Regulatory Enforcement and Sanctions Bill [Lords]

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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 31

Power 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.
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
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 32

LBRO 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 34

Orders 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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