Lorely
Burt: I am happy to support the Conservative amendment. It
seems a sensible way of strengthening the intentions of the
Bill.
Mr.
McFadden: Clause 5 is important as it sets out the
principles of better regulation to which the LBRO will have regard. As
the hon. Member for Hertford and Stortford mentioned, subsection (2)
sets out its functions stating that
“regulatory
activities should be carried out in a way which is transparent,
accountable, proportionate and consistent...targeted only at cases
in which action is
needed”. Those
of us with history in such debates are familiar with those five
principles, which have become an important part of the policy framework
regarding better regulation. The amendment deals specifically with the
regulators compliance code, recently issued under section 22 of the
Legislative and Regulatory Reform Act 2006. The scope of the code in
respect of local authorities coincides closely with parts 1 and 2 of
the Bill. It applies to local authorities in their exercise of trading
standards, environmental health, licensing and fire safety functions.
The LBRO will, therefore, take an interest in the performance of local
authorities when delivering its duties under the code.
However,
including a provision in the Bill that requires LBRO to ensure that
local authorities act in accordance with it could cause confusion for
businesses and local authorities. Although I understand the intention
behind the amendment, its effect would be to place local authorities
under two contradictory legal obligations. The provisions in section 21
of the 2006 Act and the legislative and regulatory functions order
under which the code was issued, require local authorities to have
regard to the code. Legally, that means that in certain circumstances,
a local authority can take the code into account but decide not to
apply it.
Amendment No.
1 would require LBRO to ensure that local authorities act in accordance
with the code. Under that requirement, the circumstances in which a
local authority could decide not to apply it are limited almost to
none. It would be undesirable to have those two contradictory legal
requirements running side by side.
Mr.
Prisk: I would like to clarify something. Subsection
(2)(b)
says “regulatory
activities should be targeted only at cases in which action is
needed”.
Is it the
Government’s intention—this may be helpful in the debate,
certainly to those who are concerned about the matter—that the
measure would seek to implement the full Hampton-compliant, risk-based
approach?
Mr.
McFadden: Certainly, these are known as the Hampton
principles. They are an important guide for regulators and Government
in framing regulation. My point and, to use more colloquial language,
the Government’s view is that subsections 2(a) and (b) cover
what should guide the functions of LBRO under the clause. Our problem
is that amendment No. 1 would have local authorities not only having
regard to LBRO, but acting in accordance with it, which would present
them with two potentially contradictory legal requirements running side
by side. It would require them to do that bit more by amending the
objectives of a different body altogether. I am not sure that is the
best way to
legislate. 11.30
am
Mr.
Prisk: Is the Minister saying that the Government believe
that, together, subsections (1) and (2) would require local authorities
to be wholly compliant with Hampton? Is that correct or not? If it is
correct, it would be immensely helpful.
Mr.
McFadden: The provision requires local authorities to
conduct their business according to the five principles set out in the
clause. I hope that I have been helpful to the hon.
Gentleman.
Mr.
Prisk: I think that we have got there in the end. The
purpose of the amendment was to establish explicitly what would happen.
I fully understand that subsection (2)(a) on the key points of
transparency, accountability, proportionality and consistency is
important, but the risk-based issue is unclear under subsection (2)(b).
Several businesses that will be affected by the provision have wanted
matters clarified. The Minister may have just provided that clarity,
and I am grateful to him for that. In a charitable sense, I say that
the hon. Gentleman has made progress by covering such matters, and I
beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn.
Lorely
Burt: I beg to move amendment No. 49, in
clause 5, page 3, line 42, at
end add— ‘(c) regulatory
activities should be carried out on the basis of a risk assessment of
the regulated person which should include their propensity to comply
with the
regulation.’.
The
Chairman: With this it will be convenient to discuss
amendment No. 50, in
clause 13, page 7, line 9, at
end add— ‘(c) regulatory
activities should be carried out on the basis of a risk assessment of
the regulated person which should include their propensity to comply
with the
regulation.’.
Lorely
Burt: The Hampton review recommended that all regulatory
activity should be based on a clear, comprehensive risk assessment. The
LBRO should have the power to ensure that any sanctions or inspections
should follow a risk assessment via the regulator or local authority.
If they target those that present high risks, it would give more
freedom to target rogue traders. It would free up resources and it
would reward compliant companies with a light-touch regime, which is
the reasoning behind the
amendment.
Mr.
McFadden: We are in similar territory to that of the
previous amendment. Under clause 5, LBRO is required to secure that
local authorities exercise their functions in a way that is effective,
does not give rise to unnecessary problems and complies with the five
principles under subsection (2) that we discussed a moment or two ago.
They are the principles of better regulation, which inform policy in
such areas, and they are becoming increasingly integrated into the
legislative framework for regulators. They feature, for example, in
Ofcom’s primary legislation and many regulators are required
to have regard to them under the Regulatory Reform Act
2001. I
agree with the hon. Lady that the assessment of risk should be at the
heart of regulatory activity, but so should many other commendable
practices, such as giving clear advice to those who are subject to
regulation and others, too. I am not sure that it is wise to single out
this particular issue when the principles of good regulation already
address the point. In particular, subsection (2)(b) says:
“regulatory
activities should be targeted only at cases in which action is
needed.” The
key ideas behind the five principles are probably targeting and
proportionality, reflecting the view that regulation should be based on
an assessment of risk. The Better Regulation Task Force publication
“Principles of Good Regulation” expanded on the
principles and on the best means of implementing them in practice. The
guidance covers the issues raised in the amendments, and it may help
the hon. Lady if I quote from it. The guidance says that targeting, for
instance, demands that enforcers
should “focus
primarily on those whose activities give rise to the most serious
risks.” The
issue is therefore covered in Government guidance.
The
inclusion of the principles in clauses 5 and 13 deals with the issue
raised in the amendments and makes them unnecessary. I hope that that
gives the hon. Lady some reassurance that a risk-based approach is very
much built into clause 5.
Lorely
Burt: I am grateful to the Minister for his explanation of
where else in the Bill I should seek reassurance that the risk-based
approach is included. With that reassurance, I beg to ask leave to
withdraw the amendment.
Amendment,
by leave, withdrawn.
Clause 5
ordered to stand part of the Bill.
Clause
6Guidance
to local
authorities Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: Clauses 6 and 7 are important to the functioning
of the LBRO, so I hope that the Committee will not mind if I delay it
for a short time to set out some of the issues.
Clause 6
gives the LBRO the power to issue guidance to local authorities setting
out how they should exercise their relevant functions. Once again, the
clause requires authorities to “have regard” to guidance
given under it. It will give the LBRO the right to disseminate best
practice on the full range of trading standards, environmental health,
licensing and fire safety regulations that come within the scope of
part 1. That will be critical to the LBRO’s objective of
promoting better regulation at a local level.
That means,
for example, that the LBRO could issue guidance to all local
authorities regarding best practice in implementing legislation on
trading standards. It could also issue guidance to a select number of
local authorities regarding their approach to the implementation of
risk-based regulatory enforcement, which we have just discussed.
Equally, it could issue guidance to one authority regarding its
approach to encouraging compliance among small businesses. Before the
LBRO can issue guidance, however, the clause requires it to consult
business or business representatives, local authorities and such other
persons as it considers appropriate.
That guidance
function is important and goes beyond the referee or arbitration
function, which I am sure that we will discuss in part 2. Indeed, one
of the key reasons for setting up the LBRO is that there is currently a
gap in the provision of sufficiently clear guidance to local
authorities about how legislation is to be interpreted and enforced.
The clause is therefore important.
Question
put and agreed to.
Clause 6
ordered to stand part of the Bill.
Clause
7Guidance
to local authorities:
enforcement
Mr.
Prisk: I beg to move amendment No. 2, in
clause 7, page 4, line 24, leave
out ‘LBRO’ and insert ‘The Secretary of
State’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 3, in
clause 7, page 4, line 24, leave
out first ‘it’ and insert
‘he’. No.
4, in
clause 7, page 4, line 30, leave
out subsection
(2). No.
5, in
clause 7, page 4, line 32, leave
out ‘LBRO’ and insert ‘The Secretary of
State’. No.
6, in
clause 7, page 4, line 36, leave
out ‘(2)
or’. No.
7, in
clause 7, page 4, line 37, leave
out ‘LBRO’ and insert ‘The Secretary of
State’. No.
8, in
clause 7, page 4, line 41, leave
out ‘LBRO’ and insert ‘The Secretary of
State’. No.
9, in
clause 7, page 5, line 1, leave
out ‘LBRO’ and insert ‘The Secretary of
State’. No.
10, in
clause 7, page 5, line 1, leave
out ‘it’ and insert
‘he’. No.
11, in
clause 7, page 5, line 2, leave
out ‘it’ and insert
‘him’.
Mr.
Prisk: I am grateful to the Minister for his remarks on
clause 6. They are also relevant to clause 7, so it is helpful to have
them on the record.
Clause 7
gives the LBRO the power not merely to offer local authorities
guidance, which the Minister referred to, but to direct them. As such,
it creates a significant precedent: namely, that a public body that is
not directly accountable to this House can direct any of our local
authorities in relation to more than 140 enactments. If Committee
members have not yet had the chance, it would be worth looking at
schedule 3 on page 44, which shows the number of pieces of legislation
that we are dealing with. The gamut of legislation ranges widely
through employment, criminal justice, the environment, animal welfare,
antisocial behaviour, licensing, local government, mining and office
arrangements.
Mr.
McFadden: The hon. Gentleman is right that a large number
of enactments are listed under schedule 3. It is important to clarify
for the Committee that those encompass the key functions of local
authorities with regard to regulation. They could be brought together
under the headings of trading standards, environmental health,
licensing and fire safety. Schedule 3 is the Government’s way of
illustrating the enactments that cover the key headings for local
authority enforcement. There is coherence in what is encompassed by
schedule 3.
Mr.
Prisk: I am grateful for that information. The Minister is
right to say that it is a helpful list. That is why I wanted to draw it
to the attention of the Committee. There is a natural assumption that
we are dealing with the Bill before us and no other legislation.
However, we are dealing with a series of Acts that deal with the
involvement of local authorities. My point is that the Bill has
wide-reaching implications and that it could undermine local
democracy. The
proposal has understandably attracted considerable concern, not least
when it was debated in the other place. It was notable that not just
peers from my party, but those from all parties represented on the
Committee and from the Cross Benches expressed their concern about the
potential effect of the Bill. Lord Eccles rightly questioned Ministers
about the reasoning behind the unprecedented nature of this
step. For
the benefit of the Committee, I will clarify what has happened in this
area. As I understand it, to date directions have been Executive orders
made by Ministers, usually as a last resort and limited to
administrative matters. Those Ministers are directly accountable to
this House. I have no problem with that process because it is targeted
and
accountable. In
response to the criticism of this measure, Ministers in the other place
argued that it is not a precedent. They argued that the food Act
established the rules in this matter. That Act allows the Food
Standards Agency to issue directions to local authorities about the
implementation of that Act. To date, the FSA has issued a code of
practice concerning EU and UK regulations, but no direction has been
issued. Such arguments that have been put forward by Ministers are
therefore
incorrect. The
food Act is very different from the Bill before us. It permits
directions only about the law. The Bill will permit the LBRO to direct
all of our local authorities with regard to its guidance. That is a
very different matter. In my view the situation is compounded by the
LBRO being largely untested as it is a new organisation and its
guidance being unpublished. We have no means of judging how its
directions might work, yet we are being asked to grant the power in
advance. That
brings me to the amendments. In some ways, I would prefer to delete the
clause altogether, but we try on the Conservative Benches to be
positive and to improve legislation where we can. I am offering the
Minister a compromise. Instead of simply scrapping the clause,
amendments Nos. 2 to 11 would switch the power of direction back into
the hands of the Secretary of State. That would at least create proper
accountability, given that the powers potentially affect every one of
our local authorities in relation to 140 different pieces of
legislation.
11.45
am This
is a positive set of amendments. I look forward to hearing the Minister
explain why the power of direction is needed and why, for the first
time, a non-departmental public body is being granted such a power in
advance.
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