Regulatory Enforcement And Sanctions Bill [HL] - continued          House of Commons

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Clause 18: Power to dissolve LBRO

55.     Clause 18 confers on the Secretary of State a power to provide for the dissolution of LBRO. The clause specifies that the order may, among other things, provide for the transfer of functions, property, rights, or liabilities of LBRO to another person.

56.     It is intended that LBRO will be dissolved when it is deemed to have achieved its objective. Before making an order to this effect the Secretary of State must consult, the Welsh Ministers and such persons as will be substantially affected by the dissolution of LBRO. An order under this clause, in order to provide for the dissolution of LBRO, may repeal, revoke, or amend any enactment.

Clause 19: Dissolution of LBRO: tax

57.     Clause 19 confers on the Treasury a power to make regulations varying the way in which income tax, corporate tax, capital gains tax, stamp duty or stamp duty reserve tax has effect when an order made under clause 18 makes provision regarding the transfer of the property, rights or liabilities of LBRO to another person.

Clause 20: Orders under Part 1

58.     Clause 20 specifies that an order or regulation made under Part 1 must be made by statutory instrument.

59.     Where an order is made under clauses 4(7), 7(4) or 15(7), the order will be subject to the negative resolution procedure. A statutory instrument containing regulations made by the Treasury under clause 19 is also subject to the negative resolution procedure.

60.     Where an order is made under clauses 4(4) or 18, the order will be subject to the affirmative resolution procedure.

61.     Where an order is made under clause 7(4) or 16(7) by the Welsh Ministers, the order will be subject to the negative resolution procedure of the National Assembly for Wales.

PART 2: CO-ORDINATION OF REGULATORY ENFORCEMENT

Introduction

Clause 22: Scope of Part 2

62.     Clause 22 defines the scope of Part 2 of the Bill. Part 2 applies where a regulated person carries on an activity in the area of two or more local authorities, and each of those authorities has the same relevant function in relation to that activity. For example, Part 2 will apply where a business sells a product in two different local authorities and is subject to regulatory enforcement by trading standards in both those authorities.

Clause 23: "Local Authority"

63.     Clause 23 defines "local authority" for the purposes of Part 2. Subsection (2) gives the definition of local authority in England and Wales, subsection (3) the definition of local authority in Scotland and subsection (4) the definition of local authority in Northern Ireland.

Clause 24: "Relevant function"

64.     Clause 24 defines "relevant function" for this part of the Bill. Under subsection (1)(a) "relevant function" has the same meaning in relation to a local authority in England and Wales as for Part 1 (set out in clause 4).

65.     For local authorities in Scotland and Northern Ireland, "relevant function" means a regulatory function, which is exercised by an authority under an enactment to be specified in an order made by the Secretary of State.

66.     Subsections (3) and (4) prevent the Secretary of State specifying in an order a regulatory function in Scotland that is not reserved and in Northern Ireland that is transferred.

Primary Authorities

Clause 25: Primary authorities

67.     This clause allows LBRO to nominate a local authority to act as the "primary authority" for the exercise of a relevant function in relation to a particular regulated person as defined at clause 22.

68.     The functions of primary authorities are set out in clauses 27 to 30.

Clause 26: Nomination of primary authorities

69.     Clause 26 sets out the procedure for nomination of a local authority as a primary authority. Where an authority has agreed in writing to act as a primary authority for a particular regulated person, LBRO may nominate that local authority as a primary authority. Where a regulated person has been unable to agree with a local authority that it will act as its primary authority, LBRO may nominate a local authority to act as a primary authority for the regulated person.

70.     Subsection (2) provides guidance to LBRO regarding which authorities might be suitable candidates to be primary authorities in respect of a relevant function for a regulated person. For example, where a business has its head office in one local authority area and operational premises in a number of different local authority areas, it suggests that LBRO may choose to nominate as a primary authority either the authority in whose area the most significant operational premises are located, or the authority in whose area the head office is located. It may be that LBRO nominates one local authority as the primary authority in respect of one relevant function for the business in question, for example trading standards matters, and a different authority in respect of another relevant function, for example environmental health matters. Subsection (3) requires LBRO to consult with the regulated person making the application and the authority that it proposes to nominate as the primary authority, before nominating a local authority.

71.     Subsection (4) requires LBRO to pay particular regard to any representations made by the proposed primary authority regarding the resources available to it.

72.     Subsection (6) requires LBRO to maintain a register of any such nominations. Registration can be revoked under subsection (5) where LBRO considers that the authority is no longer suitable for nomination, or that it is appropriate to do so for any other reason.

Functions of primary authorities

Clause 27: Advice and guidance

73.     This clause charges the primary authority with the task of giving advice and guidance both to the regulated person in respect of the relevant function, and to other local authorities regarding how they should exercise the relevant function in relation to the regulated person. The primary authority and regulated person may make such arrangements as they see fit in order to manage their relationship. This might include entering into an agreement or memorandum of understanding which sets out the rights and obligations of

    each party. Such agreement or memorandum might supplement any inspection plan approved by LBRO under clause 30.

Clause 28: Enforcement action

Schedule 4

74.     This clause requires any local authority other than the primary authority to notify the relevant primary authority before taking enforcement action against a regulated person that has a primary authority partnership.

75.     Under subsection (2), where an enforcing authority notifies the primary authority of a proposed enforcement action, the primary authority must determine within the relevant period (that being five working days or a longer period as directed by LBRO under the provisions of subsection (9)) whether the proposed enforcement action is inconsistent with advice or guidance it has previously given. If the primary authority determines that the proposed enforcement action is inconsistent with its advice or guidance, it may direct the enforcing authority not to take the proposed enforcement action.

76.     Under subsection (3), where a primary authority does not direct an enforcing authority not to take the proposed enforcement action and the enforcing authority chooses to proceed with the proposed enforcement action, the enforcing authority must notify the regulated person of this.

77.     Under subsection (4), an enforcing authority cannot proceed with a proposed enforcement action:

      a)      at any time during the relevant period; or,

      b) if directed not to do so by the primary authority.

78.     "Enforcement action" is defined at subsection (5). Under subsection (6) the Secretary of State may specify by order action which is or is not to be regarded as enforcement action. This is intended to allow for development of detailed guidance specifying the types of action that should not count as enforcement action for the purposes of this Part. An order under subsection (6) may, for example, specify that informal advice given to a business by a local authority should not be considered to be enforcement action.

79.     Subsection (7) gives effect to Schedule 4, which makes provision for:

    a)     an enforcing authority to refer a proposed enforcement action to LBRO if the primary authority has directed it not to take the proposed enforcement action (paragraph 1 of Schedule 4);

    b)     a regulated person to refer a proposed enforcement action to LBRO if the primary authority does not direct the enforcing not to take the proposed enforcement action (paragraph 2 of Schedule 4); and

    c) the primary authority to refer a proposed enforcement action to LBRO instead of determining itself whether or not a proposed enforcing action is inconsistent with advice or guidance that it has previously given (paragraph 3 of Schedule 4).

80.     Where a proposed enforcement action is referred to LBRO, LBRO must satisfy itself as to whether:

    a)      the proposed enforcement action is inconsistent with advice or guidance previously given by the primary authority;

    b)      the advice or guidance given by the primary authority was correct; and

    c) the advice or guidance was properly given by the primary authority (paragraphs 1(3), 2(3) and 3(3)).

81.     If the proposed enforcement action has been referred to LBRO by an enforcing authority, LBRO must confirm the direction given by the primary authority to the enforcing authority not to take the proposed enforcement action if it is satisfied as to all the points at paragraph 80 above. In any other case, LBRO must revoke the direction given by the primary authority.

82.     If the proposed enforcement action has been referred to LBRO by the regulated person, LBRO must direct the enforcing authority not to take the proposed enforcement action if it is satisfied as to all the points at paragraph 80 above. In any other case it must consent to the proposed enforcement action.

83.     If the proposed enforcement action has been referred to LBRO by the primary authority, LBRO must direct the enforcing authority not to take the proposed enforcement action if it is satisfied as to all the points at paragraph 80 above. In any other case it must consent to the action.

84.     Where LBRO confirms the direction of the primary authority under paragraph 1(2)(a) of Schedule 4, or directs an enforcing authority not to take the proposed enforcement action under paragraph 2(2)(a) or 3(2)(a) of Schedule 4, it may direct the enforcing authority to take some other enforcement action under the provisions in paragraphs 1(4), 2(5) and 3(5) of Schedule 4.

85.     Under paragraph 5 of Schedule 4, LBRO must, before determining any matter referred to it, consult any relevant regulator, and may consult such other persons as it thinks fit.

86.     Paragraph 6(1) of Schedule 4 requires LBRO to make a determination within 28 days of the date on which the reference is made. Paragraph 6(2) allows the Secretary of State to make further provision regarding the procedure to be followed under Schedule 4. This might include, for instance, time limits within which referrals may be made.

87.     Paragraph 7 of Schedule 4 enables LBRO to give guidance or directions to any one or more local authorities about any enforcement actions referred to it under Schedule 4.

88.     Paragraph 8 of Schedule 4 allows LBRO to require the primary authority, the enforcing authority, or the regulated person, to provide it with information that it may specify.

89.     Subsection (8) of clause 28 provides that where an enactment specifies a time limit within which enforcement action can be taken, any time during which the authority is prohibited from proceeding with the enforcement action under this clause of Schedule 4 does not count when calculating that time period.

Clause 29: Enforcement action: exclusions

90.     Subsection (1) allows the Secretary of State to prescribe by order the circumstances in which the procedure set out at clause 28(1) to (4), requiring consultation before taking an enforcement action, shall not apply.

91.     Under subsection (2), where an enforcing authority takes enforcement action against a regulated person where the provisions of an order made under subsection (1) apply, the enforcing authority must inform the relevant primary authority of the enforcement action as soon as it reasonably can.

92.     Subsection (3) requires the Secretary of State to include in any order made under subsection (1) exclusions where:

    a)      the enforcement action is urgently required to avoid a significant risk of serious harm to human health or the environment (including the health of animals or plants) or the financial interest of consumers;

    b) the application of section 27(1) to (4) would be wholly disproportionate.

93.     An order under subsection (1) may also, for example, specify that consultation with a primary authority is not required where:

    a) the regulatory provisions in question are deliberately local in character;

    b) it would be impractical to contact the primary authority.

Clause 30: Inspection plans

94.     This clause makes provision for primary authorities that exercise the function of inspection to draw up inspection plans in respect of the regulated person with whom they have a relationship. These inspection plans are intended to act as a guide for other local authorities who also carry out inspections in relation to that person.

95.     Subsection (3) provides examples as to what can be set out in an inspection plan. These include the frequency with which inspections should be carried out, the circumstances under which inspections should take place and what inspection should involve. The Government intends that an inspection plan should also include other information such as risk assessments detailing the risk of non-compliance and the potential consequences of non-compliance, and improvement plans detailing intended actions that will ensure compliance with regulatory requirements.

96.     Under subsection (4) the primary authority must consult with the regulated person before drawing up an inspection plan.

97.     Under subsection (5) a primary authority is required to take into account any relevant recommendations and guidance relating to inspections when drawing up an inspection plan.

98.     Under subsection (6) a primary authority is required to bring any inspection plan to the notice of other local authorities. Before doing so, the primary authority must obtain the consent of LBRO.

99.     Subsection (7) requires a local authority to have regard to an inspection plan that has been brought to its attention when proposing to inspect the regulated person to which the plan refers. Under subsections (8) and (9), a local authority other than the primary authority must notify the primary authority before it exercises a function of inspection in relation to a regulated person in a manner that departs from the recommendations in an inspection plan and specify reasons for this departure.

Primary authorities: supplementary

Clause 31: Power to charge

100.     Clause 31 allows the primary authority to charge the regulated persons reasonable fees in respect of the functions it performs under this Part. Any such charges may be subject to guidance from LBRO, as described at clause 33.

Clause 32: LBRO support

101.     Clause 32 confers powers on LBRO to do anything it considers appropriate, including making grants, to support a primary authority in the exercise of its functions under this Part. Any such grants would be subject to the usual rules associated with local government finance.

General

Clause 33: LBRO guidance

102.     Clause 33 permits LBRO to give guidance to local authorities about the operation of Part 2. Local authorities must have regard to guidance issued under this clause. Where this guidance affects the power to charge under clause 31, it is subject to consent by the Secretary of State, and consultation with the Welsh Ministers.

Clause 34: Orders under Part 2

103.     This clause specifies that orders made under Part 2 must be made by statutory instrument subject to the negative resolution procedure.

Clause 35: Interpretation of Part 2

104.     This clause sets out definitions used in this Part. Subsection (1) sets out the meanings to be given to "LBRO", "local authority", "the regulated person" and "relevant function" in this Part.

PART 3: CIVIL SANCTIONS

Clause 36: Power to make orders providing for civil sanctions

105.     Clause 36 allows a Minister of the Crown or Welsh Minister (referred to in this part of the notes as "a Minister") to make an order providing for the new alternative civil sanctioning powers. This order must be made by statutory instrument and will be subject to the affirmative resolution procedure (by virtue of clause 61).

Clause 37: "Regulator"

Clause 38: "Relevant Offence"

Schedule 5: Designated regulators

Schedule 6: Enactments specified for the purposes of orders under Part 3

106.     Clause 37 defines the terms "regulator" and "designated regulator", while clause 38 defines "relevant offence". The Bill confers powers to enable regulators to have access to the new sanctions for certain relevant offences.

107.     A "regulator" is a body that is listed at Schedule 5 to the Bill or is a body who exercises an enforcement function in relation to an offence under enactments listed at Schedule 6. It does not include police or prosecution authorities. Regulators will be allowed to use the new sanctions contained in Part 3 once the Minister with responsibility for that particular policy area has passed secondary legislation to grant them the relevant powers. The Minister will decide which relevant offences should be covered.

108.     The first group of regulators are those listed at Schedule 5 ("designated regulators"). For these regulators, "relevant offence" (as defined in clause 38(2)) means an offence in an Act in relation to which the regulator has an enforcement function (defined in clause 71), such as investigating an incident of regulatory non-compliance.

109.     The second group of regulators are those bodies with an enforcement function in relation to an offence contained in any enactment listed at Schedule 6. This group will largely consist of local authorities and Ministers. For these regulators, "relevant offence" means an offence which is contained in the enactments listed at Schedule 6 in relation to which the regulator has an enforcement function. The enactments at Schedule 6 cover regulatory areas such as agriculture, animals, the environment, food safety, consumer protection, transport and health and safety.

110.     Orders under Part 3 only confer powers in relation to offences in existing Acts. Those are offences in existing Acts enforced by those regulators listed in Schedule 5; and offences in the enactments listed in Schedule 6. It is intended that in future Acts which create regulatory offences will themselves create whatever civil sanctions are necessary.

111.     Offences in subordinate legislation are dealt with in clause 62 and Schedule 7 (see later).

Clause 39: Fixed monetary penalties

112.     This clause enables a Minister to grant a regulator the power to issue a fixed monetary penalty on a person in relation to a regulatory offence.

113.     Regulators may impose a fixed monetary penalty only when satisfied beyond reasonable doubt that the person has committed the relevant offence.

114.     The amount of a fixed monetary penalty will be specified by the order made by the Minister. The regulator will not be able to exercise discretion in determining the amount of the fixed monetary penalty in any individual case.

115.     Subsection (4) caps the level of fixed monetary penalty for offences triable summarily, and punishable by a fine on conviction, at the maximum fine applicable to that offence (which is usually £5,000).

Clause 40: Fixed monetary penalties: procedure

116.     Clause 40 specifies certain minimum requirements that the order implementing fixed monetary penalties must include. In particular, before the regulator can impose a penalty it must first issue a 'notice of intent'. The person subject to this notice will then have the opportunity to make written representations and objections against the penalty. Alternatively, the person could choose to discharge liability for the penalty by paying a discharge payment, the level of which will be set out in the order and must be no more than the penalty. Any representations or discharge payment must be made within 28 days of receipt of the notice, or such shorter period as prescribed by the notice of intent. If a discharge payment is made, no further action will be taken against that person.

117.     After this period, if the regulator chooses to impose the penalty, it must issue a 'final notice' setting out certain specified information such as the grounds for imposing the penalty and how payment may be made. Subsection (4) provides that a regulator must not impose the penalty if it is satisfied that a person would not be liable to conviction for the relevant offence because of a defence. It also provides the power for the Minister to set out further circumstances in which a regulator may not impose a penalty, for example, by creating new defences to the offence. Clause 40 also sets out the right of appeal against the sanctioning decision and the minimum grounds for that.

Clause 41: Fixed monetary penalties: criminal proceedings and conviction

118.     Imposition of a fixed monetary penalty removes the person's liability to criminal prosecution for the relevant offence in respect of the act of regulatory non-compliance in question. Clause 41 requires the order implementing fixed monetary penalties to secure this. Similarly, if a person is served with a notice of intent under the provisions in clause 40, no criminal proceedings may be taken against them within the 28 day opportunity for the discharge payment (or other shorter period as specified in the notice) following receipt of the notice. Where a person pays a discharge payment, no criminal proceedings can be taken against him in relation to the commission of the relevant offence.

119.     An order under Part 3 may allow a regulator to recover any fixed monetary penalty issued, and any additional late payment charges that are relevant, as a civil debt recoverable through the courts or as if payable under a court order (by virtue of clause 52).

Clause 42: Discretionary requirements

120.     This clause enables a Minster to grant a regulator the power to impose, by notice, one or more requirements ("discretionary requirements") on a person. These requirements are:

  • The payment of a monetary penalty of an amount that the regulator will determine, though where the relevant offence is triable only summarily and punishable by a fine, then the penalty is capped at the level of this fine;

  • To take steps within a time period as may be specified that ensure that the incident of non-compliance does not continue or recur;

  • To take steps within a time period as may be specified that restore the position, as far as possible, to what it would have been had the non-compliance not taken place.

121.     The regulator must be satisfied beyond reasonable doubt that a person has committed a relevant offence before imposing such a requirement.

122.     Clause 42 also prohibits a regulator from imposing discretionary requirements on a person on more than one occasion in relation to the same act or omission.

Clause 43: Discretionary requirements: procedure

123.     Clause 43 specifies certain minimum requirements that the order implementing discretionary requirements must include. In particular, the order must require the regulator to serve a notice on the person of its intention to impose discretionary requirements on that person and the time within which he can make representations and objections (which cannot be less than 28 days from receipt of the notice) against the proposed sanction.

124.     The order must also permit the person the opportunity to offer an undertaking to benefit any person affected by the offence and for the regulator to take that into account when making its determination. For example, if a regulator was minded to issue a variable monetary penalty, the person could offer to pay compensation to a third party affected by their actions. The regulator could then adjust the level of the variable monetary penalty to take account of this. The regulator can, however, reject an offered undertaking.

125.     After the end of the time for making representations and objections, and offering undertakings, the regulator can then decide whether to impose, withdraw or vary the discretionary requirement or replace it with a different requirement.

126.     Where the regulator decides to impose a discretionary requirement, this must be done by way of a notice. The notice must contain the information set out in subsection (6) of this clause, including the person's right of appeal against the sanction.

127.     Subsection (7) of this clause sets out the minimum grounds for appeal against the discretionary requirement that must be available.

 
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Prepared: 30 April 2008