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Mr. Thomas: Perhaps I could encourage the hon. Gentleman to talk to the business community, which welcomed the move. He suggests some scepticism about the benefits of that measure—let him talk to the business community, which actively supports it. While the hon. Gentleman is talking to the business community about that measure, he might like to ask about the revelation from my hon. Friend the Member for Amber Valley that Conservative Members have not been diligent about turning up to discussions in the Regulatory Reform Committee. [ Interruption. ] I welcome the attendance of the hon. Member for Beverley and Holderness in this
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debate—I hope that he will take up the issue of poor attendance on that Committee with those on his Front Bench.

The business community has made a series of supportive remarks about the Bill. The British Retail Consortium, for example, strongly supported the establishment of the LBRO, saying that it thought it vital that the LBRO should have full and effective powers right from the start. The consortium saw one of the office’s key roles as bringing reluctant authorities up to standard. The national policy chairman of the Federation of Small Businesses, Mr. John Walker, made it clear that ensuring a clear and consistently fair system throughout all local authorities is a “must have” for the small business sector. He went on to say that the anticipated reduction in cost to businesses means that this is a positive development and welcomed the creation of this new body. The Institute of Directors, too, welcomed the proposition that a wider range of penalties would mean less use of criminal sanctions, and less time and money being spent on court procedures. The Federation of Small Businesses said that it supported the use of alternative sanctions rather than the use of criminal prosecutions, which it thought—as we do—should be reserved for only the most egregious offenders and offences.

Several hon. Members expressed concern about what the LBRO would do for smaller businesses. Its objective is to promote better regulation for all businesses, regardless of size. We believe that all its functions under part 1 will help to lighten the burden of regulation on small businesses. For example, where small firms operate in more than one local authority area, they will have access to the primary authority scheme that is enshrined in part 2 of the Bill. For instance, a car dealership operating across several councils or small businesses that are based on internet sales could benefit from the scheme. I suspect that is why, during consultation, small businesses were concerned to ensure that the primary authority scheme did not divert resources away from their support towards bigger national firms.

Mr. Brian Binley (Northampton, South) (Con): Will the Minister give way?

Mr. Thomas: I will not give way to the hon. Gentleman; he has not been here since the beginning of the debate.

As the Macrory report made clear, we decided to introduce additional sanctions. He found that, in the past, UK regulators have relied too much on criminal prosecution as a means of tackling breaches of regulation. He identified a series of weaknesses in the current system. For example, he noted that criminal prosecution may occasionally be a disproportionate response when there is no deliberate intent or wilfulness to break the law. He also identified evidence of a compliance deficit, whereby regulators leave many breaches unpunished because they have a choice only between criminal prosecution and informal advice to tackle regulatory non-compliance.

Macrory also made clear his view that the deterrent was occasionally insufficient. He noted the criticism that the current system provides insufficient tools, with
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the courts handing down fines that often do not reflect the seriousness of the offence or the financial benefit gained through wilful non-compliance with the law. He also noted that prosecutions take time and money. Heavy reliance on formal criminal prosecutions makes resolving such cases a costly and time-consuming exercise for business and regulators. In many instances, given regulators’ limited resources, the cost or expense of bringing criminal prosecutions deters the regulator from taking any action in all but the most clear-cut cases.

Civil sanctions will allow regulators to act in a more proportionate and targeted way, thus helping to close the compliance deficit and delivering considerable savings to both businesses and regulators.

The hon. Member for Brent, East asked about restorative justice. Part 3 already includes a significant element of restorative justice through enabling regulators to impose restoration notices and accept undertakings offered on their business to rectify any harm caused by its non-compliance. The Better Regulation Executive is working in partnership with regulators to explore how they may develop restorative justice schemes locally.

The hon. Member for Beverley and Holderness expressed concern that under the Bill regulators would act as judge, jury and sentencer. Opposition Front Benchers picked up on that, as did Lord Lyell in the other place. The Bill allows many regulators to receive significant new powers and also includes important safeguards. First, the regulator will need to be satisfied beyond reasonable doubt that an offence has been committed—that is the criminal standard of proof. Secondly, the person whom the regulator suspects of committing the offence will be able to make representations to the regulator before a fixed monetary penalty or a discretionary requirement can be imposed. Thirdly, and perhaps most important, the Bill provides, as I made clear in my intervention, a right of appeal to an independent, impartial and expert tribunal.

We firmly believe that the provisions in part 3 are fully compatible with our obligations under the European convention on human rights.

Mr. Stuart: The Under-Secretary makes reasonable points. Are the Government prepared to discuss the fine levying and the conditions to be placed on that in Committee?

Mr. Thomas: We are always happy to discuss reasoned cases that are put to us. I know that my hon. Friend the Minister will enter the Committee stage in that spirit.

My hon. Friend the Member for Ellesmere Port and Neston mentioned variable monetary penalties. Perhaps I should give an example of the potential benefit of the provision. If the security industry decided that it wished to use the powers in the Bill for wheel-clamping, the new sanctions could be used to tackle unlicensed wheel clampers or organisations that use wheel clampers directly. A fixed monetary penalty could be imposed for failure to hold a licence or a variable monetary penalty to remove profit made by unlicensed wheel clampers. I suspect that many hon. Members who have received complaints from constituents about the way in which wheel clampers operate will welcome that.

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The Bill will promote better consistency of treatment for business and provide a more effective and flexible range of responses for regulators on the ground, with a view to promoting compliance and minimising the unnecessary burdens associated with regulation in practice. The Bill will modernise the way we enforce regulations, with benefits for consumers, businesses, and regulators. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

regulatory enforcement and sanctions Bill [ lords] (Programme)

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A (Programme motions) ,

Question agreed to.


Queen’s recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No. 52 (Money resolutions and ways and means resolutions in connections with Bills),

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Question agreed to.


Motion made, and Question put forthwith, pursua nt to Standing Order No. 52 (Money resolutions and ways and means resolutions in connection with Bills),

Question agreed to.


A50 (Staffordshire)

3.26 pm

Mr. William Cash (Stone) (Con): The petition is from Draycott in the Moors parish council and the community of Draycott in the Moors, with the communities and parish councils of Checkley, Forsbrook, Fulford in my constituency and other residents.

The petition states:


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Rural Payments Agency

Motion made, and Question proposed, That this House do now adjourn.— [Alison Seabeck.]

3.27 pm

Mr. Graham Stuart (Beverley and Holderness) (Con): It is a pleasure to be in the House this afternoon, knowing that because the Government business has already been completed, the Under-Secretary, other hon. Members and I have until 7 o’clock this evening to discuss the case of my constituent, who was so unfairly treated about his farm payments.

The Rural Payments Agency’s handling of the single farm payment scheme is well documented. As a Member of Parliament for a rural constituency with a proud farming tradition, I know only too well the strain that that put on families and businesses over the past few years. Many farmers across the country have been forced out of operation, many took on large amounts of debt, and all have come to regret the administrative incompetence of the Ministers who were then in the Department. Rural communities distrust the Labour Government. They are not convinced that the Government understand, or take any interest in, their way of life, and many have lost faith in their ability to improve things.

I hope that that is a source of regret for the Minister, but I suspect that after the foot and mouth outbreak, the cuts in flood defences before last year’s floods, and the failure to distribute awards from the single farm payment scheme on time, he is not especially surprised. I hope, too, that he is embarrassed by the failings of the RPA, which is guilty of staggering incompetence. The conclusions of the National Audit Office report on the delays in administering the single farm payment scheme in 2005 say it all:

Whereas Scotland, Wales and most other EU countries opted for payments calculated on the historic basis of claims made by individual farming businesses between 2000 and 2002, England adopted the so-called dynamic hybrid model. I am sure that the Minister who is here tonight would have made different choices, but the Ministers who were there then made that choice. Whereas most Scottish payments were made on time, thousands of English farmers were made to wait. Although the target was to pay 96 per cent. of all money due to farmers by the end of March 2006, by the end of June 2006, 8,586 farmers had not received any money, and 16,168 farmers had received only partial payments amounting to 80 per cent. of their claim.

The result was widespread despair and frustration among members of England’s farming community. Some 20 per cent. of those surveyed by the polling company Ipsos MORI said that the delays had caused distress and anxiety to them and their families. The NAO estimated that the delays cost farmers between £18 million and
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£22.5 million in interest and arrangement fees on additional bank borrowing. Its report stated that some farmers had

Only in this Government could the Minister who presided over such a situation be promoted to the post of Foreign Secretary.

The purpose of today’s debate, however, is not to slam the Government for past misdemeanours but to set out for the Minister the case of Sam Walton, a farmer constituent of mine. Mr. Walton has, in my opinion, been the victim of an injustice at the hands of the Rural Payments Agency. I gave the historical backdrop by setting out the way in which those payments were introduced to provide an idea of the way in which the agency ran its major project, and it is fair to do that before I deal with the way in which rules were rigidly applied to a small farmer in distress.

The injustice that Mr. Walton suffered has led to his losing out by more than £5,000 each year—a huge sum of money for farmers in today’s difficult climate. He has gone through the necessary judicial procedures to retrieve the money, and has got nowhere. As a final resort, he contacted me, and asked me to bring his case before the House. I hope that the Minister will give him a fair hearing this afternoon, and I am confident that he will. Sam Walton is a farmer of long standing in my constituency, and he is highly regarded in the east Yorkshire rural community. He has been farming at his home in the tiny village of Lockington since 1973. During that time, he has built up a plot of land totalling more than 170 acres, and he has become editor of the magazine Pig World. His main source of income for the past few years is cereal and rapeseed, as he no longer handles any livestock.

Mr. Walton’s troubles began in the year 2000-01, when he contracted with a company to grow beans on his land. The company decided to pay him for that work up front. As a result, it alone collected that year’s arable area payment—some £100 per acre. It was a wise decision for Mr. Walton to collect the money before the work was completed. In 2001 he contracted with the same company to grow winter barley. This time no money was collected up front, and when the company went bankrupt later that year, it owed Mr. Walton more than £2,000.

Mr. Walton was diligent before allowing the company to collect that year’s subsidy. He contacted the Rural Payments Agency office in Northallerton, North Yorkshire, to ask specifically whether he would be harmed in future if the transfer to the company went ahead. He was assured that he would not lose out as a result. Given the rules at the time, the civil servants who gave him that advice were entirely right to do so, but when the single farm payment scheme was introduced, he was clobbered to the tune of £5,000 a year.

The reform of the EU common agricultural policy in 2003 was generally welcomed by Members on both sides of the House. The original CAP was based on the ludicrous policy of high support prices: the more the farmer produced the greater the benefit he received, which led to overproduction and the selling of cheap food to the developing world. As a result, local and third-world producers were undercut, local economies were damaged, and millions of people were worse off.

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