Regulatory Enforcement and Sanctions Bill (RESB 01)


Written Evidence submitted by Hertfordshire County Council


Better regulation in Hertfordshire

Hertfordshire County Council is a local authority with a population in excess of one million people, and undertakes all the responsibilities and duties of a county authority, providing community leadership to the people and businesses of Hertfordshire. We are committed to securing a fair, competitive and safe trading environment for consumers and businesses, both within Hertfordshire and nationally.


We are fully supportive of legislation that seeks to deliver efficient, less burdensome regulation for businesses and taxpayers and acknowledge that Government has determined that there is a role defined for the Local Better Regulation Office (LBRO) in this through the Regulatory Enforcement and Sanctions Bill.


For Hertfordshire County Council, the LBRO will be interacting mainly with the Trading Standards Service (TSS). To place this into context, the Hertfordshire TSS has an annual budget of 3 million, within an overall budget for the authority of 1.6bn. The TSS employs some 50 people to deliver its services in protecting the consumers and businesses of Hertfordshire and the UK, of which the functions and duties concerning the Regulatory Enforcement and Sanctions Bill are just a part.


Hertfordshire has a thriving economy, and excellent transport links to London and the rest of the UK, and is consequently home to many hundreds of large businesses which trade across administrative boundaries and international borders.


The change from home authority to primary authority

Hertfordshire is currently home authority for some of the largest businesses in the UK, including Tesco, The Dixons Group, Comet, Mothercare, Nissan, Renault, T Mobile and Orange/Wanadoo. This already places a significant resource demand upon the authority, under what is a highly effective voluntary 'home authority' scheme. To put matters into context, for the companies based in Hertfordshire, the trading standards service receives more than 125 referrals per month from other local authorities across the UK. To service this need and provide home authority advice to Hertfordshire businesses requires the equivalent of three full time officers. Under the current proposals in the Bill it is estimated that this resource 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.


By way of explanation, the proposed power in the Bill enabling a primary authority (and ultimately LBRO) to prevent an enforcing authority from taking enforcement action provides in our opinion a huge incentive for all business not only to form primary authority relationships, but to ensure that the advice of the primary authority is obtained in all instances. This will place a huge resource burden on Hertfordshire. These provisions will mean that all the advice given will be more bureaucratic, less timely, and in particular more risk adverse. The Bill's provisions, with the requirement to take decisions on whether or not other local authorities can take prosecution or other enforcement action against primary authority businesses, make it incumbent upon all authorities to record any advice given or questions received, to a highly detailed level, and potentially verbatim. Such level of recording and formalization of the local authority to business relationship will have the undesired and perverse consequence of lengthening the process of providing help and assistance to businesses, resulting in greater cost to business and less expediency.


Unlike the current home authority principle, the primary authority principle provides implicitly for local authority advice to be used as a shield against prosecution. It would not be good business sense for any business not to take advantage of such a situation, given that currently such advice is freely provided by local authorities, and that the alternative option for a business is prosecution. This extra demand for advice will fall upon primary authorities and will encourage businesses to seek advice from local authority trading standards services as a matter of routine, rather than by exception, which is the current common practice


The resource implications of the primary authority principle

At present, many large businesses are content to seek advice from their own advisers in the first instance, and view the current home authority relationships as genuine partnerships, which are particularly effective as a central point of contact with local authority trading standards services. This saves businesses duplicating their resources by fielding queries on the same issue from potentially the 200 plus trading standards services in the UK, as they are able to field all such queries through their single home authority. The primary authority provisions in the Bill, will fundamentally change these local authority / business relationships, with the cost of such change falling on the public purse.


To provide an illustration, Tesco, which is one of the largest retailers in the country, retailing many thousands of products across many ranges, proactively requires advice from Hertfordshire County Council in only a minority of cases. To use the provisions of the Bill in the way in which they are intended, i.e. to reduce burdens on businesses by unnecessary actions, the advice provided to Tesco under a primary authority relationship could increase tenfold. Multiply this by the other businesses which would choose to use the 'shield' provisions of the Bill by proactively obtaining local authority advice as opposed to the current in-company legal advice, and the true nature of the resource implications these clauses generate upon local authorities becomes apparent.


Recent amendments to the Bill as it passed through the process in the Lords will serve to exacerbate the addition resource burden placed upon local authorities. The amendment to Clause 29, requiring local authorities to notify the Primary Authority before an inspection is carried out not in accordance with an agreed inspection plan, means that for the largest businesses such as Tescos and Dixons, Hertfordshire will need to create additional resource intensive processes merely to service this bureaucratic requirement. In addition, for any cases that are referred to LBRO for 'arbitration', there is a requirement on local authorities to provide LBRO with such information as it may specify. It is not inconceivable that due the nature of the anticipated primary authority responsibilities which Hertfordshire will have, that a large proportion of staff time will be involved in providing 'evidence' to LBRO for cases under arbitration.


These additional burdens placed upon Hertfordshire under this Bill, will be at the expense of other locally endorsed commitments. In practice, these provisions will have the effect of skewing local authority resource towards the largest businesses, which through their very size, generate the largest number of referrals or complaints, and which, due to the competitiveness of their markets, constantly look to test legislative boundaries.


The LBRO are already working within the premise that the larger business will be the first to take advantage of a primary authority partnership, and this will be at the expense of the smaller and less well resourced businesses. It is such smaller businesses (e.g. start-up businesses) which are often those most in need of the advice of local government regulatory services.


The impact on local determination and governance

Whilst Hertfordshire maintains its support for the LBRO as an organisation to co-ordinate, oversee and deliver on the Primary Authority Scheme, particular clauses in the Bill seek to existing local government responsibilities. This would seem to be contrary to the principles of the Central-Local concordat signed between HM Government and the Local Government Association on 12 December 2007. The proposed role for the LBRO to determine aspects of the Trading Standards role and function is at odds with the responsibilities of local authority to determine the delivery of the service in the manner most beneficial to the local economy and local people.


Clauses 23 and 24 of the Bill

These clauses provide power for the LBRO to nominate a local authority to be the primary authority for a particular regulated person (business).


Whilst we are supportive of proposals that create Primary Authority partnerships which lead towards improved communication, advice and effective regulation for businesses, we have serious concern regarding the statutory Primary Authority Principle (PAP) which proposes to give businesses operating in the area of more than one local authority area the right to a partnership with one of those councils. This is will place an additional burden on local authorities. We consider that there needs to be a commitment to fund local authorities for this additional workload. It has been a long-held understanding between the Local Government Association and HM Government, that where additional duties are placed upon local authorities, there is recognition of these in the underlying formula funding.


Additionally, powers which enable LBRO to nominate a council to act as a Primary Authority has potential risk. Effective relationships between local authorities and businesses are built upon trust, understanding and a desire to achieve common outcomes. It is felt that a forced relationship between a council and a business would not be productive or effective for either party, and that a primary authority relationship will only work if both consent to such an arrangement.


Further, only local authority officers with the right knowledge, skills and ability can deliver effective and timely business advice under such relationships and these are not easily acquired. For the intended provisions in the Bill to work successfully, either the local authorities so nominated will need to be limited to those with officers with such attributes; alternatively time and resource will need to be spent by those nominated authorities in training or recruiting suitable staff. Either way, this provision places a local authority in the position of having a requirement to provide a service imposed upon it and with no guarantee of resources in perpetuity to deliver it.


To conclude, we would repeat that Hertfordshire County Council is committed to working with business and the LBRO to secure a proportionately regulated, competitive trading environment for both consumers and businesses. We do feel however, that the Bill in its current form contains proposals that go beyond what is needed to deliver these objectives, and in particular will create an unnecessary burden on local authorities, particularly those such as Hertfordshire which have a significant number of large and complex businesses for which they acts as primary authority.



In your scrutiny of the Bill we would ask you to consider the following implications of what is being proposed:


That extra demand will be placed upon primary authorities which will encourage businesses to seek advice from their primary authority as a matter of routine, rather than as at present, seeking advice from their own advisers in the first instance. This has the effect of shifting cost burden from the business to the public purse.


That greater resource will be needed to service the primary authority than is required by the current home authority arrangement. If additional core funding is not provided in the local government funding formula, this additional work will be at the expense of other businesses in the locality and it is likely that it will be support to small businesses which will be reduced. This of itself will have a negative impact on the local economy.


That the process of the LBRO nominating primary authorities may create 'forced marriages'. There will be a need for an authority to put in place and train staff to respond to the primary authority requirements. We would prefer to see a presumption to the LBRO working collaboratively with authorities when requesting them to act as primary authority and that on the face of the Bill there should be provision for authorities to turn down a request to act as a primary authority where the authority considered it lacked the capacity to perform this role, or that so doing would have a detrimental impact on existing primary authority or local businesses.




June 2008