Clause 44: Discretionary requirements: criminal proceedings and conviction

128.     Clause 44 provides that where the person has been required to pay a variable monetary penalty (whether alone or in combination with non-monetary discretionary requirements or undertakings), the order made by the Minister must provide that the person may not be later prosecuted for the same incident of regulatory non-compliance. (This does not extend to a case where non-monetary discretionary requirements are imposed or an undertaking is accepted without the imposition of a variable monetary penalty. In this case, if the person subject to the sanction fails to comply with it, the person may be prosecuted at a later date for the original offence.)

Clause 45: Discretionary requirement: enforcement

129.     By virtue of this clause, the order may also allow a regulator to issue a monetary penalty for the failure to comply with the discretionary requirement (a "non-compliance penalty"). Non-compliance penalties are not available for failure to pay a variable monetary penalty. Failure to pay any monetary penalty can lead to the regulator recovering the amount due through civil debt procedures or as if payable under court order (see clause 52).

130.     Clause 45 also sets out the minimum grounds for appeal against the non-compliance penalty.

Clause 46: Stop notices

131.     This clause enables a Minister, by order, to confer on a regulator the power to serve on a person a notice prohibiting that person from carrying on an activity specified in the notice (a "stop notice"). For example, that activity might include a manufacturing process, use of a particular piece of equipment or sale of a particular product. The stop notice will remain in place until the person has taken steps specified in the notice.

Clause 47: Stop notices: procedure

132.     This clause sets out certain procedural requirements that the order must include when granting a regulator the power to serve stop notices. In particular, a notice must contain the grounds for issuing the notice, the person's rights of appeal and the consequences of non-compliance. Where, after service of the notice, the regulator is satisfied that the person has taken steps specified in the stop notice, the order must require a regulator to issue a "completion certificate". The person will also have a right of appeal against a regulator's refusal to issue such a certificate.

133.     Clause 47 also sets out the minimum grounds for appeal against both the imposition of the stop notice and the regulator's refusal to issue a completion certificate.

Clause 48: Stop notices: compensation

134.     This clause provides that the Minister making the order must make provision for a compensation scheme. The Minister must also provide a right of appeal to a tribunal against a decision by the regulator not to award compensation or against the level of compensation awarded by the regulator.

Clause 49: Stop notices: enforcement

135.     Clause 49 provides that a person who fails to comply with a stop notice is guilty of a criminal offence, which is triable either way. Where the offence is tried summarily in Scotland, a person is liable to 12 months imprisonment. Where the offence is tried summarily in Northern Ireland, a person is liable to six months imprisonment. Where the offence is tried summarily in England and Wales, a person is liable to six months imprisonment until section 154(1) of the Criminal Justice Act 2003 comes into force. When section 154(1) is commenced, the maximum period of imprisonment will be 12 months.

Clause 50: Enforcement undertakings

136.     Clause 50 enables a Minister to make an order allowing a regulator to accept "enforcement undertakings" offered by a person. An enforcement undertaking is an undertaking or promise by a person to take certain actions. A regulator will not be able to impose enforcement undertakings.

137.     The regulator may accept enforcement undertakings only when it has reasonable grounds for suspecting that an act or omission of the person constitutes a relevant offence. Once that enforcement undertaking is accepted, the person may not be prosecuted for the act or omission or have a fixed monetary penalty or discretionary requirement imposed on them, unless they fail, or are deemed to have failed, to comply with the undertakings. Where there is such non-compliance, the regulator will be able to prosecute the person for the original offence or impose a fixed monetary penalty or discretionary requirement.

138.     A person may offer the following type of action as part of its undertakings:

• Actions that ensure that the person does not repeat or continue their non-compliant actions. For example, the person may undertake to fix faulty equipment that breaches safety standards;

• Actions that restore the position, as far as possible, to what it would have been had the non-compliant action not taken place. For example, the person may undertake to clean up an area that has been contaminated by its non-compliant actions;

• Actions that benefit any person affected by the non-compliant actions of the person (including payment of money). For example, the person may set up a compensation scheme for victims of its non-compliance; and

• Other action that may be prescribed by the Minister in the order.

139.     Subsection (5) of this clause enables the Minister to include further provision in the order such as the procedure for entering into the enforcement undertaking, certification by the regulator that the undertaking has been complied with and the consequences for a person providing misleading or inaccurate information.

140.     There is no right of appeal against the enforcement undertaking itself, as the undertaking is volunteered by the person and is not imposed by the regulator. There may be, however, a right of appeal against a regulator's refusal to certify that the undertaking has been completed, where the Minister provides for such right in the order.

Clause 51: Combination of sanctions

141.     This clause provides that a regulator cannot be granted power to impose -

• both a fixed monetary penalty and a discretionary requirement; or

• both a fixed monetary penalty and a stop notice;

in relation to the same offence.

Clause 52: Monetary penalties

142.     This clause allows an order made by the Minister under this Part of the Bill to make provision for discounts for early payment of a monetary penalty and for the payment of interest or a financial penalty for late payment of the original penalty. The total amount of any late payment penalty must not exceed the total amount of the penalty imposed.

143.     Clause 52 provides for the enforcement of unpaid penalties (and any interest or late payment charges) through the civil courts. It also allows the order to create a more streamlined process of recovery by treating the penalty as if it were payable under a court order.

Clause 53: Costs recovery

144.     This clause enables a Minister to include provision for a regulator to recover its costs, by notice, from a person on whom a discretionary requirement or a stop notice is imposed. This provision does not extend to fixed monetary penalties and enforcement undertakings. The costs are those incurred by the regulator in relation to the imposition of the sanction, up to the point of imposition, and include investigation costs, administration costs and the costs of obtaining expert (including legal) advice. The person is not required to pay any costs he can show have been unnecessarily incurred. Clause 53 requires that, where a costs notice is served, the person subject to the notice has a right of appeal against both the regulator's decision to impose the costs notice and the amount of the costs.

Clause 54: Appeals

145.     This clause requires that appeals under Part 3 of the Bill must be heard by either the First-tier Tribunal (created by section 3 of the Tribunals, Courts and Enforcement Act 2007) or another statutory tribunal specified by the Minister in the order made under this Part. This exception is to cater for tribunals that will not form part of the First-tier Tribunal, such as the employment tribunals, which currently hear some health and safety appeals and may be an appropriate venue for hearing certain appeals under this Part.

146.     Subsection (3)(a) of this clause allows the Minister when setting out this power to make provision for the suspension of the effect of a fixed penalty or other requirement during an appeal. This might include provision such as:

• During appeal, a person may apply for the effect of the stop notice to be suspended pending the result of the appeal. If this application is unsuccessful then the notice will remain in force during the appeal; or

• Should the person appeal, the effect of the stop notice may be automatically suspended until the result of the appeal is known.

147.     In particular, subsection (3)(b) enables the Minister to make provision about the powers of an appellate body. Examples of the possible powers an appellate body might have are set out in subsection (4) of this clause. The appellate body may have power to withdraw or confirm a sanction, power to take such other steps which a regulator could take (for example, impose another sanction upon the person), and a power to remit the sanctioning decision back to the regulator for further consideration.

Clause 55: Other provision

148.     This clause enables an order made under Part 3 to make consequential and other supplementary provisions.

149.     Subsection (2) gives examples of what consequential provision might be made. Paragraph (a) may, for example, be used to allow the civil sanctions to be regarded as previous convictions for the purposes of other enactments. The power in paragraph (b) could be used to extend existing provisions in other legislation to apply to these civil sanctions. For example, the power could extend a provision that a convicted person must pay the clean up costs of the regulator, such as that under 33B Environmental Protection Act 1990, to apply to these civil sanctions as well.

150.     Subsection (3) gives examples of how the supplementary power under subsection (1) might be used. The power might be used to grant a regulator powers to require information or extend a regulator's existing information gathering powers in order to allow a regulator to investigate a matter that might lead to the use of the alternative sanctioning powers under this Bill. The power may also be used in a similar way in relation to a regulator's powers of entry, search, or seizure. Where the legislation setting out the relevant offence contains an authorisation to use certain evidence in criminal proceedings, for example, an exception to the prohibition of collateral use of information, the power under subsection (1) might be used to allow that authorisation to also apply to the imposition of civil sanctions for that offence. This may be done only in relation to authorisations that exist currently. The power may be used in these ways only for the purpose of facilitating the use of the alternative sanctioning powers contained in this Bill. It would be for the Minister to determine whether the use of the power in subsection (1) would, in any given case, be compatible with ECHR rights.

Clause 56: Excluded provision: Scotland

Clause 57: Excluded provision: Northern Ireland

151.     Clause 56 prohibits (save for consequential purposes) an order made under Part 3 of the Bill from making any provision which would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament. This would prevent the order being used to grant regulators the alternative sanctioning powers under this Bill for offences that relate to matters that have been devolved to the Scottish regulators, such as environmental health. There is no prohibition on using the powers in the Bill for matters that have been reserved to the UK Parliament, such as consumer protection.

152.     Clause 57 makes similar provision for Northern Ireland.

Clause 58: Consultation and consent: Scotland

153.     If a Minister proposes to make an order that affects the prosecution of any offence in Scotland, he is required to obtain the agreement of the Lord Advocate.

154.     If a Minister proposes to make an order that affects the powers of a regulator that is a local authority in Scotland, then he will be required to consult with Scottish Ministers because they will have an interest in the functions of local authorities in Scotland.

Clause 59: Consultation and consent: Wales

155.     The powers contained within this Part of the Bill given to a Minister of the Crown can also be used by Welsh Ministers in relation to matters that affect Wales, and which are the responsibility of Welsh Ministers.

156.     Under subsection (1), a Minister of the Crown must consult with Welsh Ministers before making an order under Part 3 that will impose a civil sanction in relation to an offence that applies in or in relation to Wales.

157.     Subsection (2) requires a Minister of the Crown, after consulting with Welsh Ministers on the provisions of an order under Part 3, to also seek the agreement of Welsh Ministers if the order affects the sanctioning of an offence which applies in or in relation to Wales and relates to functions that are exercised by Welsh Ministers.

158.     Subsection (3) requires the Welsh Ministers to consult the Secretary of State for the particular policy area before making an order under Part 3.

Clause 60: Consultation: general

159.     This clause requires a "relevant authority" (a Minister of the Crown or the Welsh Ministers) proposing to make an order under Part 3 to consult with the regulator that will be the recipient of the powers to be granted by the order and such other persons the relevant authority considers appropriate. The relevant authority will also be required to consult with relevant organisations that it considers represents the interests of persons substantially affected by the proposals.

160.     If as a result of this consultation exercise there are substantial changes to any part of the proposals, the authority will be required to undertake further consultation on the revised proposals as it considers appropriate.

Clause 61: Parliamentary and Assembly procedure

161.     Clause 61 requires that any order made by a Minister under this Part of the Bill must be made by statutory instrument and will be subject to the affirmative resolution procedure.

162.     A statutory instrument made under this Part of the Bill by Welsh Ministers requires the approval of the National Assembly for Wales.

Clause 62: Offences under subordinate legislation

Schedule 7: Enactments specified for the purpose of section 62

163.     This clause extends any power of a Minister of the Crown or Welsh Minister to create criminal offences in secondary legislation to include the powers to create alternative civil sanctions under this Part of this Bill. This applies only to those powers contained in enactments listed in Schedule 7. This would allow, for example, the Minister when amending or consolidating criminal offences contained in secondary legislation made under a listed enactment, to make provision for fixed monetary penalties. These provisions apply only in relation to existing powers to create criminal offences. Any future Bill containing a power to create criminal offences will need to have its own provision for alternative civil sanctions as this clause will not apply to that power. Furthermore, there is no power to amend Schedule 7 of this Bill.

164.     The enactments listed at Schedule 7 generally cover the same regulatory subject matter as covered by Schedules 5 and 6. Section 2(2) of the European Communities Act 1972 is not listed in Schedule 7 as the Government considers that this power is sufficiently wide to allow for the creation of civil sanctions.

165.     Subsection (3) requires that any statutory instrument conferring the power to impose any of these civil sanctions made under the enactments listed at Schedule 7 must be subject to the affirmative resolution procedure. The power is able to make any provision which could be made under Part 3 of the Bill, and thus any substantive restrictions on the sanctions will apply when the extended power is used, for example, in relation to devolution.

Clause 63: Guidance as to use of civil sanctions

166.     A Minister may not make an order that gives a regulator the powers under this Bill unless the order requires the regulator to publish guidance in relation to the imposition of a sanction and the acceptance of enforcement undertakings ("Penalty Guidance"). The order must also require that the regulator consult persons specified in the order (for example, persons affected by the new sanctioning powers) before publishing or revising the Penalty Guidance. The Penalty Guidance must also be revised by the regulator where appropriate, for example, where there has been a change in the rules. The order must also stipulate that the regulator must have regard to the Penalty Guidance when exercising its functions.

167.     The Penalty Guidance must contain information about the circumstances in which a sanction is likely to be imposed or undertakings accepted, the defences available to the person, and the person's rights of appeal. For particular sanctions under this Bill, there are further specific requirements for the Penalty Guidance set out in subsections (3) to (5).

Clause 64: Guidance as to enforcement of relevant offences

168.     This clause requires that, where a Minister grants a regulator any alternative sanctioning power under this Bill, the regulator should prepare and publish guidance about how the offence to which the power relates is enforced ("Enforcement Policy"). For each offence, the Enforcement Policy must set out the relevant sanctions to which a person may be liable. The Enforcement Policy must also set out the action which the regulator may take to enforce the offence. For example, it might state that a particular offence will usually be enforced by way of a fixed monetary penalty rather than criminal prosecution. The Enforcement Policy must set out the circumstances in which the regulator is likely to take such action. For example, the policy might say that criminal prosecution may be more likely where the person has a history of regulatory non-compliance. The Enforcement Policy, in contrast to Penalty Guidance, is focussed on how particular offences are enforced.

169.     A regulator will be able to revise its guidance periodically. The regulator will be required to consult with all persons it considers appropriate before publishing or revising its guidance.

Clause 65: Publication of enforcement action

170.     This clause requires that an order granting a regulator any alternative civil sanctioning power under this Part ensures that a regulator must publish, from time to time, reports specifying the cases in which one of the new civil sanctions under Part 3 of the Bill has been imposed, where a person has discharged their liability to a fixed monetary penalty under clause 40 or where an undertaking is accepted under clause 43. The reports should not list those cases where civil sanctions have been overturned on appeal. Further, the reports may not need to list certain cases where the Minister thinks it inappropriate for such cases to be publicised, for example, for data protection reasons.

Clause 66: Compliance with regulatory principles

171.     Before making an order under or by virtue of Part 3 and allowing a regulator access to the new sanctions, clause 66 provides that the relevant Minister must be satisfied that the regulator will exercise the new powers in accordance with the Principles of Good Regulation, as set out in clause 5(2).

Clause 67: Review

172.     Clause 67 places a duty on a Minister making an order under Part 3 of the Bill conferring a power on a regulator to impose fixed monetary penalties or discretionary requirements, serve a stop notice or accept an enforcement undertaking, to conduct a post-implementation review of the order. The review must take place three years after the order was made and must consider whether the order has implemented its objectives efficiently and effectively.

173.     In conducting such a review, the Minister must consult such persons, as he considers appropriate. The Minister must also publish the results of the review and lay a copy of the review before Parliament (or National Assembly for Wales if the review is conducted by Welsh Ministers).

Clause 68: Suspension

174.     Clause 68 enables the Minister making the order conferring the sanctioning powers on a regulator to be able to direct the regulator not to issue any further notices imposing one of the new sanctions or to accept enforcement undertakings. The Minister will be able to do so only if satisfied that the regulator has failed on more than one occasion to comply with any duty imposed on it under this Part of the Bill, to act in accordance with its published Penalty Guidance or Enforcement Guidance, or to act in accordance with regulatory principles (as set out in clause 5(2)) or other principles of regulatory best practice. This provision is a safeguard against persistent misuse of the new sanctioning powers by a regulator.

175.     The Minister may revoke the original direction given to the regulator if it is satisfied that the regulator has taken appropriate steps to remedy the identified failures.

176.     Before making any direction under this clause (including revocation of a direction), the Minister must consult the regulator and other persons he considers appropriate. The Minister must lay a copy of the decision before Parliament (or the National Assembly for Wales if the direction is given by Welsh Ministers). The regulator must publish the direction and take other steps to inform affected persons of it.

Clause 69: Payment of penalties into Consolidated Fund etc

177.     Clause 69 provides that any monetary penalty, including any additional late payment or interest charges, or any discharge payment made under clause 40 received by the regulator must be paid into the Consolidated Fund. This clause requires for the payment of such monies to the Consolidated Funds for Scotland, Northern Ireland and Wales, where appropriate.

Clause 70: Disclosure of information

178.     This clause permits the Crown Prosecution Service or the police to disclose information to a regulator that has had the new sanctioning powers conferred on it. Information may only be disclosed where the regulator has an enforcement function in relation to a criminal offence and for the purposes of the regulator exercising one of the new powers. The police will not have access to the new sanctioning powers but if, for example, they have begun a criminal investigation but think that it no longer merits a criminal prosecution, this clause would allow them to pass information to the regulator to determine whether to issue an alternative sanction.

Clause 71: Interpretation of Part 3

179.     Clause 71 defines various terms used in Part 3.

PART 4: REGULATORY BURDENS

Clause 72: Duty not to impose or maintain unnecessary burdens

180.     This clause creates a duty to keep regulatory functions under review and, when carrying out those functions, not to impose unnecessary burdens, and where proportionate and practicable, to remove unnecessary burdens. It is the person that is exercising the regulatory functions that decides whether or not a burden is unnecessary. In deciding whether the removal of an unnecessary burden would be disproportionate or impracticable, all relevant circumstances should be taken into account.

181.     Subsections (3) - (6) provide that the person to whom the duty has been applied must publish a statement setting out what they propose to do pursuant to the duty. The statement must explain what has been done in respect of the duty since the previous statement, except if it is the first statement that has published. Where a burden that is unnecessary has not been removed, the statement must explain why its removal would be disproportionate or impracticable. The first statement must be published as soon as reasonably practicable after application of the duty in relation to the specified functions and is to be for a period of twelve months. Subsequent statements must be published during the twelve-month period or as soon as is reasonably practicable thereafter and should be for a period of twelve months. The statement is intended to provide transparency and the regulated persons can discharge the requirement in the manner that is most appropriate to them, for example, in annual reports.

182.     A person to whom the duty has been applied is required, under subsection (7) to have regard to any statement produced pursuant to the duty.