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The noble Lord, Lord Jones, has kindly written to me to explain that small businesses can appeal to a tribunal. I prefer my solution for two reasons: first, it would give the regulated party the opportunity of appeal before conviction, which the Bill as drafted would not; and, secondly, the conditions as drafted in the amendment mirror those in the Bill for multi-site businesses, thereby placing small businesses on a more equal footing with larger businesses. I beg to move.
Lord Bach: These amendments would give businesses operating in, and regulated by, only one local authority access to some of the benefits of the primary authority scheme—in particular, access to arbitration by the LBRO.
I understand that the intention behind the amendments is to defend the interests of small businesses, but this is not a large versus small business issue. The benefits of the primary authority scheme can be enjoyed by a small business that operates across two local authorities in the same way as they can be enjoyed by large retailers that operate in every local authority in the country. However, the primary authority scheme has been designed to address a specific problem that affects only businesses regulated by more than one local authority—that is, that advice, guidance and enforcement can vary from one local authority to another.
The primary authority scheme does not give a business a general right of appeal. The scheme has been created purely to promote consistency of advice and enforcement among local authorities. It is not clear that single-site businesses experience similar inconsistency where they are regulated by only one local authority; nor was this a concern raised in the responses received to the consultation on the Bill.
We believe that the inclusion of the amendments would create a significant disincentive for local authorities to give advice to the single-site businesses that operate within their boundaries. With the threat that such advice could be challenged hanging over its head, a local authority might well cut its losses, cease to provide advice and, rather, use formal enforcement as a means of securing compliance. That would be to the great detriment of small businesses that rely on the advice they receive from local authorities.
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We listened very carefully to small businesses throughout the consultation period. Their main concern with the primary authority scheme is to ensure that, where a local authority is nominated for the statutory scheme with a particular business, that will not drain resources away from the support and advice that local authority enforcement officers routinely give them. The noble Baroness, Lady Wilcox, mentioned that point at Second Reading. Our inclusion of a charging provision provides much-needed clarity and will allow local authorities to recover their primary authority costs, should they wish to do so.
A number of noble Lords were eager to explore the benefits that the LBRO would bring for small businesses more generally, and perhaps I may discuss these briefly. First, the LBRO’s general functions will seek to minimise burdens on all businesses. Its guidance to local authorities is likely to address issues such as the best way to support businesses to compliance where they have limited time and resources for finding out the law. Secondly, the LBRO’s role in setting a short and strategic list of national enforcement priorities will create greater certainty and security for everyone. Lastly, but not least, there is nothing to stop a small business bringing a particular issue to the LBRO’s attention for action through guidance and, if appropriate, direction.
Noble Lords will naturally expect assurances that, in carrying out its general duties, the LBRO will not neglect the particular interests of small businesses. I am happy to give that assurance, but the relevant functions are those set out under Part 1, which we debated earlier.
I hope that, on the basis of what I have said, the noble Lord will feel able to withdraw the amendment and, further, that he will feel satisfied that the concerns of small businesses are being looked after.
Lord De Mauley: I thank the Minister for his answer. His summary of what the amendments do seems right to me. However, I am concerned about this matter and should like to give it further thought. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 85 to 87 not moved.]
5.30 pm
Baroness Hamwee moved Amendment No. 88:
The noble Baroness said: My note says nothing more than, “Oppose LBRO’s direction-making power”. I will put the point in the same way, knowing that there is a great deal more business to be got through before we get to the end of this Committee stage. Having debated the principle, albeit in a different part of the Bill, I was simply going to ask whether the Minister had more to say than was said when we came to the point in Part 1. However, as we have the noble Lord, Lord Jones, here, I shall ask him whether he has more to say. It will be a delight to hear him defend the direction-making power with which some of us feel distinctly uncomfortable. I beg to move.
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Viscount Eccles: The Committee will not be surprised to hear that I fully support the amendments of the noble Baroness, Lady Hamwee. I do so because I strongly believe that if you give these powers to direct to the LBRO, everyone else in the process will conclude that it is absolutely clear who is in charge. My noble friend Lord Cope mentioned the cane behind the back, but the cane could be behind the curtain or anywhere. The power to give directions is recognised by everyone as significant, and we must pay attention to the fact that this body has that power. In those circumstances, local authorities will say to themselves: “It is not sensible for us to prolong this discussion or argument. Why don’t we leave it to the LBRO to decide?”.
It is said that the LBRO will be a small organisation and will not cost much money. Presumably, therefore, it will not have a very big staff and its legal department will not be very large. At that point I get a sense of incompatibility. The scheme is set out in the Bill in a way that is wrong. It would be one thing for the LBRO to be advisory and to give guidance, but to have the power to direct would be another. That would completely change the LBRO’s position in relation to all the regulators and the businesses we have been talking about.
Incidentally, we should not forget middle-sized businesses. Generally speaking, they are under the most pressure. The large businesses can look after themselves—as can the small ones, usually. It is the ones in the middle that have the trouble. There needs to be a serious rethink about the reserve powers of the LBRO.
Lord Borrie: I am sorry that the noble Baroness, Lady Hamwee, has pursued this matter, except for one fact: we have the pleasure today of my noble friend Lord Jones being with us. He will know, either from his briefing or from reading Hansard, that we have discussed guidance and directions by the LBRO. Some of us took the view that there have to be directions—in exceptional circumstances, at any rate—otherwise the whole system, which is designed for the public interest and for business to achieve greater consistency and co-ordination through the creation of the LBRO, would fall down. It is essential to have that backup or reserve power. I do not know why we have to argue it again today. I thought my noble friend Lord Bach dealt adequately with the matter the other day. Of course, reserving the point, it will be a delight to hear what my noble friend Lord Jones says.
Lord Jones of Birmingham: I thank my noble friend Lord Borrie for his confidence in what I have to say. As an aside, I wish to take on the point made by the noble Viscount, Lord Eccles, about medium-sized businesses. During my time as director-general of the CBI I tried so often to reach out to them, thinking they had specific issues that were not covered by other big businesses—which I also thought looked after themselves, and I was wrong about that—or by small businesses, which everyone, every agency and parliamentarian, is usually all over like a rash. After a
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The amendments relate to a relatively restricted direction-issuing power for the LBRO. I recognise the anxieties of the noble Baroness and the noble Viscount about conferring any powers of direction on to the new body. I am going to repeat quite a bit of what my noble friend said last time and I shall clarify the reason for the inclusion of these specific powers in the context of LBRO arbitration.
The primary authority scheme gives particular multi-site businesses the right to an advisory partnership with a local authority, the core of what we are trying to achieve, and the right to a process whereby that local authority should screen actions by other local authorities for consistency with the advice it has given. Businesses across the land badly want consistency. That is their main complaint. The lack of it is a waste of the implementation of regulation—as opposed to regulation itself—because of the effect on multi-site businesses, the harm that does to productivity and the frustration it causes in so many parts of the country.
Schedule 4 allows for arbitration on request by all three parties. The results of that arbitration will be binding. In many cases the outcome of a referral to the LBRO will be of interest to other businesses and local authorities; indeed, it will be another route to ensuring that we have lack of failure in the implementation of regulation on multi-site businesses.
At Second Reading, a number of noble Lords questioned what benefits the scheme would bring to smaller businesses or to those that operate on one site only and would have no need for access to the primary authority scheme. The latter could be a very big business operating on one site; although there are very few of those around, it is not about the size of the business. The powers of direction in paragraph 7 deal with precisely that issue. They permit the LBRO, if appropriate, to give other businesses the benefit of the same certainty that the business which is relevant to the case can rely on, by extending the implications of a decision to local authorities across the country. This is being done not to add obfuscation, nor to give someone enormous power, but to make business more productive and to make the implementation of the regulatory regime more efficient.
The powers will also help deal with one of the risks of the primary authority scheme: that when the advice given by different primary authorities diverges, multi-site businesses will find themselves subject to increasingly different regulatory standards in practice. The powers of direction are limited by the requirement that they should relate to a specific enforcement action submitted to referral to the LBRO. They cannot be used more widely or arbitrarily. Paragraph 7 provides an essential part of the LBRO’s continuing responsibility to promote
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Baroness Hamwee: In response to the noble Lord, Lord Borrie, I began by saying I wanted to know whether the Government had anything to add to the comments they made last week. I am interested to hear how the noble Lord, Lord Jones, addresses the point and I will read what he said; it seemed to be more a general defence of the whole approach rather than of this specific point, but that may be unkind. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 89 and 90 not moved.]
Baroness Hamwee moved Amendment No. 91:
The noble Baroness said: The amendment would delete the delegation provision from the schedule. It aims to understand what the Government envisage. Delegation of functions can be made to any person; presumably that will include a corporate person as well as an individual. Decisions will be taken by officials of the LBRO. Does the paragraph anticipate that a board decision will be carried out by the individuals who are working for the LBRO—obviously there will be internal schemes of delegation, and one understands that—or is it, as I think it might be, to allow for delegation to a completely different organisation; in other words, requiring another organisation to carry out some of its functions? I beg to move.
Lord Cope of Berkeley: I was surprised to see this paragraph in the schedule. I support the noble Baroness in wondering what it is intended to do. After all, the way it is phrased:
“LBRO may delegate its functions under this Schedule to such other person as it considers appropriate”
means that anyone can be given by the LBRO the power to direct that enforcement action should be taken or not. It can direct local authorities about any enforcement action. The LBRO has tremendous powers in this schedule, any of which can be delegated to anyone else. Who is that? Which powers will be delegated? To whom is it thought even slightly appropriate that the powers of direction, for example, should be granted? I have not so far been able to find any guidance on that in what has been published, and I would be grateful to know what is intended.
Lord Hodgson of Astley Abbotts: I, too, support the noble Baroness. We have set out a long and elaborate set of regulations, running to two and a half pages, and then in the last line we shoot the fox. We have spent a long time discussing the fox, what shape it is and how it should work, but then the fox is suddenly dispatched in a short line and a half. The noble Baroness has raised an interesting point, and I look forward to hearing the Minister’s reassurance about how these powers will be used and why they are necessary.
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Lord Jones of Birmingham: The LBRO’s ability to delegate its arbitration functions under paragraph 9 of Schedule 4 is critical to the success of the scheme. The LBRO will be a relatively small public body with a wide-ranging scope. I am sure that Members of the Committee will have had a quick glance at Schedule 3 and will have seen the range of regulatory issues that its work will cover: if I take the simple A to Z approach, from accommodation agencies to zoo licensing. Arbitration cases may be referred to it under any of these headings, and it is unlikely that the LBRO will have the right in-house expertise to deal with all such matters.
For example, a chemicals firm may refer a matter to the LBRO that calls for a highly specialised knowledge of environmental science or of the particular issues raised by a pollutant in a very specific ecosystem. In such cases, the LBRO may wish to delegate the arbitration function to persons or bodies with the appropriate expertise—in the case I have given, perhaps to the Environment Agency.
The Committee can be sure that the LBRO will be under a public law duty not to delegate its functions irrationally. We can consider the points the noble Baroness has raised to ensure that she and the public get that assurance, but, if we removed the delegation power at paragraph 9, that would have serious implications for the viability of the scheme and how it works in practice. I will ask for the noble Baroness’s points to be considered in order to give her that comfort, but removing delegation would, frankly, render the scheme unworkable.
5.45 pm
Baroness Hamwee: So far, I am not reassured. I hope I may be at a future stage. Not having the right in-house experience does not mean you have to delegate to those who have the experience; you take advice from them. The LBRO should be responsible for the decisions and actions, and should remain so. Delegation is a step a good deal further than the Minister describes as being necessary. Of course the LBRO will take advice from others—I entirely accept that—but taking advice is not the same as handing over responsibility.
Lord Jones of Birmingham: Delegating the ability to get on with the job does not mean you delegate responsibility at the same time; you might do so, but you might not. If the noble Baroness’s point is about the delegation of responsibility rather than about bringing in specialists, I will certainly take it back to consider.
Baroness Hamwee: It seems to me that “delegation” is not quite the right term, if that is what we are attempting to address, but for the moment—
Lord Cope of Berkeley: Before the noble Baroness withdraws her amendment, I suggest that the difficulty may be in the use of the word “functions”.
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We know that the LBRO is not a quango; the Minister said at Second Reading that it was not, because it was temporary and would be wound up. Does that make it a “tango”?
The power to delegate enforcement functions, including the power to direct, is very wide. Perhaps the Minister should think about the word “functions” and see whether that needs limiting a little.
Lord Jones of Birmingham: I want to assure the noble Lord, Lord Cope, and Members generally. As I listened to that, I was thinking that there are three words here that need clarity of definition and of extent: “delegation”, “responsibility” and “function”. As the noble Baroness, Lady Wilcox, reminded me earlier, this is my first time, and I did not know whether I was going to be able to do what I want, which is to say, “I think we should take this back and look at the definitions of those three words”. I think the LBRO has to have the ability to go to specialists, otherwise it will fail, but that does not mean we do not have to deal with the legitimate points that Members have raised. I was wondering whether I would be able to make that promise to the Committee, and I am grateful that my officials have just said exactly the same thing. On that basis, we will take that back. I make it clear that the provision has to work, but the Committee deserves to have those three words clarified.
Baroness Hamwee: The Opposition will never object to a Minister saying, “We will take that back”. I can think of many people to whom delegation of the functions would be inappropriate—although the noble Lord, Lord Cope, is not one of them; nor is anyone else in this Room. One can think of situations that would appear to be allowed by paragraph 9 and would be extremely undesirable. The paragraph may need some expansion to deal with some different circumstances. It is right to focus on the term “functions” and on others. One may need to disaggregate all the thoughts that are encompassed in one and a half lines. I have written down “R” for Report, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 27 [Enforcement action: exclusions]:
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Baroness Hamwee moved Amendment No. 93:
Clause 27, page 12, line 15, after “which” insert “enforcement action is regarded as so urgent that”
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