Regulatory Enforcement and Sanctions Bill [Lords]

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Mr. McFadden: I recognise the challenge. My old boss, the former Prime Minister, was referring to the great Whitehall machine when he talked about having scars on his back. In the Bill, what we are talking about is important but in a different way. It is about how local authorities and organisations enforce regulation. The challenge for LBRO is to ensure that the two weaknesses identified by Mr. Hampton, those of inconsistency and inflexibility which I mentioned a couple of minutes ago, can be dealt with. Not all of that is done through the clause and we will go on to talk about the different powers that the LBRO uses to carry out its functions.
We believe that it should be an organisation with teeth and I welcome the hon. Gentleman’s indication that he agrees with that. Some of the amendments before us might, if passed, reduce the LBRO’s powers to be effective and could leave us with a weaker organisation. I do not want that to happen. The message from business is very important. Business wants to see clarity and consistency in the enforcement of regulation. It is one thing to have a debate about the substance of a regulation and whether it is necessary, but it is another to lack clarity about how that will be enforced in different parts of the country. That issue is an essential part of LBRO’s work.
However, it is not just about how LBRO works at local level. An important part of its job will be to speak to the regulators and to central Government about the regulations. It is not only an “eyes downward” organisation at local level; it has an important upward voice. The Government believe that currently there is a gap there, which LBRO will be able to fill. It has an important role, both in advising central Government and in ensuring consistency in the application of regulation at local level.
Mr. Prisk: I am grateful to the Minister; it has been a useful exchange. Clearly, the LBRO is one of the principal elements of the Bill, and all the powers and subsequent clauses in part 1 relate to whether it will be able to fulfil its task. I remain sceptical about its ability to fulfil that role, but I hope that it achieves it. I hope that the Minister’s sunny optimism will be proven right and I would be more than happy to—I was going to say buy him a pint of Guinness, which perhaps after Friday’s marvellous result would be even more appropriate. I am happy to be proven wrong, but at the moment I am not entirely convinced. However, the clause is there and I am grateful to the Minister for putting on the record the Government’s confidence in the ability of LBRO to do this with the resources and powers that it has. On that note, I will delay the Committee no further.
Lorely Burt: May I confirm that we are discussing schedule 1?
The Chairman: No, we are not.
Question put and agreed to.
Clause 1 ordered to stand part of the Bill.

Schedule 1

LBRO: supplementary
Mr. Prisk: I beg to move amendment No. 17, in schedule 1, page 38, line 13, leave out sub-paragraph (3).
The Chairman: With this it will be convenient to discuss the following amendments: No. 18, in schedule 1, page 38, line 17, leave out sub-paragraph (5).
No. 19, in schedule 1, page 38, line 20, leave out ‘special’.
Mr. Prisk: These are probing amendments and seek to put certain details on the record, which I hope will enable the implementation of the legislation to be improved. Amendment No. 17 seeks to delete subsection (3) on page 38. Its purpose is to ask the Minister what we mean by Welsh Ministers. Are they members of the Welsh Executive, Ministers of the Crown, or both?
Amendment No. 18 is another probing amendment, which relates to paragraph 3(5) of the schedule. It states:
“LBRO is to pay to or in respect of the ordinary members such sums as the Secretary of State may determine by way of or in respect of remuneration allowances, expenses, pensions or gratuities.”
I am not entirely clear what that text means; perhaps there is an additional or a missing word, or a typographical error. I am not sure, but I shall be happy if the Minister would clarify that. I have three or four different interpretations of it, and I would be interested to hear the Minister’s reply as to whether there is an additional “to” in there.
Thirdly, amendment No. 19, relating to paragraph 3(6), reads:
“If the Secretary of State thinks that there are special circumstances that make it right for a person ceasing to be an ordinary member of LBRO to receive compensation, LBRO must pay to that person such compensation as the Secretary of State may determine.”
Can the Minister explain what he regards as those “special circumstances”?
Lorely Burt: I am a little confused by these amendments. I am not entirely sure why the hon. Member for Hertford and Stortford maintains that they would make enforcement more effective by taking out any rules regarding how the LBRO should be composed. If amendment No. 18 means that LBRO members would not be civil servants, why does he want to delete that?
Mr. Prisk: These are entirely probing amendments. I have no wish to delete them, and it is not my wish to move them. My purpose is clarification of the Bill.
Lorely Burt: That is fine. I wait with bated breath what the Minister has to say in response.
Mr. McFadden: We had a debate about the basic purpose of LBRO, and schedule 1 gives significant detail on how the organisation is proposed to be established and run. I shall briefly answer a couple of the questions asked directly by the hon. Member for Hertford and Stortford. The term “Welsh Ministers” means members of the Welsh Executive.
He asked about the wording in paragraph 3(5) of the schedule. As I understand it, this is absolutely standard wording for describing payments to people doing this kind of work, so we see nothing unusual about that wording. The whole schedule is designed to give effect to LBRO and to enable it to carry out its work, in seeking to support local authorities in developing an approach consistent with the principles of better regulation.
The schedule—or rather, the Bill—will, as well as the functions that we have talked about, also help to give LBRO a role in preparing lists of priorities for enforcement for local government, which can be an issue, given the number of different priorities that central Government gives. In terms of the specifics of the amendments, I am glad to see that they were probing, because the effect of approving the amendments would be to neuter the body from the beginning, so I hope that the answers that I have been able to give on the subjects of payment and Welsh Ministers have been helpful.
Let me turn to the third of the amendments, amendment No. 19, which asks about “special circumstances”. We have deliberately set up the body to operate independently of Government, bringing the expertise of its members to bear on issues raised by local authority enforcement. The wording of “special circumstances” follows well established precedents, and I shall mention just a few. For example, similar measures were included in relation to board members of Natural England in the Natural Environment and Rural Communities Act 2006. The Value Added Tax Act 1994 specified that there can be compensation:
“If a person ceases to be a chairman of VAT tribunals and it appears to the Lord Chancellor that there are special circumstances which make it right that he should receive compensation”.
There is similar wording in the Criminal Justice Act 1988. The Bill follows those models and provides for the possibility of cases where the provision of some form of compensation is appropriate. Such circumstances would be rare.
I hope that I can clarify things for the hon. Gentleman. We do not believe that there should be a presumption for compensation to be paid. That is why “special” is used. Board members will come to the end of their contract naturally or could be removed for any of the other reasons set out in the schedule, including committing a criminal offence or failing to comply with the terms of their appointment. In the vast majority of cases, it would not be right for compensation to be paid. However, it seems prudent to us for the Bill to allow for unknown contingencies. The reasons for that inclusion means that we have used “special” to describe circumstances in which compensation might be paid. I hope that that helps to clarify the point.
Mr. Prisk: I am grateful to the Minister for providing those clarifications. As he knows—I know you know, Mr. Chope—one of the purposes of probing amendments is not necessarily to change the legislation, but to make sure that those putting it into practice understand the Government’s intention. Often the Bill cannot provide that. Therefore, the purpose of the three probing amendments and of a good number of others is to use our deliberation to get that clarification on the record.
I am grateful about amendments Nos. 17 and 18. I am particularly grateful for the recognition and clear statement that there should be no presumption about payments under sub-paragraph 3(6). On that basis—the hon. Member for Solihull can unbate her breath—I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Prisk: I beg to move amendment No. 20, in schedule 1, page 39, line 39, leave out subsection (1).
The Chairman: With this it will be convenient to discuss the following amendments: No. 21, in schedule 1, page 39, line 40, leave out subsection (2).
No. 22, in schedule 1, page 40, line 3, leave out subsection (4).
Mr. Prisk: These are, again, probing amendments—bated breath or otherwise. Let us look at page 39, dealing with paragraph 8, on committees surrounding the operation of LBRO. Amendment No. 20 removes the provision for LBRO to establish “one or more committees”. The provision is perfectly reasonable, but it would be helpful to know the Government’s intention or wish concerning the scope of those committees. It would help us to know the limits.
Amendment No. 21 is similar. It seeks to delete sub-paragraph (2):
“A committee established under this paragraph may include persons who are neither members nor employees of LBRO.”
The clause permits anyone to be on such a committee and, as we learn later, that is a paid position. Money comes from the public purse. Who appoints? What will the basis of those appointments be?
Amendment No. 22 is about paragraph 8(4), which is at the top of page 40:
“LBRO may pay sums by way of or in respect of expenses to or in respect of a person who is a member of a committee or of a sub-committee established under this paragraph but who is not a member or employee of LBRO.”
That is a wide statement. Given the heightened public interest in expenses, to what are the rules for those arrangements subject? What independent oversight might there be, should things go awry?
11 am
Mr. McFadden: The amendments relate to the capacity of the Local Better Regulation Office to appoint sub-committees. One example of an important sub-committee that one would expect an organisation like this to appoint is an audit committee. We would also hope to allow the appointment of expert advisers to that committee and to pay its members. This is an independent body, operating at arm’s length from the Government, and it needs that independence to create the right governance arrangements for its statutory role. If I may refer to similar organisations and parallels in other legislation, both the Commission for Architecture and the Built Environment, created by the Clean Neighbourhoods and Environment Act 2005, and the Serious Organised Crime Agency, created by the Serious Organised Crime and Police Act 2005, have similar powers to create committees.
The LBRO will not necessarily stop with an audit committee; it might wish to appoint an advisory committee, to advise it on issues raised by one or more of its functions. It should be a matter for the LBRO to decide whether it wishes to go down that road, but it may set up committees that will help it achieve its objectives. I hope that that gives some clarity on the purpose of the measure.
The hon. Gentleman asked a couple of specific questions. LBRO itself would appoint the individuals. Payments would be governed by the usual public money rules. As will be discussed later, LBRO has to account to both my Department and Parliament for its expenditure in the normal way. It has been granted a budget for the next few years, pending the approval of the legislation in Parliament, but any expenditure on paying people on its committees will have to come out of that budget.
Mr. Prisk: I am grateful to the Minister for responding. I have no wish to try to instruct the LBRO in advance regarding specific committees. Our purpose is to clarify exactly how this will work and what recourse there would be for Government, and thence Parliament, to ensure that it is operating in an effective way. I am not overwhelmed by the Minister’s response. I accept that there is an established principle and I presume that Nolan was the process that he was referring to as regards public deliberation. I do not know whether he wishes to consider that. I have no wish to press the amendment to a vote because I am well aware that it would prove a nonsense, but it would be helpful if the Minister reflected on clarifying which particular rules he refers to and whether he feels able to consider any advice that may be forthcoming. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Prisk: I beg to move amendment No. 23, in schedule 1, page 41, line 2, at end insert
‘no later than 30 days after its receipt’.
The Chairman: With this it will be convenient to discuss amendment No. 24, in schedule 1, page 41, line 25, at end insert
‘no later than 30 days after its receipt’.
Mr. Prisk: These two amendments deal with our ability to hold the LBRO to account. Members of the Committee will realise that the annual report of the LBRO is the principal document that the House will have in order to consider the performance of the organisation that the Bill establishes. I am trying to ensure that our scrutiny is timely. I therefore wish to insert a phrase to both paragraph 12(5) and paragraph 13(6). Paragraph 12(5) of the schedule states:
“The Secretary of Sate must lay before Parliament a copy of each report”
—that is, the annual report—
“received under sub-paragraph (2)(a).”
My amendment would insert the phrase,
“no later than 30 days after its receipt.”
I am sure that it is not the intention of Ministers to unduly or deliberately lay such documents significantly later than that—six months or a year or so—but if we are to scrutinise these matters as a House, it is important that we have the documentation within a reasonable time. I think that 30 days is a perfectly reasonable time within which we could expect those documents to be forthcoming. If scrutiny is to be effective, it must be timely. I hope that the Minister will treat the amendments in a positive way, as these are matters that should be pressed.
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