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Our third concern is stop notices, which clearly bring in significant sanctions for a business and lead to loss of revenue. Under the Bill—I think Clauses 44 to 47—once the business has rectified the problem it has to wait up to 14 days to be granted a certificate to operate again. We think that 14 days is an unacceptable delay.

Fourthly, on a wider and more general point, we are concerned about the fixed monetary penalties. The whole object is to catch rogue traders, not penalise small businesses which for one reason or another innocently fail to comply. We are concerned that the fixed monetary penalties will simply be

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regarded rather like the parking fine—as a toll charge that people, or at least the other Opposition, pay when they want to go shopping in Harrods—rather than a penalty that will lead to better behaviour.

The Minister will think that I am being overharsh in my comments on the Bill; I have the shelter that I have not perhaps been quite as harsh as the noble Baroness, Lady Wilcox. Of course, the proof of the pudding will be in the eating. Will the impact of regulation be reduced by this Bill? I doubt it, but we shall see. In any event, the noble Lord, Lord Jones of Birmingham, is not the first or last Minister to be caught between the rock of our risk-averse society and the hard place of the clamour of business for less regulation.

5.10 pm

Viscount Colville of Culross: My Lords, I fully understand the enthusiasm of the noble Lord, Lord Jones of Birmingham, for reducing the burden of regulation on business. I do not want to address that; I want to look at it from the point of view of one of the sets of regulators, the local authorities. I speak as a member of the Office of Surveillance Commissioners who goes around inspecting regulators such as the local authorities under the Regulation of Investigatory Powers Act 2000. I suppose that I have talked about regulatory procedures with several hundred local authorities all over the country.

I notice from the impact assessment that the Government have not been able to obtain much in the way of solid figures about benefits and disbenefits resulting from the Bill. I will therefore explore this in a little more detail. I take an example not, like the noble Baroness, Lady Wilcox, from Kensington, but from the Minister’s own area in the West Midlands, so I am sure that he will appreciate it all the more. It is, of course, like the example given by the noble Baroness, entirely mythical.

A chain of pizza restaurants in the West Midlands has its headquarters in Dudley but an outlet in all the other boroughs. One day, customers at the restaurant in Walsall start falling ill with food poisoning. By this time, the Government have acted and brought in provisions under Part 3 to enable stop notices to be issued and the Local Better Regulation Office has arranged for Dudley to be the primary authority for the chain of restaurants. Before Walsall can do anything, it must look at the guidance about kitchen inspections that has been issued by Dudley and is seriously restricted in how often it can do inspections. This is not unusual; there is usually a local rule that local authorities impose on themselves about inspections because they appreciate that they do not need to be too heavy-handed about these things.

Walsall’s hands are tied without the consent of Dudley. It would like to issue a stop notice but has no powers to do so without going to Dudley first. It must inform Dudley, which has five days to respond. Let us suppose that this happens three weeks tomorrow, on 21 December. As a result of the Bill, the five days do not include weekends, Christmas Day, New Year’s Day or any of the bank holidays, so the five days grows to 11 under these provisions. However, Dudley

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then agrees to the stop notice. Perhaps there will be a statutory instrument dealing with this sort of emergency. Of course, that is not in the Bill but only in some statutory instrument about which we know nothing.

Walsall proceeds to serve the stop notice and tells the restaurant chain that it can appeal, which it does. This goes to a first-level tribunal, an organisation set up under an Act passed earlier this year, about which I think people know very little and I know nothing. At any rate, we do not know how long that tribunal will take to decide. In fact, it decides that the restaurant should be closed, as it is in, shall we say, February. At present, it could have been done on Saturday 22 December. At least, I think that that is the case, because when I look up the Food Safety Act I find that two pages of statutory instruments have been made under the section concerned and if one looks some of them up—I have not looked them all up—one sees that a lot of them suffer from the well known defect that they introduce European Union legislation not by stating the offence but merely by giving a cross-reference to paragraph 45 of the directive concerned, so nobody has any idea without looking at the directive what it is that one is not allowed to do. However, I think that the stop notice could have effect the following day.

The next thing that happens is that the firm claims compensation under the Bill, as it can. It says that it was far too long after the event. However, we will need another statutory instrument before we know the bases on which compensation can be claimed. The firm’s compensation claim is refused and it appeals against the refusal, again to the first-level tribunal. Let us say that it loses again. What about the costs? Walsall can claim the costs up to the date when it went to the tribunal the first time, but not after that, unless the tribunal says so. I do not know whether the tribunal has powers to award costs; the Bill certainly does not say so. The Bill may reduce burdens on restaurant owners, but it does not look to me as though it reduces many burdens on members of the public who fall ill from eating food—not the meat in Essex used as an example by the noble Lord, Lord Razzall, but pizzas in the West Midlands—and it certainly does not reduce the burdens on the local authorities concerned. I wonder whether, with that sort of example, this legislation is producing the results that the Government wish to achieve.

Another point arises out of the legislation that I helped to supervise. As the noble Lord said, civil sanctions are a very good idea. A lot of local authorities already use the enforcement concordat. It has a gradation of penalties and disciplines that they can impose if they find that there is something wrong in a regulatory context, and prosecution is usually the last resort. We now have a situation where the Government can not only introduce civil sanctions as a compulsory method of dealing with these cases, but say to local authorities that they must use one of them instead of a prosecution.

This is a very serious situation for a most obscure reason. I am not sure what is going to happen about the list of regulatory duties that local authorities must

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set out under Clauses 61 and 62 and the sanction that they are going to have to use. To start with, I wonder whether central government are going to help local authorities to make a list of all the regulatory requirements that will have to be set out in this guidance. There are thousands of them and it will not be easy to make up a list, let alone decide the level of sanction that ought to be imposed.

The real dilemma is that under this legislation the council’s officers can use any of the civil sanctions only if they are satisfied to the criminal standard of proof that there is a case to go ahead on that basis. To get that sort of satisfaction, it is necessary to carry out investigations, some of which may have to be covert. That is what the Regulation of Investigatory Powers Act is all about. The Home Office has now made it clear that authorisation to carry out covert surveillance can be given only in a case where it is desired to prevent or detect crime. The Government have ordained that this should not be crime; rather, the situation is to be dealt with by way of civil sanction.

Can covert surveillance be used? I do not suppose that the noble Lord knows the answer; I certainly do not. This is not the first time; it has happened from the commencement of the 2000 Act in relation to misfeasance, malingering and moonlighting by employees of public authorities. No one has ever known until recently whether that was to be dealt with by disciplinary proceedings, as it usually is, or whether it was technically a crime—fraud, theft or something of that sort—and therefore susceptible to being dealt with by covert surveillance. The other day, the Investigatory Powers Tribunal, also set up under the 2000 Act, finally put that matter to rest. It said that activities of that sort by public employees are not susceptible to being dealt with under RIPA, as the Act is commonly known; they are outside its sphere and must be dealt with in common law.

The Government will have to make up their mind about that. Either they must persuade the Home Office to extend the grounds on which covert surveillance can be used, in order to carry out the necessary investigations to implement the civil sanctions, or they will leave a large area of doubt. A substantial bureaucratic burden is being imposed on local authorities and their officers and a uniformity that may not suit the place that the local authority tries to organise and superintend. Insufficient notice has been taken of the views of local authorities or of the difficulties that they will face.

5.22 pm

Lord Borrie: My Lords, I declare an interest in the same form as the noble Baroness, Lady Wilcox, as a vice-president and former president of the Trading Standards Institute, which represents hundreds of dedicated public servants who are employees of local authorities and responsible day to day for enforcing numerous items of consumer protection legislation. I have long been an enthusiast for effective, consistent and proportionate enforcement by trading standards officers, environmental health officers and others, and sought to promote such during my lengthy term of office as head of the Office of Fair Trading.



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My noble friend has a past, too. As he and other speakers have reminded us, during his period as director-general of the CBI he inveighed long and hard against the burdensome nature of many regulations imposed on business. In the present Bill, which my noble friend is bringing forward, I feel that he is being extremely broad-minded and fair-minded in drawing out his concern for overburdensome regulation but, alongside that—with which I can find much common cause—he wants regulators to focus their efforts on those mischiefs that pose the greatest risk to consumers. In the Bill, he articulates the value of consistent, proportionate and effective enforcement. I think that enforcement officers will value the greater flexibility introduced by the Bill, which, as my noble friend outlined, will give them a range of alternative sanctions for enforcement besides the familiar and traditional sanction of criminal prosecution. I should say, however, because no one else has quite said it so far, that I am certainly not one of those who is opposed to criminal sanctions in this field of trading malpractice. The statutory offences in the Trade Descriptions Act 1968, for example, have for nearly 40 years proved invaluable in keeping traders, big and small, up to the mark in terms of honest and fair behaviour. One of the great merits of criminal prosecution in the courts, usually the magistrates’ courts, and the spotlight of publicity given to court cases is that they have proved a useful deterrent against false and misleading descriptions of goods and services.

The Minister cited Professor Richard Macrory’s report on regulatory justice, on which the Government rely in their Explanatory Notes as part of the background to the Bill. I, too, quote Professor Macrory, who said that the Bill recognises that:

With regard to a wider range of possible sanctions, Professor Macrory uses the phrase, “Evolving the sanctioning toolkits”. I am still trying to work out exactly what that means, but surely it should be welcomed by enforcement officers up and down the country, by enforcement agencies, and—I should say to the noble Baroness, Lady Wilcox—by consumer organisations and consumers. None of these regulations against trading malpractice is there for the sake of the regulators. The regulations are there for the sake of the consumers, and surely it cannot be correct that consumers are left out of consideration, given the clear purposes of the Bill for more effective enforcement.

Part 3 provides for fixed monetary penalties, variable monetary penalties, stop notices and compliance notices requiring certain actions to be taken. I have no doubt—I think I noticed this in the useful remarks by the noble Lord, Lord Razzall, on this matter—that Clauses 37 to 39 on the procedures for imposing fixed monetary penalties should receive the close attention of this House, bearing in mind the absence of any involvement of the courts unless there are limited so-called judicial-review grounds of challenge. We all know in this House, whether we are lawyers or not, that the normal requirement on a prosecutor for a criminal offence is that he proves to a court beyond reasonable doubt that the defendant has committed the offence. Under Clause 37, the requirement on a regulator before imposing a

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fixed monetary penalty is merely that he satisfies himself. He does not have to satisfy any external body, court or otherwise; he merely has to satisfy himself beyond reasonable doubt that the offence has been committed.

I have always understood that one of the grumbles about regulation made by major retail companies—I am delighted that the speaker following immediately after me is the noble Lord, Lord Sainsbury of Preston Candover, who will surely mention his own great retail concern—with outlets in many different parts of the country has been that, with enforcement in the hands of local authorities in hundreds of different local areas, there may be a high degree of inconsistency in enforcement between one local authority and another. Major supermarkets often complained to the Office of Fair Trading when I was there that enforcement was tough in one area and lax in another, and that conflicting advice about what was permissible under the law was given by local authority offices in different areas.

Thirty years ago—I mention the number of years because it is quite a long-standing practice now—local authorities sought to respond to that complaint through adopting the home authority principle, so that the local authority where the headquarters of the business concerned was located would be the enforcement authority wherever the alleged offence took place. That has worked well to a surprising degree, but the location of a company’s headquarters is often incidental to the company’s principal geographical areas of operational activity.

The Government’s plans in the Bill for the establishment of the Local Better Regulation Office with statutory powers to promote greater consistency between local authority enforcement are very important. They provide for considerable oversight and surveillance—words which I think are broad enough to cover what is being required—over local authority departments, for the need for this new office to consult with trade bodies, such as the Trading Standards Institute and the Chartered Institute of Environmental Health, and for working together with national regulators, such as the Environment Agency—about which, no doubt, the noble Baroness, Lady Young of Old Scone, will talk—the Food Standards Agency and the Office of Fair Trading.

Clauses 23 to 28 carry forward the idea of the home authority principle, but with greater flexibility, by enabling the LBRO to nominate a local authority as the primary authority for the exercise of particular regulatory functions. The primary authority idea is surely a natural successor to the home authority principle, and puts it on a statutory basis. I have noted the concerns of the Local Government Association that it reduces local authority autonomy. I cannot deny that it does. If a body is supervising and has different views from a local authority determination, of course it interferes with its authority. The case for reducing local authority autonomy, based on the working of the home authority principle over 30 years, is made out by the Government’s Bill.

I am doubtful about Part 4, which is quite short and looks as though it has been tagged on. Perhaps I may say to my noble friend that it smacks more of old-fashioned CBI rhetoric from the 1980s than carefully

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drafted legislative policy. Anyone exercising a regulatory function must ensure that he does not impose an “unnecessary” burden. Do we think that we know what “unnecessary” means? The provision applies only if the Minister has by order applied it to a regulatory function, but I looked in vain for an interpretation clause which might define “unnecessary”.

It is not surprising that a responsible body such as the Food Standards Agency should say of Part 4 that it could limit a regulator’s ability to protect the public. Once more, I say to the noble Baroness, Lady Wilcox, that whether consumers get enough specific mention is a moot point. But, ultimately, the intentions are that the consumer should benefit throughout. The greater powers of the LBRO, the co-ordination of local authority regulators and so on, has got that end in mind. Because of that, I support most of the Bill and, therefore, commend it.

5.35 pm

Lord Sainsbury of Preston Candover: My Lords, reducing the regulatory burden has been the declared objective of Governments past and present for many years, but despite those good intentions—reiterated by the Minister today—year after year, we have witnessed the opposite, an ever increasing burden. Whether it be from Brussels or Whitehall, the number of regulations increases. Regulations imposed over the past 10 years are said to have cost business more than £50 billion. That is the background we should have in mind when hearing the welcome news about the savings to which the Minister referred in his speech.

How often are regulations cut, amended, simplified or brought up to date to reflect changing needs or to make them less bureaucratic and perhaps more effective? To state the obvious, we live in fast-changing times. Many of the regulations established, say, 20 years ago may well be inappropriate or obsolete today. They may need to be cut or amended to be effective. In other words, in one way or another, a great number must be out of date, and indeed some must be unnecessary. Successive Governments have failed to give regulations sunset clauses, giving them a limited life that would require them to be reviewed and reconsidered after a stated period. That is what I believe is needed and would better serve the interests of those whom regulations are designed to protect, be they consumers, employees or ordinary citizens.

The Bill before us has some worthy objectives. They are based on Philip Hampton’s report, a very good report given that his brief was concerned only with regulatory inspections and regulatory enforcement. However, I suggest that what is needed is not only more sensible, more proportionate and—as Hampton advocates—more risk-based enforcement, but a far more risk-based, effective, smaller, up-to-date regulatory regime.

There is, inevitably of course, a vested interest in most regulatory bodies to have more and not fewer regulations to enforce. Their jobs are then bigger and the rewards greater. There is also in the world of Whitehall a reluctance to take on the task

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of reducing, modernising, amending or cutting unnecessary regulation. There are not many rewards for doing that, as I personally found when in 1993 I was advising the Government on deregulation. Far more attractive and popular with Ministers, it seems, is to devise or gold-plate a new regulation.

So, I have to say that this Bill is a missed opportunity, concerned only with enforcement. The Minister proposing it has extensive experience on how the commercial and industrial world is overregulated. He surely knows better than most how fast the business world is changing, and therefore how great the need is to keep the regulatory regime up to date so that it can be effective in the protection it offers while minimising the burden that puts up costs and reduces our country’s competitiveness. Is it not possible for the Bill to be amended so as to give the Local Better Regulation Office an added duty to recommend to government the reform of regulation that it believes would be in the public interest, leading to fewer regulations without loss of the needed protection of the public? Sometimes that would involve the amendment, simplification or removal of regulations that were no longer needed for public protection. It is, I admit, better to have bad unnecessary regulations not enforced—or what is now called “a light touch”, as is intended in the Bill—than to have their unnecessary inspection and enforcement. But surely much better than that is to have the regulations themselves removed or amended. I suggest that the Local Better Regulation Office will be well placed to be an agent of reform, making a contribution to easing the burden of regulation by recommending to the Government and Parliament changes or the removal of regulations—and the Minister is very well placed to judge the value of such reform.

5.40 pm

Baroness Young of Old Scone: My Lords, the noble Baroness, Lady Wilcox, and the noble Viscount, Lord Colville, have done a fairly effective hatchet job on Parts 1 and 2 of the Bill; I shall try to do a hatchet job on Parts 3 and 4. I speak as one of the big five regulators, as chief executive of the Environment Agency. I have also led a smaller regulator and have been involved in a range of businesses that have for their part been regulated. I hope that my track record speaks for itself in that I have helped champion the cause of better regulation in this country for almost 10 years.

I was dead keen on the Bill when I first saw it because Philip Hampton did a very good job in his report and Richard Macrory did excellent work in devising a much more flexible range of penalties. Indeed, we were anxious to get the legislation through as quickly as possible so that we could get our hands on these penalties because, along with business, I believed they would be much more flexible and apt. Many businesses get seriously fed up of waiting considerable periods of time to be prosecuted for an offence that they know they have committed. It is a fair cop and they simply want the penalty to be applied and to move on to a better performance level. They would like these faster, more flexible, penalties.



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