Appendix 1: Digital Economy Bill: Parts 1–4
Extract from the Delegated Powers and Regulatory Reform Committee’s 6th Report of 2015–16 Session about the Energy Bill
Clause 40(2)—Amount of financial penalty
10.Chapter 5 of Part 2 of the Bill confers extensive powers on the OGA to impose civil sanctions for the purpose of enforcing compliance with various obligations, including the requirement to provide information and samples to the OGA; and clause 39 would allow the OGA to issue a financial penalty notice obliging the recipient of the notice to pay to the Authority an amount not exceeding £1 million.
11.Clause 40(2) requires the OGA:
- to issue guidance about the matters to which it will have regard when determining the amount of the financial penalty; and
- to have regard to that guidance when determining the amount of a penalty in a particular case.
The First-tier Tribunal, upon an appeal against a penalty, would also be under a duty to have regard to that guidance (see clause 47(7)).
12.We note that there is no Parliamentary procedure associated with the guidance. Indeed, there is not even a requirement to lay it before Parliament. The memorandum (paragraph 39) explains that the Bill follows the approach of section 38 of the Competition Act 1998 under which there is no Parliamentary procedure in relation to guidance issued by the Competition and Markets Authority on the exercise of its power to impose financial penalties.
13.It fails however to mention more recent examples which do not support its case! These include:
- Section 34 of the Identity Cards Act 2006 (since repealed). This provided for a code of practice about the imposition of civil penalties to be laid before Parliament in draft and brought into force by order. The affirmative procedure applied to the first order, and the negative procedure to subsequent orders.
- Section 19 of the Immigration, Asylum and Nationality Act 2006 which requires the Secretary of State to issue a code of practice about financial penalties imposed on persons who employ illegal immigrants. This must be laid in draft before Parliament and brought into force by affirmative procedure order.
- Section 55C of the Data Protection Act 1998, inserted by section 144 of the Criminal Justice and Immigration Act 2008, which requires the Information Commissioner to issue guidance about the monetary penalties he can impose for breaches of that Act. There is no Parliamentary procedure applicable to the guidance, but it does have to be laid before Parliament.
- Section 32 of the Immigration Act 2014. This requires the Secretary of State to issue a code of practice specifying factors for determining the amount of a penalty imposed on residential landlords who grant a tenancy to illegal immigrants. The code must be laid in draft before Parliament, and it comes into force in accordance with a negative procedure order.
14.We note that the guidance will be highly influential in determining the amount of what could be a substantial financial penalty imposed by the OGA—up to £1 million (with provision for this maximum to be increased to £5 million (see footnote 2)). We further note that the OGA is a brand new institution and even the memorandum refers to its “nascent enforcement framework” which is “as yet untested” (paragraph 41). In the light of this, the Committee has concluded that the guidance should be subject to some Parliamentary oversight.
15.We therefore recommend that guidance under clause 40 should be laid in draft before Parliament, and that the affirmative procedure should apply to the order bringing the initial or any revised guidance into force.