Draft Local Better Regulation Office (Dissolution and Transfer of Functions, etc.) Order 2012
The Committee consisted of the following Members:
† Brine, Steve (Winchester) (Con)
† Burt, Lorely (Solihull) (LD)
† Cairns, Alun (Vale of Glamorgan) (Con)
Clwyd, Ann (Cynon Valley) (Lab)
Cunningham, Mr Jim (Coventry South) (Lab)
† Gilbert, Stephen (St Austell and Newquay) (LD)
† Goodwill, Mr Robert (Scarborough and Whitby) (Con)
† Gyimah, Mr Sam (East Surrey) (Con)
† Halfon, Robert (Harlow) (Con)
† James, Mrs Siân C. (Swansea East) (Lab)
† Johnson, Joseph (Orpington) (Con)
† Prisk, Mr Mark (Minister of State, Department for Business, Innovation and Skills)
† Rotheram, Steve (Liverpool, Walton) (Lab)
† Ruane, Chris (Vale of Clwyd) (Lab)
† Simpson, David (Upper Bann) (DUP)
† Vaz, Valerie (Walsall South) (Lab)
† Wright, Mr Iain (Hartlepool) (Lab)
† Wright, Jeremy (Lord Commissioner of Her Majesty's Treasury)
Mark Etherton, Committee Clerk
† attended the Committee
Fourth Delegated Legislation Committee
Wednesday 18 January 2012
[Andrew Rosindell in the Chair]
Draft Local Better Regulation Office (Dissolution and Transfer of Functions, Etc.) Order 2012
2.30 pm
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): I beg to move,
That the Committee has considered the Draft Local Better Regulation Office (Dissolution and Transfer of Functions, Etc.) Order 2012.
The order has two main purposes: to dissolve the Local Better Regulation Office and to transfer its current functions to the Secretary of State and Welsh Ministers. The order is intended to deliver three key benefits. First, it will strengthen proportionate and appropriate enforcement by bringing local practice nearer to central regulation policy making. Secondly, it will improve accountability in public services, as functions will be brought closer to accountable Ministers. Thirdly, it will remove an unnecessary arm’s length body and so deliver savings to the taxpayer.
The principal legislation that will be amended by the order is the Regulatory Enforcement and Sanctions Act 2008, but the order also amends the Parliamentary Commissioner Act 1967, the Superannuation Act 1972, the House of Commons Disqualification Act 1975 and the Freedom of Information Act 2000.
In detail, and specifically related to the articles of the order, the first two articles are self-explanatory. Article 3 will dissolve the LBRO. Article 4 sets out the transfer of functions, in conjunction with schedule 1. Article 5 sets out the transfer of property. Article 6 provides for the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Article 7 will make accounting provisions. Article 8, in conjunction with schedule 2, will make provision for the transition.
Appropriate, simple and clear regulation can aid economic prosperity and consumer protection. Sadly, however, all too much regulation in recent years has neither been proportionate nor simple. That is why we are taking a comprehensive approach to reducing the burden of regulation, both new and existing. That is also why we have been reviewing how regulation is enforced. All too often, it is the high-handed, inconsistent or complex manner in which a regulation is enforced that is problematic for businesses, especially small businesses. Therefore, alongside the programme of reducing regulations, we have been considering how their enforcement can be improved.
The previous Government established the LBRO through the Regulatory Enforcement and Sanctions Act 2008. Its purpose was to promote best practice in local enforcement, administer the primary authority scheme and simplify the national framework for local authority enforcement. The primary authority scheme was particularly
welcome, as it was designed to overcome one of the main complaints that businesses have about the way in which regulations are enforced, which was often inconsistent, time-consuming or unnecessarily expensive. As such, all parties supported that scheme in principle.Last year, we began our review of regulatory enforcement as part of our wider commitment to cut the burden of red tape. It came at the same time as the Government’s plans to reform more than 900 public bodies to increase their accountability, cut out duplication and discontinue activities that are no longer needed. The review of enforcement specifically included the LBRO. We considered whether all the LBRO’s functions were still required and how those functions could best be delivered.
The first two core functions—administering the primary authority scheme and simplifying the national framework for local authority enforcement—were identified as being of clear and continuing value. Indeed, our aim is to strengthen the primary authority scheme. It provides consistency and clarity, as I mentioned earlier, which businesses are often adamant are crucial to their ability to trade. Some 438 companies have participated in the scheme, so clearly, it is popular with the business community.
Lorely Burt (Solihull) (LD): I am delighted at what the coalition Government are doing on regulation. Is pre and post-implementation assessment a part of what we will introduce in a more systematic way to regulatory enforcement?
Mr Prisk: Indeed. The principle that we are looking for is to make sure that we strengthen the assessment of regulations as they come into play, and then strengthen the oversight and the effectiveness of the way in which they are enforced. As part of our broader agenda about looking at how we review the regulators—the idea of looking at their role is important—my hon. Friend is absolutely right. Those two ends of the equation are crucial and, in a sense, bring me to a point that I shall make in a moment about how we shall bring the two elements together.
I mentioned three functions, and I have spoken about two of them. As for the third core function, having listened to stakeholders we are removing the power to direct local authorities to comply with LBRO guidance. That is because practice has shown that it is collaboration, not direction, that works best. In fact, on inquiring, I have established that the particular power to direct has not actually been used.
Equally, the delivery of the functions via a non-departmental public body was not felt to be the most effective organisational structure. We considered a variety of options, and concluded that replacing the LBRO with a streamlined unit within the Department for Business, Innovation and Skills would be the best way forward. I now come to the point that my hon. Friend made a moment ago. It would bring together central regulation policy making with those charged with improving its enforcement, and understanding that link is crucial. It would also improve accountability and provide the opportunity to make some important savings. I shall come to those two points in a moment.
The new unit will be called the Better Regulation Delivery Office and would continue the work that the LBRO undertook with national regulators, policy
departments, local authorities and business. We have consulted carefully on the proposal. Some 86 responses were received from LBRO’s stakeholders, which included businesses, trade associations, local authorities, national regulators and professional bodies. The majority of the responses that were received were positive and supportive of the proposed administrative changes. I can tell members of the Committee that 67% of respondents supported the new arrangements, including the governance changes that I have described, and 80% supported the revised functions for the BRDO.Robert Halfon (Harlow) (Con): Does my hon. Friend agree that the reason why there was such strong support for the change is that the main thrust was lighter regulation and cutting the number of quangos?
Mr Prisk: Absolutely. By doing not only that, but improving the quality and drawing together the thinking about the creation of regulatory policy and its enforcement, it can be done in a smarter way. That is important, and I am grateful to my hon. Friend for his question.
I should like to take the opportunity to put on record how well regarded many of those who work for the LBRO are by their stakeholders, including the Chartered Institute of Environmental Health and the Trading Standards Institute. I am pleased to say that the order will see the individual expertise retained. We have made specific provision for the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006, and I can confirm that most of the current LBRO experts will move into the Department for Business, Innovation and Skills to form the new BRDO.
The distinct unit will sit within the Department, complementing the Better Regulation Executive, going back to precisely what was said a moment ago. The office will have a clear focus on delivery, working with business and regulators to simplify and improve the implementation of regulations. In that sense, it will supplement the Better Regulation Executive’s focus on how we generate and design good regulation. Bringing the two elements together within the Government will strengthen the overall package of regulatory reform by recognising—as almost every business has to—that regulatory policy and its enforcement are two sides of the same coin. The BRDO will continue the operation of a successful primary authority scheme and provide support and evidence-based advice to regulators and the UK and Welsh Governments.
Let me refer briefly to independence. It was raised as a matter of interest and concern by some respondents to the consultation. As Ministers, I want to make it clear and put on the record that we will rightly want to make sure that the scheme as a whole is operating effectively, but we have no wish or intention to become involved in the day-to-day operation of the scheme or, indeed, of individual partnership decisions. I want to make that crystal clear because, quite understandably, when organisations are changed there will be some questions about the intention behind such changes.
There will be efficiency savings. The remit of the organisation is being reduced. The staff numbers will reduce. The governance model will change. We will no longer need, for example, a separate board and an oversight function within the Department. Savings to
the taxpayer are estimated at just over £785,000 per annum which, on a discounted basis, is about £6.4 million savings over the next 10 years. On the specific question of posts in office, about which I know Members are concerned, there were 38 posts prior to the review, but that is expected to fall to 29 at the point of transfer which, subject to the agreement of the House, will be 1 April.The order encompasses not only England but Wales. Throughout the review, we have worked with our fellow Welsh Ministers to ensure that we have a common approach. After all, the order relates to businesses in both England and Wales, and they should understand that there will be no distinction that might cause further confusion. The order specifically provides that
“the Secretary of State and the Welsh Ministers shall enter into a memorandum of understanding, which will set out in more detail how the two administrations will operate the transferred functions.”
That will ensure a closely co-ordinated approach across the territories, which will be crucial for businesses that operate in both England and Wales.
A detailed operating agreement will set out, specifically round the issue of independence, how the new office will work within the Department for Business, Innovation and Skills. To ensure that impartiality and independence is achieved, we will establish a representative steering group that will include representatives of business, local government, the devolved Administrations, regulators and consumers. That group will provide some of the checks and balances necessary to give people confidence that the BRDO remains impartial and independent. It will support the existing independent expert panels that are currently in play for the LBRO. All those elements will ensure that the changes establish a strong organisation that is representative and truly able to deliver value for money.
To conclude, the order seeks to build on the good practice and expertise within the LBRO and on the success of the primary authority scheme. It will strengthen proportionate and appropriate enforcement by bringing local practitioners closer to central policy making, improve accountability in public services and remove an unnecessary arm’s length body, so delivering savings to the taxpayer. We have carefully considered the order, for which we have sought and obtained broad support from both business and regulators. I therefore commend it to the Committee.
2.42 pm
Mr Iain Wright (Hartlepool) (Lab): May I say that it is a pleasure to serve under your chairing, for the first time I believe, Mr Rosindell? I also congratulate you on catching Mr Speaker’s eye at today’s Prime Minister’s questions.
I welcome the Minister’s comprehensive opening remarks, but I have some questions about the order. The Minister rightly mentioned that in all the documentation and consultation material relating to the organisation, stakeholders have always commented on the expertise and professionalism of its staff, which my hon. Friends and I certainly echo.
I appreciate that, as the Minister said, the 86 responses to the consultation showed broad support for the Government’s direction of travel. However, I draw his attention to a publication from the Federation of Small
Business, “Changing the Perception of Regulation”. In that important report, the FSB suggests various ways in which the current regulatory regime, specifically the LBRO, could be improved. It concludes:“Creating a robust and helpful relationship between businesses and regulatory services at a local level should be part of the package of measures that this Government implements to improve the general regulatory environment.”
I do not think that there is any disagreement across the Floor of the Committee Room about that. The report continues:
“For many small firms it is at this level that most of their regulatory interaction will be and could be an important conduit for information. Small firms like receiving information face to face and as much as possible from a single source. Local regulators should take on more of this role and remove power away from central Government.”
That last sentence is crucial. I suggest to the Minister that the order goes directly against the main thrust of such a sentiment and of the FSB’s recommendation.
I know the Minister did this in his opening remarks, but can he go back to first principles and explain why he seems to be going against Government rhetoric by centralising the functions of the LBRO? Does that not run contrary to the Government’s policy on localism? Does the order not effectively take regulation further away from businesses, again running contrary to responsive, relevant and therefore efficient and effective regulation?
The Minister mentioned that the office is coming in-house into the Department. He also mentioned various units within the Department for Business, Innovation and Skills. What is the Minister doing to ensure that there is not confusion and duplication between the various functions within his Department? I am thinking about the Better Regulation Executive and the successor to that organisation, the Better Regulation Delivery Office. That may also include the Regulatory Policy Committee, among other units within the Department. Does the Minister believe that bringing these functions in-house could be confusing to stakeholders and could duplicate functions and responsibilities? Will he set out his intentions over the course of this Parliament? Does he intend, for example, to abolish functions and to have one unit relating to this within BIS? That would be helpful in giving us some idea of his future intentions.
The order ostensibly transfers functions from the LBRO to BIS. It does a little more than that, actually, specifically in regard to the primary authority scheme. The current powers to direct local authorities and to force service improvement will end, to be replaced, as the Minister said, by mere guidance. There is a risk, outlined by the FSB, Unison and others, that standards in regulation might slip. The use of an inspection plan, for example, as part of the current regime allows local authorities to focus resources and eliminate unnecessary checks and saves time and costs to both businesses and local authorities. At a time of economic difficulty and unprecedented cuts in local authority finance, such efficiency and effectiveness is more important than ever. There is a risk that, as a result of the order, some local authorities may be swamped with additional work and others may face a decline in work, leaving the former with too little time to devote to helping and supporting
small and medium-sized enterprises and the latter with a lack of financial resources to support small businesses. How does the Minister propose to address that risk?There is a further risk that larger private sector companies may identify local authorities which are perceived to be somewhat weaker in their regulation. Will the Minister reassure me that that risk will be identified and managed and that the current level, standard and quality of inspection and regulation—something welcomed by all, including the FSB, Unison and others—will be retained?
I touched upon independence earlier, as the Minister rightly did. All the evidence suggests that businesses and other stakeholders have valued the independence of the LBRO. Any successor needs to maintain that. There is a risk that moving into BIS will compromise that independence. Indeed, in their response to the consultation, the Government explicitly states that the LBRO
“is moving from a relatively autonomous relationship with the Department for Business, Innovation and Skills to becoming part of the core Department.”
I know that the Minister has spoken about this, but given that policy stance, will he further outline the steps that he is taking to ensure the independence of this function and the perception of independence? I suspect— I am surprised that his opening remarks did not mention this—that he will say that such a task will be part of the responsibilities of the representative steering group and the memorandum of understanding, and I welcome that. It was an area of relative contention from the consultation process, and the Opposition welcome the fact that the Government have responded to such calls by changing tack slightly.
The Government response to the consultation states:
“Core membership of the Group”—
that is the representative steering group—
“will therefore include representatives of: business, local government, Devolved Administrations, national regulators, professional bodies, consumers, and the workforce.”
We welcome that. There are two additional stakeholders in response to the consultation—professional bodies and the work force—but the way forward remains vague. Which specific professional bodies will be included in the group? Will the work force element include trade unions, which, I am sure the Minister will appreciate, clearly have an important interest in regulation and enforcement? It would be helpful if the Minister could provide further clarity on that.
The order provides for the transfer of all the LBRO’s property, rights and liabilities. Will the Minister indicate what those assets and liabilities are?
The Minister touched on the subject of staff, and the measure is obviously a concern to those staff involved. He mentioned that there were 38 posts; I think there will be 29 on 1 April, but I am not certain whether that means posts or actual staff. The Minister accepts that most, if not all, of the LBRO’s expertise lies with the staff and their corporate memory, but he and the Government have been vague about the extent of staff transfer. Documentation, such as the impact assessment, has shown that most staff will transfer, which was reflected in the Minister’s remarks this afternoon. I do not want him to betray confidentiality or data protection, but will he provide more information? Is 29 the number
of staff members or posts? How many staff will transfer and at what grades? We want to ensure that the office’s standard, professionalism and excellence continue.Other than that, we welcome the moves that the Government are making. I hope that the Minister can answer my questions satisfactorily, and I look forward to hearing his response.
2.51 pm
Mr Prisk: I welcome the official Opposition’s support for the order’s general principle. I accept that some eminently reasonable questions have been raised. I entirely agree with the FSB and the hon. Gentleman about the calibre and consistency of good local regulation often being at the heart of businesses’ principal perception of the burden of regulation. That is why we should not confuse changing the status of the advisory body—the LBRO—to the BRDO with what happens on the ground. The job of the central organisation, which will become the BRDO, subject to the agreement of the House, would be to ensure that we promote best practice. That will not cut across the role of local authorities.
Although they go slightly beyond the remit of the order, the roles of local enterprise partnerships and primary authorities are also important. To answer the hon. Gentleman’s question about whether standards might slip, large companies will not be able to pursue what he describes as a weak regulatory body. They are looking for consistency in primary authorities, and it is the inconsistent application of the same rules that is often of concern. I hope I have reassured the hon. Gentleman.
The hon. Gentleman mentioned potential confusion between the Better Regulation Executive and the Better Regulation Delivery Office. Going back to the central point, these are distinct functions. We do not want to merge the whole system into one because of the question of independence, which he raised. However, better interaction will result from the functions being under the umbrella of the Department for Business, Innovation and Skills. Regulation and policy making will be informed by delivery on the ground and vice versa, so the order strikes the right balance.
In terms of whether we have future organisational changes in mind, we will avoid endless rearranging of the deckchairs of the structures of the organisation and focus on delivery. Changes are important, but I do not have any plans at this stage to make substantial changes in this area.
The hon. Gentleman is absolutely right to make sure that the measure is about raising standards. On the question of independence, I think I made the position fairly clear in my remarks about structure and the
intention of Ministers in this area. What I would say to underpin that is that alongside the intention of Ministers is an operating agreement and, as the hon. Gentleman rightly anticipated, a memorandum of understanding. The role of the BRDO is clearly set out. There is the representative steering group—I will come on to the membership in a moment—in addition to the existing five independent panels. So we feel that it strikes the right balance to get that interfusion of policy development, but we maintain the independence that, quite understandably, some consultees will have been concerned about.With regard to the membership, we expect no more than 12, but we would understand the importance of workers’ representatives in that field. Clearly, it is a crowded area. We would need to make sure that we have consumer groups, business groups, local authorities, devolved areas and so on, but it is important that we look at that and I understand the point that the hon. Gentleman is making.
Mr Iain Wright: Will the Minister make a decision on whether the measure can be implemented before 1 April 2012? Will he make sure that it is done as quickly as possible to provide reassurance about independence?
Mr Prisk: We are determined to make a decision as quickly as possible, because I want to make sure that the interruption of this change does not get in the way of the delivery of what we are trying to do, which is to draw that burden down.
On assets and liabilities, there are very few. The building in question is rented. There are some limited fixtures and fittings and IT equipment. Subject to the House’s agreement, I am happy to write to the hon. Gentleman with further details in due course.
With regard to jobs—or posts, to use the right jargon in this context—there are 38 posts at present. That is 33.9—do not ask me to work that out—full-time equivalents, which is to do with secondments and so on. We would transfer 29, or 27 full-time equivalents. The reason that we have not said “will” is because, as the hon. Gentleman anticipated in his remarks, we need to make sure that we do not get ahead of an individual’s conversation with their employer. The TUPE regulations are there to ensure that we retain that core expertise.
I hope I have answered the hon. Gentleman’s questions. I welcome his support for what we are trying to achieve, and I commend the order to the Committee.