Regulatory Enforcement and Sanctions Bill [Lords]

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Clause 25

Primary authorities
Question proposed, That the clause stand part of the Bill.
12.45 pm
Mr. McFadden: The clause is important because it deals with the establishment of primary authorities. As I said, it is important that all businesses operating across multiple local authorities have some access to this scheme. The Hampton report highlighted two problems. First, not all local authorities are prepared to take on the role, leaving some businesses without an effective regulatory partner. The hon. Member for Hertford and Stortford talked about the importance of that. Secondly, the division of labour between local authorities is sometimes unfair, with some councils taking responsibility for a large number of partnership schemes to the advantage of local authorities elsewhere that may host none.
The clause is designed to tackle those problems by giving businesses more certainty and allowing LBRO to facilitate a fairer distribution of responsibility for hosting the primary authority partnerships. The relationship of primary authorities and enforcement authorities is at the heart of part 2 of the Bill. The clause and those that follow are particularly important in setting up that relationship.
Mr. David Drew (Stroud) (Lab/Co-op): I agree that this is an important clause, but does the Minister agree that it would be better if services were delivered under one authority, particularly in the areas of trading standards and environmental health? There is a strong argument for unitary authorities.
Mr. McFadden: We have made relatively speedy progress this morning, Mr. Chope. I suspect, if not fear, that pausing for a discussion on which form of local authority is best may detain us for some time. In the fine city of Wolverhampton, we have a single unitary authority. In other parts of the country, we have a different system. I will resist the temptation to pronounce on which model is best. That is a debate for another day.
The clause is designed to do something a little different, which is to begin setting out in the Bill how the relationship of primary authority and enforcement authority is to run.
Mr. Prisk: I am grateful for the Minister’s opening remarks on the clause. It is important and establishes the principle of primary authorities. Key to this matter is moving on from the familiar and established procedure of home authorities. If I made an unkind and unnecessary remark towards the city of Liverpool, I am more than happy to withdraw it. It is good to see that there are collaborations. I gather from the Minister that there are collaborations in the west midlands. The car dealership that he referred to, which we will now know as McFadden Motors, will clearly be able to trade across the west midlands with some confidence.
The primary authorities established by the clause lead me to the written evidence submitted by Hertfordshire county council, which I saw this morning. It raises a good and practical series of points. There is one particularly important point on the practical and resource implications of changing from the home authority to the primary authority. I am a Member of Parliament for Hertfordshire and county hall is in Hertford in my constituency. For those who are not familiar with Hertfordshire, it is already established as a home authority for Tesco, Dixons, Nissan, Renault and Orange. It has three dedicated offices working on that role.
I refer hon. Members to the first page of the document from Hertfordshire county council. It states:
“Under the current proposals in the Bill it is estimated that this resource”—
the resource in terms of homes for primary authorities—
“would need to increase by at least 100% assuming that only the largest businesses take advantage of the Bill's provisions. If smaller businesses take advantage of the primary authority provisions in the Bill, this increase could be multiplied several times. We estimate that up to twelve full time officers would be needed to service the increased needs of the thousands of businesses based in Hertfordshire under the requirements of the Bill.”
Three officers are currently required, but that figure could rise to 12. Even if only the largest of the businesses—say only six of them—currently working with the council as a home authority continue to work with it when it is a primary authority, the latter’s resource commitment will double.
The Minister and most Committee members will be aware of the long-held understanding between the Local Government Association and Her Majesty’s Government that additional duties placed on local authorities, in legislation, will be reflected in formula funding. Will that understanding be honoured? Will any duties placed on local authorities under this Bill be directly reflected in their formula funding?
Mr. McFadden: I am grateful to the hon. Gentleman for raising the submission given to the Committee by Hertfordshire county council. I read it with interest last night, and discussed it with Bill officials. Some were surprised by the submission, given how closely that council was involved in the Bill’s development over some months. I shall not take issue with its figures for the number of such staff currently employed, but it is very different from that understood by the Bill team.
The council’s note, however, fails to make reference to the provisions in clause 31, which allows primary authorities to recover costs incurred in the carrying out of its new tasks. The council’s central point is that there are resource implications for local authorities in exercising their functions as primary authorities, which is only right. Clause 31 takes account of that by allowing for cost recovery, the principle of which has resulted in small businesses giving a warmer welcome to the Bill than might have been the case. Without that provision, they might have been concerned that the resource implications would result in too much attention being given to the national chains and not enough to their own. I believe, therefore, that Hertfordshire council’s concerns are met by clause 31. As I said, we were quite surprised to receive such a note from a local authority that has been so heavily involved in the consultation and discussions on the development of this policy.
Question put and agreed to.
Clause 25 ordered to stand part of the Bill.

Clause 26

Nomination of primary authorities
Mr. Prisk: I beg to move amendment No. 16, in clause 26, page 13, line 3, at end insert—
‘(c) the regulated person gives 3 months notice that it wishes to terminate the nomination’.
The central purpose of this probing amendment is to enable businesses to terminate the primary authority nomination. As Members will be aware, clause 26 deals with the nomination of primary authorities, but, under subsection (5), it also deals with revocations, which are permitted by the LBRO either where the LBRO considers an authority to be “no longer suitable” or where
“it considers it appropriate to do so for any other reason”.
The latter provision is found in subsection (5)(b). Amendment No. 16 would give a business the ability to indicate its wish to end that nomination. After all, clearly primary authorities will secede only if there is a two-way relationship. It is important for a regulated business to know that, if it no longer wishes to proceed with that relationship, it has the ability to seek a termination, but the clause does not make that clear. It would be most helpful to the businesses concerned if the Minister assured us that subsection (5)(b) will give them that ability.
Lorely Burt: I have growing concerns about the clause. The problem is that the LBRO can nominate a local authority to be a primary authority without its consent. Under the clause, a democratically elected local authority will not have the right to decide on the service provision that would best suit the needs of the local population and economy. Does the Minister agree that the LBRO having the power to decide how a local authority should deliver services is an undemocratic and unnecessary centralisation of control, which runs counter to the principles of the system of local area agreements? Furthermore, surely a forced relationship between a council and a business would not be productive or effective for either party. Surely, a primary authority relationship will work only if both parties want to participate.
Mr. McFadden: This is an important discussion, because how such relationships will work is at the heart of part 2 of the Bill. As the hon. Member for Hertford and Stortford pointed out, the clause deals with how the establishments are to be set up and revoked. They could be ended for several reasons. For example, LBRO might consider a local authority to be no longer suitable for the task, or a business might relocate its headquarters from one local authority area to another and request that a nomination be revoked so that it could enter a new primary authority partnership. There might be a takeover of one supermarket chain by another, as has happened in the past, in which the supermarket that is taking over the other already has a relationship with a primary authority. Alternatively, a business and its primary authority might be abusing the provisions and LBRO might wish to change their partnership.
This issue was raised on Second Reading when sweetheart deals, in which relevant businesses and local authorities have cosy relationships but enforcement authorities have a problem, were discussed. There has to be a mechanism for dealing with such situations, but the amendment would not put LBRO under a duty to change the situation. The examples that I have given involve situations in which a business or a regulated person requests that a nomination be revoked and it is open to LBRO to do that. The amendment would not put LBRO under a duty to do so, but would allow it to. That is already within its power, but it raises questions about whether there are circumstances in which LBRO could refuse a request from a business to put an end to a partnership. The Bill should allow LBRO flexibility to work with a business and a local authority to put a matter right if the relationship is not working. It would not be helpful, in all cases, to have a statutory requirement on LBRO to put an end to a partnership without question. I understand what the amendment is trying to do, but I am not sure that that is the right way to do it.
It being One o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at Four o’clock.
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