Regulatory Reform

UK Government Initiatives

Successive UK Governments over the last 25 years have attempted to cut “red tape” and the regulatory burden on businesses. The initiative has sought to remove or simplify unnecessary licensing requirements and facilitate business generally. Under these initiatives, government departments and bodies were obliged to review regulation and come up with proposals to abolish, modify or simplify regulations which were unnecessary or were unnecessarily complicated.

There have been three major pieces of law which have been designed to facilitate and speed up the deregulation process.  The first piece of legislation was the Deregulation and Contracting Out Act which set up a mechanism to repeal and modify existing laws so as to become less burdensome. This approach was continued by the Labour government elected in 1997.

The Regulatory Reform Act in 2001 introduced wider powers to amend existing laws and regulations by ministerial order. The 2001 legislation allowed for regulatory reform orders.  These are designed to reduce burdens, remove inconsistencies, anomalies and red tape.  In addition, the government was obliged to introduce a regulatory impact assessment for proposed new legislation, so as to assess whether the benefits outweigh the burdens. This law was further updated in 2006 by the Legislative and Regulatory Reform Act.

The Enterprise Act in 2002 covers a wide range of matters designed to enhance enterprise.  The Act established the Office of Fair Trading and gave general powers in relation to various matters. This included certain functions under competition law, the disclosure of information by public authorities, enhanced enforcement of consumer legislation and changes in insolvency law. The legislation gives the Office of Fair Trading a key role in consumer affairs.  The office draws up approved codes of practice for various businesses.

There is an obligation on regulators to follow certain principles of good regulation. It is required that activities be carried out in a way which is transparent, accountable proportionate, consistent and that action is only targeted when necessary.

Change of Law by Ministerial Order

The Regulatory Reform Act allows law reform by ministerial order.  A ministerial order does not need to be passed by Parliament. There are certain controls to ensure this is not abused.  Under this legislation, several hundred legal and regulatory reforms have been introduced so as to reduce the burden on business. For example, the requirement for licenses in various sectors (e.g. licence to sell milk) were abolished.  In other cases, smaller size businesses or transactions were exempted.  Restrictions on weekday and evening opening hours for shops were removed.

Formerly employment agents and estate agents were subject to more formal licensing by governmental bodies. Under regulatory reform orders, the formal licensing was replaced by code of conducts and “negative licensing”. Under negative licensing, a business does not require a licence, but can be prohibited from conducting the business for failure to comply with the requisite standards of conduct.

Another example of the use of legislation was the replacement of the procedure for opting out by a tenant from protection under a business lease.  Formerly this required a court application. After reform under the deregulation legislation, it is only required to a serve certain notices.

Better Regulation Bodies

The principal Government Department dealing with trade and enterprise in the UK  has been renamed the Department of Business, Enterprise and Regulatory Reform in recognition of the significance of the Government’s objective to reduce red tape and simplify business. The Better Regulation Executive is now within this department.  It actively encourages the public to suggest streamlining measures and simplification.  It maintains details on its website of proposals and how they have been taken forward into effect.

The Better Regulation Executive works with government departments and regulators to scrutinise new regulations and remove existing regulations where this is beneficial. The objective is to regulate only when necessary,  to do so in a way that is proportionate to the risks that are targeted,  to reduce the costs in administration and to rationalise inspection and enforcement arrangements. Resources should be directed to support compliance and tackle businesses that deliberately and consistently flout responsibilities.

The UK Government and has recently established the Local Better Regulation Office in order to promote better regulation principles amongst Local Authorities. The objective is to improve consistency in enforcement across local authority trading standards, environmental health, licensing and services. Businesses operating in more than one area may choose to have a primary authority as its regulator in relation to local authority regulations.

Under the scheme, a Primary Authority is a local authority registered by LBRO as having responsibility for a particular business or organisation in relation to environmental health, trading standards, licensing or fire safety functions. Primary Authorities are likely to be the local authority with either the business’s main production or selling activity in its area or the Council where the company head office is situated.

Alternatives to Prosecution

Under the Regulatory Enforcement and Sanctions Act 2008, regulators have been given alternatives to criminal sanctions so as to allow a more proportionate and flexible response to non-compliance. The purpose is to allow regulators to remove the financial benefits gained by businesses that deliberately seek an advantage in non-compliance.

These new powers are alternatives to criminal prosecution. There is a new monetary penalty notice regime.  This is intended to increase the range of instances of non-compliance where penalty notices are available as an alternative to prosecution if the business accepts liability.  It may make a discharge payment. There is a right of appeal if the business is unsatisfied.

New sanctions include fixed monetary penalty notices without court application, compliance notices, stop notices and restoration notices. Regulators may accept an enforcement undertaking in lieu of enforcement. Discretionary powers enable a regulator to impose either a variable monetary penalty, or a requirement to take specific steps to prevent the recurrence of an offence, or a requirement to restore a situation to what it would have been if no offence had been committed;

Stop notices prevent a business from carrying on an activity described in the notice until legal compliance is achieved. Enforcement undertakings enable a business to give an undertaking to take corrective actions.

There are provisions for application to the court to confirm the enforcement notice.  Failure to comply can be pursued by way of normal means such as a warrant of execution, charging order or third-party debt order.