Mr.
Prisk: I entirely agree that inspection plans have
considerable merit. They provide what most businesses seek, namely, a
degree of consistency, clarity and, most important,
certainty—knowledge as to what they can expect, when they can
expect the inspections and how they work from the business’s
point of view. As the Minister describes, the fear is of not having
been inspected at all and suddenly having three gentlemen or ladies
with clipboards arrive within a week. First, it is immensely intrusive,
and, secondly, it puts into the back of the mind the fear that,
“Hang on, am I being targeted or do the three not talk to each
other so we end up with this kind of nonsense?”
The purpose
of the plan is right, but how prescriptive do the Government expect the
plans to be? How far should the issues be detailed? Would the plan need
to include a get-out clause, or an option to cover circumstances where
something changes and there has to be a departure from the plan? Could
the Minister clarify how the Government anticipate that it will
work?
Mr.
McFadden: Subsection 3 of the clause refers to frequency
and circumstances, and what an inspection should consist of. We have
not been more prescriptive than that in the clause. The hon. Gentleman
is right to say that an enforcing authority may decide that an
inspection is needed even if—to continue his metaphor—the
bus is not due; it would be expected to inform the
primary authority, but we are not so rigid as to say that an inspection
in those circumstances should be banned. In fact there may be good
reasons why it has to take place; we touched on those in our debate on
the previous clause. Overall, an inspection plan would help to give
clarity, both to local authorities and to businesses. There may be
exceptions to the plan but at least having it will give business some
idea of what is expected of them and how frequently to expect
inspections. Question
put and agreed
to. Clause
30 ordered to stand part of the
Bill.
Clause
31Power
to
charge Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: The clause is important; it is about the power
to charge—a point we touched on this morning. It
states: “The
primary authority may charge the regulated person such fees as it
considers to represent the costs reasonably incurred by it in the
exercise of its functions under this
Part”. The
provision recognises two important points. The first is that there are
costs in acting as a primary authority. The primary authority is, in
effect, acting as an advice broker, both to the business and to other
enforcing authorities. Secondly, it helps to address the concern of
some small business organisations that primary authorities might devote
whatever expertise they have in regulatory enforcement to dealing
solely with the concerns of multiple-site, rather than single-site
businesses. In that respect, clause 31 makes provision for a primary
authority to recover the costs of carrying out its functions under part
2 from the business for which it is acting as a primary
authority.
The clause
also provides that a primary authority may charge only for costs that
it has reasonably incurred and does not, therefore, allow a primary
authority to profit from its functions under part 2. Furthermore, where
a primary authority chooses to charge a business, it must have regard
to the relevant guidance issued by the LBRO under clause 33.
As I said,
small businesses welcome the power to recover costs and can now
confidently expect a local authority that takes on the primary
authority role not to divert resources away from the advice and support
that they look to it to provide. One might ask why businesses should
pay for that service when they already pay their business rates.
However, participation in the primary authorities scheme will give
businesses access to a range of services over and above those available
to businesses in general.
The
provisions in clause 31 are important to the functioning of the primary
authorities scheme and respond to some of the concerns about costs
raised by Hertfordshire and other
councils.
Mr.
Prisk: This is an important clause, not least because it
goes to the heart of several of our debates.
Hertfordshire
may have been considering the Bill as it was before we debated it
today, but the council was clearly concerned about the due costs, which
we debated
before lunch. Clearly, it has been decided that those costs will now be
met by business, rather than through an adjustment within local
authorities, which I am sure will please the Chancellor. I can
understand the reasoning behind that decision, and there is an argument
that the person who benefits from a service should contribute towards
it. However, that raises the point—to return to an earlier
debate—that only multi-site businesses can benefit from the
primary authorities scheme, which provides quite a beneficial service
for them to tap into. There is therefore a regulatory distinction
between the businesses that can nominate primary authorities and the
single-site small businesses that cannot. It is important that we bear
that in mind. On the
specific point about the power to charge, the clause says that fees
must “represent
the costs reasonably
incurred” by
the authority, and that phraseology is perfectly acceptable. However,
although the arrangements seem fair on the face of it, there are
concerns, and I want to tease out a further response from the
Minister.
The purpose
of the Bill is to improve regulatory standards for businesses,
principally by enabling them to nominate a primary authority as their
sole local regulator. As the Minister said—almost in
anticipation of my point—some businesses will say, “Hang
on a moment. We’re already paying corporation tax and a range of
other things.” They are paying their national non-domestic
rates, or business rates as they are better known, so what are they
paying for in addition? The CBI is not alone when it says:
“We do
not see a compelling argument for why business should apply additional
sums or why there should be a net increase in
costs.” The
CBI’s essential point, which is not unreasonable, is that
although it wants better regulation, why must business pay for what the
Government should deliver anyway? That is a perfectly good point, and I
would be interested to hear the Minister’s response.
My final
point, which is just as important, is who will decide that a primary
authority is making reasonable charges—to use the language of
the clause? Will the LBRO be able to intervene or will it be the
Secretary of State?
Mr.
McFadden: The hon. Gentleman has given me the opportunity
to refer to the impact assessment for the Bill, which details some of
the costs and benefits. Referring to it will perhaps help to answer his
question about what the benefit in all these things will be.
As ever with
impact assessments, we are talking about an assessment. The purpose of
the Bill is to review all the issues in three years, but the assessment
of benefits to business from, for example, consistency of advice could
be anything from £24 million to £48 million. Consistency
of risk assessment could be anything between £3 million and
£5.8 million and savings from more effective priority setting
provision of guidance could be up to £32
million. 4.45
pm So
there are substantial potential cost benefits to businesses from a
regime under which the advice is more consistent and they are more
certain that they can, for example, introduce more product lines,
knowing
how that might be judged in different parts of the country. Although
cost recovery has been built in, to ensure that the primary authority
principle does not become too much of a burden to the local authorities
that take it on, there is still substantial benefit—in fact, far
greater benefit—for businesses in having this regime than in not
having it. The hon.
Gentleman asked who would determine the charges and who would judge
whether they were reasonable. I fear that, on that question, I may have
to come back to him or write to
him. Question
put and agreed
to. Clause
31 ordered to stand part of the
Bill.
Clause
32LBRO
support Question
proposed, That the clause stand part of the
Bill.
Mr.
Prisk: The clause is an interesting addendum to what we
have been talking about. Subsection (1) states:
“LBRO
may do anything it considers appropriate for the purpose of supporting
the primary
authority”. That
is quite a wide statement and, while we do not want to be nonsensical,
given that it is in the Bill and we are dealing with an unaccountable,
non-departmental public body, it is questionable whether it should be
able to do anything that it regards as appropriate. There is no
requirement, for example, for the LBRO to act in a proportionate
fashion. The clause does not say that it should act in an open and
transparent manner. It would therefore help if the Minister clarified
matters. I
am worried because it feels as though the clause has been inserted
quickly and without due consideration. That feeling is reinforced by
the fact that, having given us large, sweeping potential power under
subsection (1), the clause suddenly realises that it may have gone a
bit far, and suddenly we get subsection (2), which says, “Oh,
and that includes making grants”. There is the impression that
the clause has not entirely been thought through. I hope that the hon.
Gentleman can reassure me about
that. Fine,
I accept that the LBRO has the power to make grants. On what basis? For
how much? Where will it work? What will the grants pay for? The clause
is not well drafted. It gives a wide, sweeping range of examples and
then someone has tacked in grants at the back of it as an afterthought.
It does not feel like a coherent thought. I should be interested to
know what the Minister believes would not be appropriate, so that we
can understand how far the LBRO can extend
itself.
Mr.
McFadden: This is an enabling clause. We talked this
morning about LBRO’s budget, which has been set at about
£4.5 million a year. That is a relatively modest amount with
which to carry out its functions. It would enable it possibly to give
some support to local authorities in respect of functions that it asks
them to do, which is why the clause includes making grants to local
authorities. The Bill does not prescribe the circumstances in which
LBRO may do that and it will ultimately be for its board to decide
whether it wishes to exercise the functions. It is sensible to allow
LBRO such a power to ensure that it
is able to carry them out. It is sensible flexibility to provide the
support that, as an independent body, it should
provide. There
are constraints on LBRO’s expenditure within the normal Treasury
rules. We talked this morning about the presentation of accounts to
Parliament. That discussion was about time limits, but the normal
Treasury rules would apply to expenditure. We think that it is sensible
to have some flexibility to support local authorities in the work that
we are asking them to do in this part of the
Bill. Question
put and agreed
to. Clause
32 ordered to stand part of the
Bill. Clause
33 ordered to stand part of the
Bill.
Clause
34Orders
under Part
2
Mr.
Prisk: I beg to move amendment No. 33, in
clause 34, page 16, line 16, leave
out from ‘Part’ to end of line 17 and insert
‘may not be made unless a draft of
the instrument had been laid before, and approved by resolution of,
each House of
Parliament.’. I
was confused by the numbers. I heard 33 and assumed that it was the
amendment. My apologies for that, Mr. Chope.
As hon.
Members will see, clause 34 refers to various orders that Ministers may
present to complete this legislation through this part of the Bill. The
amendment seeks to ensure that they require the positive resolution of
both Houses before becoming law. Part 2, which we are considering at
the moment, introduces primary authorities which will affect most
employers and every single local authority in our constituencies.
Primary authorities will mean that many businesses in our
constituencies will no longer be subject to the authority of our local
authorities, and that is something that we need to consider. It is a
radical departure from current practice. It is important that we, as
hon. Members of this House, ensure that the workings of the new system
are subject to proper scrutiny. Given that the LBRO will not be
directly accountable to the House, is it not important that we ensure
that the system is accountable to us? Rather than pursuing the negative
resolution, I think that it is important to ensure that the system is
covered by the positive resolution. I look forward to hearing the
Minister’s
response.
Lorely
Burt: I support the hon. Gentleman. It is extremely
important that with legislation of this nature, we should have the
positive resolution. I hope that the Minister will give some thought to
implementing this one important
amendment.
Mr.
McFadden: There are two amendments that one can guarantee
will be moved during the passage of any Bill. One is the amendment that
turns the word “may” into “shall” and the
other will raise negative and affirmative order-making powers.
Therefore, such an amendment was always going to come up.
Clause 34 is
specifically about the order-making powers under part 2 of the Bill.
There are various other order-making powers that are subject to
affirmative resolution procedures, which we will discuss in part 3.
This is about the order-making powers in part 2. There are four
specific order-making powers in this part. The first of these, under
clause 24, allows for the legislative scope of the primary authority
scheme to be defined for Scotland and Northern Ireland. The next two
orders in clauses 28 and 29 allow for exclusions and exemptions to the
primary authority scheme to be specified. We discussed those in the
debate on clause
29. Finally,
schedule 4 allows for detailed provision to be made for procedures in
which matters raised by the primary authority scheme go to arbitration.
The Government made it clear in their submission to the
Delegated Powers and Regulatory Reform Committee that we believed these
to be essentially technical matters, and that the negative resolution
procedure was appropriate in those circumstances. None of the powers
can be used in a way that would either extend the scope of the Bill or
make other amendments to primary legislation—there is no sense
of a Henry VIII power. We therefore believe that the negative
resolution procedure is
appropriate. Two
issues were raised in the debate on this in the other place. The
Delegated Powers and Regulatory Reform Committee did not comment on the
negative resolution procedure. However, that was on the condition that
the orders establishing Northern Ireland and Scotland’s scope
should not specify functions that did not already appear in schedule 3,
which we discussed this morning. This is still about those headings set
out in the enactments in schedule 3 about trading standards, fire
safety and so on. It does not go broader than
that. There
was also a view expressed in the other place that it should be made
clear that the exemption orders should be required to exclude cases in
which serious harm might result from the delay that the primary
authority provisions could create. We are happy to make both of those
changes, which are reflected in the Bill. We will shortly be consulting
on the orders and will focus the consultation on enforcement
specialists in local authorities and businesses, because they are
likely to be highly technical, as I have said.
There is
always a debate about whether orders should be subject to the negative
or affirmative procedures. We certainly do not take the blanket view
that the negative procedure should be used throughout the Bill. As I
have said, order-making powers under part 3 will be subject to the
affirmative resolution procedure, but we feel that the negative
resolution procedure should suffice in relation to the orders covering
the issues in this part of the Bill—particularly because the
matter has been discussed in the other place and considered by the
Delegated Powers and Regulatory Reform
Committee.
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