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This clause is essential to provide sufficient legal certainty that the LBRO will be able to engage in activities that are helpful or necessary to the discharge of its functions and the achievement of its objectives.

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The clause provides specific examples of what will be covered by the ancillary powers provision—some financial, many not. There are many precedents for such provisions. Natural England was established by the Natural Environment and Rural Communities Act 2006. Section 13 of that Act specifies that Natural England may,

“do anything that appears to it to be conducive or incidental to the discharge of its functions”.

The section then sets out a list of examples, which includes all the actions included in the LBRO list, as well as some additional ones.

There are good reasons why detailed ministerial control, which would be accorded if Treasury approval was needed, is unnecessary. The first is that reliance on ancillary powers is circumscribed by the requirement that anything done must be,

“necessary or expedient for the purpose of, or in connection with, the exercise of ... its functions”.

Secondly, the LBRO will be subject to all the normal rules of public spending. Thirdly, it will be financially accountable to Parliament in the normal way through the Comptroller and Auditor-General. Fourthly, it must provide the Secretary of State and the Comptroller and Auditor-General with a copy of its accounts on an annual basis.

We argue that this is a routine provision for independent public bodies, with a good recent precedent. The clause is essential in ensuring that the LBRO can function effectively in day-to-day business matters. We do not think that adding a new level of control would do anything other than significantly hamper the organisation in its routine work.

That takes me to government Amendments Nos. 31 to 36. They place a number of important controls on the right of Ministers to give directions to the LBRO. At Second Reading and in Committee, noble Lords were concerned about the precise uses to which Ministers’ powers of direction would be put. I repeat that it is the Government’s intention that these powers of direction should be used as nothing more than a backstop. The LBRO will be operating as an independent body, and it is intended that Ministers will use the power only in cases where the organisation acts against the public interest. Naturally, we hope that that situation will not arise, but Ministers will be accountable to Parliament for the performance and conduct of the LBRO and there has to be a power of direction to ensure that accountability is assured. We accept that the powers in Clauses 15 and 16 were too broadly drawn for this purpose, and we have already accepted the recommendation of the Delegated Powers and Regulatory Reform Committee in relation to directions over the LBRO’s own direction-giving power.

In Committee, noble Lords suggested a number of additional changes, which we agreed in principle to consider. First, the noble Viscount, Lord Eccles, argued that the reference to “general or specific” directions was too broad; secondly, the noble Baroness, Lady Hamwee, suggested that a formal consultation process should be required before directions are issued; and, thirdly, the noble Lord, Lord Cope, suggested that there should be a requirement that any directions should be laid before

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Parliament or the Welsh Assembly where appropriate. We have decided to make the appropriate changes and we are grateful to the various noble Lords for their suggestions. Our amendments, which I hope to move in due course, will implement them.

Lord Hodgson of Astley Abbotts: My Lords, perhaps I may ask the Minister to clarify one point in relation to my noble friend’s amendment. He referred to the support that the Treasury would give to the LBRO. Was that de facto or de jure? Will it actually happen or is it bound to happen by law? Reading the “Status” paragraph in Schedule 1, I was struck that it was as close to saying that the LBRO is flying on its own as it could be without those words being used. The paragraph states:

“LBRO is not to be regarded as a servant or agent of the Crown ... The property of LBRO is not to be regarded as the property of, or property held on behalf of, the Crown”.

I understand that the Government may be forced to stand behind the LBRO but I should like to know whether they are bound to do so by law.

Lord Bach: My Lords, I am advised that the organisation will be treated like any other NDPB in this instance. However, I think that the points raised in this debate are worthy of a letter setting out how we intend the finances to work here; that is, setting out the relationship between the Treasury and this body. I hope that noble Lords will allow me to write to them about that.

Lord Cope of Berkeley: My Lords, that would be most helpful. I am somewhat reassured by what the Minister said on the financial provisions and I am grateful to him for accepting the suggestions that I and others made in Committee on Clauses 15 and 16. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 [Guidance or directions by the Secretary of State]:

Lord Bach moved Amendments Nos. 31 to 33:

Clause 15, page 7, line 13, leave out “general or specific”

Clause 15, page 7, line 14, at end insert—

“( ) Before giving any guidance or directions under this section the Secretary of State must consult—

(a) LBRO, and(b) such other persons as the Secretary of State considers likely to be affected by the guidance or directions, or persons representative of such persons.”

Clause 15, page 7, line 16, at end insert “and lay a copy of any such guidance or directions before Parliament”

On Question, amendments agreed to.

Clause 16 [Guidance or directions by Welsh Ministers]:

Lord Bach moved Amendments Nos. 34 to 36:

Clause 16, page 7, line 30, leave out “general or specific”

Clause 16, page 7, line 32, at end insert—

“( ) Before giving any guidance or directions under this section the Welsh Ministers must consult—

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(a) LBRO, and(b) such other persons as the Welsh Ministers consider likely to be affected by the guidance or directions, or persons representative of such persons.”

Clause 16, page 7, line 34, at end insert “and lay a copy of any such guidance or directions before the National Assembly for Wales”

On Question, amendments agreed to.

Clause 19 [Orders under Part 1]:

Lord Bach moved Amendment No. 37:

Clause 19, page 9, line 38, after “section” insert “4(7),”

On Question, amendment agreed to.

Clause 25 [Nomination of primary authorities]:

7.15 pm

Lord Bach moved Amendment No. 38:

Clause 25, page 11, line 30, after “agreed” insert “in writing”

The noble Lord said: My Lords, this group includes Amendment No. 39, to which I shall also speak. On reflection, I will not, as it is in the name of the noble Lord, Lord Cope, but perhaps I may respond to it in due course.

Amendment No. 38 concerns a small matter but it was one on which the noble Lord, Lord Cope, moved an amendment in Committee and we thought that he was right about it. Where a local authority agrees with a business that it will act as the business’s primary authority, the agreement should be made in writing, and that should be stated in the Bill. Of course, it is likely that the LBRO would register a primary authority partnership only where it received notification in writing of an agreement between a business and a local authority, but we believe that there is some benefit in making that a requirement and that is what we do in Amendment No. 38. I beg to move.

Lord Cope of Berkeley: My Lords, I am most grateful for the noble Lord’s agreement to the amendment by putting it in writing in the form of an amendment. He has taken on board not only the point that I made but also the drafting, simple as it was.

In Amendment No. 39, I am concerned about a quite separate point. At present, when a primary authority lays down how a series of local authorities are to carry out their responsibilities in respect of, say, a chain of shops, the local authorities in which the shops are situated all over the country have no certainty of being told whether their authority will be controlled by the agreement made between the primary authority and the headquarters of the business concerned.

When I moved a similar amendment in Committee, I was told, “It’s all right because it will all be on a website, so they can look it up quite easily if they are thinking of going to have a look at a shop”. However, in a high street, some shops will be owned by national chains—we all know that any high street has a lot of shops owned by national chains. Others will be independent—I hope that as many as possible of them will be because I like to see independent shops

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in high streets—and some will be franchises. As we know from Committee, it will be extremely difficult to know whether franchises will be controlled through a primary authority or whether they will be treated as independents. Therefore, the local authority regulator will have to go through the website looking at all the shops in the high street before he sets out to see whether they are complying with the regulations. That is why I am saying that the LBRO should let the junior authorities know whether an agreement is in place. I have also provided in the amendment that they should be told when it is proposed that a primary authority will be appointed so that, if they want to, they can object to it.

It is not particularly easy to tell who owns the shops in a high street. Some will be trading under names which are not the names of the companies that own them but trade names, and that will add to the complication for the local authority regulators. I do not want the regulators to be placed in the position where they go into a shop—for example, with a view to enforcing some food regulations—only to be told, “Push off. There’s an agreement with our headquarters that you are not supposed to do this. You’re supposed to do it another way”. That would be bad for the local authority regulators. Therefore, it is important that the junior authorities, as I call them, know when such agreements are either proposed or enforced. That is the intention behind Amendment No. 39. However, I am grateful for Amendment No. 38.

Lord De Mauley: My Lords, I shall support—very briefly, your Lordships will be pleased to hear—my noble friend Lord Cope in his Amendment No. 39, which will make sure that the regulated party and, crucially, the regulators will be completely clear who is responsible for enforcement.

Lord Bach: My Lords, Amendment No. 39 gives me an opportunity to discuss how we envisage primary authority partnerships will be publicised in practice. We understand the concerns of the noble Lord about how the existence of primary authority partnerships will be brought to the attention of local authorities. I like to think that we can put his mind to rest.

The critical issue is the register of partnerships that the LBRO will be required to maintain under Clause 25(6). The primary authority provisions are, deliberately, closely built on the basis of tried and tested voluntary arrangements which local authorities have maintained. There are a large number of such partnerships and they are listed on databases maintained by LACORS and the Health and Safety Executive. When a serious regulatory issue arises relating to a multi-site business, all that local authority enforcers have to do is simply look the company up on LACORS’s or the HSE’s database and consult the authority which has taken on that role. In practice, there is no difficulty in finding out whether a partnership exists and which areas of regulatory activity are relevant. As with the existing voluntary schemes, the LBRO database will make this very clear. The process we are proposing is no more

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complicated than what authorities already require of themselves under voluntary arrangements at present, but it will be more rigorous and give businesses the certainty that they need.

We feel that the amendment may rest on the assumption that local authorities will need to keep tabs on each partnership just in case something untoward emerges. That is not the case. Local authorities will only need to refer to it if there is a specific problem to be dealt with where an enforcement action is necessary. Local authorities that already participate in the voluntary guidance on home lead schemes will find that it is simply an extension of existing practice—but, of course, the database will be the responsibility of the LBRO rather than other bodies.

It may be helpful to go through a hypothetical series of events. Say an enforcing officer in local authority A establishes that there is a trading standards problem with a business that needs attention. It is not an emergency, so the exemptions created by Clause 28 do not apply, and the requirement to contact the primary authority takes effect. All the officer needs to do is look up the company’s name on the database. If there is a partnership—there may not be, but if there is one—three pieces of information will be listed against it: the name of the primary authority, the field of regulation within which it has effect, and the contact details for notification of the issues. It will be very clear if there is a trading standards partnership in existence and about the appropriate steps for getting in touch with it.

It is important to think through the practicalities of the scheme. We think that the scheme that we are intending to set up, which relies a lot on what has existed before, is practical and can work. For that reason we are not persuaded that the amendment is necessary.

Lord Lyell of Markyate: My Lords, I had not intended to intervene here but, as the Minister will realise when we come to the groups of amendments with which I am involved, the question of numbers of prosecutions, and therefore numbers of regulated bodies or individuals that might be prosecuted, will become important. Can he give the House any idea of what proportion there is now, and what proportion is anticipated, of enforcement actions likely to be covered by instructions from primary authorities or the requirement to consult them?

Lord Bach: My Lords, I am grateful to the noble and learned Lord, but it is extremely hard to answer his question because it will need the development of the primary authority principle to know from experience how widespread the effect will be. Perhaps he will let me consider what he has said and maybe on a later amendment we can come back with a better answer.

On Question, amendment agreed to.

Lord Cope of Berkeley had given notice of his intention to move Amendment No. 39:

Clause 25, page 12, line 13, at end insert—

“( ) LBRO must inform the local authorities in whose area the regulated person carries on the activity being regulated—

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(a) when it is proposed to nominate a primary authority, and(b) when such an authority has been nominated.”

The noble Lord said: My Lords, I was not particularly happy with what the Minister said but I do not wish to move the amendment.

[Amendment No. 39 not moved.]

Clause 27 [Enforcement action]:

Lord Bach moved Amendment No. 40:

Clause 27, page 12, line 27, at end insert “pursuant to the relevant function”

The noble Lord said: My Lords, we come to an important series of amendments which deal with various matters, many raised in Committee, relating to the primary authority’s provisions in Part 2. I will speak to my Amendments Nos. 41, 42 and 44 in due course.

The first amendment is technical, aiming to tackle an unintended omission in Clause 27. Primary authority partnerships will be established between businesses and local authorities, and will cover particular areas of regulation. That situation reflects practice under the existing voluntary schemes. Firms will commonly have trading standards partnerships with, for example, a county council and environmental health partnerships with a district council. To use the language of Clause 24, they will be nominated to play the part of primary authority for the “relevant function”.

Clause 27 needs to be limited to reflect that specialisation. An enforcing authority should only be under an obligation to consult the primary authority before taking enforcement actions that follow from the regulatory function in question. For example, an enforcing authority should be under an obligation to contact a business’s primary authority with responsibility for environmental health if, and only if, the issue at hand is an environmental health issue. It should not be required to contact the primary authority responsible, for instance, for trading standards. That reflects practice under the existing home lead schemes, where local authorities will in many cases contact different lead authorities for different areas of regulation. Enforcing authorities should not be required to consult on enforcement actions of every sort. Amendment No. 40 would make this restriction clear.

Amendment No. 41 will remove the LBRO’s power to delegate to another body its arbitration functions under Schedule 4. The noble Baroness, Lady Hamwee, and the noble Lords, Lord Cope and Lord Berkeley, expressed concern in the Committee that the LBRO’s power to delegate its arbitration function could result in another body directing a local authority under paragraph 7 of Schedule 4. It has never been our intention that the delegation power should be used in this way.

The LBRO will be a relatively small body with a wide-ranging scope. The types of cases that can be referred to the LBRO for arbitration could range from agricultural produce to zoo licensing, dog breeding to explosives. We do not expect the LBRO to have the necessary in-house expertise to effectively

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arbitrate on all the issues that could be referred to it. Instead, we expect it to consult with, and take the advice of, expert bodies such as national regulators when arbitrating. We think that sufficient provision is made for this purpose without the LBRO delegating its arbitration function to another body. In particular, under Clause 14:

“LBRO may do anything which it thinks necessary and expedient for the purpose of, or in connection with, the exercise of its functions”.

That could include seeking advice from a national regulator when arbitrating. In addition, under paragraph 5 of Schedule 4, the LBRO must consult with the relevant national regulator, and may consult other persons it considers appropriate, when arbitrating. Therefore, we are removing the power for the LBRO to delegate its arbitration function.

Amendments Nos. 42 and 44 will specify those matters which must be exempt from the requirement to notify a primary authority before enforcement action is taken. For reasons that were discussed in Committee, we considered it important to retain as much flexibility as possible for exemptions to the primary authority provisions to be dealt with by order. Noble Lords may wish to refer to the guide accompanying the Bill, which lists the categories of exemptions that we now intend to make here. The detail of these exemptions needs to be worked up in consultation with those on the ground. We shall consult on the details later this year. We were persuaded by the strength of the argument presented in Committee that where it is possible to do so, such exemptions should be put in the Bill.

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