsequently published in July 2013 and set out the Government's proposal to remove the requirement for a licence in 'community premises' where the exhibition:
takes place between 08:00-23:00; and
is "not for profit"; and
takes place to audiences of 500 or less; and
is held in accordance with any age classification set by the British Board of Film
Classification (BBFC), or where different, any age rating set by the licensing authority
where the exhibition takes place251
According to the Government, this approach would mean community organisations would no longer need to spend time or money on licensing applications and administration; would not be put off from hosting film activities when other entertainment activities were deregulated; and could begin community screenings of positive social value.252 However, possible disadvantages included less notification to responsible authorities of the premises exhibiting film in their area as well as less direct licensing control over the operation of film content in the venues concerned.253
The Government published its response to the consultation in December 2013. There were forty eight responses; ten favoured doing nothing, while thirty three supported the Government's proposal.254 Community groups tended to support the proposal although many had views on how its cope might be broadened.255 In its response, the Government said it would amend the 2003 Act to introduce a limited licensing exemption for film exhibition in community premises with the aim of benefiting film societies, film clubs and other local social groups for whom licensing costs and bureaucracy are a barrier to exhibiting films.256
The Bill
Clause 43 of the Bill would create a new exemption in relation to the exhibition of a film by inserting a new paragraph 6A into schedule 1 to the 2003 Act. The exemption would apply
247 Ibid, p26 248 DCMS, Entertainment deregulation - consultation response, January 2013 249 Ibid, p19 250 Ibid, p19 251 DCMS, Community film exhibition – a consultation, July 2013, p11 252 Ibid, p11 253 Ibid, p12 254 DCMS, Consultation on community film exhibition: government response, December 2013, p6 255 Ibid, p7 256 Ibid, p8
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where the exhibition takes place at community premises and the following conditions are satisfied.257
prior written consent for the entertainment to take place at the community premises
has been obtained by or on behalf of a person concerned in the organisation or
management of the entertainment258
the entertainment is not provided with a view to profit;
the audience consists of no more than 500 persons;
the entertainment takes place between 8am and 11pm on the same day; and
a recommendation concerning the admission of children to the exhibition of the film
has been made by the film classification body or relevant licensing authority, and the
admission of children to that exhibition of the film is subject to such restrictions (if any)
as are necessary to comply with that recommendation.
13 Administration of justice
13.1 Repeal of Senior President of Tribunals duty to report (clause 44)
Clause 44 would remove the duty on the Senior President of Tribunals to report each year to the Secretary of State on the standards of decision making by the Secretary of State based on cases which are appealed to the First-tier Tribunal. It would form part of the laws of England and Wales and Scotland.
The duty is imposed by section 15A of the Social Security Act 1998259 and applies in relation to appeals against decisions of the Secretary of State taken in accordance with that Act.
The Explanatory Notes to the Bill state that:
Alternative and more direct methods for providing feedback from the judiciary to the
Secretary of State have in practice been developed which have made the annual
report of the Senior President of Tribunals unnecessary as well as burdensome on his
time.260
The Joint Committee on the Draft Deregulation Bill heard evidence of a number of concerns about this clause.261 Concerns were raised about the timing of the repeal, coming at a time of significant changes to the benefits system and an increase in the number of appeals.262
257 “community premises” are defined in section 193 of the 2003 Act as premises that are (or form part of) a
church hall, chapel hall or other similar building or a village hall, parish hall, community hall or other similar building
258 The written consent should be obtained from the management committee of the community premises (as defined in section 193 of the 2003 Act) or, where there is no management committee, from a person with control of the community premises in connection with the carrying on by that person of a trade, business or other undertaking or. Where there is neither of these, consent should be obtained from an owner of the community premises
259 As amended by the Transfer of Tribunal Functions Order 2008 260 Para 220 261 Joint Committee on the Draft Deregulation Bill Draft Deregulation Bill Report 11 December 2013 HL Paper 101
HC925 Session 2013-14, para 230. 262 As a result of the changes brought about by the Welfare Reform Act 2012, which replaced the Employment
and Support Allowance and Disability Living Allowance with Universal Credit and Personal Independence Allowance.
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The Commons Justice Committee pointed out in evidence to the Joint Committee on the Draft Bill, that the clause comes “against a background of disapprobatory reports published by the Senior President of Tribunals on the standards achieved by the [Department for Work and Pensions] and Atos”, with almost half of all appeals brought to court being successful. Witnesses also felt that the transparency and accessibility of the current system and the fact that it offered an acceptable route for the judiciary to comment were arguments to retain the duty to report.263
13.2 Criminal procedure (clauses 45-47)
The Criminal Procedure Rules (CrimPR) govern the way a criminal case is managed as it progresses through the criminal courts in England and Wales. They are a statement of the statutory and common-law procedural rules that apply in criminal cases. The CrimPR are made by the Criminal Procedure Rule Committee under section 69 of the Courts Act 2003 and apply in all magistrates' courts, the Crown Court and the Court of Appeal (Criminal Division).
The report of the Joint Committee on the Draft Deregulation Bill made no particular comment on clauses 45, 46 and 47.
Written witness statements (clause 45)
Currently, section 9 of the Criminal Justice Act 1967 contains statutory provisions regarding witness statements and other matters of evidence in a criminal trial.
Clause 45 would amend section 9 of the Criminal Justice Act 1967 to provide that the CrimPR can alter the period in which the parties can object to a written statement being tendered in evidence. That period would not be less than the current statutory period of seven days.
Clause 45 would also repeal certain provisions in section 9 of the Criminal Justice Act 1967 with regard to matters to be included in the statement, the serving of exhibits, the reading aloud at the hearing of the statement and the manner of service. The clause would allow for the Criminal Procedure Rule Committee to make rules governing these procedures. The Explanatory Notes to the Bill state:
In practice these changes will allow these procedures to be overseen by the Criminal
Procedure Rule Committee, which was created by the Courts Act 2003 explicitly to
make rules governing the practice and procedure to be followed in the criminal courts.
The Committee will be able to ensure that the rules provide appropriate safeguards for
defendants but do not require courts to follow procedures that are unnecessarily
complex or lengthy.264
Sarfraz Khan, senior lawyer from the Equality and Human Rights Commission raised concerns, in oral evidence to the Joint Committee on the Draft Deregulation Bill, that the proposed changes did not take into account the principle of open and transparent justice. He said:
People, particularly the media, if they attend court, may not have a very good idea if
witness statements are not read out aloud during the course of a trial. The information
263 Joint Committee on the Draft Deregulation Bill Draft Deregulation Bill Report 11 December 2013 HL
Paper 101 HC925 Session 2013-14, para 230. 264 Para 222
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that is provided may not allow them to report on what is happening, and open, visible
and transparent justice is not served.265
Clause 45 would affect the law in England and Wales only.
Written guilty pleas (clause 46)
Sections 12 and 12A of the Magistrates’’ Courts Act 1980 allow a defendant to plead guilty in writing without attending court in certain cases. The Explanatory Notes to the Bill explain:
The procedure can be used only for comparatively minor offences, and only where
certain procedural requirements have been met. The procedure is widely used in minor
road traffic cases and for cases of TV licence evasion, for example.266
Currently, section 12(7) of the Magistrates’’ Courts Act 1980 provides that certain matters must be read aloud in court before the court may accept a guilty plea. Clause 46 would allow the CrimPR to dispense with this requirement.
The Commons Justice Committee, in evidence to the Joint Committee on the Draft Bill, welcomed the measure in principle on the basis that it would “merely allow” the Criminal Procedure Rules Committee to dispense with the requirement, which would, the Justice Committee presumed, only take place after the usual consultation and consideration.267
In written evidence to the Joint Committee on the Draft Bill, the Newspaper Society raised concerns that clauses 45 and 46268 would remove open justice safeguards which assist public scrutiny and understanding of the courts and diminish the media’s ability to report the pertinent evidence, impeding the dissemination of contemporaneous fair and accurate reports of court proceedings.269
Clause 46 would affect the law in England and Wales only.
Criminal Procedure Rules (clause 47)
Schedule 1 of the Police and Criminal Evidence Act 1984 (PACE) allows a Circuit judge to make a production order, or in some circumstances to issue a warrant, authorising an investigator to obtain access to some types of potential evidence that investigators are not entitled to seize under a search warrant issued by a justice of the peace.
Clause 47 would remove the provisions in PACE which deal with the procedures for applications for these orders and provide that the CrimPR may make provision for such procedures.
Schedule 5 to the Terrorism Act 2000, and section 352 of the Proceeds of Crime Act 2002, allow a Circuit judge to issue a warrant for the same purpose as under PACE but in connection with a terrorism investigation or in connection with an investigation into the disposal of the proceeds of crime. Section 59 of the Criminal Justice and Police Act 2001 allows a Crown Court judge to make an order for the return to its owner of property seized during an investigation. Section 2 of the Administration of Justice (Miscellaneous Provisions) Act 1933 allows a prosecutor to apply to a High Court judge for permission to start 265 Joint Committee on the Draft Deregulation Bill , Uncorrected Transcript of Oral Evidence, 30 October 2013,
Q306 266 Para 225 267 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill - Evidence Volume 1, HL 101 HC 925,
p615 268 Then clauses 36 and 37 269 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill - Evidence Volume 2, HL 101 HC 925,
p972
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proceedings in the Crown Court where, for some unusual reason, the case has not been sent for trial by a magistrates’ court.
For each of these four types of application, clause 47 would make amendments that would allow the CrimPR to make provisions regarding procedure. The amendments made by clause 47 to the Administration of Justice (Miscellaneous Provisions) Act 1933 and PACE would form part of the law of England and Wales. The amendments made to the Terrorism Act 2000 and the amendments made to the Proceeds of Crime Act 2002 would form part of the law of England and Wales and Northern Ireland. The amendments to the Criminal Justice and Police Act 2001 would form part of the law of England and Wales, Scotland and Northern Ireland. However, CrimPR made under section 69 of the Courts Act 2003 govern procedure in criminal courts in England and Wales; the amendments made by the clause would therefore affect England and Wales only.
13.3 Multi-Agency Public Protection Arrangements (clause 48)
The Explanatory Notes to the Bill explain the meaning of Multi-Agency Public Protection Arrangements:
Multi-Agency Public Protection Arrangements ("MAPPA") are a statutory set of
arrangements operated by criminal justice and social care agencies that seek to
reduce the serious re-offending behaviour of sexual, violent and other offenders and
protect the public from serious harm. They were introduced by the Criminal Justice Act
2003. They are designed to allow criminal justice agencies to share information
regarding serious offenders in order to protect the public.
The provisions of the Criminal Justice Act 2003 impose a duty on the agencies
concerned to make arrangements to co-operate with each other in managing the risks
posed by certain offenders. This offender group is largely comprised of those sexual
and violent offenders described by section 327 of the Criminal Justice Act 2003.270
Clause 48 is concerned with a particular group of offenders: those who received a disqualification order. The court’s power to impose disqualification orders (which prevent offenders from working with children) was repealed by the Safeguarding Vulnerable Groups Act 2006, but the MAPPA arrangements currently apply to those who received them in the past.
The Explanatory Notes to the Bill state that the Government does not consider that it is necessary for MAPPA arrangements to continue to apply automatically to persons solely because they received a disqualification order. Clause 48 would amend section 327 of the Criminal Justice Act 2003 so that MAPPA arrangements would not apply solely for this reason.
Clause 48 would make further amendments which, according to the Explanatory Notes, would ensure that this change does not result in a failure to manage serious offenders. The duty to make MAPPA arrangements would therefore be extended to those offences for which a disqualification order could have been imposed, which did not previously fall within the duty. These offences would trigger the duty only where the sentence imposed was of a certain level of seriousness or in other limited circumstances.
270 Paras 231-232
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The Commons Justice Committee, in evidence to the Joint Committee on the Draft Bill, commented that this clause does not appear to be contentious as the removal of one means of public protection is largely replaced with another.271
13.4 Prison closures (clause 49)
Clause 49 would allow the Secretary of State to close a prison without the need for an order.
Section 33 of the Prison Act 1952 gives the Secretary of State broad powers to provide prisons. He or she may “with the approval of the Treasury alter, enlarge or rebuild any prison and build new prisons” and may also declare any building or floating structure to be a prison.272 By contrast, under section 37 of the 1952 Act, prison closures require an order. A further restriction is that, under section 37(2), where a prison is the only prison in the county, the Secretary of State cannot make the order “except for special reasons, which shall be stated in the order.” This provision dates back to section 33 of the Prison Act 1877, which created a centralised prison system by transferring powers and responsibilities from the local justices to the Home Secretary. It was carried across to the 1952 Act.
The provision in clause 49 was not part of the draft Bill and so was not the subject to scrutiny. It could be argued that the change is of little significance. If, under the current law, the Secretary of State wished to close the last prison in a county, the existing requirement to produce an order stating what “special reasons” might exist would not provide much of an impediment. However, the closure of small local prisons in favour of large ones is often controversial. For example, in October 2013 the Prison Reform Trust criticised the Government’s plans for the prison estate:
The pressure of budget cuts and economies of scale have led to the roll out of "Titan
prisons by stealth" with a drive to close small community prisons, build larger jails and
add additional capacity to existing establishments.
This is despite evidence published by the Prison Reform Trust (...) based on data
provided by HM Prisons Inspectorate, showing that smaller prisons tend to be safer
and more effective than larger establishments, holding people closer to home and with
a higher ratio of prison staff to prisoners.273
Clause 49, like the sections of the 1952 Act it would amend, extends to England and Wales.
14 Measures to reduce burdens on public authorities
14.1 London street trading appeals (clause 50)
At present, the majority of street trading appeals under the Local London Authorities Act 1990 and the City of Westminster Act 1999 are heard by a Magistrates Court. However, appeals of a more general nature (such as a decision to designate a street as one in which street trading may take place without a licence) are heard by the Secretary of State. The Government considers that this is an inefficient and inconsistent approach. Consequently, Clause 50 would ensure that all street trading appeals are made to the Magistrates Court; they have more expertise in making such determinations.
271 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill - Evidence Volume 1, HL 101 HC 925,
p616 272 For example, a prison ship, HMP The Weare, opened in 1997 to ease overcrowding, but closed in 2005 (HC
Deb 20 January 2009 c1341W) 273 Prison Reform Trust, Nearly half of all prisoners to be warehoused in 1,000 plus super sized jails, 30 October
2013
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14.2 Gangmasters (Licensing Act) 2004 enforcement (clause 51)
Background
The Gangmasters (Licensing Act) 2004 regulates agencies that supply workers to the agriculture and shellfish sectors.274 The Act prohibits a person from acting as a gangmaster without first obtaining a license from the Gangmasters Licensing Authority, and creates a range of related offences. Enforcement officers may be appointed by the Secretary of State under section 15 to enforce the prohibition of unlicensed activities.
The Bill
Clause 51 would make a somewhat technical amendment to section 15 of the 2004 Act. The Government considers that the power to appoint enforcement officers has the effect that, where appointed, prosecution decisions must be made by the officers and cannot be made by the Director of Public Prosecutions. Clause 51 would clarify the law by providing that section 15 does not prevent the Secretary of State from making arrangements for relevant prosecutorial functions to be carried out by the Director of Public Prosecutions. As section 15 applies to England and Wales and Scotland, so too would the amendment, however it would apply only to criminal proceeding in England and Wales.
14.3 Reduction in the regulation of providers of social work services (clause 52)
Background
In the 2006 Green Paper, Care Matters: Transforming the Lives of Children and Young People in Care,275 the previous Labour Government proposed exploring the feasibility of delegating children’s care service to independent GP-style social care practices.276 A power to pilot these independent ‘providers of social work service services’ (SWPs) for up to five years was included in the Children and Young Persons Act 2008.277 The Act received Royal Assent on 13 November 2008.
Following the pilots, if SWPs were extended to all local authorities, section 4 of the 2008 Act made provision for all SWPs to be regulated as agencies under the Care Standards Act 2000 and subject to registration and inspection by the Chief Inspector for Education, Children’s Services and Skills. Section 6 of the 2008 Act - a sunset provision - required the regulatory measures contained in section 4 to be brought into effect within five years of the Children and Young Persons Act 2008 receiving Royal Assent. If section 4 was not brought into effect before November 2013, the provisions on SWPs under Part 1 of the Act would cease to have effect.
The SWP pilot programme ran from 2008 to 2012 and examined whether smaller social work-led organisations, independent of local authorities, could improve the experiences and outcomes for the most vulnerable children and young people in care, empower social workers to do their jobs effectively, and reduce bureaucracy.’278
Consultation on the regulation of providers of social work services
Between 15 January and 28 February 2013, the Government consulted on two issues relating to SWPs. The first was the full commencement of Part 1 of the Children and Young Persons Act 2008; the second concerned proposals to remove the requirement for direct 274 Gangmasters (Licensing Act) 2004, sections 3-4 275 Department for Education and Skills, Care Matters: Transforming the Lives of Children and Young People in
Care, October 2006; Cm 6932 276 Further information on the development of the policy is contained in the Library research paper on the then
Children and Young Person Bill RP08/44 277 Section 6, Children and Young Persons Act 2008 278 Details of the local authorities that participated in the pilots between 2008-2012 are available in a Written
Answer to a Parliamentary Question: HL deb 29 August 2013 WA 414
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registration and inspection by Her Majesty's Chief Inspector of Education, Children's Services and Skills (Ofsted) of SWPs. The Government stated that the first proposal received “broad support” from respondents to the consultation.279 In relation to the second issue, 53 per cent of those who responded agreed that the proposal would avoid introducing burdens for SWPs and Ofsted; 32 per cent disagreed; and the remainder were unsure.280
The draft Legislative Reform (Regulation of Providers of Social Work Services) (England and Wales) Order 2013 (LRO) was laid before Parliament on 13 May 2013, together with an explanatory document.281 The explanatory document set out the Government’s intention to remove the registration and inspection requirements in relation to SWPs in England in order to ‘avoid the imposition of new burdens’ on Ofsted.282 The effect of the LRO would be to remove the registration requirements under section 4 of the Children and Young Persons Act 2008, in so far as they apply to England, before the sunset provision under section 6 came into effect in November 2013. The explanatory document explained that the delegated functions would be inspected as part of the local authority inspection and as a result there would not be a duplication of Ofsted functions:
As the 2008 Act [the Children and Young Persons Act 2008] stands full
commencement would result in a new requirement for separate registration with and
inspection by HMCI [Ofsted]. This would introduce significant new burdens for the
inspector, providers of services and to a lesser degree local authorities. HMCI’s new
inspection framework makes explicit provision for consideration of the experiences of
children receiving these services under delegated arrangements, and to reach
judgements on leadership and governance on the basis of management of these
arrangements. To introduce the requirement of section 4 of the CYPA would mean that
where [local authority] functions were delegated, they would be inspected through
[local authority] inspection and through duplicate arrangements for separate provider
inspection. It is Government’s view that this is an unnecessary burden.283
The draft LRO was examined by the House of Lords Delegated Powers and Regulatory Reform Committee on two separate occasions.284 When the Committee first examined the draft LRO, it expressed concerns that the Government had not given adequate consideration to the impact of the proposal on the existing necessary protections relating to the fitness of providers. In its report the Committee stated:
We note that, while the LRO would remove the requirement for registration and
inspection of providers of social work services in England by HMCI, the explanation of
future arrangements given by the Department [in the explanatory document] bears
largely on inspection, and makes little reference to registration under Part 2 of the Care
Standards Act 2000. Registration under Part 2 would allow the imposition of national
minimum standards and requirements as to the fitness of providers. It would also
provide a mechanism for removing providers who are failing to meet standards.
279 See: Department for Education, The Legislative Reform (Regulation of Social Work Services)(England and
Wales) Order 2013 – Explanatory Document, para 2.4 280 Ibid, paras 4.10-4.12 281 Department for Education, The Legislative Reform (Regulation of Social Work Services)(England and Wales)
Order 2013 – Explanatory Document 282 Ibid 283 Ibid, para 2.1 284 The House of Commons Regulatory Reform Committee also assessed the LRO. In its First Report of Session
2013–14, published on 5 June 2013, the Committee recommended the LRO be approved using the affirmative resolution procedure.
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Nothing is said in the [explanatory document] about the removal of these protections
and why these protections are no longer considered to be necessary.285
The Committee considered the draft LRO for a second time, taking into account a letter received from the Minister for Children and Families, Edward Timpson MP,286 in response to its first report. However, the Committee was not persuaded by the Minister’s argument that holding local authorities to account for their commissioning arrangements would be as effective as a separate regulatory scheme for SWPs. The Committee therefore recommended that the LRO should not proceed.287
In response, the Government stated that it would prefer to remove the regulatory requirements on SWPs but was mindful not just of the Committee’s recommendation, but of the sunset provision in section 6 of the 2008 Act, which meant that the SWP provisions would no longer have effect if section 4 was not brought into force by November 2013. Accordingly, the Government decided to proceed with the registration regime under section 4 for the time being and the provision came into effect on 12 November 2013.288
Current law
Since November 2013, provisions under Part 1 of the Children and Young Persons Act 2008 have allowed all local authorities to delegate specified functions in relation to looked-after and former looked-after children to independent social work bodies. Referred to in the 2008 Act as ‘providers of social work services’ (SWPs), these independent bodies are required to employ registered social workers to supervise the functions the local authority would otherwise be discharging.289
In common with fostering and adoption agencies, SWPs are required under the Care Standards Act 2000 to register with Ofsted as agencies.290 It is an offence to provide or manage a SWP without registration.291 Ofsted has the power to inspect SWPs directly under the 2000 Act292 and also under the Education and Inspections Act 2006 as part of the inspection of the delegating local authority. 293
The Bill
The Bill would give effect to the Government’s intention to remove the requirement for SWPs to be registered with and inspected by Ofsted. Clause 52 would remove section 4(10) of the Care Standards Act 2000 which provides for the Act to apply to SWPs as it applies to agencies inspected by Her Majesty's Chief Inspector of Education, Children's Services and Skills (Ofsted). As a result of the provision, there would also be consequential amendments to the 2000 Act and to section 4 of the Children and Young Person Act 2008, which inserted section 4(10) into the 2000 Act.
285 Delegated Powers and Regulatory Reform Committee - Third Report, June 2013; para 23 286 Delegated Powers and Regulatory Reform Committee - Seventh Report, July 2013 Appendix 1 287 Delegated Powers and Regulatory Reform Committee - Seventh Report, July 2013 288 Department for Education, Consultation on Registration of Providers of Social Work Services, 19 September
2013 289 Children and Young Persons Act 2008, s 2(5) 290 Care Standards Act 2000, ss4(10) and 11 291 Ibid, s 24 292 Care Standards Act 2000, s 31 293 Section 136, Education and Inspections Act 2006
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The changes proposed by the clause would apply to England only.294
Comment
As the Government decided to proceed with the registration scheme for SWPs to avoid the sunset provision in the 2008 Act coming into force, the issue of deregulation was not included in the most recent consultation on SWPs which ran until October 2013.295
The Government had previously consulted on the deregulation proposals as part of the draft LRO consultation. The consultation document asked ‘whether or not consultees agreed with the proposal to remove the requirement in section 4 of the Children and Young Persons Act 2008 for separate registration and inspection of providers of social work services.’296 45 per cent of respondents to the consultation disagreed with the proposal, 40 per cent agreed with it, with the remainder being unsure.297 Narrative responses were not included in the consultation response document published by the Department for Education.
14.4 Access to registers kept by Gas and Electricity Markets Authority (clause 53)
Background
Under section 36 of the Gas Act 1986 and section 49 of the Electricity Act 1989 the Gas and Electricity Markets Authority, the governing body for Ofgem, is required to maintain a register of documents relating to licensed gas and electricity operators and to make this available for public inspection.
The Bill
Clause 53 would amend section 36 of the Gas Act 1986 and section 49 of the Electricity Act 1989. It would remove the requirement for physical registers to be open to the public and instead requires that the contents of each register must be shown on the Authority’s website.
This clause would form part of the laws of England and Wales and Scotland. It would come into force at the end of the period of 2 months beginning with the day on which the Bill becomes an Act.
Comment
Regulations dealing with the public registers were covered in the Government’s Red Tape Challenge after which it was announced, without controversy, that DECC would either streamline these regulations or explore repealing them if Ofgem were to implement an electronic public register.298
15 Repeal of local authority duties
The Bill would repeal a number of legislative duties placed on local authorities under the 1997-2010 Labour governments.
294 The Welsh Government has indicated that it does not want the system introduced by Part 1 of the 2008 Act to
apply in Wales, and it is content for the sunset provision to have effect. See Department for Education, The Legislative Reform (Regulation of Social Work Services)(England and Wales) Order 2013 – Explanatory Document, para 3.22 and the Third Report from the Delegated Powers and Regulatory Reform Committee, June 2013 at para 20
295 Department for Education, Consultation on Registration of Providers of Social Work Services, 19 September 2013
296 Department for Education, The Legislative Reform (Regulation of Social Work Services)(England and Wales) Order 2013 – Explanatory Document, para 4.4
297 Ibid, para 4.45 298 Gov.uk website: Red Tape Challenge Energy Theme’s proposed “scraps” and
“improves”
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15.1 Sustainable community strategies (clause 54)
Background
Section 4 of the Local Government Act 2000 requires local authorities to produce a ‘sustainable community strategy’. The strategy is associated with the power, in the 2000 Act, to promote economic, social and environmental well-being in the council’s area (‘the well-being power’). The strategy produced should be “for promoting or improving the economic, social and environmental well-being of their area and contributing to the achievement of sustainable development in the United Kingdom”.299 In preparing the strategy, ‘responsible local authorities’ – i.e. upper-tier authorities - are required to consult a range of partner bodies, set out in section 104(2) of the Local Government and Public Involvement in Health Act 2007. The Secretary of State may issue guidance on the preparation of the strategy, but should consult such persons as he considers appropriate before doing so.
The 2000 Act as passed simply required the production of a ‘community strategy’: the word ‘sustainable’ was added by the Sustainable Communities Act 2007. The strategy must have regard to any arrangements to co-ordinate the reduction of child poverty in the area under sections 21-23 of the Child Poverty Act 2010: including a child poverty strategy, a needs assessment, or other arrangements for co-operation.
The Bill
Clause 54(1) of the Bill would repeal the requirement to produce a sustainable community strategy. Clause 54(2) repeals several references to the sustainable community strategy in later Acts.
Clause 54 extends to England only. The requirement on Welsh local authorities to produce a sustainable community strategy was repealed by Schedule 2, paragraph 1(3)(a) of the Local Government (Wales) Measure 2009.
15.2 Local area agreements (clause 55)
Background
The 1997-2010 Labour Government required local authorities in England to produce ‘local area agreements’. Initially these were an informal framework for co-operation between local authorities and other public bodies in their area, to improve joint working and deliver policies more effectively. Pilot local area agreements (LAAs) were introduced in 2004 in a small number of authorities, on a non-statutory basis. Subsequently, the Local Government and Public Involvement in Health Act 2007 put LAAs on a statutory footing.
LAAs were put in place for a three-year period, from April 2008 to April 2011. However, following the General Election in May 2010, they were effectively abandoned by the Coalition Government. A Written Statement to this effect was made in October 2010.300
The Bill
Clause 55 of the Bill would repeal sections 105-113 of the Local Government and Public Involvement in Health Act 2007 and consequential provisions in sections 117 and 118, thereby removing the duty to prepare and submit LAAs, together with associated duties. Both Clause 55 and the original provisions in the 2007 Act apply to England only.
Further details on Local Area Agreements can be found in the Library standard note LAAs and MAAs (SN/PC/03168).
299 Local Government Act 2000 s4(1) 300 HC Deb 13 October 2010, cc20-1WS
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15.3 Multi-Area Agreements (clause 56)
Background
Multi-area agreements are a similar concept to local area agreements, but they may straddle the boundaries of a number of local authority areas; or cover two local authority areas that are not geographically connected. They were provided for under Part 7 (sections 121-137) of the Local Democracy, Economic Development and Construction Act 2009.
A multi-area agreement (MAA) could cover one or more upper-tier local authorities. Section 124 of the 2009 Act permitted a single upper-tier authority, or a group thereof, to request that the Secretary of State direct them to prepare and submit a multi-area agreement. Like LAAs, MAAs were required to contain improvement targets and specify to which partner authorities they related.
As with local area agreements, MAAs were effectively abandoned by the Coalition Government.
The Bill
Clause 56 (1) of the Bill would repeal Part 7 of the 2009 Act. Clause 56(2) provides for the consequential repeal of related provisions in later Acts. Both Clause 56 and the original provisions in the 2009 Act apply to England only.
15.4 Repeal of duties relating to consultation or involvement (clause 57)
Background
Section 3A of the Local Government Act 1999, inserted by section 138 of the Local Government and Public Involvement in Health Act 2007, provides that:
(1) Where a best value authority considers it appropriate for representatives of local
persons (or of local persons of a particular description) to be involved in the exercise of
any of its functions by being—
(a) provided with information about the exercise of the function,
(b) consulted about the exercise of the function, or
(c) involved in another way,
it must take such steps as it considers appropriate to secure that such representatives
are involved in the exercise of the function in that way.
A ‘best value authority’ is a local authority in England, defined in section 1 of the 1999 Act. Under section 3A(3) of the 1999 Act, these provisions do not apply to police authorities.
The removal of the requirement to consult regarding local authority functions was addressed in the Draft Deregulation Bill Committee’s pre-legislative scrutiny report:
We heard from Councillor David Simmonds, of the LGA, that this clause was
welcomed as it would “bring an end to some of the tick-box culture that has been
enforced on local authorities, where there is a need to demonstrate consultation,
consultation and consultation again”. He told us that he did not think anything would be
lost by the repeal, other than the “likelihood of challenge”….. Friends of the Earth
described consultation as “a core element of a democratic government and one of the
main ways that Government can be held to account for their actions”. They told us the
Government’s justifications for the removal of consultation requirements were “neither
satisfactory nor sufficient”. The most pressing concern we heard in relation to this
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clause was the risk of conflict with the Aarhus Convention, which stems from Principle
10 of the Rio Declaration. We heard from Essex County Council that the removal of the
consultation requirement may mean that the UK falls foul of its international
obligations. Friends of the Earth thought that it should be made clear how the
obligations in relation to the Aarhus Convention would be discharged.301
The Bill
Clause 57(1) of the Bill would repeal section 3A of the 1999 Act. Clause 57(2) would repeal related provisions in later Acts. Schedule 16, paragraph 14 of the Bill would repeal the requirement on the Secretary of State to consult before making regulations regarding the keeping of accounts by best value authorities.
Both clause 57 and the provisions in the 1999 Act extend to England only. Welsh local authorities were best value authorities under the 1999 Act as passed, but the relevant provisions were repealed by Schedule 1 paragraph 10 of the Local Government (Wales) Measure 2009.
16 Legislative reform
16.1 Power to spell out dates in described legislation (clause 58)
Clause 58 would confer a power on Ministers to amend primary or secondary legislation by statutory instrument in order to spell out dates described in it. For example, where a provision in primary legislation states it will come into effect on the “appointed day”, defined subsequently by a commencement order, the power could be used to replace “appointed day” with an actual date, negating the need to search for the commencement order. The clause would form part of the law of England and Wales, Scotland and Northern Ireland, but the power could not be used in respect of devolved matters.
16.2 Ambulatory references to international shipping instruments (clause 59)
Clause 59 would amend the Merchant Shipping Act 1995 and would affect powers to make secondary legislation under the Act. As a result, a reference in that secondary legislation to an international agreement would be interpreted as a reference to the agreement as modified from time to time, rather than simply to the version of the agreement that existed at the time the secondary legislation was made. This is intended to simplify the current arrangements where a mixture of primary legislation and secondary legislation is used to implement international maritime conventions in UK law. The Government believes this is complex and confusing.
The Explanatory Notes state that the practical effect of this change would be that:
… where the power has been applied through secondary legislation the government of
the day would not need to make further secondary legislation or publish any other
regulatory document in order to give effect to changes to international obligations and
standards; changes to the text of an international instrument would be automatically
incorporated into UK law in the circumstances specified in the secondary legislation.302
The change would apply to England and Wales, Scotland and Northern Ireland.
In its report on the draft Bill, the Joint Committee expressed concern about a sub-clause within this provision that would have had the effect of allowing the Secretary of State to give
301 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill (pre-legislative scrutiny), HC 925 2013,
pp.69-70 302 Bill 162 EN 2013-14, para 273
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directions about whether, when and how any particular change to an international instrument would apply. That power to give directions was extensive: for example, were a direction to disapply a particular change in a convention, it could also disapply provisions in the regulations and make alternative provision, effectively bypassing Parliament. The committee recommended that this be amended; in the event, it has been removed from the Bill.303
16.3 Legislation no longer of practical use (clause 60)
Clause 60 states that Schedule 17 has effect. Schedule 17 would make provision for repeal of a range of legislation which the Government believes is no longer of practical use. The legislation that would be repealed by Schedule 17 is outlined below.
Part 1 would make a minor change to the Companies Act 2006; it would remove unnecessary provisions relating to the audit of charitable companies.
Part 2 would make changes to a range of legislation, considered to be redundant or to have no current practical effect.
Part 3, paragraph 12 would repeal a requirement under the Energy Act 1976 for the Secretary of State’s consent for offshore natural gas to be liquefied (for transportation). The measure was introduced to control the possible export though since enactment no permissions have yet been sought.304 Paragraph 13 would repeal a redundant provision in the Sustainable Energy Act 2003 to ensure a maximum of £60 million raised by the Non-Fossil Fuel Obligation would be spent on promoting renewable energy. That maximum has since been reached. Paragraphs 14 and 15 would revoke three orders associated with the energy efficiency obligation that is no longer running.
Part 4 would repeal section 64A of the Road Traffic Act 1988, as amended. This repeal removes the offence of using an unregistered tractor or motor cycle on a public road without a valid EC Certificate of Conformity. The reason for the repeal is that this offence is covered by other legislation, specifically, section 29 of the Vehicle Excise and Registration Act 1994, as amended (using an unlicensed vehicle of any type on public roads, including vehicles that have not been registered for the first time). This applies to England and Wales and Scotland.
Part 5 covers environmental legislation in England and Wales. It would repeal:
The Farm and Garden Chemicals Act 1967, which covers the labelling of pesticides
for sale, as these have now been superseded by EU regulation 1107/2009
concerning the placing of plant protection products on the market. This applies to
England and Wales and Scotland
The Statutory Water Companies Act 1991, as there are no longer any statutory water
companies in existence. Ofwat summarised their history as follows:
These were private companies, usually formed by local businessmen, with
share capital, incorporated under individual Acts of Parliament. Most dated
from the middle of the 19th Century and included, for example, York
Waterworks, which was acquired by Yorkshire Water in 2000.305
This would apply to England and Wales Only
303 op cit., Draft Deregulation Bill, paras 81-84 304 Deregulation Bill 2014, Explanatory Notes 305 Ofwat, The Development Of The Water Industry In England And Wales, 2006
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Section 10 of the Sea Fish (Conservation) Act 1992, which required the Minister to
review the effectives of the Act for conserving sea fish by 1st of June 2007. This is
because the report was never produced, as there was nothing in the view of the
Government to report, and the date has now expired. This applies to England and
Wales, Scotland and Northern Ireland.
Part 6 of the schedule covers animals and foods. It would repeal:
The Agricultural Produce (Grading and Marking) Acts 1928 and 1931, which apply in
England and Wales and Scotland, are repealed as they were hardly used and have
been superseded by more recent UK and EU legislation.
Part 2A of the Animal Health Act 1981, which applied in England and Wales and
restricted the genotypes of sheep that could be bred, is repealed. It aimed to increase
resistance to scrapie in sheep through breeding. According to the Explanatory Notes
the powers have never been exercised and “following further scientific evidence the
EU decided against introducing such compulsory breeding programmes”.
The Milk (Cessation of Production) Act 1985, which allowed for milk quotas to be
surrendered in exchange for compensation, is repealed in England and Wales and
Northern Ireland. The scheme has not been operational since 2007, and the EU milk
quota system will cease in 2015.
The Coal and other Mines (Horses) Order 1956 which set out the rules and welfare
requirements for using horses underground is repealed. There have been no working
pit ponies in the UK since 1999 and the Government view is that in the event of them
ever being used again they would be covered under the Animals Welfare Act 2006.
Part 7 would repeal the Greenwich Hospital School (Regulations) (Amendment) Order 1948 which concerns admissions to the Royal Hospital School, and is now redundant. The Government states it “is thought that an oversight led to a failure to revoke the Order when the Greenwich Hospital Act 1990”.306
Part 8 of Schedule 17 would repeal 22 of the 25 remaining criminal offences in section 28 of the Town Police Clauses Act 1847. The Explanatory Notes to the Bill state that these offences relate to obstructions, annoyances or dangers in the street and are either anachronistic or relate to behaviour which is covered by more recent legislation.307
17 Exercise of regulatory functions
17.1 The economic growth duty (clauses 61-64)
Background
One of the Bill’s key proposals is to impose a statutory duty on non-economic regulators to “have regard to the desirability of promoting economic growth”.308 It would be a new duty and would apply to non-economic regulators specified in secondary legislation. Non-economic regulators within its scope would include those regulating a range of sectors, including health, food, the environment, equality and human rights. In its consultation response, the Government indicated which regulators would be in scope of the duty (see below). The
306 Deregulation Bill, Explanatory Notes, para 653 307 Para 655 308 Clause 61(1)
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Government has published draft guidance on the proposed duty as well as an impact assessment.309 The Joint Committee discussed the proposal at pages 33-41 of its report.310
Current law
Regulators are currently subject to statutory duties to regulate proportionately. Part 2 of the Legislative and Regulatory Reform Act 2006 outlines principles to which regulators must have regard when exercising their functions. Section 21(2) provides:
regulatory activities should be carried out in a way which is transparent, accountable, proportionate and consistent;
regulatory activities should be targeted only at cases in which action is needed.
Sections 22-23 of the 2006 Act empower a Minister to “issue and from time to time revise a code of practice in relation to the exercise of regulatory functions”.311 The Regulators’ Compliance Code was published under this power on 17 December 2007.312 Regulators within its scope must have regard to it when developing policies and procedures to guide their regulatory activities, but are not required to have regard to it in relation to individual actions.
A revised code was recently the subject of a separate consultation, which ran from 8 March 2013 to 3 May 2013,313 and resulted in the publication of a draft new Regulators’ Code, which the Government anticipates will be given statutory force during April 2014.314 The draft Codehttps://www.gov.uk/government/uploads/system/uploads/attachment_data/file/262915/13-1016-regulators-code.pdf states:
Regulators should carry out their activities in a way that supports those they regulate to
comply and grow
….
When designing and reviewing policies, operational procedures and practices,
regulators should consider how they might support or enable economic growth
for compliant businesses and other regulated entities, for example, by considering how
they can best:
understand and minimise negative economic impacts of their regulatory activities;
minimising the costs of compliance for those they regulate;
improve confidence in compliance for those they regulate; and
encourage and promote compliance.315
309 See ‘Growth duty: draft guidance’, Gov.uk [accessed 23 January 2014] 310 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Session 2013-14, HL Paper 101, HC
925, 19 December 2013 311 Section 22(1) 312 Department for Business, Enterprise and Regulatory Reform, Regulators’ Compliance Code - Statutory Code
of Practice for Regulators, 17 December 2007 313 BIS, Consultation Paper - Amending the Regulators’ Compliance Code, March 2013 314 BIS, draft Regulators’ Code, July 2013; see ‘Guidance - Regulators' Code’, Gov.uk [accessed 24 January
2014] 315 Ibid, p3
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The requirement to have regard to the Code applies to a wide range of non-economic
regulators in respect of all their functions, as well as certain regulatory functions
exercised by local authorities.316
In addition to the Code and Legislative and Regulatory Reform Act 2006, regulators are also subject to section 72 of the Regulatory Enforcement and Sanctions Act 2008, which creates a “duty not to impose or maintain unnecessary burdens”. Under section 72(1):
Any person exercising a regulatory function to which this section applies must keep
that function under review and secure that in exercising the function the person does
not—
(a) impose burdens which that person considers to be unnecessary, or
(b) maintain burdens which that person considers to have become unnecessary.
Government consultation
The Government’s consultation on the growth duty ran from March to July 2013. In the consultation document the Government set out its case for the duty:
Establishment, in statute, of a clear objective to promote economic progress that non-
economic regulators must have regard to in the discharge of their various functions
would remove any uncertainty over whether regulators are able to take account of such
considerations. The provisions in the LRR Act, which are common to a number of
regulators, seek to address certain elements of these problems. However there
remains a gap in the statutory framework for regulators. Supporting growth and
stripping back burdens are not sufficiently prioritised.
The primary objective is therefore to make it clear that regulators can and should be
mindful of the economic consequences of their actions, thereby stimulating
improvements in business experience of regulation and creating a regulatory
environment conducive to growth.
….
A growth duty will enable regulators to respond more comprehensively to the challenge
of stripping back burdens to the minimum necessary and proactively supporting growth
by incorporating economic concerns into the forefront of thinking. The key objectives of
the duty can be summarised as: providing a legal basis for regulators’ approaches to
consider the economic impact of their actions, where currently there is none, in terms
of both support to growth and reducing unnecessary burdens to the minimum; and
enabling regulators to see themselves as supporting prosperity and protection whilst
recognising how their actions fit with the wider regulatory landscape.
In order to achieve the first objective, the duty needs to be imposed via primary
legislation to provide the legal foundation needed. As a consequence regulators would
need to be able to demonstrate that they have considered the economic impact of their
actions when making decisions.
Whilst the duty may therefore create a means of challenging regulators’ decisions,
regulators should be accountable for their actions, including compliance with the
growth duty. Importantly however, in order to safeguard the existing statutory duties of
316 Annex C of the Government’s consultation on the Code provides a non-exhaustive list of these regulators and
functions.
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regulators to regulate and protect, the duty is intended to be complementary to, and
not override, these existing duties.317
The evidence base for the proposal rests in part on a post-implementation review of the Regulator’s Compliance Code led by the Better Regulation Delivery Office in 2012.318
Annex B of the consultation on amending the Code (see above) contains a summary of the findings of the review.319 Broadly, the review found:
at a policy level, regulators have generally accepted the Code and its principles;
“the extent to which regulators perceive their role as supporting business growth is not consistent. Whilst the Code contains the principle that regulators should support economic progress, regulators consistently see their role as primarily to protect consumers and citizens”320 – businesses are not seen as customers;
many businesses were not aware of the Code, limiting their dialogue with regulators;
the Code does not apply to individual enforcement actions but rather the “general policy or principles by reference to which”321 the regulator exercises its functions;
planning and building control at a local level are not within the scope of the Code, and are regularly cited by businesses as being burdensome.322
In its consultation response, published July 2013, the Government said the proposed duty was designed to address these issues, providing “a framework for regulators explicitly to balance growth with their existing duties to protect, where they have not previously felt able to do so”.323 The consultation response summarised the 117 consultation responses:
Businesses and industry representative bodies were strongly in favour of the growth
duty.
A wide variety of respondents including regulators special interest groups, businesses
and trade associations said that regulators’ first priority should be protection and that a
growth duty should not take precedence over regulators’ core statutory duties.
Whilst businesses, trade associations and some regulators felt primary legislation was
required, other regulators said they considered existing Better Regulation measures –
including the Regulators’ Compliance Code – already achieved the policy objective,
and over a third of regulators said they considered they already had regard to growth.
Around a third of respondents felt the duty should be principles-based, while only a
very small number said it needed to be prescriptive. However, nearly half agreed that
guidance was needed.
317 BIS, Non-economic Regulators: Duty to Have Regard to Growth, March 2013, pp10-11 318 Ibid, p15; BIS, Government Response - Non-economic Regulators: Duty to Have Regard to Growth, July
2013, p5 319 BIS, Consultation Paper - Amending the Regulators’ Compliance Code, March 2013 320 Ibid, p22 321 Legislative and Regulatory Reform Act 2006, section 22(2) 322 BIS, Consultation Paper - Amending the Regulators’ Compliance Code, March 2013, pp21-23 323 BIS, Government Response - Non-economic Regulators: Duty to Have Regard to Growth, July 2013, p8
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Respondents cited a variety of ways in which regulators could support growth. These
include coordinating inspections, providing more targeted advice, being generally risk-
based and proportionate, and helping businesses achieve compliance. Some
respondents said that regulation is key in creating a level playing field and providing
market confidence, both of which support growth.324
In addition to the views summarised above, some respondents, notably, the Equality and Human Rights Commission (see below), have voiced concern that the duty may detract from regulators’ core functions. The Government response stated that the duty would not prevent a regulator from taking an action that does not support growth, but would in that event require the regulator to be able to justify its decision.325
Annex A of the Government’s consultation response provided a list of non-economic regulators in its scope.326 In a clarification note published following the consultation, the Government stated that the non-economic regulators affected by the duty “have ‘a combined budget of around £2 billion and 25,000 employees devoted to regulatory activity’”.327
The Bill
Clause 61 of the Bill contains the proposed economic growth duty. Clause 61(1) provides that any person exercising a regulatory function must, in the exercise of that function, “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.
Clause 62 would empower a Minister to specify by way of statutory instrument, subject to the affirmative resolution procedure, the functions to which the duty applies. Prior to exercising the power the Minister must consult any person specified and such others as the Minister considers appropriate.
Clause 63 would empower as Minister to issue guidance on performance of the duty to which persons subject to it must “have regard”. The guidance would be subject to the affirmative resolution procedure.
Clause 64 is an interpretation clause.
The duty would apply to England and Wales and Scotland. The order-making power under clause 62 would have the same extent but only in relation to matters which are not devolved or transferred.
Comment
Reactions to the proposal have been mixed, but on the whole cautiously positive, as indicated by the consultation responses. 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.328
The Joint Committee considered the proposal in some detail and made the following conclusions:
324 Ibid, p3 325 Ibid, p10 326 BIS, Government Response - Non-economic Regulators: Duty to Have Regard to Growth, July 2013, p21 327 BIS, Clarification Note - Non-economic Regulators: Duty to Have Regard to Growth, January 2014 328 Joint Committee on the Draft Deregulation Bill, Draft Deregulation Bill – Session 2013-14, HL Paper 101, HC
925, 19 December 2013, pp36-37
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We conclude that an economic growth duty on regulators is welcome provided that
safeguards are 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. We welcome the Minister's assurance on these points;
that the duty will not "take precedence over the main reason for their existence ... [or]
impinge on the confidence that the public have in the way they exercise their regulatory
function"
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.
….
We are not clear that this measure is, in itself, necessarily deregulatory but if it is
applied thoughtfully by regulators, it could lead to less burdensome regulation for some
business in the future.
….
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. We note the inclusion of the
Equality and Human Rights Commission and the risks that its inclusion may present to
its international standing.
….
We welcome the Government's reasons for proposing a duty on regulators to have
regard in broad terms to "economic growth".
We recommend that the Government consider by what criteria the impact of the duty
could be demonstrated.329
Thus, the duty was broadly welcomed by the Committee, although a significant area of concern was its application to the Equality and Human Rights Commission (EHRC). The Joint Committee summarised its evidence on this point as follows:
Of particular concern to many was the inclusion of the EHRC. The Commission itself
spoke about "the intrinsic incompatibility between the growth duty and the duty to
promote and protect human rights". We were told that the EHRC is subject to the Paris
Principles, the second of which being that the national human rights institution must be
independent of the Executive. The EHRC was concerned that the duty may be
perceived as fettering their independence and therefore putting both the 'A' status of
the Commission and the British candidacy on the UN Human Rights Council at risk. It
was suggested by the EHRC that "having an 'A' status as a national human rights
institution is quite important for the projection of soft British power abroad". The Joint
Committee on Human Rights agreed that clause 60 appeared to be "incompatible with
the requirement in the Paris Principles" and as such was a "significant risk" to the 'A'
status of the Commission. This concern was shared by the EDF.330
329 Ibid, pp33-41 330 Ibid, p39, para 112
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The Joint Committee on Human Rights said the following in relation to the growth duty:
My Committee is concerned about the implications for the UK’s compliance with the
UN’s Paris Principles if the proposed duty on regulators to have regard to the
desirability of promoting economic growth in clause 58 of the draft Bill is intended to
apply to national human rights institutions such as the Equality and Human Rights
Commission (“the EHRC”).
Clause 60 of the Bill provides that any regulator who is subject to the proposed new
duty “must” have regard to any guidance issued by the Secretary of State (clause
60(4)), and that guidance may include guidance as to the ways in which regulatory
functions may be exercised so as to promote economic growth (clause 60(2)(b)). Such
a duty to have regard to ministerial guidance about how to exercise its functions would
appear to be incompatible with the requirement in the Paris Principles that national
human rights institutions must be independent of the Government, and may therefore
imperil the “A” status accreditation enjoyed by the EHRC. This significant risk could be
easily avoided if the proposed new duty did not apply to national human rights
institutions such as the EHRC.331
In its response to the Joint Committee’s report, the Government said:
We note the Committee's observations on the EHRC and recognise the need to avoid
inadvertently jeopardising its international standing. We will work closely with EHRC to
consider this issue further before finalising the list of regulators.332
331 Ibid, p103 332 Government Response to the Report of the Joint Committee on the Draft Deregulation Bill, Cm 8808, January
2014, p11, para 67