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Good morning. I open the 11th meeting this year of the Subordinate Legislation Committee. We have a poor turnout today, I am afraid. We are quorate, but only just. I have apologies from Sylvia Jackson, who is unwell. Stewart Maxwell has other commitments. Mike Pringle is at a Justice 2 Committee meeting in Glasgow. Murray Tosh may or may not stagger in in due course.
I am Douglas Greig, head of the enterprise and industry division at the Scottish Executive's Enterprise, Transport and Lifelong Learning Department. Among other things, I deal with improving the regulatory framework. My colleagues are Alisdair Meldrum, who heads the improving regulation unit, and Liz Hannah, who is the expert on these matters.
Maybe I could get the ball rolling. We are interested in the approach that Scottish Executive departments take to regulation. For example, we are aware that departments have to prepare a regulatory impact assessment in respect of policy proposals that might impact on business, charities, the voluntary sector or whatever. When is that required? Is it required in relation to bills, or just in relation to secondary legislation? Where does that fit in? I will just fire the question out. You decide among yourselves who is best to answer it.
It can be required in any legislative situation in which it is recognised that there could be a burden on business, from either primary or secondary legislation. Invariably, we have discussions with policy developers about whether the primary legislation inflicts a burden or whether the burden will arise from the secondary legislation. We can agree with them to defer the preparation of a regulatory impact assessment until the secondary stage, when the regulations are being prepared, but there are occasions when it is prepared in the face of the primary legislation coming forward.
Is that a choice that you have? There is no statutory requirement to prepare a regulatory impact assessment at one stage or another.
There is no hard-and-fast rule. It is a matter for judgment, based on where we and the policy developer see the burden arising.
Do you consider only the impact of the policy proposal or the secondary legislation, or do you consider the impact that a proposal will have in the round, when taken together with other aspects of the regulatory framework?
We tend to look at each one as an individual item.
Is there an argument for looking at the situation in the round, or in the context of similar provisions that already exist?
Are you suggesting that there could be a cumulative effect? We recognise that the cumulative effect is an issue for business, but the regulatory impact assessment process is a means of giving advice to people who are developing a policy and of considering the options. We see it as a method of assessing the burdens that arise out of a proposition and the options within it, so as to advise officials and ministers on what judgments are needed as a policy is taken forward.
As I understand it, the impact assessment is what you might call the main tool that the Scottish Executive has to assess regulations, but is that it? Are there other methods or tools of which we should be aware?
It is our primary tool for assessing the burden of regulation on the business community. We see other issues as being of importance to the business community—the atmosphere within the enforcement regime is also of importance. However, when it comes down to the measurable burden on business, the regulatory impact assessment is our main tool, as you say.
Alisdair is right to say that it is the main tool, but the short paper that we submitted and the Scottish Parliament information centre paper, which contain a range of measures, tried to put that in the context of raising awareness and transparency about the effects of regulation, which we take forward in a number of ways, including direct engagement with businesses and business organisations, which allows them to feed back to us.
I want to take us back a stage to a matter in which I am particularly interested. When departments carry out regulatory impact assessments, what criteria are used to determine whether there must be regulation, instead of simply having no regulation or having self-regulation? Sometimes I wonder whether we need regulations in the first place.
We encourage policy developers to consider that issue very seriously. Indeed, it is one of the processes in the regulatory impact assessment guidance that developers use. When we are discussing the matter with them, we ask them to consider whether they should use other possible routes. We have to ask daft-laddie questions, because invariably we are neither experts in nor even familiar with the detail of the developers' agenda or their policy objectives. As a result, we try to ask trigger questions that will make them consider non-regulatory options and build them into their assessment of the potential options.
In his political introduction to the UK guide to regulatory impact assessment, no less than the Prime Minister said:
Although the specific conclusions of the Equitable Life inquiry have not yet fed through to us, the quandary that you raise is one that we have faced since time immemorial and has not come to the fore simply because of Equitable Life. Indeed, the business community presents us with the same quandary from time to time. We see our role as encouraging policy developers to adopt as light a touch as possible in their approach to whatever issue they are addressing, which is why we encourage them to consider non-regulatory routes.
If we leave aside cases in which regulators become involved—which does not happen in relation to many of the regulations that the Scottish Parliament deals with, apart from those in relation to water—is the concept of a light touch just a myth? After all, either you have regulation or you do not.
Invariably, regulations will have an enforcer, even if that is only the courts. For instance, the Scottish Environment Protection Agency is the regulator on many of the big issues that go through the Scottish Parliament and which impact on the business community.
So how do you deal with any legal liability that might arise because of regulations not being appropriately enforced, as might happen with Equitable Life?
That is an issue that the policy custodian would have to address. We leave the policy custodians in no doubt that we are here only to guide, encourage and advise them on how we would wish them to address regulatory matters. However, it is for policy developers and their ministers to make decisions on, and to answer for, the course of action that is taken.
That puts almost everybody in an impossible situation if something goes wrong. On the one hand, you are there to guide and to advise and consult industry. Having done all that consultation, you come back and say, "In this case, minister, our recommendation is this, and the industry agrees with us that the matter can be given a light touch or left to self-regulation." On the other hand, if it all goes pear-shaped, you then say, "Well, minister, we only guided and advised."
I mean that we, as the improving regulation unit, can only advise the policy developer to adopt a light touch. Those in the policy area and the minister responsible for that area will have to take the decision on which touch is appropriate in the light of the consultation and discussion that they will have had with the business community and other stakeholders.
I am not suggesting that it is necessarily easy, that you will always get it right or that the policy developer will adopt the right touch because of your advice or regardless of it.
I am not the legal expert here, but there are various interpretations of any legal text. I will not put words into the Prime Minister's mouth, but I suspect that "light touch" might mean, particularly when we transpose European Union regulations and laws into domestic ones, that we should not gold plate them or take them literally. I think that it means that we should look at the "whereas" clauses and consider how a law or regulation could be alleviated when being introduced either through a domestic statutory instrument under the European Communities Act 1972 or by any other kind of secondary means. At that stage, we can sometimes ask whether a lighter touch could be applied, with the agreement of industry and, as Alisdair Meldrum has rightly pointed out, within the bounds of what the accountable officer for that policy area deems appropriate. Ensuring that the policy is implemented properly and effectively still comes back to that accountable officer.
One aspect of our process that might address the mistakes in the regulatory process that you are suggesting can happen is the fact that we have adopted the review RIA process, which requires policy developers to revisit within 10 years their decisions on the course to adopt. It requires them to reassess the costs involved in a particular course of action and whether it was and still is the best course of action to address the situation that they were trying to address. The review RIA process provides them with the opportunity to review the situation and to check that the approach that they adopted is still current and appropriate. Indeed, it puts an obligation on them to do so.
I would like to jump ahead to something that is mentioned in our later questions, because it seems to be connected with what you are talking about. What happens if you discover that the RIA is not being done? Is that something over which you have power? Are there steps that you can take? Do you have any authority to bring to bear on the situation?
It does not rely on power or authority. All that is required is for us to point out to the people responsible that they have not done what the guidance suggests they should have done. We try to get them to redress matters.
I suppose that this question is hypothetical, but what happens if you take a different view of a proposal's regulatory impact than the sponsoring department? If there is a conflict, would you inform the minister? What happens if he thinks that you are right and the department is wrong? I hate to talk about power all the time, but where does the ultimate responsibility lie?
The responsibility lies in the department that is developing the policy and with the ministers associated with it. We have never come to loggerheads or reached such disagreement about a judgment of a proposal's likely impact as to make us consider getting our ministers into a confrontation over the detail of a regulatory impact assessment.
Can you see a place for your having more authority to force amendment or to ensure that steps are taken? Would your influence be increased if you were part of the Office of the First Minister in the same way as the regulatory impact unit is part of the Cabinet Office at Westminster? Would your influence increase if you were centralised in that way?
We have not seen a need for that approach in the Scottish scene. We are aware of how different our approach tends to be from that of Whitehall. We acknowledge that there is a difference, but we have found that our consultative, advisory, cajoling approach has generated benefit, spread the message and transformed awareness of the economic implications of decisions within the Executive.
So far so good.
It is noticeable that, over the years, officials have gained a more firmly grounded awareness of the economic implications of their decision-making processes, particularly in the areas of environment and planning.
Earlier you said that you go out and engage with businesses. How do the microbusiness tests work? How do you engage with businesses and carry out those tests?
You are asking about the microbusiness test. We see the obligation as being on the policy developer, to engage with the business community in relation to his agenda and, in preparing the regulatory impact assessment, to take account of the business community's views on the costings and the burden involved. We would advise policy developers on how to do that. Our role would be to advise them of the business and trade associations that they might approach to gain entrance and to identify companies in the sector to which they could speak.
Right, so engagement is with the business and trade associations. Is that the main route?
That tends to be the initial approach route.
The enterprise networks can also provide—
How many microbusinesses are members of trade associations or are engaged with the enterprise networks, once they have received their initial start-up advice? Most microbusinesses are so busy getting on with running themselves that they have precious little time to engage with a trade association or to talk to the enterprise company unless they need something. I wonder how effective the networks are at getting microbusinesses' views about the impact of a regulation.
We could get you figures from the enterprise networks on the number of small businesses that engage with them. I will certainly commission that work if it would be helpful. I will leave the Federation of Small Businesses and other small-business organisations to answer for themselves. We use our best endeavours to try to encourage the policy developers to achieve correct assessments of the effects on microbusinesses. However, I agree that we cannot get pin-point accuracy.
Clearly, neither the Federation of Small Businesses nor the Forum of Private Business would tell us that they do not represent small businesses, even though both organisations aim to represent the same people. I just wonder how many such people are not represented.
Probably a lot, I would think.
Another assumption that has to be made is the extent to which there might be a radically different cost structure or impact on different businesses. Not every small business will be a member of those organisations, but the question is whether the memberships of those organisations are representative. We cannot measure the impact on hundreds of thousands of microbusinesses, so we try to consider the impact on the typical or average business.
Whether or not businesses are members of such organisations, policy developers find it challenging to get feedback and input from the business community.
Is it still difficult even with the establishment of the business gateway, which used to be the small business gateway.
It is still difficult to get individual companies to provide input to the costing of policy development.
Presumably, that is because such input involves an additional cost burden on the companies, which have their own work to do.
That is right.
Unlike the RIU down south, which considers the impact of regulation on the voluntary sector and charities, you focus only on the impact on businesses. Would you welcome the extension of your remit so that it covered those sectors?
We do not exclude charities and voluntary sector organisations from our interests. We are continuing the long-standing policy of attending to the interests of businesses, charities and voluntary sector organisations. We give more attention to the interests of the business community almost by default, but we do not specifically exclude the interests of charities and the voluntary sector.
We and others are aware of the existence of the voluntary issues unit within the Executive and of the compact with the voluntary sector. We influence each other and raise awareness. We speak to each other to ensure that the voluntary issues unit is aware of any RIA that might have an impact on the voluntary sector and vice versa.
Would it be more advantageous for your reputation and status if the voluntary sector were formally included in your remit?
It has never been formally excluded from our remit.
However, we know the sensitivities of the sector and that most people have a desire to be formally recognised. The fact that the sector is not formally excluded equally means that it is not formally included. The voluntary sector is not referred to.
However, we are aware of it. The cake could be cut in any number of different ways, but it still comes down to the need for our people who deal with the different sectors to speak to and understand each other.
This may be a minor point. Your unit is called improving regulation in Scotland and the Scottish Executive has an improving regulations strategy. Does improving regulation in that context mean less regulation or more effective regulation, or both?
There is certainly scope for that advice to be made available to ministers. We act not under strict statutory operational guidance but within the normal administrative convenience of the Executive, so we could advise ministers to intervene at any point if they wished.
Earlier, you talked about the greater awareness in the Executive's departments of the potential impact of regulation, particularly in the environment and planning fields. I suppose that the justification for the work that you are doing lies in your belief that people understand the requirements more.
Measuring awareness in that way is difficult. We would have no objection to undertaking a customer satisfaction survey. As part of the on-going changing to deliver programme and the continuous improvement policy in the Executive, we are a lot more conscious of the need to be aware of what our clients, customers and stakeholders think of us. It might be that we need to consider a degree of measurement in that regard. I should say, as an ex-economist, that the fact that an exercise involving awareness seminars and surveys is never going to give precise measurements means that I have a slight difficultly with the suggestion. Nevertheless, that might be something that we should consider.
A ministerial small business consultative group meets roughly every quarter under the chairmanship of the Deputy First Minister and Minister for Enterprise and Lifelong Learning. All the principal business representative bodies are on the group and I attend as a matter of course because regulatory matters are a standing agenda item for the group.
I appreciate that satisfaction is not an easy thing to assess, but if you are going to tell a parliamentary committee that people are much more aware of the requirements and that the system is working well, I think that we are entitled to ask what the evidence for that is. I do not disbelieve what you are saying, but I am well aware that there are contrary voices.
I am sorry; I thought that you were asking how you might be able to judge the level of satisfaction. We officials feel able to judge it by examining the content of the policy submissions that are sent to ministers, which much more thoroughly address the economic implications of proposals, and the accompanying regulatory impact assessments. That is how we come to the conclusion that that awareness is much greater than it once was.
So you can see and assess the improvement and you think that your quarterly meetings with business groups allow them to see it. Given that we are not involved in your quarterly meetings and that we do not see the policy submissions that go to ministers, how might we measure it?
The regulatory impact assessments that accompany bills that go before the Parliament are laid in SPICe and are available to all members. I hope that they also illustrate the matter to members of the Parliament.
Do the assessments go on your website?
They are on our website in final form and in partial form as they are developed in the course of consultation processes.
Do you have any way of monitoring the number of hits on them?
No. We have tried to do so, but I am afraid that we have not been successful yet.
We might want to think about talking to information technology staff about that.
I must make it clear that we—which at the time meant the Scottish Office—and the Convention of Scottish Local Authorities were both signatories to the concordat. As COSLA largely conducts the promotion of the concordat among local authorities, I should not try to speak too fully about the local authority situation. However, I acknowledge that application of the concordat is not uniform. Although we had 100 per cent sign-up of local authorities in Scotland soon after the concordat was published, work is still to be done to achieve universal application of the concordat's precepts among local authorities.
Do you continue to work with COSLA to do that?
We are still working towards that with COSLA. From time to time, we have meetings with the lead officers in local authorities to assist them to spread the message in their authorities, but there is no doubt that the message is being spread more effectively in some authorities than it is in others. Likewise, we are trying to spread the message among the enforcement agencies that are linked directly to the Executive, but we acknowledge that the response is variable even among those agencies. We are involved in an on-going education process.
I want to go back a bit to the Deputy First Minister's quarterly meetings. Are issues to do with the application of the concordat ever raised in those meetings?
Yes.
Is that another standing item?
The matter is viewed as part of the regulatory issues. Comments often come from the business community about inconsistencies in the application of regulation. That issue is touched on regularly in the meetings.
In England and Wales, the better regulation task force publishes regular reports on general or particular aspects of regulation. Would a similar unit be of assistance here and, if so, why do we not have one?
We have not as yet seen the need for such a unit because we can benefit from the work of the better regulation task force. We know that the task force is a creature of the Prime Minister and that its remit does not extend north of the border. We regularly receive its reports and have never hesitated to ensure that we promulgate them to the parts of the Executive that have a parallel interest in the issues that are addressed by the task force. We try to ensure that we learn lessons, wherever they come from, and that the policy developers take those lessons on board.
I have two further points, the first of which concerns the 10-year requirement to assess. I know that it is the promoting department that does that, but would it not be better if you did it?
We would hope that the experts on the subject would be best placed to do that. Their thinking would be subject to our views and scrutiny at the review process, as was the case in the initial process.
Are you confident of their complete objectivity in such an exercise?
We are confident in our ability to make them understand and to ensure that they have understood the business impact.
You point out subjectivity where it arises.
Would it be better if the situation were the other way round, so that unless the Executive were active in introducing a new instrument, the previous one would lapse after a certain period? I am thinking of the sunset regulation, in which case the period of time might have to be slightly longer than 10 years; it might have to be 15 years, for example, after which time the instrument would lapse and have to be renewed.
And be rejustified?
Yes.
To a great extent, we hope that the review process amounts to a rejustification of the measure. Given that we have not got to the 10-year point at which we would go through a review, the process has not been tested as yet. Our expectation is that that will be the case, however.
And the review process is not given the parliamentary scrutiny by a subject committee that the original order received.
No. That is not built into the review process.
On one level, I take your point that it makes no difference. In lawyerspeak, however, we would talk about the onus shifting or the dynamic changing. If the instrument were to be a sunset regulation, the onus would shift to justifying doing the measure again, as against letting it drop.
That is correct.
In the back of my mind, I am thinking of how many instruments come before this committee. In practice, would the sunset regulation route produce a phenomenal burden on any system?
We would need to assess that. I do not think that we could judge that at this distance.
Would it not spur people on to consolidate instruments? They do not do that under the existing system.
It might well.
Consolidation is an issue that is raised at committee time and again.
I know that the UK Government is encouraging that approach to regulatory processes to be taken at European level. The UK Government is very conscious of the need for consolidation in some areas of European regulation and is encouraging the European Commission to go down that road. If the committee believes that there are similar situations that need to be addressed in the Scottish context, I am sure that that kind of approach would be encouraged.
Although you say that the question has not arisen as yet, there are instruments around that predate the Scottish Parliament. Surely they must be coming up for a 10-year review?
But the review process is being applied only to those instruments that have come through since devolution.
I take it that there is a practical reason for that? The scale of the regulations that are lying about is huge.
If we did otherwise, we would face the difficulty of establishing a start date.
I suppose so.
The Deregulation and Contracting Out Act 1994 allows some regulations to be removed if they are causing an unnecessary burden, but there have been no such removals since devolution—I do not know whether there were any before. Does that mean that there are no unnecessary burdens, or does it mean that the mechanism does not exist for anyone to think about removing regulations?
We know that we have that power still at our disposal, but we have not felt a need to put in place the process to allow orders under the Deregulation and Contracting Out Act 1994 to be brought forward because a requirement for that process has not been brought to our attention.
Have any regulations been removed south of the border over the same period?
South of the border, the 1994 act is no longer used, as there is now the Regulatory Reform Act 2001. We did not sign up to that because we were assured that there would not be a need for us to sign up to it. Nevertheless, the UK Government continues to bring forward a regular programme of orders under the Regulatory Reform Act 2001.
You were assured by whom?
We were assured by officials in the constitution area who were drawing up the rules and procedures for the new Parliament that we would not need fast-track procedures, as we would have time at our disposal to pursue matters in the normal course of events.
I think that that has probably come to pass. Nobody has come to us with a proposal asking us to rescind an order. Until they do, we do not know whether we can change things quickly.
At the moment, the normal processes have accommodated all the demands that have been made of them.
I will not ask any more about that. It points us towards some interesting questions that we should ask about how the Regulatory Reform Act 2001 works south of the border and why—or whether—it is necessary there.
There are a number of questions that we might ask as a result of what we have heard.
I thank our witnesses. I have the impression that your overall position is that, in the past few years, things have got much better. The cynic would say that I would say that; as Murray Tosh points out, there may be other views. However, is it your position that we are getting the hang of regulatory impact assessments and so on?
We know that we have a long way to go. We are conscious of the mediocre quality of many of the regulatory impact assessments that are done. In spite of those shortcomings, we have made a lot of progress and have seen big improvements throughout the Executive concerning awareness of the economic implications of actions.
On behalf of the committee, I thank you very much. We will take a short break.
Meeting suspended.
On resuming—
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