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Alistair Burt: I support my hon. Friend. This is an opportunity to speak, as it were, for the other side in this very balanced Bill. Like my hon. Friend, I do not see the reason for specifying the maximum sum. To give maximum flexibility to the authorities it is necessary to take into account all the aggravating factors that might have led to proceedings being taken in the first place. I shall not reiterate everything that has come up in the Committee, on Second Reading and in our everyday experience. However, we have sometimes found the most distressing circumstances produced by companies that, when their financial affairs are probed, are more than able to stand a substantial fine.
For some very small companies or for those that operate small partnerships or the like this is a deterrent sum. For those who rake in millions of pounds—often in the unfair manner suggested by the right hon. Member for Leeds, West (Mr. Battle)—this would appear to be no more than an occupational hazard. Therefore an opportunity to include flexibility seems useful.
Malcolm Bruce (Gordon) (LD): The amendment is appropriate and should be debated. Does the hon. Gentleman agree that the problem with the Bill is that there are two sanctions? One is a fine of up to £50,000 and the other is the cancellation or withdrawal of the licence. The trouble is that that is a nuclear option for the very large companies for which a £50,000 fine would not be a deterrent. It is incumbent on the Minister to explain how he would deal with the gap between a large fine and the withdrawal of a licence.
Alistair Burt: The hon. Gentleman is absolutely right, and I am sure that the Minister will address his point. We have received briefings that have made it clear that although the powers of the OFT have been based to some degree on the powers of the Financial Services Authority, in similar circumstances the latter body is not limited to a specified amount when considering a fine. This appears to be an appropriate situation to draw a parallel.
The opportunity to fine gives maximum flexibility, bearing in mind all the circumstances of the case, for the authorities to show their concern. No matter how much money certain companies may have, receiving a very large fine would have an exemplary effect in discouraging unfair practices; it would finally hit them where it hurts, and for most commercial companies where it hurts is in the wallet. For those reasons, my hon. Friend's amendment is more than justified, and I
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hope that, on balance, we might assist the Minister by giving him the opportunity to respond positively.
Malcolm Bruce: I raised the issue of what the penalty would be applied to, and that also cropped up on Second Reading. In other words, if a company has been pursuing practices that are determined to be in breach of the law, is the penalty a one-off fine for the collective breach or could it be a series of fines for each individual breach? If the latter were the case, a much larger fine could be imposed on a company.
Will the Minister say whether the advice to him is that the courts could apply a ruling in that way? That would substantially alter the effect of the Bill. It is unusual, although not unprecedented, to include a figure in a Bill. It is not often, I must say, that Opposition Members encourage Ministers to introduce secondary legislation, but here it might be appropriate.
Mr. Sutcliffe: I thank hon. Members for trying to assist me. I know that they do it in the proper spirit.
Mr. Battle: Of course.
Mr. Sutcliffe: I meant Opposition members—I am not sure about the Government members. There have been interventions and interventions from them, but, on balance, they have been helpful.
Hon. Members are right to raise the issue of the penalty because there was a great deal of debate on Second Reading about why it should be in the Bill. Issues around the drafting of the clause also related to that confusion. I hope that my explanation will rectify that and prove that the amendment is not required. However, we will go through it to be consistent.
The amendment concerns the maximum penalty that the OFT can impose for breach of a requirement or an information requirement, and the trigger is that sum of £50,000. On Second Reading, we were asked how we decided on that figure. It was felt that £50,000 would be proportionate to the type of infringements that lead to a penalty, but not all penalties would be that high: it is a limit, not a target. The OFT's guidance will elaborate further, and it will decide on the amount of the penalty.
In reply to the hon. Member from North-East Bedfordshire, we considered linking the penalty to turnover. Features of the Competition Act, for example, attract penalties of up to 10 per cent. of turnover, but those penalties are for monopoly market power built up over a number of years, which are completely different in nature to the infringements that this power tackles.
We welcome the hon. Member for Gordon (Malcolm Bruce). He asked me to explain the difference between the options—the nuclear options, as he put it. However, as we discussed on previous clauses, the OFT will seek requirements of licensees if they breach agreements, and it can set individual requirements on one branch in a chain of branches, or on an individual in that branch. If that did not occur, the OFT would move on to penalties if there were many breaches. We would then move to the nuclear option of considering the fitness of that person or organisation to have a licence.
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Clause 53(3) already includes a power for the Secretary of State to amend the maximum. That clause amends section 181 of the 1974 Act to include the maximum civil penalty as one of the provisions on monetary limits that can be amended by a statutory instrument, subject to resolutions of both Houses. As the hon. Member for Tewkesbury said, this is important for future-proofing. I appreciate that the drafting meant that this power was perhaps not immediately evident on Second Reading, but it does what the hon. Member's amendment seeks to do. It is already there; the secondary power will be taken.
I hope that I have explained the reasoning behind the £50,000 penalty and how the penalty system works with regard to the requirements, the interim arrangements and, finally, the loss of licence. I hope that the hon. Gentleman will now withdraw the amendment.
Mr. Robertson: I am grateful to the Minister for his explanation. I accept that section 181 of the 1974 Act covers the clause. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.45am
Mr. Robertson: I beg to move amendment No. 38, in clause 52, page 43, line 23, after 'OFT', insert 'through the courts'.
The amendment gives me a chance to question the Minister. It refers to proposed new section 39A(5)(a), which states that
''the penalty shall be recoverable by the OFT''.
By adding ''through the courts'' my amendment questions whether that would be the procedure for recovering the penalty.
It is not immediately obvious what the right of appeal is against the penalty imposed, so will the Minister clarify that? I appreciate that that is not strictly related to the wording of the amendment, but it may help the Committee to have an explanation.
Mr. Sutcliffe: I thank the hon. Gentleman for his amendment; it gives me the opportunity to clarify matters. It is not necessary to specify whether the penalty could be recovered through the courts; that is understood. The OFT asks in its notice for the penalty to be paid in a specified period. If it is not, the OFT may have to take court action to recover the money.
The current framing of the clause means that the OFT is not restricted to going to court to recover the penalty. If it were in the interests of efficiency for the OFT to recover the penalty in another way, we would not want the legislation to prevent it from so doing. I reassure the Committee that however the penalty is recovered, the OFT will act reasonably and properly. Safeguards are in place. Other than using the courts, the OFT may employ a debt collector, although it would always ensure that those working on its behalf behaved properly, in accordance with the previous clauses. The right of appeal is set out in clause 53(2).
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I hope that the hon. Gentleman will withdraw his amendment.
Mr. Robertson: Will the Minister explain the right of appeal against the penalty that the OFT would impose, if there is such a right?
Mr. Sutcliffe: That is covered by the reference to clause 53(2). If it is not, I shall write to the hon. Gentleman setting out the rights of appeal.
Mr. Robertson: In view of the Minister's explanation and his undertaking to write to me on that issue, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 52 ordered to stand part of the Bill.
Clause 53
FURTHER PROVISION RELATING TO CIVIL PENALTIES
Mr. Robertson: I beg to move amendment No. 39, in clause 53, page 43, line 41, leave out 'and'.
The Chairman: With this it will be convenient to discuss amendment No. 40, in clause 53, page 44, line 3, at end insert
'; and informing him of his right of appeal against this penalty.'.
Mr. Robertson: Proposed new section 39B states:
''(1) Before determining to impose a penalty on a person under section 39A the OFT shall give a notice to that person—
(a) informing him that it is minded to impose a penalty on him;
(b) setting out its reasons for being so minded;
(c) stating the proposed amount of the penalty;
(d) setting out its reasons for proposing that amount;
(e) setting out the proposed period for the payment of the penalty; and
(f) inviting him to submit representations to it about the matters mentioned in the preceding paragraphs in accordance with section 34.''
The OFT's notice would be a standard document and would be easy to put together, so the OFT should be obliged to notify the licensee about his right of appeal. I previously asked about the right of appeal, and the Minister said that he would write to me. I do not mean to be pedantic.
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