Further information

Regulatory approaches

There is an enormous amount of commentary on regulation as a subject. This includes academic literature – for instance the bibliography of “Understanding Regulation” Oxford University Press (2nd edition) alone runs to some 20 pages. There are also many guides to regulation and studies from various bodies, including for example, National Audit Office and OECD and Parliamentary committees referred to in our briefing.

Principles of good regulation

Better regulation initiatives include proposals for deregulation in the 1980’s to the Government’s 2021 consultation on Reforming the framework for better regulation to which ICAEW responded (Rep 94/2) and the Government’s current proposals outlined in The Benefits of Brexit.

Government has been assisted by what is now (after various incarnations), the Better Regulation Executive (BRE) which is part of the Department for Business and Trade.

Influential historic reports and publications include:  

• BRE’s 2003 publication, the Principles of Good Regulation which provides good starting point for those seeking to understand the key principles of good regulation.  
• The Hampton Report of 2005 which considered the inspection and enforcement costs imposed by independent regulators and set out a vision for a risk-based approach to regulation. It included a set of principles for regulatory inspection and enforcement, based around risk and proportionality, as well as a major streamlining of regulatory structures.
• BRE’s Less is More: Reducing Burdens, Improving Outcomes publication in March 2005 recommended various regulatory changes, including the introduction of, in effect, a Dutch model, with impact assessments, business impact targets and “one in one out”.  
• Following on from the Hampton Report, the Macrory Report of 2006 Making Sanctions Effective made several recommendations in relation to regulatory non-compliance, including that regulators should have regard to six principles for setting penalties and seven characteristics of a successful sanctioning regime. It also found that many regulators were heavily reliant on one tool – criminal prosecution – and noted why this might be problematic.   
• The “Red Tape Challenge” of 2010-15 Parliament invited suggestions for removing red-tape (ie unused or ineffective regulation) or otherwise “deregulating”. The then Prime Minister commented: 

"There are over 21,000 statutory rules and regulations in force, and I want us to bring that number - and the burden it represents - down.  Indeed, I want us to be the first government in modern history to leave office having reduced the overall burden of regulation, rather than increasing it."

• No Stone Unturned (2012) was a report with recommendations on how to increase economic growth, including that government should impose an obligation on regulators to take proper account of the economic consequences of their actions.  

Many of the better regulation initiatives have been implemented in whole or part through statute and so, collectively, have had a substantial impact on the UK’s regulatory framework. The following are perhaps the most far reaching:

The Legislative and Regulatory Reform Act 2006

The Legislative and Regulatory Reform Act 2006 introduced major reforms to the UK regulatory regime including implementing some of the Hampton report recommendations on enforcement, and BRE’s principles of good regulation and the Regulator’s Code. Follow this link for more information on the Act, Principles and Code.

Regulatory Enforcement and Sanctions Act 2008

The Regulatory Enforcement and Sanctions Act 2008 primarily implements key recommendations contained in the Hampton Review and the Macrory Review referred to above and the Government paper Next Steps on Regulatory Reform, published in July 2007. More information can be found in Appendix 1.

Small Business, Enterprise and Employment Act 2015

The Small Business, Enterprise and Employment Act implemented BRE proposals on impact assessments etc.  Related to this:

• Guidance on the Better Regulation Framework issued by the Department for Business and Trade sets out the current “better regulation framework” including impact assessments etc provided for under the Act: and
• The DBT’s principles of best practice contains an explanation of the process for post-implementation reviews. 
• It publishes an annual report on BIT as required under the framework.

Deregulation Act 2015 (as amended)

The impact of the Deregulation Act of 2015 is described in Appendix 1.

Reform measures are not confined to the above. Other examples include (by way of illustration only):

• The Enterprise Act 2002 which gives certain regulators power to apply for Enforcement Orders from the court;
• The Enterprise and Regulatory Reform Act 2013 (which also covers competition law, mergers, green energy and employment law) which provides (in section 59) for sunset clauses and review clauses. Section 59 simply inserts a new permissive definition into the Interpretation Act 1978.

Many of our conclusions about regulators are drawn from materials cited throughout and examples given in the briefing. For instance, the idea that regulators can have either or both of rulemaking and enforcement roles is recognised in the definition of functions of “regulating” in the Deregulation Act and different legal forms are apparent from the examples (and other commentary) cited throughout.

We could not find a definitive list of all UK regulators. The National Audit Office reported that there were “more than 90 regulatory bodies” in its 2017 Short Guide. It refers to “about 90 regulatory bodies not including local authorities” in its 2019 paper “Regulation”. The Hampton Report considered “only” 650 regulatory bodies, of which 63 were “national regulators”, the others being local government or bodies having responsibility for enforcement.

For more information on ICAEW’s Oversight regulators, see our response to the Insolvency Service’s call for evidence on regulation of insolvency, Rep 107/19.

Regarding funding, see, for example, NAO analysis in its 2019 Regulation paper, which includes a review of government departments:

Regulation is funded in various ways. For example, the Financial Conduct Authority is wholly funded by the industry it regulates through licence fees and levies, the Competition and Markets Authority is mostly funded by government, and Ofgem receives funding from both industry and government. Some regulators, such as the Food Standards Agency, also delegate regulatory functions (including inspections and enforcement activities) to local authorities and these are funded separately. Our work in recent years has identified some regulatory funding models that are coming under pressure from emerging risks, raising questions about their financial sustainability.

The nature of rules – how they have force

Our view on what makes a “rule” is not derived from any specific source. However, the NAO reviews of government departments look at a range of regulatory approaches from “prescriptive” to “light touch” e.g. see its 2019 paper, Regulation.

The variety of terminology used is demonstrated by the examples cited in the briefing. As regards secondary legislation, the “understanding legislation” section of the UK legislation site notes:

There are three main types of UK Statutory Instruments: ‘Orders’, ‘Regulations’, ‘Rules’. However, there is no limit imposed on the descriptions that may be given to Statutory Instruments. Other examples include ‘Scheme’, ‘Direction’ and ‘Declaration’.  Different types of instruments serve different functions, but they all have the same legislative force.

Bye-laws. This is legislation delegated to bodies such as local authorities, operators of transport systems or public utilities.

Who makes the rules

We provide further information below regarding the rule making roles of:

• Parliament (the legislature)
• the Government and Civil Service (the executive)
• the Courts.

Parliament and Government are different bodies. Our briefing does not seek to cover UK constitutional matters in any detail, but information about the separation of powers between legislature, executive and the courts is available in a note for Parliament (somewhat dated).

The role of Parliament is described in materials contained on its website as:

“to check and challenge the work of Government, make and shape effective laws, and debate/make decisions on the big issues of the day.”

The site includes information on how Parliament works (the two houses etc), how laws are made (white papers, bills etc) and committees (including select committees and general committees).

The UK government is the central executive authority of the UK. The government webpage ‘How Government Works’ explains the role of the Prime Minister etc (as does the Parliament site).

Another page on the UK Government site lists all the government departments/ministries (23 as at 1/8/22), non-ministerial departments (20) and agencies and other public bodies (417), ‘high profile groups’ (106), public corporations and 3 devolved administrations.  Tribunals are non-departmental public bodies and are part of the justice system and have jurisdiction over a specific area of law - for example, the Competition Appeal Tribunal.

The various categories of public bodies are explained in the Cabinet Office handbook, Classification of Public Bodies: Guidance for Departments. This includes “Arm’s length public bodies”. It covers other relevant issues, eg on funding rules and degrees of independence of various bodies. It states:

“New public bodies should only be created if there is a clear and pressing requirement, a clear need for the state to provide the function or service through a public body, and no viable alternative - effectively establishing new public bodies as a last resort. This is to prevent any unnecessary increase in the number of public bodies.”

It also describes the role of the Civil Service:

…the Civil Service does the practical and administrative work of government and is co-ordinated and managed by the Prime Minister, in their role as Minister for the Civil Service

It provides a link to the Civil Service site, which includes material with further explanation, eg:

We’re politically impartial and independent of government and work in central government departments, agencies, and non-departmental government bodies (NDPBs). The Civil Service does not include government ministers (who are politically appointed), members of the British Armed Forces, the police, officers of local government or NDPBs of the Houses of Parliament, employees of the National Health Service (NHS), or staff of the Royal Household.

HM Courts and Tribunals Service is responsible for the administration of criminal, civil and family courts and tribunals in England and Wales.

The Supreme Court is the final court of appeal in the UK for civil cases and for criminal cases from England Wales and Northern Ireland.

The Supreme Court hears cases of the greatest public or constitutional importance affecting the whole population.

Unlike some Supreme Courts in other parts of the world, the UK Supreme Court does not have the power to 'strike down' legislation passed by the UK Parliament. It is the Court's role to interpret the law and develop it where necessary, rather than formulate public policy.

Lord Hodge (Supreme Court) outlined the role of common law against law-making in a speech in 2019, concluding:

Judicial law-making is therefore constrained law-making. It is also a minority activity. The vast majority of judicial work, well over 90 percent, involves no law-making but is what Lord Devlin famously described as “the disinterested application of known law”. The fact that judge-made law is an independent source of law contributes to its flexibility; and judges continue to adapt the common law to changes in commercial practice and social values as Lord Mansfield did 180 years ago.

Rule-making processes

The Cabinet Office guide on Making Legislation contains more (300+ pages) information on the processes involved in making legislation.

Detailed Cabinet Office guidance from the Office of Parliamentary Counsel covers the King’s consent (Crown prerogative etc).

The topic of secondary legislation has been subject to a good deal of commentary (criticism) – see Appendix 2 for selected examples.

Aspects of the rules of natural justice are covered in Judge Over Your Shoulder which is designed to help civil servants advise ministers and governments on decision making but is also a lay person’s guide to Administrative Law – the branch of law that governs the relationship between the government and citizens, and how it is applied.” It covers consultation requirements.

Cabinet Office consultation principles give guidance to government departments on conducting consultations and were amended in the light of comments from the Secondary Legislation Scrutiny Committee.

The Government's decision to place the Cabinet Office in charge of the review, rather than an independent unit, is of a piece with those elements of the Principles described above which place the Government's own interests above those of stakeholders in civil society generally... In our view, it is in the Government's own interest to encourage and consider practical views from those affected, so that legislation can be more effective and efficient.

The principles include “do not consult for the sake of it” and to consult only where a decision has not been taken.

Drafting of rules

Statutes (and some secondary legislation) are drafted by the Parliamentary Counsel. The Office of Parliamentary Counsel are part of the Cabinet Office and their web page describes their role and links to related materials, including guidance for them on drafting and a very thorough exploration of  “When laws become too complex” including a history of criticism complex law (back to Edward VI, d.1553), possible reasons for shortcomings, some misconceptions and suggestions for improvement, reference to extensive academic publications on the subject and launch of a “good law” project (now seemingly dormant) etc.

….. we should regard the current degree of difficulty with law as neither inevitable nor acceptable. We should be concerned about it for several reasons. Excessive complexity hinders economic activity, creating burdens for individuals, businesses and communities. It obstructs good government. It undermines the rule of law.

• Explanatory Notes to primary legislation (introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts) and
• Explanatory Memorandums (to accompany any SI or draft SI laid from June 2004 onwards).

Public availability of the rules

• What legislation is published
• How amendments are applied
• What legislation is updated
• Application of legislation to different jurisdictions in the UK.

Much of the commentary in the briefing is based on the examples cited or descriptions given in the Hampton and Mcrory reports (see Section 1 above).

Inspection

For example, the Hampton Report states that:

Regulators will generally be empowered (in the applicable legislation) to carry out some level of inspection to ensure that the regulations they enforce are being complied with. They have different inspection regimes often due to the different issues and regulatory structures they enforce, e.g. whether preventative or reactive.

Whistleblowing – ICAEW publishes short guidance on this subject. Whistleblowing may be relevant in respect of defences or sentencing, e.g. for Bribery Act, Criminal Finances Act, SFO whistle-blower hotline.

Sanctions available

Civil

The Mcrory report states:

It is important that any administrative penalty system where decisions are taken by public officials, acting as part of a Government department or agency carries with it the necessary protections for any person or business served with a penalty notice. Having access to an effective and quick appeal route is an absolute necessity when referring to administrative financial penalties. The Department for Constitutional Affairs’ White Paper on Complaints Redress and Tribunals states that ‘where mistakes occur, we are entitled to complain and to have the mistake put right with the minimum of difficulty; where there is uncertainty we are entitled to expect a quick resolution of the issue’

Deferred Prosecution Agreements - see SFO site.

Criminal

Some statutes provide for specific types of remedy eg Proceeds of Crime Act 2002 provides for confiscation orders and courts have related powers to enforce (e.g. freezing assets).

A Law Commission review in 2010 recommended alternatives to criminal sanctions for regulatory purposes.

Who imposes sanctions and who adjudicates

As regards civil sanctions, there are many tribunals, covering a wide range of areas affecting day-to-day life and they hear appeals from citizens made by Government departments or agencies.

Some of the individual jurisdictions dealt with by tribunals are UK-wide, e.g., immigration and asylum, and others cover parts of the UK, e.g., mental health covers England only. Some tribunals are administered through local authorities (e.g., the School Exclusion Panels), some by government departments (e.g., Valuation Tribunals) and others through Her Majesty’s Courts and Tribunals Service (HMCTS), an agency of the Ministry of Justice.

The Crown Prosecution Service prosecutes criminal cases that have been investigated by the police and other investigative organisations in England and Wales. The CPS is independent, and makes decisions independently of the police and government.

This is an agreement between the CPS and prosecution authorities (which include the Department for Business and Trade, Department for the Environment, Food and Rural Affairs, Department of Work and Pensions, Environment Agency, Financial Services Agency, Information Commissioner’s Office, Office of Fair Trading and the Serious Fraud Office) to abide by broad principles which promote improved liaison and a coordinated approach to decision making where two or more signatories have a common interest.

There is also a code for prosecutors which contains information about prosecutors and processes of prosecution.

The DPP is the head of the Crown Prosecution Service (CPS), which is the principal public prosecution service for England and Wales. The DPP operates independently, under the superintendence of the Attorney General who is accountable to Parliament for the work of the CPS. The Code gives guidance to prosecutors on the general principles to be applied when making decisions about prosecutions. The Code is issued primarily for prosecutors in the CPS but other prosecutors follow the Code, either through convention or because they are required to do so by law. The independence of the prosecutor is central to the criminal justice system of a democratic society. Prosecutors are independent from persons or agencies that are not part of the prosecution decision-making process. CPS prosecutors are also independent from the police and other investigators. Prosecutors must be free to carry out their professional duties without political interference and must not be affected by improper or undue pressure or influence from any source.

The CPS prosecutes on behalf of some other Government departments. In such cases, prosecutors should have regard to any relevant enforcement policies of those departments.

Specific procedures/considerations may arise depending on the area of law concerned, e.g. Guidance on Bribery Act.

The Director of Public Prosecutions (DPP) or the Director of the Serious Fraud Office (DSFO) must give personal consent to a prosecution under the Act, as set out in section 10 of the Act.

A personal consent is to be distinguished from usual DPP consents, as it cannot be delegated to a Crown Prosecutor, and must be approved personally by the DPP.

Sanctioning companies/corporations

The UK’s approach to applying criminal sanctions to corporations has been under review for many years and subject to proposals for reform.

Parliament

For more information on Parliament and how it works, see “who makes the rules” above and the UK Parliament page - checking the work of Government.

Ministers are subject to the Ministerial Code.

Ministers must also comply at all times with the requirements which Parliament itself has laid down in relation to the accountability and responsibility of Ministers. …..The Minister in charge of a department is solely accountable to Parliament for the exercise of the powers on which the administration of that department depends. The Minister’s authority may, however, be delegated to a Minister of State, a Parliamentary Secretary, or to an official. It is desirable that Ministers in charge should devolve to their junior Ministers responsibility for a defined range of departmental work, particularly in connection with Parliament.

 

Heads of departments and the chief executives of executive agencies are appointed as Accounting Officers. This is a personal responsibility for the propriety and regularity of the public finances for which he or she is responsible; for keeping proper accounts; for the avoidance of waste and extravagance; and for the efficient and effective use of resources. Accounting Officers answer personally to the Committee of Public Accounts on these matters, within the framework of Ministerial accountability to Parliament for the policies, actions and conduct of their departments.

Parliamentary Committees

The Mcrory report (see Section 1 above) commented:

Departmental Select Committees work on issues relevant to their specific government department. While this sector specific scrutiny is appropriate in many instances, the cumulative impact of regulatory issues is difficult to capture under such governance arrangements. Both the Hampton Review and my own review have demonstrated that, despite very different legislative structures and institutional arrangements, there are many common issues and challenges in the regulatory field that cut across sectoral boundaries. I support the view of the House of Lords Select Committee in recommending that a joint Parliamentary Select Committee be created to focus on overarching regulatory issues. This recommendation was also endorsed by the Hampton Review ……. This committee could also take on additional functions, which fall outside of my remit, but I suggest some options for Parliament to consider.....

The Constitution Committee of the House of Lords

examines all public bills for constitutional implications and investigates broad constitutional issues. Its 2004 Report and the then Government’s response, The Regulatory State: Ensuring its Accountability, provides a helpful analysis of how the regulatory environment had changed in the preceding decades, especially with the creation of more independent regulators.

The Industry and Regulators Committee (House of Lords)

considers matters relating to industry, including Government policies to promote industrial growth, skills and competitiveness, and to scrutinise the work of UK regulators.

Find out more about its work.

The Public Accounts Committee

examines the value for money of Government projects, programmes and service delivery. Drawing on the work of the National Audit Office the Committee (in its words) “holds government officials to account for the economy, efficiency and effectiveness of public spending.” It was scathing about cost of regulation in its Eighteenth Report of Session 2016–17: Better Regulation.

The Secondary Legislation Scrutiny Committee (House of Lords)

Reviews aspects of secondary legislation and can draw matters to attention of member of Parliament (a necessary function, given the volume of secondary legislation).

Find out more about its work.

Reporting and other controls

The Mcrory report contains extensive commentary, e.g:

All regulators have an accounting officer; They have to produce annual accounts – available to everyone; They can be audited by the National Audit Office or the Audit Commission; They can be subject to value for money examinations by the National Audit Office; or They can be called to appear before the relevant House of Commons or Lords select committee to answer for their actions.

… Whilst accountability to Parliament and Ministers is important, it is equally important that regulators are clearly answerable to those that they regulate, and those on whose behalf they are regulating. Such accountability would assist in reassuring the regulated community that non-compliance is dealt with effectively. My recommendations on improved transparency will serve to strengthen regulators’ accountability to the public and the regulated community through the publication of their enforcement policies and outcomes of their enforcement actions…

… The business community usually interacts with several regulators. At present, the accountability mechanisms that exist are often narrow and sectoral in scope, and therefore have difficulty in assessing the wider consequences of regulatory requirements and their enforcement, both for those that are regulated and society as a whole.

The National Audit Office

The Comptroller and Auditor General (C&AG) certifies the accounts of all government departments and many other public sector bodies and has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively and with economy.

More information about the C&AG’s powers.

NAO has produced various materials on better regulation initiatives. For instance, it made a submission to the BRE review of controls on regulation in 2012, which reviewed the state of SBEE controls etc at that time. In its Departmental Overview 2019, it noted:

Regulators are typically accountable to Parliament, either directly or through their sponsor minister, or both. The way in which they are accountable broadly depends on their administrative status.... Most regulators are directly accountable through their own accounting officer, who must personally “be able to assure Parliament and the public of high standards of probity in the management of public funds” (Managing Public Money). Executive agencies are accountable through the government department of which they are a part. Consumers and citizens are also able to hold regulators to account and to directly seek redress for poor service, such as through ombudsman services or advocacy bodies.

More about the National Audit Office.

The Green Book

The Green Book is guidance issued by HM Treasury on how to appraise policies, programmes and projects. It also provides guidance on the design and use of monitoring and evaluation before, during and after implementation. Appraisal of alternative policy options is an inseparable part of detailed policy development and design.

The Courts – natural justice

Decisions of public bodies can be challenged in court under judicial review. This is a complicated area of law. The guide for civil servants and ministers The Judge Over Your Shoulder states:

Judicial review claims are brought to the Administrative Court or Upper Tribunal in the first instance against public authorities including Central Government Departments to challenge the lawfulness of their decision, action or inaction. .. All public bodies should aim to practise ‘good administration’: i.e. to perform their public duties speedily, efficiently and fairly. …’Public bodies’ describes a range of bodies exercising public, often statutory, functions. Examples include: central government departments, non-ministerial departments, non-departmental public bodies, arm’s-length bodies, executive agencies, devolved administrations, NHS bodies and local government...

Administrative law has developed a series of tests for measuring the lawfulness of an exercise of public law powers; some of them are:

• legality — acting within the scope of any powers and for a proper purpose. To act lawfully, the department must have the legal power to do what it intends to do. If it does not, it will be acting ultra vires, or outside its powers: i.e. it will be acting unlawfully. Where the power does exist, it will usually be found in primary legislation (an Act of Parliament) or subordinate or secondary legislation (such as a statutory instrument)
• procedural fairness — for example, to give the individual an opportunity to be heard
• reasonableness or rationality — following a proper reasoning process and so coming to a reasonable conclusion
• compatibility with the ECHR rights.

The Legislative and Regulatory Reform Act 2006

This Act implemented some of the better regulation initiatives noted in Section 1 above – the Explanatory Notes refer:

The Hampton report, published in March 2005, recommended a set of enforcement principles (the Hampton Principles), which focused on:

• the use of comprehensive risk assessment to determine enforcement activities,
• the provision of authoritative, accessible advice to help regulated entities understand and comply with legal requirements, and
• the reduction of unnecessary information requirements.

The Act provides the statutory basis for:

• The Principles of Good Regulation and
• The Regulators’ Code

to apply in relation to specified regulatory functions.

The Principles

…”the Act establishes statutory principles of good regulation, based on the Better Regulation Commission's [Now BRE] Principles of Good Regulation, to which regulators exercising regulatory functions specified by order must have regard. These statutory principles will also inform a Code of Practice issued by the Minister, to which regulators must have regard when determining any policy or principles by reference to which they exercise specified regulatory functions.”

The Code

(s22) Empowers Ministers to issue a Regulators’ Code.

(2) Any person exercising a regulatory function to which this section applies must, except in a case where subsection (3) applies, have regard to the code in determining any general policy or principles by reference to which the person exercises the function.

(3)Any person exercising a regulatory function to which this section applies which is a function of setting standards or giving guidance generally in relation to the exercise of other regulatory functions must have regard to the code in the exercise of the function

This Government website page provides some background information, including links to the Code.

The in scope regulatory functions/regulators

The duties in sections 21 and 22 of the Act only apply to the exercise of regulatory functions specified by Order made under section 24 of the Act. The first such Order was the Legislative and Regulatory Reform (Regulatory Functions) Order 2007 as amended in 2009, 2010 and 2014 (none of which show the consolidated position following the amendments).

• Part 1 of the Schedule to the Order specifies the regulatory functions exercisable by relevant statutory regulators (around 30 of them).
• Part 2 specifies the relevant regulatory functions exercisable by a Minister of the Crown (some 300 pieces of legislation are referenced, but the responsible Ministers are not expressly identified)
• Part 3 specifies the relevant regulatory functions exercisable by local authorities (a couple of hundred references to legislation)
• Part 4 refers to functions of local authorities conferred by secondary legislation made under section 2(2) of the European Communities Act 1972 in relation to food hygiene, food standards and animal feed (the Order does not state the secondary legislation concerned).

The relationship between the Principles and Code

The Explanatory Notes note to the Act notes that the Minster is required:

…...when preparing the draft Code, to seek to secure that it is consistent with the principles set out in section 21. This is to avoid discrepancies between the principles and the Code, which could cause difficulties for regulators who are under a duty to have regard to both. The Minister must consult the persons listed in subsection (3) about the draft Code. The draft Code must be laid before Parliament and can be issued by the Minister if it is approved by a resolution of each House of Parliament. While the Code is not itself a statutory instrument, it must be brought into force by a statutory instrument as set out in subsection (6). (The statutory instrument is not subject to any procedural requirements.)

The Explanatory Notes to the implementing 2007 Order explain:

The Compliance Code will only apply at the point where regulators decide their policies and principles and set standards and give guidance, but not to the individual decisions of a regulator’s enforcement staff. The Government believes that having regard to the Compliance Code when a regulator develops his policies on enforcement activities will ensure that the good practice in the Code effectively filters through to all the regulators’ activities, whether planning inspections, preparing a strategy on advice, or allocating resources between different regulatory functions.

 

…Unlike the Compliance Code, the Principles of Good Regulation, specified in section 21(2) of the Act, apply to individual enforcement activities, as well as to the policy-setting of regulators. This is because, as the Better Regulation Task Force noted, the principles are widely regarded as the gold standard for judging regulatory activities, and are necessary to ensure consistency of approach among regulators.

Regulatory Enforcement and Sanctions Act 2008

The Regulatory Enforcement and Sanctions Act 2008 primarily implements the key recommendations contained in the Hampton Review and the Macrory Review (referred to above) and the Government paper Next Steps on Regulatory Reform, published in July 2007.

Key provisions include:

Local authorities

The Act establishes a new body, The Local Better Regulation Office (LBRO), to ensure that local authorities exercise their relevant functions in a manner that is effective, does not give rise to unnecessary burdens and that complies with the [BRE’s] Principles of Good Regulation (see above) and promotes co-ordination amongst local authorities by making provision regarding communication between local authorities and conflict resolution by LBRO.

Non-criminal sanctioning powers for regulators

The Act enables Ministers to confer on regulators the following sanctioning powers (instead of exercising criminal powers they have):

• Fixed monetary penalties (eg for low-level instances of non-compliance);
• Discretionary requirements which include: variable monetary penalties …determined by the regulator; compliance notices; and restoration notices.
• Stop notices – requiring a person to cease an activity that is causing serious harm etc ; and
• Enforcement undertakings – an agreement offered by a person to a regulator to take specific actions related to what the regulator suspects to be an offence.

The Act specifies they type of regulators that can be given the power to use the new civil sanctions, including 28 "designated regulators" (including eg: the Charity Commission, Pensions Regulator and Prudential Regulation Authority); any other person who has an enforcement function under an Act (eg local authorities and Ministers); and any other person who has an enforcement function under specified secondary legislation.

The provisions apply to sanctioning powers under statutes existing at the time only, on the basis that such powers can be given in relevant legislation in future. The Crown Prosecution Service (CPS) and the police are specifically excluded from using civil sanctions.

Government issued a statement concerning new Orders applying the Act to protect small and medium sized enterprises in 2012. It published guidance on the Act in 2008, since archived.

There are various safeguards built into the Act, including for appeals against imposition of civil sanctions (typically First-tier Tribunals (created by section 3 of the Tribunals, Courts and Enforcement Act 2007) and requirements for relevant regulators to publish guidance (penalty guidance) in relation to the imposition of a sanction and the acceptance of enforcement undertakings and to publish reports on sanctions made. A minister making making an order must conduct a post-implementation review of the order within 3 years of making it.

Any monetary penalty received by the regulator must be paid into the Consolidated Fund.

Duty to avoid unnecessary burdens on business

The Act places a duty on 5 regulators (eg Ofgem, Ofwat) not to impose or maintain unnecessary burdens on businesses and to report on progress annually. Ministers can apply the duty to other regulators by order if this would help the Government's better regulation agenda.

Deregulation Act 2015 (as amended)

The Deregulation Act is something of a hotchpot of supposedly de-regulatory provisions and include provisions for certain regulators to have regard to economic growth.

The Explanatory Notes summarises it thus:

The Deregulation Act provides for the removal or reduction of burdens on businesses, civil society, individuals, public sector bodies and the taxpayer. These include measures relating to general and specific areas of business, companies and insolvency, the use of land, housing and development, transport, communications, the environment, the regulation of child trust funds, education and training, alcohol, sport and entertainment, the administration of justice, public authorities and legislative reform. The Act also provides for a duty on those exercising specified regulatory functions to have regard to the desirability of promoting economic growth. In addition, the Act repeals legislation that is no longer of practical use.

……The Bill was presented by the government as contributing to its commitment to reduce or improve regulation and to cut "red tape" during the 2010 to 2015 Parliament. As such, several of the measures in the Bill were brought forward from the government’s "Red Tape Challenge" programme which sought views from businesses and the public on the removal and reform of areas of regulation.

Some noteworthy provisions in the Act include the following (explanations taken from the Explanatory Notes).

Section 104: Power to spell out dates described in legislation

This section confers a power on Ministers to amend legislation – primary and secondary – by statutory instrument in order to spell out dates described in it.

Section 105: Combining different forms of subordinate legislation

This section provides that powers to make orders, regulations and rules may be used to make a single instrument, where it is appropriate to do so.  This deals with the position where it is necessary to make a number of different orders, regulations or rules to give effect to a single policy.

Sections 108 to 111: Exercise of regulatory functions: economic growth

Section 108 imposes a duty on persons exercising certain regulatory functions to have regard (in the exercise of those functions) to the desirability of promoting economic growth. See Better regulation initiatives above for background.

The section 108 duty was implemented by the Economic Growth (Regulatory Functions) Order 2017. The explanatory notes say:

This Order specifies regulatory functions to which the duties in Section 108 apply...Under section 110A of the Act (inserted by section 16 of the Enterprise Act 2016) regulators within scope of the Growth Duty will be required to report on the effect it has on the way that they exercise their regulatory functions and the impact of this on business. This transparency will allow Government to measure the extent to which its objectives are being achieved. Government intends to bring this duty to report on the effect of the Growth Duty into force in due course.

Section 111 defines terms used in sections 108 to 110. The definition of “regulatory function” in subsection (1) is relevant to our briefing:

Functions falling within the definition might be exercised by government departments and independent statutory regulators. The first limb of the definition…is aimed at functions of “regulating” (for example, by producing rules, or imposing requirements, which apply to a category of persons). The second limb of the definition …covers functions of enforcing or securing compliance with such regulation.

Secondary legislation as a rule making tool has been subject to much commentary because of its importance in the UK regime.

What is secondary or delegated legislation?

The Parliament website glossary says:

Secondary legislation is law created by ministers (or other bodies) under powers given to them by an Act of Parliament (primary legislation). 

Secondary legislation is also known as 'delegated' or ‘subordinate’ legislation and often takes the form of a statutory instrument. 

Who can make secondary legislation?

The Statutory Instrument Committee (frequently asked questions) says:

All Government Departments can lay SIs, as can some professional organisations such as the General Medical Council. Laying is the process of formally depositing a copy in each House of Parliament. Once this is done the instrument should be published on the legislation.gov.uk website, run by the National Archives, within 24 hours.

How is Secondary Legislation made?

The UK Parliament site explains:

Statutory Instruments (SIs) are documents drafted by a government department to make changes to the law. They are published with an explanatory memorandum, which outlines the purpose of the SI and why the change is necessary. 

This includes a link to a 26 page briefing paper for MPs which gives more detail:

Many SIs are not subject to any parliamentary procedure, and simply become law on the date stated. Whether they are subject to parliamentary procedure, and if so which one, is determined by the parent Act. The majority of SIs subject to parliamentary control automatically come into force but Parliament has the power to annul them within a particular period after they are laid (the negative resolution procedure). A smaller number of SIs require the approval of Parliament before they can be made and brought into force (the affirmative resolution procedure).

What are the criticisms of secondary legislation?

The Hansard website and Hansard Society 2014 publication, The Devil is in the Detail  contains a detailed critique of the secondary legislation process:

The procedures are complex and often illogical, and many parliamentarians willingly admit they don’t understand them. The nomenclature – ‘made’ and ‘laid’, ‘negative’, ‘affirmative’ and ‘super-affirmative’, ‘prayers’ and ‘Henry VIII powers’ – is confusing and undermines parliamentary and public understanding of the legislation…. There is no clear and consistent pattern between the subject matter of a delegated power and the scrutiny procedure to which the SI arising from it is allocated. …Several levels of parliamentary control have been created and tweaked over time to reflect the different types of delegated power available to ministers. This incremental approach has produced a patchwork of procedures, resulting in a system of scrutiny that is overly complex and confusing… Only 25 Legislative Reform Orders have been laid since 2007 and one Localism Order since 2011. Only 29 Public Bodies Orders have been laid to date; it is estimated that there will be 30% fewer Orders than estimated. …But how Parliament deals with this legislation is widely regarded as deficient .‘Palpably unsatisfactory’ ‘close to preposterous’ , and ‘woefully inadequate’ are just some of the phrases used over the years to describe it. Yet despite such criticism it is an area of the legislative process that has seen little reform. ……etc

It also provides a history of developments (including Statutory Instruments Act 1948 and reforms to it since then), including establishment of various committees from time to time.

The creation of the Delegated Powers and Regulatory Reform Committee is perhaps the biggest success story in the delegated legislation process in recent decades. Its impact on the process is considerable, and it is often cited as an example of best practice in the scrutiny of delegated legislation for other jurisdictions.

…….. As with the DPRRC, the Constitution Committee is regarded as one of Parliament’s heavyweight committees, highly respected for its scrutiny and judgement, all of which is underpinned by the legal and constitutional expertise of its members. It has ‘not only carved out a role for itself as a constitutional guardian, but is also gradually helping shape notions of ‘constitutionality’ in the UK’.Its influence and status deriving from, ‘its ability to articulate, interpret and develop the norms of the British constitution that are relevant to the scrutiny process’.

It gives examples of secondary legislation that are not SIs:

• Immigration Rules
• alterations to the Highway Code
• draft Codes of Practice on Industrial Relations
• Recommendations for the Welfare of Livestock are not technically SIs but are subject to parliamentary procedure