APPENDIX 5: REGULATORY ENFORCEMENT AND
SANCTIONS BILL [HL]
Memorandum by the Department for Business, Enterprise
and Regulatory Reform
Introduction
1. This memorandum describes the purpose and
content of the Regulatory Enforcement and Sanctions Bill (the
Bill); identifies the provisions of the Bill that confer powers
to make delegated legislation; and explains in each case the purpose
of the power, why the power has been left to delegated legislation,
and the nature of, and reason for, the procedure selected.
Background to and purpose of Bill
2. The Bill delivers four distinct but related
policy areas that are key to the delivery of the better regulation
agenda.
- Part 1 of the Bill will establish
the Local Better Regulation Office (LBRO) as a statutory corporation.
- Part 2 of the Bill seeks to secure co-ordination
of regulatory enforcement by local authorities by establishing
the Primary Authority Principle.
- Part 3 of the Bill delivers key recommendations
of the Macrory Report and makes provision for the introduction
of an alternative system of civil sanctions for criminal regulatory
offences.
- Part 4 of the Bill empowers Ministers to place
a requirement on persons exercising regulatory functions to perform
their duties in a manner that conforms to the Hampton principles
by removing unnecessary burdens.
3. The policy drive behind all four parts of
the Bill stem from the recommendations of the Hampton Report,
Reducing Administrative Burdens: Effective Inspection and Enforcement
(2005), which the Government accepted in full.
Part 1
4. The Hampton Report stated that, while
there were many positive aspects to the work of local authority
trading standards and environmental health services, there remained
wide variations and inconsistencies in the application of national
standards. These inconsistencies can result in uncertainty and
unnecessary administrative burdens for business. In addition unco-ordinated
action on the ground leads to unnecessary inspections, conflicting
advice and duplication of effort at a local level.
5. Part 1 of the Bill will establish LBRO as
a statutory corporation. LBRO has already been set up as a company
wholly owned by the Government, with a programme spend to support
best practice in local authority regulatory services. The statutory
LBRO will be established with the core aim of supporting local
authorities to regulate more effectively and efficiency (as announced
at Pre-Budget Report 2005).
6. LBRO's role will be to:
- improve the co-ordination and
consistency of local authority regulatory enforcement through
its management of the Primary Authority Principle, resolving disputes
when they arise (discussed in further detail below);
- issue guidance to local authorities in respect
of their regulatory functions;
- review and revise a list of national priorities
for local authority regulatory services;
- provide advice to Government on regulatory enforcement
and regulatory issues associated with local government; and
- encourage best practice, and innovative approaches
to the provision of local authority regulatory services, including
through the use of its programme budget.
Part 2
7. Part 2 of the Bill will deliver the Government's
commitment (Pre-Budget Report 2006) to place the Home and Lead
Authority Principles[29],
which will now be known collectively as the Primary Authority
Principle, on a statutory footing. The Primary Authority Principle
is based on the core idea that a business operating across the
UK should be able to rely on a single local authority for regulatory
advice and support. For example, a multi-site retailer who seeks
guidance from the local authority on product labelling, should
feel assured that if the guidance is followed, it will not be
challenged in any of its individual outlets by other local authorities.
It is intended that this will improve the consistency of advice
and enforcement across local authority trading standards, environmental
health, licensing and fire safety services.
Part 3
8. The Hampton Report found that regulators'
penalty regimes can be cumbersome and ineffective and recommended
that a comprehensive review of these regimes should take place.
9. The Macrory Review, Regulatory Justice:
Making Sanctions Effective (2006), laid out a vision for transforming
the regulatory sanctioning regime in the UK. The proposals set
out by the Macrory Review were accepted in full by the Government.
10. The Review noted that the current regulatory
sanctioning regime was ineffective, over reliant on criminal prosecution
and lacking in flexibility. Its recommendations included introducing
an alternative system of civil sanctions for regulatory offences
in order to set up a modern, targeted fit for purpose sanctioning
regime.
11. The new administrative sanctions include:
- Fixed monetary penalties
(FMP): A notice which requires a defaulter to pay a fixed monetary
penalty.
- Discretionary requirements:
A requirement to impose a variable monetary penalty (VMP), a compliance
notice or a restoration notice.
- Stop notices: A notice
requiring defaulters to cease carrying on an activity until the
defaulter brings itself back into compliance.
- Enforcement undertakings:
These are promises offered by the defaulter to the regulator to
take specific actions related to non-compliance.
Part 4
12. In July 2007 the Government published 'Next
Steps on Regulatory Reform' which said the Government was
attracted to introducing a duty which could be applied to a regulator,
requiring it to review its functions in order to consider whether
it is imposing unnecessary burdens and to explain how it will
ensure it does not impose or maintain unnecessary burdens in carrying
out its functions. This proposal was first presented in the Pre-Budget
Report 2005.
13. Reduction of administrative and other burdens
introduced by regulators in the execution of their activities
was central to the Hampton Report. The Legislative and Regulatory
Reform Act 2006 (LRRA) and the Regulator's Compliance Code implement
key requirements identified in the Hampton Report. The introduction
of a power to implement a duty will provide a baseline to tackle
burdens underpinning these other requirements.
14. The LRRA requires regulators to follow the
five principles of better regulation which are:
- Transparent;
- Accountable;
- Proportionate;
- Consistent;
- Targeted.
15. This Part introduces an order-making power
that will enable a duty to be applied to regulators that requires
them to secure that they do not impose or maintain unnecessary
burdens when exercising the regulatory functions specified in
the order.
16. If applied, the duty will require regulators
to:
- keep their functions under review
to ensure they do not impose or maintain unnecessary burdens;
- consider the extent to which it would be appropriate
to remove or reduce burdens; and
- where appropriate act to remove or reduce burdens;
- publish a statement setting out what the person
proposes to do in respect of the unnecessary burdens.
Delegated Powers
17. A list of all of the delegated powers contained
in the Bill is set out in the table below.
| CLAUSE | TITLE
| SUBJECT | PROCEDURE
|
| PART 1 |
| | |
| 4(4) | Relevant function
| Amending the schedule or clause by adding or removing enactments or matters
| Affirmative resolution
|
| 17(1) | Power to dissolve LBRO
| Dissolution of LBRO |
Affirmative resolution |
| PART 2 |
| | |
| 22(1)(b) | Relevant function
| Specifying regulatory functions in respect of Scotland
| Negative resolution |
| 22(1)(c) | Relevant function
| Specifying regulatory functions in respect of Northern Ireland
| Negative resolution |
| 26(6) | Enforcement action
| Specify action which is or is not to be regarded as enforcement action
| Negative resolution |
| Schedule 4, para 6(2) |
Enforcement action: references to LBRO
| Procedure to be followed on reference to LBRO
| Negative resolution |
| 27(1) | Enforcement action: exclusions
| Prescribe circumstances in which certain provisions shall not apply
| Negative resolution |
| PART 3 |
| | |
| 34 | Power to make orders under Part 3
| Power to make provision in respect of fixed penalty notices, discretionary requirements, stop notices, and enforcement undertakings
| Affirmative resolution
|
| PART 4 |
| | |
| 69(2) and (4) | Functions to which section 68 applies
| Power to apply the duty in section 68
| Affirmative resolution
|
| PART 5 |
| | |
| 72 | Commencement
| | No procedure
|
18. In deciding whether subordinate legislation
was appropriate in any particular case the Department had in mind
the following criteria:
- The desirability of putting detailed
technical provisions in secondary legislation rather than on the
face of the Bill;
- The need to ensure flexibility in responding
to changing circumstances without requiring primary legislation;
- The need to allow flexible timing to ensure that
the drafting of technical details is right and affected parties
can be consulted;
- Precedent, given that some of the powers are
similar to those already available in existing legislation.
Part 1: LBRO
19. This Part of the Bill makes provision for
the establishment of LBRO as a statutory corporation, sets LBRO's
objective, and gives it the following functions: (i) providing
guidance to local authorities as to how to exercise their relevant
functions; (ii) directing local authorities to comply with guidance
issued by LBRO or another person such as a national regulator;
(iii) providing financial support and assistance to local authorities;
(iv) giving advice to Ministers on the way in which local authorities
exercise their relevant functions; and (v) preparing and publishing
a list of priorities specifying those regulatory matters to which
local authorities should give priority. Part 1 applies to England
and Wales only.
Clause 4: Relevant Function
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Affirmative resolution
|
20. Clause 4 defines the local authority functions
that are within the scope of Part 1 of the Bill. Those functions
fall into four broad categories of regulatory activity: (i) trading
standards; (ii) environmental health; (iii) entertainment licensing
and (iv) fire and rescue. In order to capture the functions falling
within those categories with sufficient certainty, "relevant
function" has been defined by reference to a list of enactments,
and instruments made under such enactments, and, for secondary
legislation made under section 2(2) of the European Communities
Act 1972, by reference to the subject matters listed in clause
4(3).
21. Clause 4(4) confers on the Secretary of State
a power to amend: (i) the list of enactments in Schedule 3, such
as to add or remove any enactment from the list, and (ii) the
list of subject matters in clause 4(3), such as to add or remove
any matter from it. As such, it is a power that allows amendments
to be made to primary legislation. Adjustments to the list of
enactments and subject matters may be required, for example, to
allow matters in respect of which there are currently no instruments
under section 2(2) of the European Communities Act 1972 (for example,
entertainment licensing) to be added. Whilst there is no current
intention to increase or reduce the scope of Part 1 of the Bill,
this power does provide flexibility to allow such changes to be
made without the need for primary legislation.
22. As the power allows amendments to be made
to primary legislation, including the possibility of extending
the scope of Part 1 of the Bill, affirmative resolution procedure
has been chosen. Parliament can, therefore, be assured that there
will be appropriate scrutiny and approval of any proposed amendments.
Clause 17: Power to Dissolve LBRO
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Affirmative resolution
|
23. Clause 17 confers on the Secretary of State
the power to dissolve LBRO and to make consequential, supplementary,
incidental, and transitional provision in relation to its dissolution.
Clause 17(2) includes an illustrative list of the kinds of things
that an order under this clause may do. This includes repealing,
revoking or amending primary legislation.
24. LBRO is established with the general objective
of securing that local authorities exercise their relevant functions
effectively, in a way that does not give rise to unnecessary burdens,
and in a way that conforms with the following principles: regulatory
activities should be carried out in a way that is transparent,
accountable, proportionate, consistent and targeted only at cases
where action is needed. It is hoped that LBRO will be successful
in fulfilling its objective and, in the future, that it will no
longer be needed, or at least will no longer be needed in its
current form. This clause is based on similar provisions in the
Clean Neighbourhoods and Environment Act 2005 (section 90). It
allows LBRO to be dissolved and if appropriate, facilitates the
transfer of its property, rights, liabilities and functions to
another person. Any decision to dissolve LBRO will be taken at
some point in the future when, for example, it is decided that
it is no longer required in its current form. The power to make
amendments that are consequential or supplemental to the dissolution
of LBRO is delegated to allow such amendments to be made in a
timely manner without the need for separate provision.
25. The Secretary of State is required to consult
persons who may be substantially affected by the dissolution of
LBRO before making any order under this clause. In addition, the
power is subject to affirmative resolution procedure which will
allow Parliament to debate whether or not LBRO should be dissolved.
Part 2: Coordination of Regulatory Enforcement
26. This Part of the Bill seeks to secure co-ordination
of regulatory enforcement by local authorities by establishing
the Primary Authority Principle. The scheme will allow regulated
persons carrying on an activity in the area of two or more local
authorities to have a single local authority nominated as its
primary authority in respect of one or more regulatory functions.
The primary authority will have the function of giving advice
and guidance to the regulated person and to other local authorities
about those regulatory functions. Where a local authority proposes
to take enforcement action against a regulated person with a primary
authority relationship, the enforcing authority must consult with
the primary authority before taking the action. The primary authority
can block the proposed action if it is inconsistent with advice
or guidance it has previously given to the regulated person. Where
the primary authority blocks the proposed enforcement action,
the enforcing authority can, with LBRO's consent, refer the matter
to LBRO. Where the primary authority does not block the enforcement
action, the regulated person can, with LBRO's consent, refer the
matter to LBRO. A primary authority may, with LBRO's consent,
instead of deciding a matter for itself, refer the matter to LBRO.
On a reference, LBRO must confirm whether or not the enforcement
action can proceed, or may recommend that some other enforcement
action should be taken.
27. It is intended that these provisions will
secure more consistent regulatory enforcement by local authorities
and allow local authorities to target their regulatory resources
more effectively.
28. Part 2 applies in England and Wales, Scotland
and in Northern Ireland.
Clause 22(1)(b): Relevant Function
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Negative resolution
|
29. As noted at paragraph 20 above, "relevant
function" is defined in Part 1 by reference to enactments
listed in Schedule 3, instruments made under those enactments,
and instruments made under section 2(2) of the European Communities
Act 1972 with respect to certain matters. For local authorities
in England and Wales, the definition of relevant function remains
the same for Part 2. In relation to local authorities in Scotland,
"relevant function" means a regulatory function which
is exercised by that authority under an enactment and is specified
for the purposes of this Part by order made by the Secretary of
State. Part 2 of the Bill is to apply in Scotland only in respect
of reserved matters. This is achieved by restricting the order
making power such that any order may not specify a regulatory
function which is conferred by provision falling within the legislative
competence of the Scottish Parliament.
30. The principle that this Part of the Bill
should apply in Scotland in respect of reserved matters is settled.
The power merely allows the Secretary of State to specify a subset
of the enactments in Schedule 3, under which it is agreed as between
the Department and the Scottish Executive that the functions fall
in a reserved area. Delegation will afford the time necessary
to ensure that the Department and the Scottish Executive can agree
which enactments give rise to functions in a reserved area. The
power has been delegated in order to avoid repetitive and voluminous
listing of enactments for England and Wales, and then separately
for Scotland, and Northern Ireland, in the Bill itself. The power
will also allow any changes to Schedule 3 to be reflected for
Scotland without the need to resort to primary legislation.
31. As this power is designed only to allow detailed
technical provision to be made in respect of reserved matters
for Scotland (the preparation of a list of enactments), it is
subject to negative resolution procedure.
Clause 22(1)(c): Relevant Function
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Negative resolution
|
32. Part 2 of the Bill will not apply in Northern
Ireland in respect of matters falling within the legislative competence
of the Northern Ireland Assembly. This power is the equivalent
power to that listed above, and applies in order to allow that
devolution arrangement to be given effect in respect of Northern
Ireland. As for the power in respect of Scotland, it is subject
to negative resolution procedure.
Clause 26(6): Enforcement Action
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Negative resolution
|
33. Clause 26 sets out the key features of the
Primary Authority Principle: a local authority other than the
primary authority must notify the primary authority before taking
enforcement action against a regulated person; if the primary
authority determines within five working days that the proposed
action is inconsistent with advice or guidance it has previously
given, it may block the enforcement action; and the enforcing
authority may not proceed with the enforcement action during the
five working day period.
34. The Department wishes to avoid imposing unnecessary
administrative burdens where the action that the local authority
proposes to take involves something short of "formal"
enforcement action. The difficulty here is that regulated persons
can incur significant costs amending their behaviour because a
local authority indicates informally that it considers the regulated
person to be in breach of regulatory requirements. Whilst these
provisions are intended to minimise unnecessary costs being incurred
as a result of inconsistent advice, equally, the Department wishes
to avoid unnecessary bureaucracy impeding the essential, informal
guidance and education function that many local authorities employ
in managing their relationships with regulated persons and achieving
compliance with regulatory requirements.
35. A definition of "enforcement action"
is included in clause 26(5). In order to allow the definition
to be finessed in light of experience, the Secretary of State,
with the consent of the Welsh Ministers, is empowered under clause
26(6) to specify action which is or is not to be considered to
be regarded as enforcement action. The power is delegated to provide
flexibility in the light of experience of the operation of the
Primary Authority Principle.
36. As the power allows detailed technical provision
to be made once the scheme has been operational, negative resolution
procedure has been chosen.
Clause 26(7): Schedule 4, paragraph 6(2): Enforcement
Action: references to LBRO
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Negative resolution
|
37. Where a primary authority concludes that
proposed enforcement action would be inconsistent with advice
it has previously given, it may block the action. If it does block
the action, the matter can be referred to LBRO by the enforcing
authority. If it does not block the action, the matter can be
referred to LBRO by the regulated person. The primary authority
may itself refer the matter to LBRO instead of deciding the matter
itself. Schedule 4 sets out the framework for references to LBRO
to be made by the enforcing authority, the regulated person, and
the primary authority.
38. On a reference, LBRO must decide whether
or not: (i) the proposed enforcement action is inconsistent with
advice or guidance previously given by the primary authority,
(ii) the advice or guidance was correct, and (iii) the advice
or guidance was properly given by the primary authority. LBRO
must then, dependent upon its assessment, either confirm that
the proposed enforcement action should, or should not, proceed,
or, it can recommend that some other enforcement action should
be taken.
39. General provision is made allowing LBRO to
consult such persons as it thinks fit before making a determination
and requiring LBRO to make a determination within 28 days. However,
further detailed provision is likely to be necessary, for example
to enable LBRO to secure the information it needs in order to
make its determination. This power enables the Secretary of State
to make further provision as to the procedure that will be followed
for the purpose of references to LBRO.
40. The power has been delegated in order to
avoid setting out detailed procedural rules in the Bill. There
are numerous precedents for such an approach including, for example,
section 5 of the Special Immigration Appeals Commission Act 1997
which allows the Lord Chancellor to make provision for procedural
rules governing appeals to the Special Immigration Appeals Commission.
41. As the power allows detailed technical rules
to be made, and does not allow changes to be made to primary legislation,
it is subject to negative resolution procedure.
Clause 27(1): Enforcement Action
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Negative resolution
|
42. During consultation on the draft Bill, it
became apparent that there was enforcement action in respect of
which the requirement to consult the primary authority and wait
five working days before taking action would be problematic. For
example, where an environmental health or trading standards officer
enters a supermarket and sees that there is a dropped egg on the
floor, it would be inappropriate if the officer had to contact
the primary authority and wait for five working days before asking
supermarket staff to clear the mess. Similarly, for many licensing
issues, the key concerns will be exclusively local issues and
it would not be appropriate for the enforcing authority to be
required to notify the primary authority. Therefore, the Department
proposes that there should be exemptions from the requirement
to consult the primary authority before taking enforcement action
in certain circumstances. It proved extremely difficult to specify
the range of de minimis enforcement actions of this type
which should be excluded from the prior consultation requirement
in the Bill.
43. This power enables the Secretary of State,
with the consent of the Welsh Ministers, to specify the kinds
of enforcement action that will be exempt. Other types of action
where the requirement to consult before taking such action would
be problematic are where the primary authority cannot be reached,
for example where there is a noise nuisance during the night,
or where failure to take immediate action may jeopardise evidence
of a breach.
44. Specifying what should be excluded from the
requirement to consult before taking action without jeopardising
the purpose of the provisions is something that can only be done
via detailed technical provisions and with the use of examples.
Such detail is inappropriate for primary legislation and the intention
is that LBRO will work with the Department to develop a code of
practice which will allow exempted actions to be described. This
will be laid before Parliament appended to an order of the Secretary
of State.
45. As the power is designed to allow detailed
technical provision to be made in respect of the primary authority
scheme, it is subject to negative resolution procedure.
Part 3: Civil Sanctions
46. Part 3 of the Bill establishes a system of
administrative sanctioning powers that may be conferred on designated
regulators, or persons exercising enforcement functions in respect
of specified offences, by way of Ministerial order. The regulatory
bodies to whom the powers may be awarded are set out in Schedule
5 and the enactments under which the specified offences arise
are set out in Schedule 6.
47. Part 3 applies in England and Wales, Scotland
and Northern Ireland.
Clause 34: Power to make orders under Part 3
| Power conferred on:
| Ministers of the Crown and the Welsh Ministers
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Affirmative resolution
|
48. The power to make orders applies in respect
of each of the civil sanctions provided for in Part 3: (i) fixed
monetary penalties; (ii) discretionary requirements; (iii) stop
notices; and (iv) enforcement undertakings. The power enables
any Minister of the Crown, or where appropriate, the Welsh Ministers,
to confer upon a regulator listed in Schedule 5 (a designated
regulator), or upon an authority which has an enforcement function
in relation to an offence contained in any enactment listed in
Schedule 6 (a designated enactment), a power to impose any one
or more of the civil sanctions. The power to confer on regulators
the power to impose civil sanctions is circumscribed by the very
detailed and prescriptive provisions in the Bill as to the nature
of the civil sanction that the regulator can impose. In particular,
the Bill specifies a number of requirements in respect of each
civil sanction. These fall into three main categories: (i) the
character of the sanctioning power that may be conferred,
(ii) the procedure that must be followed in respect of
the sanctioning power and (iii) the effect of the sanctioning
power. These are summarised in respect of each civil sanction
below.
| FIXED MONETARY PENALTIES
|
| Character | Procedure
| Effect |
| Regulator must be satisfied beyond reasonable doubt that the person has committed the relevant offence
| Notice imposing the penalty must specify: grounds for imposing penalty, amount of penalty, how and when to pay, discounts or penalties for early or late payment, right to require review, circumstances in which regulator may not impose requirement, right of appeal and consequences of non payment
| Defaulter cannot be convicted of relevant offence giving rise to the penalty
|
| Requirement to pay prescribed amount
| Defaulter must be allowed to require the regulator to review the imposition of the penalty and to appeal the decision to a tribunal
| Regulator may not impose discretionary requirement or stop notice in addition to fixed monetary penalty (clause 49)
|
| Amount calculable by reference solely to prescribed criteria
| Internal review must take place within 28 days and penalty must be withdrawn if person on whom it is imposed would not be convicted of relevant offence
| |
| For summary offences punishable by fine, amount of fixed monetary penalty must not exceed maximum amount of that fine
| Grounds of appeal must include: decision based on error of fact; decision wrong in law; decision was unreasonable for any other reason
| |
49. In addition to the detailed, imperative provisions
as to the character, procedure and effect for fixed monetary penalties
set out in clauses 37-39, the Bill makes further provision as
to the nature of the penalty and the appeals process, and the
post-implementation review procedure that must be followed by
a Minister who has made an order conferring power on a regulator
to impose fixed monetary penalties.
50. An order which enables a regulator to impose
fixed monetary penalties can include provision for early payment
discounts, financial penalties for late payment, and for enforcement
of the penalty. In respect of appeals, the order can make provision
to suspend the notice pending determination of the appeal, as
to the powers of any person to whom the appeal is made, and as
to how any sum payable is to be recoverable. Where a power has
been conferred on a regulator to impose fixed monetary penalties,
the order conferring the power must secure that the regulator
publishes guidance about the use of the sanction, detailing the
circumstances in which the penalty is likely to be imposed, the
circumstances in which it may not be imposed, what the penalty
is or how it is calculated, and the rights to require review and
rights of appeal. The regulator must also publish guidance as
to how the penalty will be enforced.
| DISCRETIONARY REQUIREMENTS
|
| Character | Procedure
| Effect |
| Regulator must be satisfied beyond reasonable doubt that the person has committed the relevant offence
| Regulator must issue a notice of intent outlining what action they intend to take. Notice of intent must be served specifying: grounds for proposal to impose requirement; defaulter's right to make representations; circumstances in which regulator may not impose requirement; and period within which representations should be made
| Where requirements are imposed or undertakings accepted, the regulator cannot impose a fixed monetary penalty (clause 49)
|
| Requirement to pay a monetary penalty of such amount as regulator may determine (variable monetary penalty)
| After the end of the period for making representations, the regulator must determine whether or not to impose discretionary requirement (with or without modifications)
| Defaulter cannot be convicted of relevant offence except where no monetary penalty has been imposed and defaulter fails to comply with any non-monetary requirement imposed
|
| Requirement to take such steps as regulator may specify to secure that offence does not continue or recur
| If a requirement is to be imposed, final notice must be served which includes information as to: grounds for imposing the requirement; where it includes a monetary penalty, how and when payment should be made; discounts or penalties for early or late payment; rights of appeal and consequences of non-compliance
| If defaulter fails to comply with a non-monetary discretionary penalty or an undertaking, the order can confer on regulator a power to impose a monetary non-compliance penalty
|
| Requirement to take such steps as regulator may require to secure that position is restored
| Grounds of appeal must include: decision based on error of fact; decision wrong in law; that amount of penalty is unreasonable; nature of requirement is unreasonable; decision was unreasonable for any other reason
| |
| Where requirements are imposed or undertakings accepted, the regulator cannot impose any further discretionary requirement
| The order may confer on a regulator a power to accept undertakings offered by a defaulter to take action to benefit any person affected by the offence
| |
51. In addition to the detailed, imperative provisions
as to the character, procedure and effect for discretionary requirements
set out in clauses 40-43, the Bill makes further provision as
to the nature of the penalty and the appeals process. In particular,
clause 51(1) provides that the order conferring the power to impose
discretionary requirements may include provision for the regulator
to require the person upon whom the discretionary requirement
is imposed to pay the costs incurred by the regulator in relation
to the imposition of the discretionary requirement. Where such
provision is made, it must secure that the notice requiring payment
of costs specifies the amount to be paid, the regulator may be
required to provide a detailed breakdown of that amount, the person
liable to pay costs is not liable to pay any costs shown to have
been unnecessarily incurred and the person required to pay costs
may appeal against the decision of the regulator to impose the
costs and the decision of the regulator as to the amount of the
costs.
52. An order can also extend any period within
which criminal proceedings may be initiated against any person
so as to allow for the revival of criminal liability in the case
where undertakings or non-monetary discretionary requirements
are not complied with. The provisions as to appeals, early payment
discounts/late penalty charges (in respect of variable monetary
penalties and non-compliance penalties), guidance and the requirement
on the Minister to review the operation of the provision and to
direct that no further notices shall be served, also apply in
respect of the power to confer a power to impose discretionary
requirements.
| STOP NOTICES |
| Character | Procedure
| Effect |
| Requirement to cease carrying on an activity until the defaulter has taken such action as regulator may specify
| Order must secure that where a stop notice is served: the person on whom it is served can appeal; if the steps in the notice have been taken, the regulator must issue a completion notice; the notice ceases to have effect on the issue of the completion certificate; the person on whom notice is served may at any time apply for completion certificate; the regulator must take a decision as to whether to issue a completion certificate within 14 days of such an application; the person may appeal against the decision not to issue a completion certificate
| Defaulter who does not comply with requirement is guilty of an offence and liable on summary conviction to fine not exceeding £20,000 and/or up to 12 months' imprisonment, and on indictment to fine and/or up to 2 years' imprisonment
|
| Requirement can only be applied where the regulator reasonably believes that the activity as carried on, or as likely to be carried on, by that person is causing, or presents a significant risk of causing, serious harm to human health, environment or financial interest of consumers, and the regulator reasonably believes that the activity as carried on, or as likely to be carried on, by that person involves or is likely to involve the commission of a relevant offence by that person
| The stop notice must include information as to: grounds for serving the notice, rights of appeal, and consequences of non-compliance
| |
| Grounds of appeal must include: decision was based on error of fact; decision wrong in law; the decision to impose the notice was unreasonable, the requirement is unreasonable; defaulter would not, by reason of any defence, be liable to be convicted of relevant offence
| |
| Order must include provision for the regulator to establish a compensation scheme. The grounds for compensation must be specified in the order.
| |
| There must be a right to appeal against decision not to award compensation and decision of regulator as to amount of compensation
| |
53. Clause 51(2) provides that the order conferring
the power to impose stop notices may include provision for a regulator
to require a person upon whom a notice is served to pay the costs
incurred by the regulator in relation to the notice. The requirements
in respect of costs recovery are the same as for discretionary
requirements.
54. The provisions as to appeals, guidance and
the requirement on the Minister to review the operation of the
provision and to direct that no further notices shall be served,
also apply in respect of the power to confer a power to impose
stop notices.
| ENFORCEMENT UNDERTAKINGS
|
| Character | Procedure
| Effect |
| Regulator can accept an undertaking where it has reasonable grounds to suspect that the person has committed a relevant offence and for the undertaking to have the specified effects
| The order making provision empowering the regulator to accept enforcement undertakings will specify the procedure
| Unless defaulter has failed to comply with the undertaking: the defaulter may not be convicted of relevant offence; and regulator may not impose fixed monetary penalty or discretionary requirement
|
| Regulator can accept an undertaking from defaulter to take such action as may be specified within such period as may be specified
| | |
| The action specified must be: to secure that offence is not repeated or continued; restoration of position to what it would have been if offence had not been committed; action to benefit any person affected by offence; action of a prescribed description
| | |
55. The provisions as to guidance and the requirement
on the Minister to review the operation of the provision and to
direct that no further undertakings should be accepted apply in
respect of the power to confer a power to accept enforcement undertakings
as well.
56. The power to confer civil sanctioning powers
on regulators and bodies with enforcement functions is delegated
because the decision to confer any such powers will not be taken
unless and until: (i) a regulator has requested that it should
have access to some or all of the powers; and (ii) it has satisfied
the relevant Minister of the Crown that it is compliant with the
Hampton principles of better regulation. This will allow appropriate
and relevant powers to be granted to regulators as and when those
regulators want the powers, and can demonstrate that they are
compliant with the Hampton principles of better regulation. It
is not intended that all regulators and bodies with regulatory
functions should have access to all of the civil sanctioning powers.
Regulators and bodies should only have such powers where they
are appropriate and where the regulator or body has demonstrated
that it is compliant with the Hampton principles of better regulation.
This power allows the granting of the powers to be undertaken
flexibly.
57. The legislation also needs to cover a wide
range of regulatory regimes. To attempt to cater for the peculiarities
of each regime in primary legislation would be unwieldy. Allowing
some of the detail to be determined through secondary legislation
will enable the relevant Minister to tailor the legislation as
appropriate.
58. The power is heavily circumscribed by the
inclusion in the Bill of very detailed provisions as to the nature
of the sanctioning power that can be conferred. The Bill specifies
in great detail what each of the sanctioning powers will look
like: the delegated power is merely a power to regulate access
to the sanctioning provisions, a technical gateway.
59. Where by virtue of a relevant enactment a
Minister of the Crown or the Welsh Ministers have the power by
statutory instrument to make provision for a criminal offence
and the power has been or is being exercised so as to create an
offence, clause 60 allows the power to be exercised so as to confer
power to impose a civil sanction. The relevant enactments are
listed in Schedule 7.
60. Whilst not itself a stand-alone order making
power, clause 60 extends existing order-making powers in order
to allow provision for the civil sanctions in Part 3 to be made.
The procedural requirements attaching to the existing powers will
continue to apply. There is a precedent for such a power in section
28 of the Legislative and Regulatory Reform Act 2006.
61. Orders under Part 3 may include consequential,
supplementary, incidental or transitional arrangements. The consequential
provision includes provision as to how any enactment passed or
made before the day on which this Act is passed applies or operates
in relation to the imposition of a fixed monetary penalty, discretionary
requirement or service of a stop notice, and where such an enactment
applies in relation to a person convicted of a criminal offence,
provision extending that enactment to a person on whom a fixed
monetary penalty or discretionary requirement is imposed or a
stop notice is served in relation to that offence. An order making
such provision may repeal, amend or revoke an enactment.
62. The devolution arrangements in Part 3 are
as follows: in respect of Wales, the Welsh Ministers may make
orders conferring civil sanctioning powers where the provision
relates to matters in Wales in respect of which the Welsh Ministers
exercise functions. There are detailed requirements to consult
with, or seek the consent of the Welsh Ministers for matters in
respect of which the Welsh Ministers exercise functions and Welsh
Ministers must consult the Secretary of State before making an
order under this Part. As regards Scotland, orders under Part
3 may not, except for consequential purposes, make any provision
which would be within the legislative competence of the Scottish
Parliament. Therefore, the power is exercisable only in respect
of reserved matters in relation to Scotland. If the power is to
be exercised in relation to an offence in Scotland the Minister
must obtain the consent of the Lord Advocate and Scottish Ministers
must be consulted before an order is made in relation to a regulator
which is a local authority in Scotland. As regards Northern Ireland,
an order may not, save for consequential purposes, make any provision
which would be within the legislative competence of the Northern
Ireland Assembly if it were contained in an Act of that Assembly.
63. The Bill includes procedural safeguards
in respect of the order making power. Before making an order under
Part 3, the Minister must consult the regulator to whom the order
relates, such organisations as are representative of persons substantially
affected by the proposals, and such other persons as the Minister
considers appropriate. Further, the Minister must carry out a
review of the operation of the order as soon as is reasonably
practicable after the end of the period of three years, beginning
with the day on which the provision came into force. The Minister
must consult with appropriate persons and publish the results
of the review.
64. The Minister has the power to suspend a regulator's
exercise of its civil sanctioning power under clause 64. The power
can be used only where the Minister (including the Welsh Ministers
where relevant) is satisfied that the regulator has on more than
one occasion failed: (i) to comply with any duty imposed on it
under this Part; (ii) to act in accordance with its guidance;
or (iii) to act in accordance with the principles of better regulation
set at in clause 5(2). The Minister must, before making such a
direction, consult with the regulator and such other persons as
are appropriate. Where a direction is made, a copy must be laid
before Parliament (or the National Assembly for Wales) as appropriate.
65. As the power allows new civil sanctioning
powers to be conferred in respect of existing criminal offences,
and provides for amendments to be made to primary legislation,
it is subject to affirmative resolution procedure. A statutory
instrument containing an order made by the Welsh Ministers may
not be made unless it has been laid before and approved by resolution
of the National Assembly for Wales. Together with the requirement
to consult, the Department considers that this will ensure that
an appropriate level of debate and scrutiny will precede the conferring
of civil sanctioning powers, whilst maintaining the flexibility
that is necessary to ensure that this Part of the Bill works.
Part 4: Regulatory Burdens
66. Part 4 of the Bill facilitates the imposition
of a duty on persons exercising regulatory functions to secure
that they do not impose or maintain unnecessary burdens. The duty
will not require unnecessary burdens to be removed where removal
would be impracticable or disproportionate. Where the duty is
applied, the person must publish a statement setting out what
they propose to do to remove the unnecessary burden, what has
been done in respect of the unnecessary burden since any previous
statement, and where an unnecessary burden is maintained, state
why its removal would be impracticable or disproportionate.
67. Part 4 applies in England and Wales, Scotland
and Northern Ireland.
Clause 69: Functions to which section 68 applies
| Power conferred on:
| Minister of the Crown and the Welsh Ministers
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| Affirmative resolution
|
68. The duty is imposed on persons exercising
regulatory functions by order of a Minister of the Crown: the
order will specify regulatory functions in respect of which the
person exercising that function must comply with the duty set
out in clause 68. Orders of Ministers of the Crown under this
Part are restricted to reserved matters. Welsh Ministers have
an equivalent power under clause 69(4) to make orders in respect
of regulatory functions so far as exercisable in Wales if or to
the extent that it relates to a matter in respect of which the
Welsh Ministers exercise functions.
69. An order making power is required because
it will provide appropriate flexibility both as regards the identity
of those to whom the duty should be applied, and the timing of
the application of the duty. It is intended that the duty will
only be applied when a Minister is confident that sufficient evidence
justifies its application and that it would add to existing requirements.
The duty may be applied in a wide range of regulatory contexts.
To attempt to cater for the peculiarities of each regime in primary
legislation would be too unwieldy. Allowing some of the detail
to be determined through secondary legislation will enable the
relevant Minister to tailor the legislation as appropriate.
70. Orders made under this Part may make consequential,
supplementary, incidental or transitional provision, including
amending any enactment. The power to amend enactments is necessary
to ensure that legislation, including primary legislation, conforms
with the application of the duty to a regulator. It would allow,
for example, for the duty to be added to founding statutes of
regulators.
71. The procedural safeguards in respect of the
power include a requirement that the Minister should consult any
person whose regulatory functions are to be specified in the order
and any other persons the Minister considers to be appropriate,
before making an order. As the power allows amendments to be made
to primary legislation, it is also subject to affirmative resolution
procedure.
Part 5: General
72. This Part contains the provisions as to extent
and commencement.
Clause 72: Commencement
| Power conferred on:
| Secretary of State
|
| Power exercisable by:
| Order made by statutory instrument
|
| Parliamentary procedure:
| No Parliamentary procedure
|
73. The Secretary of State is empowered to bring
Parts 1 to 4 of the Bill into force by commencement order. Consistent
with the usual practice, the commencement orders are not subject
to any Parliamentary procedure.
November 2007
29 The Home and Lead Authority Principles are voluntary
schemes currently run by the Local Authority Co-ordinator of Regulatory
Services (LACORS) and the Health and Safety Executive (HSE) respectively.
Both schemes seek to encourage consistency of regulatory enforcement
by local authorities.
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