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So we have a situation where the primary authority cannot veto the inspection but can then veto any enforcement action that arises as a consequence, thus rendering the inspection a waste of both the local authority’s and the business’s time. Even more than that, it might be argued that an inspection plan,
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What we want to deal with is the situation where a local authority is, for no good reason, simply disregarding a plan that every other authority is going along with. Our amendment is an attempt to bring these procedures into harmony and to enhance the workability and effectiveness of the whole primary authority principle. It would do so without undermining the ultimate authority of the local enforcing authority. That local enforcing authority would advise the primary authority of its desire to conduct an inspection outside the plan in advance. The primary authority could agree, as it may well do if the reasons are satisfactory, or it could disagree, with reasons, and ask the local authority to review its decision. The local authority could decide not to go ahead or it could decide to go ahead. In the latter case, it would have to advise the primary authority, which might then suggest that it agrees to let the LBRO arbitrate. A local authority that is certain could agree but, at the end of the day, it could still go ahead if it insisted. We do not envisage that this would be a long drawn-out process. Rather it should be a matter of days with a streamlined procedure. I beg to move.
Lord Bach: My Lords, I believe that the noble Lord, Lord De Mauley, and I have largely the same intentions in our amendments. We are both trying to facilitate discussions between enforcing authorities and primary authorities before an inspection takes place; to give primary authorities the opportunity to share with enforcing authorities their knowledge and expertise; to give primary authorities the opportunity to inform the approach taken by an enforcing authority to an inspection; and to allow primary authorities to demonstrate, where appropriate, that an inspection is just unnecessary.
We do not think that primary authorities should be required to consent to inspections proposed by an enforcing authority, because inspections can be triggered by a wide range of factors, including a complaint that must be followed up and recurring management failings within an outlet that must be addressed. We do not think that an inspection plan can take into account all these factors. If an enforcing authority has to seek the consent of the relevant primary authority before undertaking an inspection, the result will be a deluge of notifications to the primary authority, bogging down the primary
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The noble Lord asked why there are different provisions for inspection and enforcement. Inspection is a different animal from enforcement. It imposes far fewer burdens on the business than an enforcement action does and we think that it would be disproportionate to require anything more than informing the primary authority. We do not think that consent is necessary. We fear that, although these are well intentioned amendments, their tendency would be to undermine the expected benefits of inspection plans. For that reason, I urge the noble Lord to withdraw them.
Lord De Mauley: My Lords, I think that my case stands and I am not entirely convinced by the Minister’s response, as he will not be surprised to hear. But in view of the hour, I will not press the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cope of Berkeley moved Amendment No. 48:
Notwithstanding any provision of this Part, each local authority shall carry out its relevant functions in a fair and even-handed way with respect to all those carrying out regulated activities within its area.”
The noble Lord said: My Lords, this returns to the problem of the patchwork created by the legislation. The noble Lord, Lord Jones, in one of his visits to the Grand Committee, agreed that the patchwork has changed. Until this legislation, there was a patchwork effect across the branches of large organisations. Branches in different towns might be subject to different regimes from the different local authorities. Now all that is to end by statute as the agreements are put in place. The patchwork will be along the high street or within the trading estate, if noble Lords see what I mean. Different local authorities will ultimately be the primary authorities for different businesses spread around the trading estate or high street. The regulations can potentially be enforced differently.
As I said earlier, much of this is going on voluntarily at the moment. The Bill would put that aspect into statutory form. But statutory form is very different from voluntary form because of the compulsion involved and because the courts may get involved in arbitrating and making decisions about how the provision works, looking back to the legislation that we are passing. My new clause would ensure that, if a number of shops in a high street were being regulated in a particular way as a result of primary agreements elsewhere, a different,
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I have referred to this point on a number of occasions both today and in Grand Committee. This is an attempt to place a legal constraint on the way in which local authorities exercise their functions so that, if a small business feels that it is being discriminated against on this basis, it will have the opportunity to appeal and say, “It’s not fair. The big businesses either side of me are not being regulated as toughly as I am”.
In moving this amendment, I am conscious that, from time to time, electoral pressures are very great on local authorities. For reasons that are often but not always good, there is pressure on the regulators to produce results that show that the public are being protected. The only people whom they can lean on once this is in statutory form are the independent businesses. Those are the people whom I am worried about and this new clause would prevent that from happening. I beg to move.
Lord De Mauley: My Lords, I support my noble friend’s important amendment, which stipulates the need for fair jurisdiction in light of the primary authority partnership principle proposed by the Bill. I will not repeat the debates voicing the many concerns over the primary authority partnership that dominated so much of our time in Grand Committee, but I reiterate the nervousness on these Benches that the primary authority principle may lead to unfair or prejudiced treatment against smaller, especially single-site, businesses. The Minister will, I am sure, assure us that we need not worry about that, but the insertion of this clause would provide an even better assurance.
Lord Lyell of Markyate: My Lords, I support the insertion of this new clause. There are five requirements for better regulation, which include proportionality and targeting. Proportionality is obviously enormously important. Targeting is more worrying. The Minister will be aware that targeting over the past 10 years has in some areas got a bad name for the unintended consequences that it has produced. As my noble friends Lord De Mauley and Lord Cope said, pressures can sometimes be brought to bear. There can be political pressures to try to achieve one thing over another. This is a salutary reminder that, if the Bill goes through as drafted, immense powers will be given to probably tens of thousands of officials in local authorities and regulatory authorities up and down the country. The importance of even-handedness can hardly be overemphasised.
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Lord Bach: My Lords, the noble Lord, Lord Cope, has made clear since Second Reading his concern to ensure that the Bill does not work against the interests of independent businesses and, sometimes, smaller
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Part 2 will work to bring greater consistency to the treatment of businesses operating across more than one local authority. Consistency in other respects is also important, not least consistency between businesses. Promoting consistency between businesses, in this sense, will be just as much a part of the LBRO’s work. Its power of giving guidance to which local authorities must have regard will be its most effective tool in this instance. The primary authority scheme will not interfere with those areas where local discretion is necessary. It will promote consistency in areas where there is simply no good reason why standards should not be the same across the country.
Businesses have spoken to us about the very substantial costs they face where standards differ. In such cases as the brand name on a line of clothing, a method of preparing rice for cooking, or the kind of footwear necessary for staff working in a specific type of warehouse, an approach that was unproblematic from the home authority’s point of view was challenged elsewhere. There is no good reason why, in cases like these, standards that are acceptable in one part of the country should not be equally acceptable in another. That is why businesses, including the Federation of Small Businesses, so overwhelmingly support the aims of the Bill.
The main issue put to us by smaller businesses during the consultation was not that they disliked the primary authority scheme in principle. In fact, many smaller businesses operating over a handful of local authorities face problems of consistency themselves, and will benefit from it directly. Their concern was that local authority resources would be diverted away from them. We included a cost-recovery clause in the Bill, which we believe has removed that risk completely.
The Bill foresees, and deals in paragraph 7 of Schedule 4, with the risk that enforcement practice may diverge between businesses as primary authorities give subtly different advice on compliance by conferring on the LBRO the right to give guidance and, if need be, directions relating to specific actions which have been subject to arbitration. That is, lessons learnt from particular arbitration cases can be disseminated more widely to all businesses and local authorities if necessary.
The noble Lord and others who have spoken are concerned that local authorities must be even-handed. I ask the House to remember that local authorities are under a duty to be proportionate under the Legislative and Regulatory Reform (Regulatory Functions) Order 2007. We referred to levels of inspection for independent and multi-site businesses. The accusation is that inspection plans will somehow give multi-site businesses an unfair advantage. The inspection plans will not mean that
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Finally, on the “patchwork” issue that the noble Lord, Lord Cope, is concerned about, there will be different standards in some areas, but we do not think that that will affect matters which really count for local people. In fact, the residents of local authorities everywhere will benefit from much better intelligence-sharing between councils, which will focus the energies of their local authority enforcement officers on the important issues associated with multi-site firms. If need be, the powers of direction in Schedule 4 will allow the LBRO to bring more consistency between and within businesses. We do not believe that the extremely well meaning amendment of the noble Lord is necessary because of the way in which this system will work.
Lord Cope of Berkeley: My Lords, the noble Lord has confirmed what I said at the start of our debates this afternoon—that this office is the national office for regulating local government regulators. I shall not pursue that.
This new clause is intended to be a safety net for smaller businesses, as was recognised in the debate, because I am conscious from my experience in Parliament and in government that, due to the law of unintended consequences, the way in which things work out in practice is not always what was intended by the legislators at the time. But the Minister conceded earlier that, as there is to be a review before long so that we can see how this is all working, the unintended consequences can be considered at that time, if they exist and if my fears are realised. In the light of that, I will not press this safety-net clause at this time and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 35 [Power to make orders providing for civil sanctions]:
Lord Lyell of Markyate moved Amendment No. 49:
The noble and learned Lord said: My Lords, in moving the amendment, I shall speak also to the other amendments in my name—Amendments Nos. 50, 51, 52, 55, 60 and 63.
Amendments Nos. 49 and 50 remove the power of regulators by themselves to impose fixed and variable penalties. Amendment No. 52 removes the exclusion of the normal prosecuting authorities—the CPS, the police and their Scottish and Northern Ireland equivalents—from their normal prosecuting functions. In other words, the aim of my amendments is largely to keep the present system going and only to amend it where it produces improvements, rather than an oppressive effect. Amendments Nos. 55, 60 and 63 continue the process by removing Clauses 38, 39 and part—I emphasise,
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The overall objective of these amendments is not to destroy the Bill, as has occasionally been feared, nor to damage in any way the existing regulatory system. I recognise that we need fair and carefully thought-out systems of regulation. The objective is to prevent the ousting of the jurisdiction of the ordinary courts, which provide one of the most important checks and balances in our free society and which are not adequately replaced by an end-of-the-line right to appeal to a specialist or non-specialist tribunal. The Bill, as drafted by the Government, potentially makes every regulator and every public official in every local authority, effectively not just the regulator, but the investigator, prosecutor, judge, jury and sentencer in his or her own cause, subject only to that ultimate right of appeal, supposedly to a first-tier tribunal. There may be other problems with the appeals procedure, which we will deal with in later amendments.
The idea mentioned by Professor Macrory is that this should be a specialist tribunal. Whether this will turn out to be the case in practice, given the huge diversity of subjects, is questionable when one remembers that the Bill covers something like 178 different statutes, plus all the statutory instruments that come under them, as set out in Schedules 6 and 7 to the Bill. This is a huge constitutional inroad into the liberties of tens of thousands—perhaps hundreds of thousands—of citizens who, in one way or another, will find aspects of their lives increasingly subject to regulation. If we were to count how many things we do that are regulated in one form or another, most of which we carry pretty lightly, and then think of all the regulations covering people who in ordinary life serve us in one way or another—whether they be hauliers, waste disposers, people in hospitals, people who manufacture drugs or gardening products, all the farming industry and so on—it is necessarily a very broad subject and these are immense powers. It is not just me who says this. Both the Delegated Powers and Regulatory Reform Committee and the Constitution Committee, of which I am a member, have warned of the unprecedented effects of this Bill.
Last July, on taking office, the Prime Minister told the other place that the Government intended to return the control of executive powers to Parliament. This goes in the opposite direction, because it takes away from the ordinary courts the right and duty to dispense justice and it gives it, subject only to that right of appeal, to public officials. The Delegated Powers and Regulatory Reform Committee, in its second report of the 2007-08 session, says in paragraph 34 on page 10:
“This Bill, among other things, enables subordinate legislation to prescribe, to an unprecedented extent, sanctions which may be imposed on those considered to have committed offences under a range of Acts or under subordinate legislation”.
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“The purpose of Part 3 of the Bill is to enable Ministers of the Crown to confer on regulators power to impose sanctions as an alternative to prosecuting the offender through the criminal courts ... The Crown Prosecution Service, the police and the others specified in Clause 35(3) are excluded. So in practice this second category will comprise largely local authorities and Ministers”.
The Government argue that there are examples where this has happened before—and there are examples, but on nothing like this scale. If one takes the VAT authorities, the tribunal system is well established. The Financial Services Authority has similar powers and, at the other end of the scale, if you are appealing against a parking ticket, which is a civil penalty, you can go to the parking authority tribunal, or whatever its name is. But what is being done here is very different. With regard to VAT tribunals, the chambers I was in for many years, and from which I am now retired, has many barristers who are experts in this field. This is an extraordinarily complex and detailed area, and only a thoroughly expert tribunal is suited to dealing with it. It would be impossible to deal with it sensibly before magistrates or the Crown Court without making special provisions effectively for a special court. A lot of that applies to the FSA as well.
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Parking regulations are utterly different. They are simply penalties in circumstances where one knows pretty well whether one is guilty. Most people accept their guilt, but in quite a large number of cases, if there has been a mistake, the decisions are turned over by the tribunals. One occasionally gets rather cross when they are not overturned but it is not a big deal for the citizen and it is perfectly acceptable.
Unfortunately, as I shall explain in a moment, in this area we are dealing with substantial penalties, even under the fixed monetary penalty system. They can be up to the magistrates’ court maximum, which I think is currently £5,000, and a penalty of half that amount can damage the lives of a large number of citizens. Then there are variable monetary penalties. I sympathise with Professor Macrory in that people who have committed very serious offences should be punished proportionately and the punishments may have to be very large fines, but if those fines are dished out by an official and are subject only to an appeal, that is not satisfactory.
The Bill was very much led by substantial business, although it is supported in many ways by small business. However, I think that sometimes the small business report gets overenthusiastic about King Stork and is overcritical of what might be seen as King Log. Other noble Lords will remember the moral of La Fontaine’s whatever it was called.
The Delegated Powers and Regulatory Reform Committee warns in paragraph 49 that:
“The scheme under Part 3 must be distinguished from the two types of ‘civil sanctions’ scheme which are more commonly to be found in existing legislation”.
I invite Ministers to think very carefully about whether they could go down that route—particularly the first type of civil sanction, which is,
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