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The impact assessment does not say what proportion of these penalties will be fixed and what proportion will be variable. How many cases will the appeal tribunals set up under Clause 52(1) be expected to hear? What will each tribunal cost per day simply to provide the tribunal? Unlike magistrates, the members of the tribunal will have to be paid. They will also have to be identified and trained. Will they be independent? Will the Minister give some examples of real rogues?
Finally, could we have more explanation of the annexe to the full impact assessment issued by BERR? According to figure 4 at paragraph 36, the estimated savings in administrative burdens on business of this whole scheme are calculated at between £45 million and £65 million, as against administrative burdens imposed by regulators, the total cost of which is £3.631 billion. The overall cost of administrative burdens has been estimated at £13.7 billion. Out of 105 respondents, seven business representatives and 42 government and local authorities commented on the impact assessment. Will the Minister place these responses in the Library for us all to see?
For the present, we look forward to the Ministers answers to our questions before Report, but at the same time we ask the Government to think again carefully about the whole of Part 3. They can achieve their laudable objective of better regulation without it. I beg to move.
Lord Borrie: The noble Baroness, Lady Wilcox, has dealt clearly, comprehensively and with an abundance of argument with these amendments, which would otherwise have been spoken to by the noble and learned Lord, Lord Lyell of Markyate. She will not mind my saying that, despite the ability with which she has put forward the amendments, I am sorry that the noble and learned Lord is not in his place; we have had one or two private conversations about this and I know how keen he is on what I might put simply as preserving the role of the magistrates courts and the Crown Court in any new role that they would have under this Bill were it not for the insertion of administrative tribunals into the procedure. He feels strongly about that and, in earlier discussions in Committee, I have shared with him an enthusiasm for the success of the criminal law in dealing with a lot of regulatory offences, particularly under the Trade Descriptions Act 1968, which will celebrate its 40th anniversary this year. Moreover, it is not just the bringing of an action but, as the noble Baroness indicated, the threat of an action and a criminal penalty that so often proves to be such a valuable deterrent and incentive to better business conduct.
But, and I suspect that the noble Baroness thought that there would be a but somewhere along the line, she will remember that my noble friend Lord Bach made it clear thatalong with the Macrory recommendations, the civil sanctions and the new remedies that may be sought and which we have been discussing in this Billthe criminal sanctions for breaches of food law, health law, trade description law and so on are all still in place. They have not been taken away and, in suitable cases, they are all available to be brought. However, the point of the Bill, as has been explained many times by my noble friend, is that, while the criminal law will continue to be used as appropriate, there will be more flexibility once it comes into force. If the distinction is going to be clear between, on the one hand, criminal sanctions and penaltiesthe criminal aura and the burden that a businessman faces of having been found guilty of a criminal offenceand, on the other hand, the new flexibility offered by the so-called civil sanctions of stop notices, discretionary and fixed penalties and so on, it is not a bad idea to have a separate group of bodies dealing with the procedures covering how those sanctions are to be imposed. Hence we come to the regulator, along with the right of the person on whom a penalty has been imposed to appeal, not to the magistrates court but to an administrative tribunal.
I suggest that the different administrative tribunals have had long experience over the years, whether they deal with social security or employment issues, for
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Nowadays, 50 years on from the Tribunals and Inquiries Act 1958, and following the tribunals Act last year, tribunals have equal status in the public mind; they are authoritative, fully a part of the judicial system, expert and apt for the jobs that they are asked to do. They are as trusted and established as the magistrates courts and the Crown Court.
Lord Razzall: I am second to none in my admiration for the intellect and understanding of the noble and learned Lord, Lord Lyelland, indeed, for his handmaidenbut on this occasion I cannot support him. The Bill is about implementing the principles of the Hampton and Macrory reviews. We cannot go through the Bill and with every amendment try to sneak back something that goes against those principles. We either accept the system of administrative sanctions, which the noble Lord, Lord Borrie, described better than I could, or we do not, but we cannot keep amending the Bill until we have a hotchpotch of the existing system and the principles of the Macrory review. I suspect that the best procedure for the noble and learned Lord, Lord Lyell, would be to attempt to vote down the whole Bill. There is no point in having the Bill if we emasculate it by chipping away at the administrative sanctions in Part 3. On this occasion I cannot support him or the noble Baroness, Lady Wilcox.
Lord Cope of Berkeley: In this clash of principles across the Floor, in which the Liberal Democrats have just lined themselves up with the Government, my Amendment No. 159 suggests a middle course. With the permission of the Grand Committee, perhaps I may speak to it now, because it covers very similar ground.
Whereas the amendment of my noble and learned friend Lord Lyell seeks to knock out the first-tier tribunal and replace it with a court of law, my amendment seeks to remove subsection (1)(b) and the reference to,
It is unsatisfactory that we should sanction an appeal to an unknown tribunal. I am not sure whether these unknown tribunals are simply not specifiedobviously they are not specifiedor whether they have not been invented yet. Either way, we have no information about them and yet we are asked to sanction an appeal to them. It would be better if, while still allowing the appeal to the first-tier tribunal to remain in placeI am to that extent moving a little nearer to the Government and the noble Lord, Lord Razzall, than to my noble and learned friendthe ordinary courts of law remained within the loop rather than some new or unknown tribunal that we have yet to be told about.
The noble Lord, Lord Borrie, said, in effect, that these will become expert tribunals and that we should leave it to the experts. But, to a degree, the point of appeals in situations such as this is to bring the voice of the man in the streetthe ordinary personto bear on the decision being made rather than that of the experts. That is why we have lay magistrates and juries in the more important cases. I do not automatically jump to the idea that an expert tribunal can be expected to bring common sense to bear on a case that others may think to be unfair.
Lord Bach: We have had an interesting debate and I am grateful to the noble Baroness, Lady Wilcox, for raising this important issue. I will not comment on what the noble Lord, Lord Razzall, said. On the 100th anniversary of the day that women got the vote, it would be inappropriate to do so.
As the two noble Lords pointed out, this amendment, if carried, would absolutely be a stab in the heart of the Macrory principles. This is an important moment in a sense, because we know that the Government have accepted Macrory and obviously, given the speech of the noble Lord, Lord Razzall, the Liberal Democrats in this House have, too. I know that the noble Baroness was eloquently reading a speech written by the noble and learned Lord, Lord Lyell of Markyate, but it is an important point for all Members of the Committee to come to a view aboutindeed, for Parliament to come to a view about. Is Macrory the way forward or is it not? If the amendment were carried, Macrory would effectively be a dead duck.
On the letters that have been asked for, of course I will write them. As for the details of the case that my noble friend Lord Jones of Birmingham graphically described at Second Reading, yes, it will be a pleasure to try to fill out a few more details, although, knowing how dangerous it is to take issue with a former Attorney-General, I do not think that offencesthe noble Viscount, Lord Colville, will know the answer to thissuch as those that we are talking about are likely to lead to any appeal against the lightness of sentence, because I do not think that the law allows for that. I see that the noble Viscount does not think so either; I am gratified by that. But we will see. We will look at that issue, too. That letter will be sent.
Professor Macrory found two main advantages in a tribunal hearing appeals rather than the criminal courts. First, a tribunal can comprise members with both legal and specialist expertise in the subject matter before it, thereby providing it with a fuller understanding of the regulatory issues. He pointed out that cases of regulatory non-compliance make up less than 1 per cent of all cases heard in magistrates courts, making it more difficult to provide specific training to magistrates and legal advisersnot impossible, but more difficult. Secondly, a tribunal would not consider regulatory cases alongside cases
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Professor Macrory specifically ruled out some form of hybrid systemor hotchpotch system as the noble Lord, Lord Razzall, accurately saidwith appeals against civil sanctions heard by the criminal courts. Professor Macrory argued for a clear separation between the criminal and civil systems. Tribunals were set up in the first place because they were considered to be more accessible than the courts and less formal. Businesses would be able to present their cases, should they wish to do so, without the greater need for legal representation. Tribunals will also be independent from regulators and will be able to ensure that the procedural and other rights of businesses are protected. For those reasons, and for the ones better set out by my noble friend Lord Borrie and the noble Lord, Lord Razzall, we could not accept the amendment.
The noble Lord, Lord Cope, as always, seeks the middle way between one view and another in order to help the Committee to come to a firm view. He asked when we would know which tribunal would hear appeals; he talked with a man-on-the-street perspective. That will be set out in the order giving the regulator access to the new powers. The order will be subject to consultation and the affirmative resolution procedure. Lay members can and do sit on tribunals.
The first-tier tribunal is to be set up under the Tribunals, Courts and Enforcement Act 2007 and will consolidate the jurisdictions of a number of existing tribunalsfor example, the VAT and duties tribunals, the Financial Services and Markets Tribunal and the Pensions Regulator Tribunalbut a number of tribunals will remain whose jurisdictions will not be incorporated into the first-tier tribunal. The Explanatory Notes give the example of the employment tribunals, which currently hear some appeals on health and safety matters, but other tribunals, such as the Competition Appeal Tribunal, will not come within the first-tier tribunal.
The Bill is not prescriptive in determining which tribunal will hear appeals and I understand the noble Lords concern about which body the Minister may specify in the order. However, the exemptions are limited to statutory tribunals and would therefore exclude administrative tribunals or other less formal hearing panels. I hope that that is of some comfort to the noble Lord, although I take his point about it not being entirely satisfactory that we do not know at this stage which tribunal this will go to. However, it will not be an administrative tribunal; it will be a statutory tribunal.
Lord Cope of Berkeley: The point behind my intervention is that those tribunals would still be within the terms of the Bill. Of course, the Government may decide that, although they are within the scope of the Bill, they will not use them for that purpose.
Before I sit down, I think that it is important just to back up the fundamental point that we are making about supporting Macrory. I pray in aid rather powerful and interesting bodies. The criminal sub-committee of the Council of Her Majestys Circuit Judges states:
We support the view that a distinction must be drawn between matters of regulation and criminal offending. There is a pressing need to avoid expensive court time being taken up with matters that are better suited to an administrative penalty.
EEF supports the principle of alternative penalties for regulatory offences as a mechanism for reducing demands on court time, speeding up the process of enforcement and sanctioning, and reducing the costs associated with this for business.
Baroness Wilcox: I thank the Minister for the care with which he has responded to the two amendments, especially as I was speaking to them on behalf of my noble and learned friend Lord Lyell. I thank the noble Lord, Lord Borrie, for his words, and my noble friend Lord Cope.
The object of the amendments was to probe the wisdom or otherwise of excluding the jurisdiction of ordinary courts. Based on my noble and learned friends experience, he feels passionately about this. As he has said, the ordinary courts are part of a well established and trusted system. They exist all over the country and they provide the prosecuting authority. We know from many other instances that, although a move away from the tried and tested can sometimes be exciting and more fun, it often turns out to be very sad. It is for this reason that the final amendment to be moved by this side of the Committee will propose a sunset clause to see how things develop as time goes by. For the moment, however, it is only right that I should withdraw this amendment. We shall read what the Minister said. I thank him on behalf of my noble and learned friend Lord Lyell for undertaking to go into the detail in a letter to be placed in the Library. We are most grateful for that. I beg leave to withdraw the amendment.
The noble Lord said: After those great clashes of principle, this proposed new clause is rather more probing in nature. It is obvious to anyone who knows anything about it that when breaches in these various laws occur, the sanction of a fine can be extremely important to the business concerned. But a fine is more likely to do real damage to a business, making it difficult to carry on, if it is a small concern. A giant supermarket chain finding one of its stores in trouble in the local courts or under this new arrangement can quite easily pay the fine and either forget about the problem or take steps to tighten up its procedures to avoid the breach happening again. Such an event is not necessarily damaging to the business overall. What is damaging is the publicity of being taken to court and dragged into the public arena for having caused a breach of, say, a food safety arrangement. It is this disparity between small and large businesses that I want to draw attention to with the amendment.
Nowhere in the Bill is it provided that the new system will involve any publicity at all. I thought I would suggest the new clause to see whether that is intended. Once the new arrangements get going, a cosy arrangement may develop to some degree between the regulators and the large businesses that are being regulated. In part that is what is intended and wanted. Indeed, the Minister said earlier today that the regulators and the regulated bodies will talk to one another more frequently than is the case at the moment. But if there is a breach and a cosy arrangement exists, we may not hear much about it having taken place. It may be hushed up after a quick payment is made, and on we go. In reality, that is no sanction against a giant firmor at least it is only a very small sanction. On the other hand, it could crush a small firm or seriously damage its business. For many businesses, it would be a personal fine on the proprietor, as opposed to a big corporate entity, for which such a fine would be a microscopic proportion of its turnover or profits.
I am merely probing what publicity there will be to preserve both an effective sanction over and above fines and the balance of sanctions which seems to exist in the present system between small and large businesses. I beg to move.
Lord Bach: I am grateful to the noble Lord, Lord Cope, because this is an interesting and perhaps difficult area. We agree that local authority regulatorsand, for that matter, all regulators, whether local authority or otherwiseshould publicise the details of their civil enforcement activity. That would lead to greater transparency and could prove to be a useful tool in encouraging compliance from those keen to maintain their public reputation. We very much take the noble Lords point about how publicity affects some more than others, in the same way that penalties affect some more than others.
Publicising details of enforcement actions was a recommendation of the Macrory review. Amendment No. 179A, which we shall come to later, replicates the wording of Macrorys recommendation that regulators should publish details of all enforcement actions, including criminal prosecutions. This recommendation formed part of a wider discussion on improving the transparency and accountability of regulators.
The Government accepted all Professor Macrorys recommendations and it is agreed government policy to improve the transparency and accountability of regulators. We therefore have some sympathy with the amendment, although the noble Lord will forgive me if I say that we do not accept the precise drafting. If he will withdraw the amendment, we will consider it further and return to this issue on Report.
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