House of Commons portcullis
House of Commons
Session 2007 - 08
Publications on the internet
General Committee Debates
Regullatory Enforcement and Sanctions

Regulatory Enforcement and Sanctions Bill [Lords]

The Committee consisted of the following Members:

Chairmen: Mr. Christopher Chope, Mr. Eric Martlew
Baron, Mr. John (Billericay) (Con)
Burt, Lorely (Solihull) (LD)
Dorries, Mrs. Nadine (Mid-Bedfordshire) (Con)
Drew, Mr. David (Stroud) (Lab/Co-op)
Kidney, Mr. David (Stafford) (Lab)
Lilley, Mr. Peter (Hitchin and Harpenden) (Con)
McFadden, Mr. Pat (Minister for Employment Relations and Postal Affairs)
McCarthy-Fry, Sarah (Portsmouth, North) (Lab/Co-op)
McKechin, Ann (Glasgow, North) (Lab)
McGovern, Mr. Jim (Dundee, West) (Lab)
Main, Anne (St. Albans) (Con)
Mallaber, Judy (Amber Valley) (Lab)
Prisk, Mr. Mark (Hertford and Stortford) (Con)
Prosser, Gwyn (Dover) (Lab)
Seabeck, Alison (Plymouth, Devonport) (Lab)
Teather, Sarah (Brent, East) (LD)
Celia Blacklock, Chris Shaw, Committee Clerks
† attended the Committee

Public Bill Committee

Thursday 19 June 2008


[Mr. Christopher Chope in the Chair]

Regulatory Enforcement and Sanctions Bill [Lords]

Clause 66

Compliance with regulatory principles
Amendment proposed [this day]: No. 45, in clause 66, page 32, line 6, at end add—
‘(2) Where the regulator is a local authority or authorities, prior to the provision being made the relevant authority shall consult the LBRO as to whether the authority or authorities are fully compliant with the said principles and will continue to act in accordance with those principles.
(3) Notwithstanding subsection (2), the relevant authority may proceed to make the provision in subsection (1) with the condition that the LBRO is satisfied that any authority that is not fully compliant will become fully compliant within one year of the provision being made.’.—[Mr. Prisk.]
1 pm
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are discussing New clause 3—Duty to secure observance of Code of Practice—
‘Where any local authority has been granted powers under Part 3 of this Act, the LBRO shall have the duty or reviewing and, if appropriate, certifying every three years whether local authorities are compliant with the provisions of any Code issued under Section 22 of the Legislative and Regulatory Reform Act 2006.’.
Lorely Burt (Solihull) (LD): I was mid-sentence before we broke for lunch, Mr. Chope. We were talking about new clause 3, and I was asking whether it would be helpful, when you quite rightly said, “Order, order”. I was going to ask whether it would be helpful in ensuring that local authorities comply with the Hampton principles and continue to comply with them where they have had a track record of non-compliance.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The hon. Member for Hertford and Stortford said that I might, in responding to the debate, end up pointing him to another part of the Bill that covered some of the issues before us, and he is correct. I point him to clause 60(1)(c), which says that the relevant authority—as we have said, that will be a Minister—must consult
“such other persons as the relevant authority considers appropriate.”
I also point him to the guide to the Bill, which we have published and distributed. Page 28 says:
“For local authority regulators the Government will look to LBRO for advice on whether, in a particular regulatory field, local authorities in general are Hampton compliant.”
We have therefore drawn attention to the issue not only under the general duty on consultation elsewhere in the Bill, but in the guide, and that covers one part of what the amendment is intended to do. As the guide makes clear, a Minister who intends to award the new sanctioning powers will look to the Local Better Regulation Office for advice.
I want, however, to raise a point about the second part of the amendment. Clause 66 says that a Minister can award the powers in the Bill to regulators if he or she is satisfied that the regulator will exercise them in accordance with the principles of good regulation, which we have discussed several times. However, new subsection (3) in amendment No. 45 could give local authorities a year’s grace, in that they could use the sanctions without complying with the principles of good regulation until the end of that year.
The Government would have a problem with that because authorities that are not Hampton-compliant could be given the powers in the Bill on the basis of a projection that they might be compliant some time in the next year. There is also the question of what would happen in a year’s time if that judgment proved not to be well-founded. Authorities could have been exercising the powers for a year but might still not be Hampton-compliant. That could create a difficulty. Would the powers automatically lapse? The amendment is silent on that. That could create some uncertainty for regulators and business.
I am slightly surprised by new clause 3 because it would vastly expand LBRO’s functions. As we have discussed, LBRO will have a relatively modest budget and be relatively modest in size. The new clause would ask LBRO to review all 450 or so local authorities every three years. That would be a significant undertaking and would require a big increase in resources, but there is another reason why it goes against the grain of where we are trying to go with regulatory principles. We discussed risk-based approaches to regulation the other day, and we also know that within local authorities—but not only local authorities—there are concerns about the amount of routine, tick-box audit and inspection. A requirement that is not risk-based but includes all local authorities, every three years, would be pulling in a different direction from where we are going more generally with audit and inspection policy.
Clause 67 requires the Minister who makes the order that gives local authorities and other regulators access to the new powers to undertake a one-off, post-implementation review three years after it comes into effect. That is sensible. A measure that made that happen to every local authority every three years would be going too far. For those reasons, we do not want to accept new clause 3.
On the review mechanism in the Bill, the Minister would have to consult such persons as he considers appropriate. When local authorities have been given the powers, the Minister would be expected to consult LBRO. There is also an issue with a different requirement on the compliance code from elsewhere in the Bill. Local authorities will have to “have regard to” the compliance code when carrying out their enforcement activity, including the use of part 3 powers. However, new clause 3 would mean that
“local authorities are compliant with the provisions of any Code”.
We spoke about conflicting requirements on local authorities when we spoke to a previous amendment. “Have regard to” is the amendment that is set down on the compliance code. There are a few grounds on which I hope new clause 3 and amendment No. 45 are not pressed to a Division.
I accept that the hon. Member for Hertford and Stortford is trying to keep those things under review, but the proposals might be only a blunt instrument in that regard and, as I said, they would pull us away from the more risk-based approach that we are pursuing.
Mr. Mark Prisk (Hertford and Stortford) (Con): It has been a useful debate. Amendment No. 45 was not entirely dealt with in the Minister’s response. He said that part of the guidance that comes with the Bill talks about compliance in general. However, we are not concerned with the general but specifically with the local authority and whether it is truly compliant with the principles on which the Bill is based. I am therefore not entirely convinced by what the Minister said.
I recognise and accept that amendment No. 45 would be unduly burdensome as a regulatory cost. I shall come back to that in a moment.
On new clause 3, when we go back to the Macrory principles—I was reading them again yesterday to clarify them in my own mind—we will see that there is a good argument for saying that if we are going to have an established set of principles on how regulators operate, it is important to ensure that they operate on a consistent basis and not just on a snapshot. There is an entirely legitimate argument that the new clause would give the LBRO a significant and increased function to perform, but that does not outweigh the importance of ensuring that the local regulatory bodies are consistently compliant, and that they therefore fit with what Macrory says. After all, we are talking about a three-year period, and as we know, local authorities vary in their performance over a year, let alone three. We are simply seeking to ensure that the LBRO has the ability to investigate. How it seeks to do so—perhaps by a detailed inspection—is not specified; rather, it would give the LBRO the opportunity to ensure that authorities are consistently compliant.
Mr. McFadden: May I clarify something that the hon. Gentleman said? We are not talking about specific local authorities, but the capacity of local authorities in general to exercise powers in a regulatory field. We do not want some local authorities to be able to exercise them, and others not. I hope that he takes the point about the difference between local authorities exercising the powers in a regulatory field—for example, trading standards—and individual councils in different parts of the country.
Mr. Prisk: That is entirely reasonable. I think that the Minister has highlighted the Government’s intentions. At the beginning of the debate, I said that I wanted to deal with the amendment and new clause 3 separately. If acceptable, I shall withdraw the amendment and, at the appropriate moment, press the new clause to a Division. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66 ordered to stand part of the Bill

Clause 67

Question proposed, That the clause stand part of the Bill.
Mr. Prisk: I welcome the clause. The Minister referred to the fact that after three years there will be a review, which my party, in another place, was able to establish as a very important part of what will be a new regulatory environment. It is important to put that on the record. In particular, it is worth the Committee noting that there is not only a three-year review period, but a requirement to publish the outcome and lay it before the House. We welcome those important aspects of the Bill.
Question put and agreed to.
Clause 67 ordered to stand part of the Bill.

Clause 68

Question proposed, That the clause stand part of the Bill.
Mr. McFadden: The clause provides that where a Minister has made an order conferring sanctioning powers on a regulator, they may direct it not to impose further sanctions. Subsection (2) provides that the Minister may take such action only if there is evidence that the regulator has failed
“on more than one occasion”—
an important point—to comply with a duty imposed on it. We are not trying to set up a new regulatory regime, as the hon. Member for Hertford and Stortford just said in relation to the previous clause, that could simply be withdrawn if there is a failure on just one occasion. There is a tone of persistence about the suspension clause that I want to impress on the Committee.
The clause provides, therefore, that such a direction could be made only where there is evidence that the regulator has failed more than once to comply with a duty imposed on it under part 3 of the Bill, or to act in accordance with its penalty guidance, enforcement policy or relevant principles of regulatory best practice. Subsection (3) provides that a Minister may revoke a direction suspending a regulator’s sanctioning powers
“if satisfied that the regulator has taken the appropriate steps to remedy the failure”.
Furthermore, the clause ensures transparency, and subsection (4) requires the Minister to consult before making a direction to suspend the powers or revoke such a direction. As the hon. Gentleman said earlier, the Bill allows regulators access to a range of important new powers. We talked this morning about stop notices, which could be particularly significant. Businesses and others subject to the powers in the Bill need assurances that regulators will use the sanctioning powers responsibly and consistently. The clause contains safeguards, therefore, by providing for a power to suspend their use, if that is not the case.
Question put and agreed to.
Clause 68 ordered to stand part of the Bill.
Contents Continue
House of Commons 
home page Parliament home page House of 
Lords home page search page enquiries ordering index

©Parliamentary copyright 2008
Prepared 20 June 2008