Mr.
Prisk: This has been a helpful debate. I accept that a
number of the orders principally relate to technical matters. As the
Minister highlighted, the orders in parts 1 and 3 are subject to the
positive resolution. However, that is not the case here. I considered
the issue with some care and looked at the matter in terms of schedule
4. Enforcement action is quite an extensive part of the Bill in
relation to the way it reaches the operations of the LBRO. That is
particularly the case in those areas
where the actions of the LBRO will impinge upon the businesses
concerned—the regulated person, as it were.
My
problem is that the LBRO itself is not accountable to us. Therefore it
is important that we strengthen our ability to scrutinise the
Government’s actions wherever else we can. Although I accept
that, for the most part, the principal purpose of the orders for this
part is technical, the enforcement action is nevertheless important. If
I might refer to the metaphor used by the Minister, enforcement action
will be the teeth that are often seen and, indeed, felt by the
regulated persons. It is therefore important that we have the
opportunity—no more than that—to debate these matters in
an appropriate fashion. Although I understand the assurances of the
Minister and do not always think it is appropriate to pursue the
positive resolution on technical matters, on this occasion it is. I
therefore seek to press the amendment to a
Division. Question
put, That the amendment be
made:— The
Committee divided: Ayes 5, Noes
8.
Division
No.
3] Question
accordingly negatived.
Clause 34
ordered to stand part of the Bill.
Clause 35
ordered to stand part of the Bill.
5
pm
Clause
36Power
to make orders providing for civil
sanctions Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: If you will permit me, Mr. Chope, I
will go slightly wider than may be appropriate and pause for a moment
to talk about part 3. This takes us into the second significant area
identified by Hampton in his report. The first area was inconsistency,
and we talked about that a lot in parts 1 and 2 regarding the
establishment of LBRO and the primary authority principle that we were
debating.
We now turn
to Hampton’s other significant criticism of the regulatory
regime—inflexibility. This part of the Bill begins to address
that issue, and gives greater flexibility to regulators in terms of the
sanctions that they can impose. Some of those sanctions are monetary,
some involve corrective actions or instructions for corrective measures
to be taken, but they all address the issue of inflexibility and the
disproportionate nature of having a one-club policy to
enforcement—that of criminal prosecution.
Hampton’s
work was built on by Professor Richard Macrory who, if memory serves
me, published his report in November 2006. Macrory recommended a number
of the different sanctions outlined in part 3, which acknowledges and
introduces different powers, including fixed penalties, available
monetary penalties, stop notices and so on. We will help ensure that
rogue traders—or, as it says in my speaking note, “rouge
traders”—will not continue to receive an unfair advantage
by failing to adhere to the law, and we will increase confidence
further in the regulatory regime.
The proposals
have been welcomed by bodies including the Engineering Employers
Federation, the Federation of Small Businesses, local authority
enforcers and the Institute of Directors. There is widespread support
for more flexibility in the system and clause 36 specifically allows a
Minister of the Crown or a Welsh Minister to make an order providing
for those new civil sanctioning powers as an alternative to criminal
prosecution.
As I have
said, the sanctions will provide regulators with more proportionate,
flexible and effective ways of targeting regulatory non-compliance.
Before making an order, the Minister must be satisfied that the
regulator will exercise such powers in a manner that is in line with
the principles of good regulation—we talked about that this
morning—in a way that is transparent, accountable, proportional,
consistent and targeted and used only in cases where action is needed.
The Minister must seek the approval of the Panel for Regulatory
Accountability, whose terms of reference include ensuring that the
burden of regulation on business is kept to a minimum. That process is
set out on pages 28 and 29 of a guide to the Bill published by my
Department.
The Bill also
requires the Minister to consult before making an order, and subjects
it to affirmative resolution procedure. That means that the relevant
parliamentary processes will apply to that order. Part 3 is an
important part of the Bill. It addresses the issue of inconsistency, it
gives greater flexibility to the regulators and it ensures that we will
tackle these rouge
traders.
Mr.
Prisk: I welcome some of the remarks that the Minister has
made. He has identified that this clause seeks to provide powers to
make orders providing for civil sanctions, but it then proceeds to do
so right across the whole of the part. To follow his remarks, which
edge slightly beyond clause 36, without testing your patience,
Mr. Chope—I am sure that you will guide me should I
stray too far—he is right to say that this part of the Bill,
which provides many of the order-making powers, introduces a wide range
of sanctions. We have fixed monetary penalties, discretionary stop
notices and other enforcement actions. Those are provided not just for
a single regulator, but for 26 different regulators, as well as all the
local committees, so probably 30 bodies. Those include the Financial
Services Authority, the Charity Commission, the Health and Safety
Executive, the Football Licensing Authority and even the Human
Fertilisation and Embryology Authority—so a really wide range of
regulatory bodies.
Legally, the
sanctions according to schedule 6, which I am sure we will come to in
due course, apply to no fewer than 142 separate laws. Almost every
aspect of our constituents’ lives will be covered by this: from
housing to jobs, from animal welfare to protecting our children, from
disability discrimination to Sunday trading. All of those statutes are
listed in the Bill and are affected by the new range of sanctions that
we are considering in the clause. Most notably,
the sanctions, which are often fines, will be imposed without recourse
to the courts. The Opposition do not oppose civil penalties as a matter
of principle, but we believe they are most appropriate for minor
offences such as parking or speeding. The danger is that we may end up
with the regulators handing out the equivalent of parking fines, which
may prove rather attractive to them. That is bad for business and it
undermines what we have debated so far—the concept of a
risk-based approach to regulation as set out in parts 1 and
2.
Many business
organisations are concerned. The Minister said that there was wide
support. Let me joust briefly with two or three proponents on this side
of the argument; he has mentioned two or three on his side. The British
Retail Consortium is very concerned. It regards the section as
“unacceptable”. The Forum of Private Business regards it
as a deal breaker. The CBI says
that “business
is still concerned that introducing more administrative fines will
foster a ‘parking ticket’ mentality amongst inspectors,
which will fundamentally change the existing relationship between
inspectors and
businesses”. Let
us be candid with one another: there are mixed views rather than a body
of opinion that is wholly on one side or the
other.
Lorely
Burt: While the hon. Gentleman is talking about a parking
ticket mentality among inspectors, does he agree that a parking ticket
of £70 might be nothing to someone who has a good
income—such as a Member of Parliament, dare I say it—but
to a pensioner a parking ticket is a huge imposition? I certainly could
not use the example of a Member of Parliament as regards changing
behaviour, but a lot of people can disregard parking tickets and treat
them as part of doing business, whereas for other people they make a
big difference.
The
Chairman: That was a long intervention. This Bill is not
about parking tickets.
Mr.
Prisk: It was a metaphor rather than an allusion. The
metaphor was to illustrate not that we were talking about real parking
tickets, but that we are talking about the danger that simply handing
out fines or sanctions is not the way in which compliance is achieved.
Obviously, the principles of Hampton and Macrory, upon which the Bill
is based, are anxious that we do not go down that path. It is that
mentality that the hon. Lady was referring
to. The
concern about this section of the Bill and about the clause, which
introduces many of the related powers, is not limited to business.
There were serious and extensive debates in the other place, with
contributions from members of all the political parties. The reason is
that, while providing for what the Minister described as a
simpler process of enforcement for the regulator, the provisions remove
the right to be heard in an ordinary court of law. The orders in the
clause, which would relate to fixed monthly penalties and discretionary
monthly penalties elsewhere in part 3 of the Bill, mean that instead of
any one of those 27 or so regulators only being able to investigate a
possible breach, they would also be the people that would decide on a
person’s guilt and who would hand out the sanction. They would
have the dual role of investigator and prosecutor, and judge and jury,
all in one
body. On
Second Reading and in earlier debates, Ministers have been keen to say,
“Ah, but there is an independent tribunal
process”—an appeal process is available. There is, but it
is just that, an appeal process. In other words, that process only
happens after the sanction or the fine has been handed out. To use the
criminal law equivalent, that only happens after the accused has been
found guilty. There is, therefore, no opportunity for an innocent
person to defend themselves until appeal. That is the crux of the
concern. The
orders set out in the clause, which relate to the rest of part 3, are
important. If the clause related to just one regulator or one piece of
legislation, it might not be regarded as such a significant incursion.
However, we are talking about over 27 different regulators, with 142
different pieces of legislation. It is therefore a huge shift in the
law. Whatever the Minister’s original intentions, the clause has
the potential to result in a significant reduction in our civil
liberties. It is worth remembering that a regulated
person—someone who could receive such a sanction or
fine—is not just a business, but a person. Hon. Members may wish
to reflect on that and what impact that might have on, say, a shop
worker, who might suddenly find that those 27 regulators and 142
different pieces of legislation might well relate to them. That is
worth bearing in
mind. My
party and I have serious reservations about this part of the Bill. We
understand the benefits of, as the Minister rightly says, not simply
relying on one, crude, one-size-fits-all criminal approach and we
understand that there is a good argument for the civil procedure, but
our worry is about a wide range of powers for a wide range of
regulators. Therefore, as we go through this and subsequent clauses, I
hope that the Minister will be able to demonstrate why the approach is
both right in principle and appropriate in
practice.
Mr.
McFadden: I shall try to answer some of the specific
points without going into a Second Reading debate on part 3 of the
Bill. The
hon. Gentleman raised two points, the first being about a parking
ticket mentality and whether that would be encouraged—although I
have said that we are not talking about parking tickets as such. There
are safeguards against that developing too easily. Regulators will have
to be satisfied to the criminal standard of proof—beyond
reasonable doubt—that a person has committed an offence before a
regulator can impose a fixed monetary penalty. The person will be able
to make representations to the regulator before the sanction can be
imposed. The hon. Gentleman was somewhat dismissive of the right to
appeal against the sanctions to an independent tribunal, but it is
there, in the Bill, and is an important safeguard against an abuse of
the powers by a regulator. Also, regulators will not directly benefit
from penalties,
as any moneys gathered as a result will be paid into the consolidated
funds. We are not setting up a money-making scheme for
regulators. The
hon. Gentleman talked about businesses being concerned about judge,
jury and so on all being one. In the end, we must make a judgment about
whether we want to have a regime that includes such sanctions in
addition to the traditional route of criminal prosecution. Criminal
prosecution has been used until now—or often not used, because
of various issues. It can be a disproportionate response to many
instances of non-compliance, and we believe that regulators need access
to a range of more flexible
sanctions. 5.15
pm As
Professor Macrory said, civil sanctions are an established part of the
enforcement landscape. A number of regulators already have the power to
impose them. It is not a new constitutional departure. It will give the
regulators listed under the schedules to which he referred the capacity
to use the sanctions as they do not use them at the moment, but the
principle of them is not new. The powers will be conferred on
regulators only if the Minister is satisfied that they will act in
accordance with better regulation principles. We have talked a lot
about them today when using the powers, so I shall not repeat that
now. Businesses
will have an opportunity to make their case against the imposition of
the sanction. They can make representations and objections, and have
the right of appeal to an independent tribunal. We will argue the case
further in respect of the individual amendments that we shall discuss,
but we must make a judgment about whether we shall implement Professor
Macrory’s recommendations and vary the mix of sanctions
available under the regulatory regime. We have decided to do so, and
that is what this part of the Bill
does. Question
put and agreed
to. Clause
36 ordered to stand part of the
Bill.
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