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We have considered this matter carefully and are today proposing amendments that provide for employers to object to a fixed-penalty notice in the first instance and to appeal against such a notice to the first-tier tribunal in the second instance. As we have discussed previously, the enforcement powers that local authorities have in relation to employers will be used only as a very last resort and will always be preceded by informal engagement with employers to ensure that they understand their duties and are given the chance to put right the situation voluntarily. We will develop clear guidance in conjunction with employer organisations during the next five years to ensure that employers fully understand what is expected and do not risk facing enforcement action. However, should the enforcement provisions need to be used, it is important, as I hope that noble Lords will agree, to make it clear that employers have the rights of objection and appeal that I set out. I therefore hope that noble Lords will support the amendment. I beg to move.
Baroness Verma: My Lords, I welcome the Government’s amendments, which reflect concerns raised by the Constitution Committee. It is very important for employers—and I speak as one—to know exactly where they stand. It is crucial that they are able to appeal fines imposed on them under these clauses. I am pleased that the Government have taken on board the widespread concern that provisions in the Bill risk adding to the burdens that small businesses must carry. However, I reiterate my concern about the necessity for a system of fines and penalties at all.
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Baroness Garden of Frognal: My Lords, we on these Benches also welcome the direction in which the amendments are taking us. There is a recurring theme throughout this debate: the balance between persuasion and coercion. For the measures in the Bill to succeed, employers must be fully engaged with colleges, schools and other learning providers. Their active involvement is fundamentally important. It is far preferable that they be willing participants and convinced of tangible benefits both for the young people concerned and for their business.
We recognise that if young people are entitled to receive appropriate training in their employment, it will impose duties and responsibilities on employers. But it should be as a very last resort that enforcement is required. I welcome the Minister’s assurances on that score.
We are pleased that provisions have been introduced to clarify what employers can expect if they do not meet requirements and that the Government have responded so positively to concern expressed by the Committee on the Constitution that employers should have opportunities to set out their objections to a penalty notice. We also welcome the assurances that any reduction in penalty would be repaid with interest.
In the debate on 3 July, noble Lords asked questions to which the answers remain unclear. How are Clauses 22 and 23 going to work? How will a local authority find out if employers do not allow access to education and training when they should? The noble Lord, Lord Adonis, stated that information could be obtained through the Connexions service, through engagement with young people and through contact with employers, where it may transpire that young people are not participating in education or training. But it may not be a simple task to obtain sufficient reliable information to prove contravention. This could be time consuming and tie up resources that the authority may feel would be better spent elsewhere. Even if a local authority has obtained convincing evidence, it could have reservations about enforcing penalties. We had assurances from the noble Lord, Lord Adonis, that the word “may” in Clause 22 meant that the local authority had discretion over whether to require the employer to pay a financial penalty.
Enforcement is going to take resources of time and finances and, as the CBI and others have advised, risks deterring employers from taking on young people. It would not help the aims of the Bill if the penalties alienate small businesses, where the majority of young people find employment. Since this was debated in Committee, the economic climate has not made it any easier for employers large or small to give high priority to training programmes and a light touch on enforcement is even more desirable than before. Recently, the Government have been particularly encouraging of the public sector to increase its work placements. I wonder how enforcements will be managed within the public sector and what safeguards there are that public sector resources will not be diverted to cover appeals and penalties.
The Government have responded encouragingly to the concerns raised previously and, while we might like a few further assurances, we congratulate the
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Baroness Morgan of Drefelin: My Lords, I am more than happy to write in detail to the noble Baroness, answering her questions in full. However, my main point is that in the Bill the whole emphasis on enforcement is to create a power not a duty. We are very much expecting local authorities to take a balanced and proportionate approach to this whole question of enforcement. I appreciate that we have tabled some fairly lengthy new clauses on this and we are pleased to respond to the Committee’s concerns in full. I hope very much that I can answer all the noble Baroness’s questions in detail and copy that answer to the rest of the interested Peers.
On Question, amendment agreed to.
Baroness Morgan of Drefelin moved Amendment No. 22:
22: Clause 22, page 12, line 25, at end insert—
“( ) the steps that the employer may take if the employer objects to the giving of the penalty notice, including how the employer may appeal against it,”
On Question, amendment agreed to.
Baroness Morgan of Drefelin moved Amendments Nos. 23 and 24:
23: After Clause 22, insert the following new Clause—
“Withdrawal or variation of penalty notice given under section 22 following notice of objection
(1) This section applies where a penalty notice has been given to a person (“the employer”) under section 22 by a local education authority.
(2) The employer may, by giving notice (a “notice of objection”) to the authority, object to the giving of the penalty notice on either or both of the following grounds—
(a) that the employer did not commit the contravention of section 21 stated in the penalty notice;
(b) that the amount of the penalty stated in the penalty notice is too high.
(a) may be given to the authority only during the period of 2 weeks beginning with the day on which the penalty notice was given to the employer, and
(b) must state the grounds of the objection and the employer’s reasons for objecting on those grounds.
(4) A local education authority must consider a notice of objection given under subsection (2) and, by giving notice (a “determination notice”) to the employer—
(a) withdraw the penalty notice,
(b) if the amount of the penalty determined in accordance with regulations under section 22(2) is smaller than the amount stated in the penalty notice, replace the penalty with the smaller amount, or
(c) confirm the penalty notice.
(5) The determination notice must be given within the prescribed period beginning with the day on which the notice of objection was given.
(6) Where, under subsection (4)(b), the amount of a penalty stated in a penalty notice is replaced with a smaller amount, the notice is to have effect as if it had originally stated the smaller amount.”
24: After Clause 22, insert the following new Clause—
“Appeal against penalty notice given under section 22
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(1) This section applies where a penalty notice has been given to a person (“the employer”) under section 22 and—
(a) the period during which a notice of objection may be given in relation to the penalty notice has expired, and
(b) if a notice of objection has been given in relation to the penalty notice, a determination notice has been given in relation to the notice of objection.
(2) The employer may appeal to the First-tier Tribunal against the giving of the penalty notice on one or more of the following grounds—
(a) that the employer did not contravene section 21 in the way stated in the penalty notice;
(b) that the circumstances of the contravention of section 21 stated in the penalty notice make the giving of the notice unreasonable;
(c) that the amount of the penalty stated in the penalty notice is too high.
(3) On an appeal under this section, the First-tier Tribunal may—
(a) allow the appeal and cancel the penalty notice,
(b) if the amount of the penalty determined in accordance with regulations under section 22(2) is smaller than the amount stated in the penalty notice, allow the appeal and replace the penalty with the smaller amount, or
(c) dismiss the appeal.
(4) Where, under subsection (3)(b), the amount of a penalty stated in a penalty notice is replaced with a smaller amount, the notice is to have effect as if it had originally stated the smaller amount.
(5) In subsection (1), “notice of objection” and “determination notice” have the same meanings as in section (Withdrawal or variation of penalty notice given under section 22 following notice of objection).”
On Question, amendments agreed to.
Clause 23 [Withdrawal of penalty notice given under section 22]:
Baroness Morgan of Drefelin moved Amendments Nos. 25 to 30:
26: Clause 23, page 12, line 40, leave out “(and has not already been withdrawn) and insert “, and
(b) any appeal made under section (Appeal against penalty notice given under section 22) in respect of the penalty notice has not been determined.”
27: Clause 23, page 13, line 1, leave out “subsection (2)” and insert “section (Withdrawal or variation of penalty notice given under section 22 following notice of objection) or (Further power to withdraw penalty notice given under section 22)”
28: Clause 23, page 13, line 4, at end insert—
“(3A) If the amount of a penalty is reduced under section (Withdrawal or variation of penalty notice given under section 22 following notice of objection), any sum already paid or recovered must, to the extent that it was paid or recovered in respect of any amount in excess of the reduced amount, be repaid to the employer with interest at the appropriate rate running from the date when the sum was paid or recovered.”
29: Clause 23, page 13, line 5, leave out “For the purposes of subsection (3)” and insert “In this section”
30: Clause 23, Divide Clause 23 into two clauses, the first (Further power to withdraw penalty notice given under section 22) to consist of subsections (1) and (2) and the second (Withdrawal or variation of penalty notice given under section 22: further provisions) to consist of subsections (3) to (4)
On Question, amendments agreed to.
Clause 27 [Contravention of section 24 or 25: enforcement notice]:
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Baroness Morgan of Drefelin moved Amendment No. 31:
31: Clause 27, page 15, line 32, leave out paragraph (a) and insert—
“(a) particulars of the contravention of section 24 or 25 in respect of which the notice is given, and”
On Question, amendment agreed to.
Clause 28 [Financial penalty for non-compliance with enforcement notice given undersection 27]:
Baroness Morgan of Drefelin moved Amendments Nos. 32 and 33:
32: Clause 28, page 16, line 30, leave out paragraph (a) and insert—
“(a) particulars of the failure by the employer in respect of which the penalty notice is given,”
33: Clause 28, page 16, line 34, at end insert—
“( ) the steps that the employer may take if the employer objects to the giving of the penalty notice, including how the employer may appeal against it,”
On Question, amendments agreed to.
Clause 29 [Withdrawal of enforcement notice given under section 27]:
Baroness Morgan of Drefelin moved Amendments Nos. 34 and 35:
35: Clause 29, page 16, line 43, leave out “(and has not already been withdrawn)” and insert “, and
(b) if a penalty notice has been given in respect of the enforcement notice under section 28, any appeal made under section (Appeal against penalty notice given under section 28) in respect of the penalty notice has not been determined.”
On Question, amendments agreed to.
Baroness Morgan of Drefelin moved Amendments Nos. 36 and 37:
36: After Clause 29, insert the following new Clause—
“Withdrawal or variation of penalty notice given under section 28 following notice of objection
(1) This section applies where a penalty notice has been given to a person (“the employer”) under section 28 by a local education authority in respect of a failure of a kind mentioned in subsection (2) of that section relating to an enforcement notice.
(2) The employer may, by giving notice (a “notice of objection”) to the authority, object to the giving of the penalty notice on one or more of the following grounds—
(a) that the employer did not contravene section 24 or 25 in the way stated in the enforcement notice;
(b) that the requirements imposed by the enforcement notice were unreasonable;
(c) that the employer did not fail in the way stated in the penalty notice;
(d) that the amount of the penalty stated in the penalty notice is too high.
(a) may be given to the authority only during the period of 2 weeks beginning with the day on which the penalty notice was given to the employer, and
(b) must set out the grounds of the objection and the employer’s reasons for objecting on those grounds.
(4) A local education authority must consider a notice of objection given under subsection (2) and, by giving notice (a “determination notice”) to the employer—
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(a) withdraw the penalty notice,
(b) if the amount of the penalty determined in accordance with regulations under section 28(3) is smaller than the amount stated in the penalty notice, replace the penalty with the smaller amount, or
(c) confirm the penalty notice.
(5) The determination notice must be given within the prescribed period beginning with the day on which the notice of objection was given.
(6) Where, under subsection (4)(b), the amount of a penalty stated in a penalty notice is replaced with a smaller amount, the notice is to have effect as if it had originally stated the smaller amount.”
37: After Clause 29, insert the following new Clause—
“Appeal against penalty notice given under section 28
(1) This section applies where a penalty notice has been given to a person under section 28 in respect of a failure of a kind mentioned in subsection (2) of that section in relation to an enforcement notice and—
(a) the period during which a notice of objection may be given in relation to the penalty notice has expired, and
(b) if a notice of objection has been given in relation to the penalty notice, a determination notice has been given in relation to the notice of objection.
(2) The person may appeal to the First-tier Tribunal against the giving of the penalty notice on one or more of the following grounds—
(a) that the person did not contravene section 24 or 25 in the way stated in the enforcement notice;
(b) that the circumstances of the contravention of section 24 or 25 stated in the enforcement notice make the giving of an enforcement notice under section 27 unreasonable;
(c) that the requirements imposed by the enforcement notice were unreasonable;
(d) that the person did not fail in the way stated in the penalty notice;
(e) that the circumstances of the failure stated in the penalty notice make the giving of the notice unreasonable;
(f) that the amount of the penalty stated in the penalty notice is too high.
(3) On an appeal under this section, the First-tier Tribunal may—
(a) allow the appeal and cancel the penalty notice,
(b) if the amount of the penalty determined in accordance with regulations under section 28(3) is smaller than the amount stated in the penalty notice, allow the appeal and replace the penalty with the smaller amount, or
(c) dismiss the appeal.
(4) Where, under subsection (3)(b), the amount of a penalty stated in a penalty notice is replaced with a smaller amount, the notice is to have effect as if it had originally stated the smaller amount.
(5) In subsection (1), “notice of objection” and “determination notice” have the same meanings as in section (Withdrawal or variation of penalty notice given under section 28 following notice of objection).”
On Question, amendments agreed to.
Clause 30 [Withdrawal of penalty notice given under section 28]:
Baroness Morgan of Drefelin moved Amendments Nos. 38 to 43:
39: Clause 30, page 17, line 23, leave out “(and has not already been withdrawn)” and insert “, and
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(b) any appeal made under section (Appeal against penalty notice given under section 28) in respect of the penalty notice has not been determined.”
40: Clause 30, page 17, line 27, leave out “subsection (2)” insert “section (Withdrawal or variation of penalty notice given under section 28 following notice of objection) or (Further power to withdraw penalty notice given under section 28)”
41: Clause 30, page 17, line 30, at end insert—
“(3A) If the amount of a penalty is reduced under section (Withdrawal or variation of penalty notice given under section 28 following notice of objection), any sum already paid or recovered must, to the extent that it was paid or recovered in respect of any amount in excess of the reduced amount, be repaid to the employer with interest at the appropriate rate running from the date when the sum was paid or recovered.”
42: Clause 30, page 17, line 31, leave out “For the purposes of subsection (3)” and insert “In this section”
43: Clause 30, Divide Clause 30 into two clauses, the first (Further power to withdraw penalty notice given under section 28) to consist of subsections (1) and (2) and the second (Withdrawal or variation of penalty notice given under section 28: further provisions) to consist of subsections (3) to (4)
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