This month the Legislative and Regulatory Reform Act 2006 ('the Act') comes into force.  It is one of the Government's key legislative proposals for 2006, designed to promote productivity and ease the burden of regulation. 

The Act replaces the Regulatory Reform Act 2001 and is part of the UK Government's Better Regulation Action Plan 2005.   However, as it confers on Ministers broad powers to amend existing legislation and to promote regulatory principles, it has been the subject of substantial debate.  Now that it has become law, what does it do?

The Act aims to enable Ministers to reform unnecessary or over-complicated legislation quickly.  It is hoped that by using the order-making powers in the Act, regulatory reform may be achieved without having to progress an amending Bill, which can take some time.

Powers in the act allow Ministers to make orders to remove or reduce legislative burdens imposed by, other legislation.  Ministers may do this by making a variety of orders, for example to amend the existing functions of a body; or creating a new body, or even amending or repealing an existing enactment. "Burdens" are defined as: financial cost; administrative inconvenience; obstacles to efficiency, productivity or profitability or sanctions that affect the carrying-on of lawful activity. 

Ministers may also make orders that they consider "would serve the purpose of ensuring that regulatory functions are exercised so as to comply with the Better Regulation Commission's five Principles of Good Regulation".  These principles broadly require that regulatory activities be carried out in a way that is transparent, accountable, proportionate and consistent and targeted only where action is needed.  These orders can range from amending the constitution of a regulatory body, to creating an entirely new body with regulatory functions in order to replace an existing regulator. 

Of course there are limits to the Ministers' powers.  For example, the Act imposes certain 'preconditions' that must be met in order to use the various Order-making powers. These conditions are:

  • that the aims of the Order could not be satisfactorily achieved by non-legislative solutions, such as the issuance of guidance;
  • that the Order will create an effect proportionate to the policy objective;
  • that the Order strikes a fair balance between the public interest and the interests of the persons adversely affected by the Order;
  • the Order should not remove any necessary protection, such as civil liberties or environmental protections;
  • the Order will not prevent the exercise of any right or freedom of a person, which he might reasonably expect to continue to exercise;
  • the Order should not be 'of constitutional significance' - this mainly reflects the need to take account of Scottish constitutional matters, but would not prevent incidental changes to be made in relation to devolved matters, and even to the Scotland Act itself.

Finally, a Minister using the Order-making powers under this Act must lay an explanatory document before Parliament, setting out why he considers that all of the preconditions have been met.

With such broad conferral of powers, the Act has the potential to be used to reduce legislative and regulatory burdens on business.  However it will only become clear the extent to which Ministers are able to take advantage of their new powers once the first of these Orders is placed before the Parliament.

Kelly Harris is a public law specialist with UK law firm Shepherd and Wedderburn. 0131 473 5382

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