Lorely
Burt: I tabled an amendment to delete the clause, but
although the amendments are something of a compromise in transferring
the LBRO powers to the Secretary of State, I would be happy to support
the
hon. Member for Hertford and Stortford if he decided to press them to a
Division. It is fair to say that none of us is happy with giving
directive powers to non-elected bodies over elected bodies—in
other words, over local authorities.
Clause 6
gives the LBRO the power to issue guidance to local authorities on the
exercise of their regulatory functions. Local authorities are required
to have regard to such guidance. In addition, every local authority has
to have a published enforcement policy, and will be required to comply
with the new statutory regulations compliance code, which requires them
to exercise their regulatory functions in a clear, proportionate and
transparent manner. We therefore believe that clause 7 is not
necessary.
If a local
authority does not pay due regard to the guidance issued by the LBRO, a
range of mechanisms are already available to the LBRO, another local
authority or a regulated person or entity in order to hold them to
account for any failure. Those mechanisms include legal appeal
mechanisms if the failure results in any form of enforcement action,
and the corporate complaint procedures that every local authority is
required to publish; and there is the independent local
ombudsman.
Clause 7 was
amended in the other place to add subsection (4), which requires
directions that affect more than one local authority to be subject to
the negative procedure; it also added subsection (5)(a), which requires
the LBRO to consult the local authority that it intends to direct
before issuing the direction. Under subsections (2) and (3), the LBRO
must obtain the consent of the Secretary of State or Welsh Ministers
before issuing a direction.
However, none
of those safeguards alters the fact that, because local authorities
have to have regard to LBRO guidance under clause 6, the possibility of
issuing directions will arise only if authorities have good reason for
acting differently. It is most likely to arise if the authority feels
that the LBRO guidance runs counter to its statutory obligations. The
power could therefore give rise to lengthy legal difficulties over
whether its guidance can take precedence over an Act of
Parliament.
Mr.
McFadden: I begin by agreeing with the hon. Member for
Hertford and Stortford that clauses 6 and 7 go together and are
probably best seen in the same light. Our discussion takes me back to
the first question that the hon. Gentleman asked this morning, which
was whether I and the Government were confident that a relatively small
organisation such as LBRO would have the teeth to do the job. That is
what clause 7 is about.
One obviously
believes that guidance will mostly be observed, but if not the question
is whether there should be a power to issue directions in some
circumstances. It is intended to be a backstop power that might be
used, for example, where one or more local authorities persistently
disregard a particular piece of guidance to the detriment of business
or the general public.
The LBRO may
use the power only with the consent of the Secretary of State or Welsh
Ministers and after consultation with the local authorities to whom the
direction is being given, any relevant regulator and such other persons
as LBRO considers appropriate, including, for example, representatives
of bodies such as the Trading Standards Institute or the
Chartered Institute
of Environmental Health. Where LBRO gives direction to two or more local
authorities, ministerial consent must be given in an order. I believe
that that provision came about partly as a result of the
recommendations of the Delegated Powers and Regulatory Reform
Committee, which was keen to ensure proper procedures for issuing such
directions. There was considerable debate on the issue in another
place. The clause has been amended to take account of those
discussions, and I think that it has been improved by it. The argument
is that the powers are unprecedented and that there is a lack of
democratic accountability in how they work. To give a bit of
background, we started consulting on them last year. The consultation
made it clear that a number of stakeholders were concerned to ensure
that the body would have real teeth in carrying out its functions. We
proposed the backstop power to be used in circumstances like the ones
that I have
outlined. The
hon. Member for Hertford and Stortford took issue with the comparison
with the Food Standards Agency quoted in this debate. It is not an
exact parallel, but it is the closest precedent. Under section 40 of
the Food Safety Act 1990, the agency may give directions to a local
authority to take steps to comply with a code of practice, much as the
LBRO may require a local authority to comply with its guidance. It is
also true, however, that the Food Standards Agency has extensive other
powers to which LBRO will not have access: for example, the power to
audit local authorities’ performance of their functions or even
to take over the management of local authorities’ relevant
functions directly at the request of the Secretary of State. I am not
sure that what is proposed in the measures is a constitutional
precedent that goes beyond what happened before. It is important and
right that clause 7 should contain safeguards, partly in response to
some of the concerns raised.
The use of
the powers of direction is subject to the consent of the Secretary of
State. The example quoted from the Food Standards Agency is weaker, as
the Food Standards Agency must only consult the Secretary of State.
That falls short of the strict requirement in the clause to secure the
Secretary of State’s consent. LBRO, as I said, must also consult
any local authority subject to directions, and parliamentary approval
will be required where the directions affect more than one
authority. The
amendments tabled by the hon. Member for Hertford and Stortford would
transfer the power from LBRO directly into the hands of the Secretary
of State. The issue is clearly one of democratic accountability and
ensuring that LBRO gives directions to local authorities in a proper
way. He believes that that should be done only by an elected person. We
believe that the requirement in clause 7 for ministerial consent is an
important democratic safeguard. Hopefully, it will have the effect that
he wants, which is to secure democratic accountability in the exercise
of the power. LBRO will be able to propose directions, but the decision
to approve their use will rest firmly with Ministers. From the
accountability point of view, the effect would, in the end, be the same
because Ministers would effectively be responsible for any use of the
directions. However, the amendments would make the provision work in
quite a different way because transferring the power to direct into the
Secretary
of State’s hands would undermine LBRO’s position as the
expert body on regulatory guidance, and would place the Secretary of
State in a more active decision-making role. Although he might, of
course, argue that it is open to LBRO to give advice to the Secretary
of State on when or whether to direct, making the Secretary of State
the decision maker would change the way in which LBRO’s role is
perceived in practice. Doing so would ultimately undermine the
provision, which is importantly and rightly surrounded by proper
democratic
safeguards. The
provisions in clause 7 are important to enable LBRO to achieve its
objective, and sufficient safeguards are in place to ensure that LBRO
uses its power to direct compliance with guidance in a responsible
manner. The idea of direction has support from a number of groups. I
shall quote one or two of them. For example, the British Retail
Consortium
said: “In
our view, the LBRO should be able to decide the strength of the
guidance—i.e. it should decide whether authorities must comply;
whether they should have regard to the guidance; or whether it is
merely
advisory.” It
is not just business groups that say such things; the National Consumer
Council has said:
“Although
we recognise the concerns of local authorities, we consider this
measure is necessary to ensure that consumers do not experience a
postcode lottery.”
The Trading Standards
Institute has stated:
“TSI
believes...it is necessary that LBRO has the power to direct local
authorities that are at odds with central guidance in order to ensure a
consistent regulatory
environment.” The
CBI said.
“we would
welcome moves to maintain the powers of the Local Better Regulation
Office (LBRO). Business has been promised a better regulatory
environment if regulators are awarded new powers. But this requires
regulators to deliver on this, and we think it important that the LBRO
is given the appropriate powers to ensure that local authorities do
just this. Maintaining Clause 7 as currently drafted, which gives the
LBRO powers of direction, would help achieve
this”. So,
a significant number of voices are saying not just that there should be
a power of direction, but that the LBRO should be the body using that
power.
Judy
Mallaber: My hon. Friend referred to the National Consumer
Council. Will there be provision for consumer organisations to be
consulted as part of the process, because that is not in the Bill?
There has been concern that businesses get consulted but that the
consumer’s voice does not get
heard.
Mr.
McFadden: That is certainly possible. I refer my hon.
Friend to subsection (5), which states:
“Before
giving a direction under this section LBRO must
consult—
(a) the local
authorities in England or Wales to whom the direction is to be
given; (b) any
relevant regulator,
and (c) such
other persons as LBRO considers
appropriate.” So,
it is certainly open to the LBRO to consult the National Consumer
Council—although I do not pretend that that is written in the
Bill in every instance.
I am coming
to the conclusion of my remarks. I quite understand why both the hon.
Members for Hertford and Stortford and for Solihull asked questions
about the power for an organisation, such as LBRO, to direct
local authorities. What is the Bill about in the end? It is about
ensuring that there are teeth in the better regulation effort at a
local level. It is fair for hon. Members to say that with teeth should
come some democratic accountability. As drafted, clause 7 meets that
democratic test without setting up a system that hampers the
LBRO’s work. It contains provisions relating to consultation,
and the consent of the Secretary of State, and provisions for consent
to be given by order where a certain number of local authorities are
involved. That is the balance that we have to strike in the
clause. The powers do
have some precedent in the example that has been quoted. I believe that
business wants these powers and other organisations such as the Trading
Standards Institute and the National Consumer Council have also said
that they support them. The amendment would not provide a gain in terms
of democratic accountability—that is a fair question to ask, but
it is something that we have covered. The amendment might actually make
that more difficult to operate, not in everyday situations, but on
those occasions when guidance is not enough and it is necessary to
exercise the teeth that we began today’s proceedings by calling
for.
12
noon
Mr.
Prisk: It has been a useful debate, but I am not convinced
by the Minister’s arguments. He is right to say that the clause
has been significantly improved. It was improved in the other place by
the efforts of Members of that House and there are certain measures,
which he has referred to, that have made it a better clause. However,
there remains the question of a precedent. He has only been able to
cite one example: the Food Standards Agency. As I have demonstrated,
that agency seeks to direct the implementation of an Act, not of
guidance, and that is an important difference. Unless he has three
other good examples, I have not heard from him where this is not a
precedent. We remain clear, therefore, that although the example that
has been offered has some relevance, it is not directly the same, and
that therefore a precedent has been established.
What about
the question of teeth? The purpose of my amendment is not to remove the
power to direct—it could be quite legitimately argued that that
would remove the teeth. To continue the metaphor, and I shall probably
stop it at that point, the teeth remain. I am concerned with how they
are harnessed and the accountability. The clause already asks that
where the LBRO seeks to make a direction, it goes to the Secretary of
State. That does not solve the problem that although that body is
accountable to the Minister, it is not accountable us in this House. I
understand, therefore, that business will take the view that it does
and I do not disagree with that view. Looking at how businesses
responded to the Bill, I have a string of quotes here about their
concerns about it. The CBI, which the Minister referred to, said on
21
May: “This
Bill requires business to take a leap of faith: it proposes that
regulators be awarded additional powers to sanction business in
exchange for the promise of a better regulatory
environment.” We
could trade quotes as to who is in favour of which bit or whatever; the
fundamental question is whether this power needs to be in the hands of
an unaccountable non-departmental public body.
For the first
time, we have no sight of the guidance that we are supposed to be
providing direction powers
for. We are not able to say that this is a long-standing, tried and
tested public body that is known to this House, that has established
principles and procedures and with which we are familiar. We are being
asked in advance to give a body with which we are not familiar, which
is not directly accountable to us, the ability for the first time to
give directions on its guidance and not on legislation. There is a
fundamental difference with any precedent that has been established. On
that basis, I am not convinced by the Minister’s arguments and I
therefore seek to press the
amendment. Question
put, That the amendment be
made:— The
Committee divided: Ayes 6, Noes
8.
Division
No.
2] Question
accordingly negatived.
Clause 7
ordered to stand part of the Bill.
Clause 8
ordered to stand part of the Bill.
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