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Anyone who heard Professor Macrory will not be surprised to hear me say this—he emphasised that the criminal prosecution system will and should continue to play an important part in these matters. This provision is not to get rid of court cases so that none is left and everything is done by civil sanction. He said that there are clearly cases which have to be dealt with in that way, and that they should be dealt with in that way.
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I turn quickly to the amendments. Amendment No. 104 would prevent a Minister giving a regulator access to a discretionary requirement. Amendment No. 136 would remove variable monetary penalties from the list of discretionary requirements in Clause 40. Discretionary requirements are a key component of the Macrory scheme. The package of new sanctioning powers comprise variable monetary penalties, compliance notices and restoration notices, which will allow regulators to tackle non-compliance in a more imaginative and more effective way.
Variable monetary penalties are designed to be flexible enough—and we will come on to them in due course; I hope this afternoon—to capture the financial benefit to the business arising from non-compliance in order to ensure a level playing field for compliant businesses and to deter future non-compliance. Again, that is a key recommendation not just of Macrory in this case, but of Hampton too.
Amendment No. 109 would remove the exclusion of the police and prosecution authorities, such as the CPS, from the definition of regulators in Clause 35. The new powers in Part 3 are an alternative to criminal prosecution. The latter course of action will remain available to the police and prosecuting authorities. The powers in Part 3 are designed specifically for use by regulators. We do not think that it is appropriate to extend their usage.
I add that under Clause 66 police and prosecution authorities will be able to refer matters to a regulator if they consider that a civil sanction may be more appropriate. I do not expect my response to have changed the mind of the noble and learned Lord, but I hope that this has clarified some of the issues, and that the letter I have promised will clarify others. I thank him again for introducing the debate.
Lord Lyell of Markyate: I thank the Minister for a very full and careful answer and for the promise of further information. The further information will be of real help to the Committee and the Chamber because, while kind things have been said about the work I put into this, I have not achieved everything by any means. I have just seen a Regulatory Enforcement and Sanctions Bill impact assessment, which my noble friend Lord Cope passed to me. That suggests that there will be something like an increase of about 4,000 or 4,500 cases a year. It looks as though, if I have read it correctly, there will be some 13,000 cases in the future, a quarter of which are estimated will go to appeal.
The figures the noble Lord will give us—perhaps he will put a copy of them in the Library at the same time—will show what the ambit is. From the Macrory report I obtained about 15,000 cases. Then I looked at other tables in the report and I obtained more than 30,000 cases. Far more cases may be going on than the impact assessment suggests.
There will be about 4,000 appeals. If I have read and got the figures right—I can be corrected by letter if necessary— and according to page 33 of the impact assessment, the total cost to business of preparing for an appeal before the independent and expert tribunal will be approximately £1.6 million. That is £400 a
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I am grateful to the Minister for pointing out that Professor Macrory suggests constructive ways of improving the use of the courts. I am glad to hear that a substantial use of the courts will continue. The Minister has been kind enough to say that he will go back and look at the matter. Obviously, he has made no commitment to change anything and I fully appreciate that. There are serious issues, but in the light of that, and thanking him for the further information that is to come, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 105 not moved.]
Lord Cope of Berkeley moved Amendment No. 106:
The noble Lord said: After my noble and learned friend’s constitutional whale, this is a drafting minnow. Amendments Nos. 106 and 162 move the phrases in subsection (3) to a more appropriate place in the Bill and do not alter them. They move them to Clause 59.
When reading Bills, I am always conscious that when they become Acts they will have to be read by people who must use them. Some consistency in drafting is therefore helpful. Each of Parts 1, 2 and 4 have the equivalent provision at the end. In Part 2, the provision appears at the bottom of page 13:
In Part 1, the provision appears in Clause 18; in Part 3, it is in Clause 32; and in Part 4 it is in Clause 69. In those three cases, it appears at the end of the part, but in Part 3, the equivalent provision is at the beginning. As a result, it is divorced from the provisions of the parliamentary procedure that is to follow when there is such a statutory instrument. In the other three cases, the parliamentary procedure is adjacent to the provisions. The drafting would be tidied up if Part 3 were drafted in a similar manner. I beg to move.
The Deputy Chairman of Committees: I should point out that if the amendment were to be carried, I could not call Amendment No. 107 by reason of pre-emption.
Baroness Wilcox: I fully support my noble friend Lord Cope in these two amendments. They move the requirement to make the orders under Part 3 from Clause 34 to Clause 59. By doing that, the drafting becomes more consistent and follows the practice used in Parts 1 and 2 of putting the provision at the end of the part and not at the beginning. My noble friend seems to have found favour with his amendments and I suspect that he is likely to find favour with this amendment too. I shall be interested to hear the Minister’s reply.
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5 pm
Lord Bach: I thank the noble Lord for moving his amendment. We understand that bringing symmetry from Parts 1, 2 and 3 has some attraction. However, Parts 1 and 2 are structured differently to Part 3 for good reasons. Parts 1 and 2 each include a number of different order-making powers and it is therefore possible and logical for each part to have a separate clause grouping together miscellaneous propositions about the formalities and procedures relating to orders in those parts. But the whole of Part 3 is about a single order-making power. That is set out in Clause 34—the first clause that deals with Part 3—and it seems sensible to include within the same clause provision about the form of the order. A separate clause headed “Orders under Part 3”, akin to that included in Parts 1 and 2, would make no sense in Part 3.
Nor is it possible, as it is in Parts 1 and 2, to have a clause wrapping up all the miscellaneous formal and procedural requirements attached to orders. We understand the sentiments behind the amendments, but I am not sure that they would add anything to the Bill. While I know that this is not an answer to the noble Lord, parliamentary counsel has, no doubt, spent hours looking at the noble Lord’s amendment and, I am afraid, has come to the view that what we have done is better on this occasion.
Amendment No. 162 might lead to greater confusion. The form that the order is to take sits comfortably with the power in Clause 34 to make the order. The procedural provisions sit comfortably together in Clauses 56 to 59. Splitting the form of the instrument from the power to make it, and putting it in with provisions about procedure would not be helpful. It would also necessitate a change in the title of Clause 59 and the subject heading that precedes Clause 56.
I have attempted to deal with the points that the noble Lord made and I hope that he has been persuaded.
Lord Cope of Berkeley: I thought that the Minister made half a case for not moving this provision to Clause 59, but not much of a case for divorcing it from the parliamentary procedure to be followed when it is a statutory instrument—that is to say, by moving the contents of what is now Clause 59 and including it in the earlier clause. I am not going to pursue this minnow this afternoon. I may reflect on it and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Razzall moved Amendment No. 107:
Clause 34, page 14, line 21, after “instrument” insert “and shall not be made under this section unless the Minister is satisfied that the regulator is fully compliant with any Code issued from time to time in accordance with section 22 of the Legislative and Regulatory Reform Act 2006 (c. 51) for such time as that section shall remain in force”
The noble Lord said: Clause 34 clearly goes to the heart of this part of the Bill, as is indicated by the hour and a quarter that we have already spent on the issue. I did not participate in the debate on the amendment of the noble and learned Lord, Lord
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However, the second set of principles that this legislation endeavours to implement are those set out in the Hampton review. The purpose of the amendment in my name, and Amendment No. 108 in the name of the noble Lord, Lord De Mauley, and others, puts the view that if we are in Clause 24 to give powers to regulators to implement the Macrory review, the Hampton principles should be implemented in the Bill. That is the purpose of my amendment and the amendment in the name of the noble Lord, Lord De Mauley. I have no pride of authorship of my amendment and I doubt if he has of his. We are trying to make the same point. I beg to move.
Lord De Mauley:Before I start on Amendment No. 108, which is tabled in my name, I shall say that I support Amendment No. 107, tabled by the noble Lord, Lord Razzall, which is in line with what we are saying and have been saying in this Committee.
I think that the Minister will say that paragraphs (a) and (b) of my amendment will be dealt with by government Amendment No. 164—he is nodding his head. I am grateful and am happy to let matters rest there so far as they go. However, I want to probe my paragraph (c), which is a point the Government have not taken up. Indeed, the Minister rejected it in the context of clauses we have already debated. It is the suggestion that regulatory activities be carried out on the basis of a risk assessment. The Minister’s rejection was on the grounds that if, as the Bill states, activity is targeted and proportionate, then almost by definition the risks will have been adequately assessed.
When we debated Amendment No. 24, I said that I would try to think of a situation where regulatory activities were targeted and proportionate, but not based on a risk assessment. In very simplistic terms, let us suppose that a large seaside tourist resort has been the subject of widespread abuses of customers by retailers, perhaps by using misleading labelling and overpricing. The local authority might reasonably interpret “targeted action” to be to focus activity on that town. “Proportionate action” could be interpreted as the degree of enforcement that is exercised upon proof that a particular retailer has indeed been guilty of abuse. In my submission, had a risk assessment exercise been carried out at the outset, effort would still have been saved, because the authority would have known in advance that it did not have to investigate certain retailers because they had a history of compliance. My proposition is that whether or not the words “targeted” and “proportionate” imply a risk assessment depends to an extent on each authority's interpretation
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Lord Bach: I start by welcoming the noble Lord, Lord Razzall, to his place in this Committee. His colleague the noble Baroness, Lady Hamwee, has played an important role until now, and I sure he will play such a role from now on.
Amendment No. 108, to which the noble Lord, Lord De Mauley, has just spoken, is similar to government Amendment No. 164, which I shall turn to shortly. Amendment No. 107, tabled by the noble Lord, Lord Razzall, takes a slightly different approach to the same issue. Again, we sympathise with the intentions, and we would expect regulators to use their compliance with the code as part of the evidence of their suitability to take on the sanctioning powers we propose. However, requiring the Minister to be satisfied that a regulator is compliant with the code would be a step too far. Section 22 of the Legislative and Regulatory Reform Act 2006 requires a regulator to have regard to the code. Amendment No. 107 would instead require regulators to be fully compliant with the code before these powers could be conferred on them. There may be only a small difference between us, but we think that would be a little too onerous.
I shall move government Amendment No. 164 in due course—whether that is today or on another day is a matter of question. In its report on the Bill, the Delegated Powers and Regulatory Reform Committee accepted the general procedure for awarding the powers to a regulator by secondary legalisation, but recommended that the circumstances in which the new powers are awarded should be set out in the Bill. It has always been our intention that only those regulators who are capable of acting in a way that is compliant with the principles of better regulation should have access to the new sanctions, and our amendment gives effect to that.
The drafting of the government amendment is a little different from that of Amendment No. 108, proposed by the noble Lord, Lord De Mauley. Amendment No. 164 requires the Minister making the order to be satisfied that the regulator will act in accordance with the principles of better regulation, as set out in Clause 5(2), when exercising the new sanctioning powers. This makes the approval of regulators more directly related to the exercise of the new Part 3 powers; it also captures new regulators who may not be able to demonstrate that they are currently acting in a way that is compliant with the principles. Instead, the Minister will have to be satisfied that such regulators will act in this way.
The issue of risk assessments was mentioned in Amendment No. 108. We agree that the assessment of risk should be at the heart of regulatory activity. We believe, however, in spite of the noble Lord’s valiant efforts, that this is captured by the words “targeted” and “proportionate”, as a targeted and proportionate approach should be one that is based on an assessment of risk.
Members of the Committee may also be wondering why the amendment creates a new clause rather than
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As for the principles of good regulation, regulations should be focused on the problems of minimised side effects and avoid a scattergun approach and enforcers should focus primarily on those whose activities give rise to the most serious risks.
I hope that I have done enough to persuade the noble Lord to withdraw his amendment.
Lord Razzall: I shall read in Hansard what the Minister said, but, as he said, there is not much between us on this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 108 not moved.]
[Amendment No. 109 not moved.]
[Amendments Nos. 109A and 109B not moved.]
Schedule 5 [Designated regulators]:
Lord Bach moved Amendment No. 110:
The noble Lord said: This amendment is extremely short. It will remove the Civil Aviation Authority from Schedule 5. There is a very good reason why I want to do that—it was erroneously included in the schedule and should be removed. The CAA already has sufficient powers to ensure that it is able to discharge its statutory duties and therefore should not be included in the scope of the Bill. I beg to move.
On Question, amendment agreed to.
5.15 pm
Lord Razzall moved Amendment No. 110A:
The noble Lord said: I know that much of the substance of my point is made in Amendment No. 111, tabled by the noble Lord, Lord Berkeley. Clearly, there is concern about why the regulators of the gas and electricity markets and water services should be excluded from the powers enshrined in the Bill and set out in the Macrory recommendations. It is a straightforward point. They have indicated that they do not wish to be included. No doubt the Minister will explain why that is the case. When something like that occurs and significant regulators are excluded, one inevitably asks why they are being excluded. Is there something wrong with the Bill, or is there something wrong with them? I would welcome the Minister’s comment on which of the two is right. I beg to move.
Lord Berkeley: I found the six regulators in Amendment No. 111 in the list of major economic regulators. Like the noble Lord, Lord Razzall, I wondered why they had been omitted. I still find it slightly odd that the
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Then I looked at Schedule 5, which contains a list of regulators, and at Schedule 6, which contains the list of offences covered. It is a bit odd, because Schedule 6 lists Section 18 of the Energy Act 1976, but Ofgem is not on the list. I am not sure which of the regulators in Schedule 5 will take action under the Energy Act. Similarly, the Goods Vehicles (Licensing of Operators) Act 1995 and six road traffic Acts are listed, but I do not see any regulators for road traffic offences listed in Schedule 5. I do not know whether the Office of Rail Regulation would want to take action. Perhaps the noble Baroness who runs Natural England would want to, but perhaps not. I do not quite see the link between the two lists.
I believe that the Office of Rail Regulation would be happy to be on the list, as various pieces of rail legislation are mentioned, but it appears to be a bit haphazard and amateurish. Perhaps my noble friend can tell us about the principles that put regulators in, or not in, Schedule 5. Presumably, they have said which legislation they feel is appropriate to come under Schedule 6. If there is legislation in Schedule 6 but no regulator in Schedule 5, what is the point of it?
Lord Selsdon: I apologise to the Committee for having 11 pages of amendments. I was so pleased with the noble Lords, Lord Berkeley and Lord Razzall, because I always thought that a regulator was something you used to control a steam engine. Then I though that the regulator had a job to regulate regulations or Acts of Parliament. As the noble Lord, Lord Bach, knows, I wanted to know which Acts of Parliament and which regulations a regulator should regulate, and how and when. I then asked which ministries were responsible for the activity of which regulations, which Bills, which Acts and so forth. The Government kindly told me that they did not know.
The last question that I asked the Government was: “Under which of these Acts in the schedule would a Minister have powers of entry?” The noble Lord, Lord West, replied: “None”. Of course a Minister does not himself have powers of entry, but he has the ability to give powers of entry.
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