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I am grateful for all the work put in by Members on both sides of the House. The Bill is intended to improve how regulation works in our economy, in the interests of the regulated and, most of all, of the public. It is in
all our interests for us to have a system in which business can thrive and grow and for the public to be confident that the regulations that the House considers and passes are enforced properly and proportionately in practice. That is what the Bill is intended to ensure, and I commend it to the House.
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Mr. Prisk: I am grateful to the Minister for his opening remarks, which I should like to reciprocate by thanking him for the courteous and patient way in which he approached our discussions in Committee.
It is in vogue in the Government to compare oneself with a fictitious literary character; on that note, I suggest that the Minister has performed with the patience and courtesy of Mr. Bennet from “Pride and Prejudice” to his rather awkward and occasionally annoying offspring. I shall save the Minister the blushes that would be involved in suggesting which particular member of his family he might wish to compare me to.
I should also like to thank my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) and my hon. Friends the Members for St. Albans (Anne Main) and for Mid-Bedfordshire (Mrs. Dorries), who were of great support to me in Committee. I particularly thank my hon. Friend the Member for Billericay (Mr. Baron) for his patient guidance and help.
As the Minister said, this Bill is not the Government’s first attempt to tackle regulation. In both 2001 and 2005, attempts were made to turn the regulatory tide. Sadly, neither made any real impression on the volume or complexity of the law, and meanwhile the burden on business has grown. It is important to remember that context when we consider the aims and outcomes of the Bill and the deliberations that we have had to date. I shall not attempt to rehearse the arguments debated on Second Reading—nor would you allow me to, Mr. Deputy Speaker, and rightly so. Let me just say that we Conservatives endorse the principles of risk-based regulation, but we believe that this measure is too narrow and, all too often, far too complex. As our economy faces a serious downturn, we need to be bolder in freeing enterprise from needless red tape.
Deliberation on the Bill began, of course, in the other place, and right from the start it was clear that there were serious deficiencies. For example, a new super-local-regulator was to be established, but there was to have been little effective oversight. I am pleased to say that my noble Friends tabled substantial amendments that would improve the scrutiny and operation of the local better regulation office. The insertion of provisions for a formal three-year review in clause 17, and for consultation in clauses 9 and 10, are all the direct result of that scrutiny.
Equally, the original Bill permitted regulators the ability not only to issue civil fines—we debated that on Report—but to keep the money from those fines. There was a danger that that new source of revenue could encourage regulators to become the worst sort of target-led traffic wardens—fine first, and ask questions later. As the Minister said when we debated the matter in Committee, the danger of that would have been its undermining of the risk-based approach to regulation that lies at the heart of the legislation’s original aims. Thankfully, that danger has been averted; instead, the moneys will be
deposited into the general consolidated fund, thus removing any incentive for regulators to use fines inappropriately. I have no doubt that that sensible compromise will be even more welcome in a rather cash-strapped Treasury.
Looking back, I estimate that there have been at least a dozen important amendments to the Bill during its passage through Parliament. I hope that the Government Whips will note that all this took place without the need for heavy-handed so-called programme motions. Scrutiny is often more effective when not held on a short leash.
However, the Bill is far from perfect. I remain sceptical about the capability of the LBRO to change single-handedly the performance of the worst local regulators. Change management, as the Minister will know, is about the leadership and culture of an organisation, but the Bill fails to address either. The precedent in clause 7—the power for an unaccountable body to turn guidelines into directions—is one that we thoroughly debated at various stages of the Bill’s passage. Conservative Members remain concerned, and we would expect the whole matter to be included explicitly in the three-year review that the Government conceded earlier. There are real dangers surrounding this precedent. It is the first time, as far as I am aware, that an unaccountable body that is not directly accountable to this House has the ability to turn its guidelines into directions. Despite the Minister’s assurances, I suspect that it will not be long before we find before the House similar measures and requests from other quangos for pretty similar powers.
Part 2 establishes primary authorities for multi-site businesses. That could be good news for larger firms such as Tesco, but it has the potential, as my hon. Friend the Member for Wellingborough (Mr. Bone) said in his comments on Report, to leave small single-site firms behind. In Committee, the Minister gave me clear assurances that small businesses will not be disadvantaged. I intend to hold him to his word, and to that end I will contact small business organisations to ask them to help me to monitor this whole process among their members. I am sure that the Minister will agree that it is vital that small businesses trade on a fair and level playing field.
Equally, I remain concerned about the potential for confusion among consumers about how complaints and enforcement action will be handled. Indeed, we heard strong evidence in Committee about the potential for bureaucracy, not least from Hertfordshire county council, which fears that it could need another 12 officers. That is just one local authority of nearly 500, so hon. Members will realise the potential cost to council tax payers, or, if the money is recouped by business, as the Minister suggested earlier, the unwelcome costs to businesses that they may not have anticipated in full.
Then there is the power to charge businesses. During our discussions on the first day in Committee, I asked the Minister who would determine those charges and who would judge whether they were reasonable. I am pleased to say that yesterday I received the Minister’s reply by letter, which I think has been copied to all members of the Committee.
Mr. McFadden indicated assent.
Mr. Prisk: The Minister confirms that. In his letter, he says that each primary authority would set the charges and the LBRO would provide oversight. I welcome that clarification, although I can see the potential for delay before such directions may be forthcoming.
In Committee, the Minister also promised to answer my questions about the budgets for first tier tribunals handling the appeals, especially in their first year. Again, he did not have the answer, which came in his letter yesterday; I think that hon. Members who have not had the chance to see it will be interested. He said that each regulatory regime, or first tier tribunal, involved would expect a cost in the region of £100,000. Could he confirm, now or again through correspondence, how many different regulatory regimes the Government anticipate, and therefore the total cost? There will be several different regulatory regimes, but his letter does not tell us how many, so it is unclear whether we are talking about 26—I doubt that, but it would mean costs of £2.6 million—or only two or three.
Part 3 was highly controversial when first published because, as we said earlier, it extends the power to fine people to not only one regulator but more than 26. I say that because 26 are named, and then it refers to “local fisheries committees”. It is unclear whether that means there are 432 or 29. Not only are a notable number of regulators involved, but the fines and sanctions that will be applied will involve 140 other pieces of legislation, each of which are listed in the Bill. The powers granted will allow those regulators to be the investigator, the judge and the jury.
Thankfully, the Bill has been significantly amended. There will be, as the Minister has highlighted, an independent appeals process, but as we discussed, that process will occur only after the event. There will be no independent hearing, therefore, in which an accusation will be tested, and in which the guilt will have to be proven before the event. The Minister has given the House quite extensive assurances, both in the debates on amendments Nos. 10 and 12 on Report, and in Committee, that the system will be fair and open. I take him at his word. I simply say to him that we will hold him and any of his successors to that, so that the Government ensure that those promises are fulfilled.
We want to monitor closely how the process evolves. As we learned from the excellent identification by my hon. Friend the Member for Wellingborough, some 14,000 sanctions could be involved, half of which the Government expect could be rescinded. This is not a minor matter, but an important one. I recognise the benefits of a streamlined, civil system of sanctions, but we must not lose sight of fairness. I suspect that many small businesses will just pay up, because they do not have either the time or resources to fight. The danger is that we will then see a real sense of injustice, which can undermine the system and the economy.
The origin of the Bill was, rightly, in seeking to improve the quality and consistency of regulation and its implementation. Those are good principles, but what is at stake is whether the Bill will achieve them. The process in this House and the other place has improved the Bill, but it remains far from perfect. That is why we have sought to set out our reservations carefully, cautiously and perhaps at greater length than some on the Government Benches may have liked. Equally, no one should forget that this Bill is the third attempt by the Government to
tackle regulation. Both of their two previous attempts have failed. After 11 years in office, and more than 35,000 new regulations, Ministers must understand that neither business nor consumers will tolerate a third failure.
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Lorely Burt: I shall be brief; we have had extensive discussion this afternoon. I extend my thanks to everyone who worked so constructively in Committee, and to the various bodies that have been so kind as to give me advice. I particularly single out Local Authorities Co-ordinators of Regulatory Services and the CBI.
Although this is not the most nerve-tinglingly exciting Bill that I have ever worked on, it is hugely important for business in its constant struggle to meet the demands of regulation and to make money, especially in these difficult financial times when business needs to concentrate on defending existing business share on top of growing new business. For everyone’s sake, I hope that the establishment of local better regulation offices will not only smooth the passage of regulatory compliance for business, but will be carried out in a spirit of helpfulness, with the sharing of best practice, to make business better placed to meet regulatory requirements and to become more efficient and better able to tackle the challenges of today’s tough business world.
I hope that the formulation of the primary authority will help resolve business frustration about any local enforcement inconsistencies that might be experienced in operating from more than one local authority area.
Mr. Bone: I am slightly worried about that point and the Tesco argument. If Tesco finds a primary authority that whizzes through all it wants, it could impose all that in Wellingborough against my local authority’s wishes. The Government seem to be in league with huge businesses.
Lorely Burt: I am grateful for the hon. Gentleman’s intervention and I share his concerns. The Bill contains sanctions, which are available to the local better regulation office and the company that is being regulated. We must trust that they will be effective. The Tesco example, to which the hon. Gentleman alluded, is the position whereby an organisation, which is being regulated from elsewhere, does not comply with not only the organisation’s overall requirements but local requirements. That is why I felt that it was important to ensure that the local enforcing authority can react strongly and quickly when such circumstances arise.
The primary authority must be mindful of and sensitive to the fact that local authorities serve local people, and I hope that any conflicts that arise between the primary authority and the enforcing authority can be resolved sensitively. After all, customers are customers, wherever they reside.
The faster, more automatic system and the wider range of penalties that we have discussed today should make for speedier resolution of breaches of regulation. However, it is to be hoped that that does not give the green light to less scrupulous companies to disregard a regulation’s intention and delay putting their house in order by simply paying up specific statutory fines again and again. I am sure that the local enforcement authority
and the lead authority will work together to ensure that that does not happen. We must safeguard those companies, which the hon. Member for Hertford and Stortford (Mr. Prisk) mentioned, that seek to comply with regulations and work within the rules honestly. They ask only for a level playing field, which regulation at its best can offer.
Reputation is a factor to which I wish the Government had seen fit to pay more regard. The option to elect for criminal proceedings would have given comfort—not as something that a company would envisage needing to do, but as a fall-back if it felt strongly that an injustice had been done.
Mr. McFadden: I do not want to rerun our debate, but does the hon. Lady acknowledge that a criminal prosecution, even if the business won the case, could also result in damage to reputation?
Lorely Burt: The Minister makes an interesting point, but I gave an example earlier of an old lady whose name is cleared and who is vindicated. I believe that companies should have that right, not after they receive the fine or other penalty, but before that damage is done. Once a fine is imposed, reputation is lost, even if the decision is overturned on appeal.
As I said, regulation can help business as well as the consumer by creating a level playing field. However, I am sure that everyone involved—businesses, consumers and the Government—would wish to see less regulation. The Government have committed to reducing the regulatory burden on business by 25 per cent. by 2010. We are now halfway through the time allocated, yet even having picked the low-hanging fruit, the Government have managed only 6 per cent. so far. It is to be hoped that the local better regulation offices will work extra hard in conjunction with the primary and the local enforcement authorities to help to mitigate the effects of the huge burden of regulation on British business today.
Mr. Deputy Speaker (Sir Michael Lord): Order. Before I call the last speaker, I have to report an error in the numbers reported as having voted yesterday in deferred Division No. 258, on the draft Northern Ireland (Sentences) Act 1998 (Specified Organisations) Order 2008. The numbers voting Aye were 298, rather than 285. The number for the Noes was not affected and remains at 118. The Clerk will arrange for the record to be corrected.
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Mr. Bone: It is a great pleasure to follow the hon. Member for Solihull (Lorely Burt), who throughout today’s debate set out reasoned arguments that I was very surprised the Government did not accept. I am also delighted to follow my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), who has led so well for Her Majesty’s Opposition. I notice that he entered the realm of fictitious characters, but I think he chose the wrong one for the Minister. A much more appropriate character would be Jim Hacker, whom I will mention later. I must declare my interest in the Register of Members’ Interests and the fact that I am a director of a small family company and a fellow of the Institute of Chartered Accountants in England and Wales.
The Bill is not a minor measure; it is a major shift to centralisation by the Government. As my hon. Friend mentioned, 27 regulators are affected by the Bill, excluding local authorities which are all affected. It would be helpful to read out the list of regulators. They are the British Hallmarking Council, the Charity Commission for England and Wales—one can imagine the potential impact on local authorities—the Coal Authority, the Competition Commission, the Countryside Council for Wales, the Environment Agency, the Financial Services Authority and the Food Standards Agency, which raises another issue. If one of the regulators has a prime authority in one particular area, that could be very damaging.
The list continues: the Football Licensing Authority, the Forestry Commissioners, the Gambling Commission, the Gangmasters Licensing Authority and the Health and Safety Executive, which is an extraordinary regulator to be included in the list. I say that because the Government, through the local business regulatory office, will be controlling what the regulator does, as we will see later. That will be extremely damaging to the Health and Safety Executive, whose independence I would have thought ought to be most important.
The list continues: the Hearing Aid Council, the Historic Buildings and Monuments Commission for England, or English Heritage for short, the Housing Corporation, the Human Fertilisation and Embryology Authority, the Human Tissue Authority, the Information Commissioner, local fisheries committees, Natural England, the Office of Communications, the Office of Fair Trading, the Office of Rail Regulation, the Pensions Regulator, the Security Industry Authority and the Statistics Board.
That is an extraordinary list, but why pick those and not other regulators? The Government did not comment on that at all in the debate on Second Reading, to which I both listened and contributed. Unfortunately, I was not allowed to be a member of the Public Bill Committee, which I regret, as there was competition to serve on it. Third Reading is therefore my only opportunity to comment on the Bill as a Back Bencher.
Mr. David Drew (Stroud) (Lab/Co-op): As someone who was allowed to serve on the Committee, given my special knowledge of this area, may I ask the hon. Gentleman whether he was a little surprised by his party’s decision not to force Divisions on Second Reading or—I do not know; perhaps he will comment on this—Third Reading?
Mr. Bone: That is a very useful and helpful comment, because it brings me to something I was going to say later in my speech. Unfortunately, there has been a lack of intervention by Labour Back Benchers to show support for the Minister. In fact, I think that the number was zero on Second Reading and zero on Report, but never mind.
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