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Regulatory Enforcement and Sanctions Bill [HL]

Volume 696: debated on Wednesday 28 November 2007

My Lords, I beg to move that this Bill be now read a second time. I welcome this opportunity to put it before noble Lords. For six and a half years as director-general of the Confederation of British Industry, I pushed every day, representing business, for regulatory reform. Today is a step in the direction of such reform. The burden of red tape kills the flower of enterprise. It destroys jobs and wealth creation, which pays the tax which pays for schools and hospital. The Government have listened to business.

The Bill is about improving the way in which we encourage regulatory compliance. Regulation provides essential protections to society and brings invaluable benefits. It ensures that our air is clean, our medicines are safe and that the rights of everyone are protected. It can help to ensure that businesses treat customers fairly, while not standing in the way of the effective competition that drives greater choice and value for money for consumers. It also creates a level playing field for business. Moreover, quality, well implemented regulation reduces civil and criminal litigation, which means less time in court. Less time spent on preparing for court might be bad news for lawyers—I used to be one—but is very good news for everyone else.

However, businesses, charities and public servants regularly complain about the amount of time they spend on regulation and rules, and the consequent bureaucracy. To address these concerns, the Government are pursuing an ambitious programme of regulatory reform. The key elements are, first, regulating only when necessary and doing so in a way that is proportionate to the risk; secondly, reducing the cost of administering regulation through exacting targets; thirdly, rationalising inspection and enforcement arrangements; and, fourthly, tackling businesses that deliberately or consistently flout their regulatory responsibilities. Proportionate regulation and inspection arrangements can help to drive up standards and to deliver outcomes on the ground, whether in the form of improving public services and the environment for business, or driving forward economic reform.

In May, the Government renewed the process of assessing the impacts, costs and benefits of government policy making. The revised impact assessment is designed to increase transparency, improve economic analysis and embed these principles in the earliest stage of policy making. I am pleased to note that this Bill, when it was issued in draft, was accompanied by the first of these new impact assessments, which was welcomed in many quarters.

The Government have a code of practice on consultation. This year we asked people what they wanted from the consultation process. As a result of this we will revise our code of practice. Further, the Government’s commitment to issuing guidance to legislation 12 weeks in advance of implementation remains. We are adding further weight to this and are developing a new code of practice. As an expression of their intent, the Government have already published a guide to this Bill.

The better regulation agenda within government is moving ahead apace. There is a dynamism to it that has to be welcomed in every part of society. Business asked us to simplify employment legislation, so measures will be introduced in this House shortly to tackle employment dispute resolution regulations, which as a whole will bring expected savings of more than £150 million every year. Work is under way to improve the design, delivery and take-up of employment law guidance. That is expected to deliver £365 million of administrative savings for business every year. Business also asked us to simplify the planning laws, so we have introduced a new single planning form for businesses, replacing the multifarious forms of each different local authority. That will save business £124 million every year.

More widely, there is a cross-government commitment to reduce administrative burdens on the private and third sectors by 25 per cent by 2010, and an announcement detailing our good progress in delivering on this target will be made before Christmas. The UK’s better regulation agenda is widely regarded across the world as being the most ambitious anywhere. The OECD tells us that our policies on better regulation are the best in the world—we are the number one. The World Bank ranks us as sixth in the world and second in the EU, beaten only by Denmark. Individual business people with experience of working internationally agree that the UK has a better regulatory environment than most of our competitors.

But, of course, it could be better. I do not like coming second to anyone, not even Denmark. Better policy-making alone is not enough. The way we handle compliance and enforcement is every bit as important. This Bill will complement the existing initiatives and deliver the following benefits. Businesses will benefit from greater consistency and co-ordination, and reduced regulatory burdens for compliant business. The Bill will help to ensure that rogue traders do not enjoy an unfair advantage from failing to adhere to the law. Local authorities will benefit from a more effective division of regulatory responsibilities and from greater clarity and consistency in the way that central government set a framework for the work of local authorities. National and local regulators will benefit from a more flexible, and modern sanctioning regime which is both transparent and proportionate, and the public will benefit from a more coherent and effective system of regulatory enforcement.

This Bill builds on and takes forward the better regulation agenda, taking further important steps towards modern and effective regulatory enforcement, by making four significant changes. Part 1 will create in statutory form an expert body, the Local Better Regulation Office, with a remit to improve the way in which the Government, regulators and local authorities work together in enforcing regulations. Part 2 will create a statutory framework giving greater certainty and consistency of treatment for businesses which operate across local authority boundaries by granting them a right to one single primary authority. Part 3 will give regulators access to a suite of more flexible and proportionate sanctions, which will provide alternative routes to promoting better compliance with relevant regulations. Part 4 will bring greater effectiveness and accountability to the way in which regulators work in practice by putting a greater focus on the removal of unnecessary regulatory burden. Together, the measures in the Bill will transform the legislative framework of regulation, ensuring greater certainty for those businesses that are doing their best to comply with the law.

There will be swifter and more appropriate treatment for those businesses that seek to gain an unfair advantage by deliberately flouting regulation, and a more strategic focus on securing standards of protection for the public in the most effective way possible. This, in the end, will get rid of bureaucracy and layers of regulation. The Bill is at the heart of the Government’s intention to ensure that the UK is one of the best possible places on this planet in which to do business.

Local authority professionals play a critical role in the enforcement of regulation in this country. They have a history which goes back to the great public health and government reforms of the 19th century. However, their services are often insufficiently respected. I have been struck by the enormous range of public protections which are provided by their work and which so many of us take for granted. For instance, they protect the public from dangerous food, dangerous goods, dangerous premises; they protect from scams, including those committed by organised crime; they also protect the public’s health and safety, both at work and elsewhere.

The services are rightly proud of their ethos of providing support and advice to business in helping to ensure that it is compliant with the law. Local authority enforcers sit at the centre of a system that has grown up over decades within a framework set by multiple government departments, initiatives and regulators. It is a very complex system and, because of this very complexity, it has not always been as effective as it might have been. Parts 1 and 2 of the Bill aim to strike a careful balance by ensuring that the legitimate expectations of business are met within the system while at the same time ensuring that local authorities retain the freedom and flexibility that they need to get on with doing their job effectively. I am particularly grateful to the business community for the way in which it too has worked with us in ensuring that the practicality of the Bill is not lost.

Part 1 of the Bill will create a statutory public corporation, the Local Better Regulation Office, LBRO, charged with the statutory objective of ensuring that local authorities carry out their regulatory functions effectively and in a way that is compatible with the five principles of better regulation. LBRO has already been established as a company; the Bill will give it statutory form, with the powers and duties that it needs to take forward this work.

First, the Bill will allow the LBRO to issue guidance to local authorities in England and Wales. It will not—repeat not—duplicate the work of the existing national regulators, which are the experts in their respective fields. It will, however, seek to support local authorities in developing a cross-cutting approach which is consistent with the principles of better regulation.

Secondly, the Bill will give LBRO a function of providing expert advice to Ministers on the way in which local authorities perform their relevant functions and on legislation, both old and new, to provide for more effective policy making at source. This will help ensure a more considered and strategic approach to the framework set for them at the centre.

Thirdly, the Bill will give LBRO a role in preparing, publishing and keeping updated a list of priorities for local authority enforcement. Here it will be taking forward the good work carried out independently earlier this year by Peter Rogers, which was the first systematic attempt to establish a core list of priorities for local regulatory enforcement.

Finally, LBRO will carefully allocate a modest budget to allow it to support its partners to promote best practice in local authority regulation.

Those four core functions for LBRO are set out in Part 1 of the Bill much as the Government consulted on them in May this year. I specifically draw the attention of the House to two changes reflecting representations made to us during the consultation. First, to give greater clarity on LBRO’s relationship with the major national regulators, there will now be a requirement on LBRO to reach an agreement on how it will work with each of them in the form of memoranda of understanding. Secondly, a number of consultees were concerned that LBRO should have sufficient power to enable it to deliver its ambitious objective. Therefore, subject to safeguards, a reserve provision was added to the Bill allowing LBRO to make adherence to its guidance compulsory. Those were two suggestions that came out of consultation; the Government listened; they are in the Bill.

Part 1 addresses local authorities’ regulatory work with business as a whole but Part 2 of the Bill is more narrowly focused. It provides a framework to allow more consistent regulatory treatment of firms that operate across local authority boundaries. The Hampton review highlighted the difficulties that can arise when multiple local authorities take different approaches to regulatory compliance and enforcement with businesses whose operations extend across more than one local authority area. That structure of localised enforcement, with responsibility often spread among several hundred local authorities, can be a poor fit with the needs of businesses operating in multiple locations all over the country. The business is faced with uncertainty, expense, demoralisation of its employees and confusion in its customers, and can be unsure how to act compliantly with regulations on which conflicting advice may well have been given and different enforcement procedures have been inconsistent. The result is, without doubt, additional cost to the business and consequent lack of competitiveness.

I recognise the important role that local authorities, the local authority co-ordinators of regulatory services—LACORS—and bodies such as the Health and Safety Executive have already played in co-ordinating work with major businesses through the existing home authority and local authority schemes. They have been enormously beneficial both to businesses and local authorities and we want to build on them. However, the existing schemes are informal and voluntary. They are not always open to businesses that urgently need them. Competitiveness is being destroyed, and we have to deal with that.

Some nationwide firms deal with more than 400 local authorities. There are occasions when communications between authorities are simply not effective. As one of the major retailers noted in its response to our consultation, major inconsistencies are rare but they have significant costs for the businesses involved. Where inconsistent approaches occur, they can have major implications: uncertainty in planning for rolling out new product lines, for instance, or money being wasted where, on the basis of primary authority advice, a firm has implemented a nationwide policy that has subsequently needed to be revised because of a challenge in just one local authority area. The primary authority principle enshrined in Part 2 of the Bill will ensure that where a business and a local authority have committed time and effort to the establishment of an effective advisory relationship, there should be a presumption that, unless there are good reasons for local variation, the advice the business has been given should hold good across the whole country and that the business should be able to plan its operations confidently on that basis.

The primary authority scheme is underpinned by three key provisions. The first is a right for the LBRO to nominate a local authority as the primary authority for a business that wants one. The second is a statutory framework for consultation between other authorities and the primary authority where significant enforcement action is proposed. That will require the primary authority to check for consistency between advice the business has been given and the enforcement action that is proposed. The primary authority may object to the action where it is inconsistent with the advice previously given, but the action will have priority. Thirdly, the Bill also allows for a process of binding arbitration by the LBRO, where the enforcing authority or the business wishes to challenge the primary authority’s approach. The consultation process on this aspect of the Bill is very thorough. My officials are particularly grateful for the care and expertise that were brought to the discussions over the summer by so many different parties.

A number of concerns were raised about the primary authority scheme. Consequently, a number of changes were made to the Bill to ensure that the scheme works effectively. It is in everyone’s interest that the scheme works, but it is new and it causes concern. We made certain changes after consultation. Concerns were raised about the ability of local authorities to resource the primary authority role. The LBRO will be under a duty to consult with an authority and to take resource constraints into account before nominating it to act as a primary authority. The LBRO may also provide funds itself.

The Bill now includes a power allowing a local authority to recover from the business partner any costs incurred in running the scheme. The Government strongly believe that it is right that where a business derives benefit from the work of a given local authority, that should not be at the expense of other spending priorities for that particular authority on its own—not least the support it will want to give to smaller businesses in their attempts to comply with regulation.

Earlier drafts of the Bill included a power for the primary authority to object to an enforcement action where it considered that the action was inappropriate. There were concerns about the wide-ranging character of this power and the Bill has focused the primary authority’s role more clearly around checking for consistency of the proposed action with advice that it has previously given to the business. There were also concerns that the requirement to consult a primary authority might undermine the practical protections that prompt and effective regulatory enforcement provides. It is not the Government’s intention to inhibit officers from giving advice to business or from taking action when delay of any sort would jeopardise protections. The Bill therefore now contains a power to make detailed exemptions to the requirement to notify primary authorities in advance of taking action, allowing examples to be specified in a way that will be most useful to practitioners on the front line, dealing with urgent cases.

Part 3 is aimed at promoting greater adherence to the law by businesses. It provides additional civil enforcement tools to complement regulators’ existing criminal sanctions. In his review Philip Hampton identified a number of cases where the relative inflexibility of the existing regime for regulatory sanctions meant that businesses operating outside the law could gain a competitive advantage. This was largely because the penalties available fell far short of the commercial value that comes from the decision to ignore the rules. For example, Hampton highlighted a case where an individual was fined only £30,000 for abandoning 184 drums of toxic waste, a penalty which in no way reflected, first, his personal gain from disposing of them, for which he received £58,000, or the wider costs to the community, as the waste authorities had to spend £167,000 to dispose of the waste properly thereafter. Hampton recommended that there should be a thorough review of the system, and in particular that the Government should explore the potential for a range of administrative sanctions to provide a more appropriate, relevant and flexible response than criminal prosecution.

In response to this recommendation, the Government invited Professor Richard Macrory of University College London to take a deeper look at regulators’ penalty regimes. In his final report, published in November 2006, he found most regulators to be over-reliant on criminal prosecution as a means of tackling regulatory breaches. He identified what he called a “compliance deficit”, when non-compliance has occurred but no enforcement action is taken because the appropriate tool is not available to the regulator in an appropriate case. He set out a vision for a penalties system that would allow for a flexible and proportionate approach with a broad range of sanctioning powers, where regulators could respond to the needs of individual cases and the nature of the underlying offence would be paramount. He set out six penalties principles that should underpin such a system. These are that a sanction should aim to change the behaviour of the offender; aim to eliminate any financial gain or benefit from non-compliance; be responsive and consider what is appropriate for the particular offender and the regulatory issue; be proportionate to the nature of the offence and the harm caused; restore the harm caused by regulatory compliance, where appropriate; and aim to deter future non-compliance.

Part 3 implements the main legislative recommendations of Professor Macrory’s report, with the aim of putting those principles into practice. It creates a framework within which regulators can acquire access to a suite of civil sanctioning powers while not hurting their current criminal sanction capability. Not all the powers will be necessary in all cases; sometimes comparable powers already exist, and sometimes they will not be appropriate in a particular context. The Bill therefore allows Ministers, by order, to select particular options from the range of new civil sanctions, depending on the particular regulatory regime, and the regulator, whoever it may be, will be obliged to use those sanctions when they could usefully complement their criminal sanctions. This is flexible. This is new. This is different. This is a way of making the punishment fit the crime.

The range of sanctions set out in the Bill is as follows. First, fixed monetary penalties will help to address the compliance deficit identified by Professor Macrory and allow regulators the option of imposing penalties in respect of low-level non-compliance. Secondly, variable monetary penalties will address the problem identified by Professor Macrory where criminal fines have not always been set at levels reflecting the financial gain to the business arising from the non-compliance. Thirdly, compliance notices will allow the regulator to require the business to take certain steps to bring itself back into compliance. Fourthly, restoration notices will allow the regulator to require the business to take steps to put right a situation which has followed from the breach of regulation. Fifthly, stop notices will, in serious cases, allow a regulator to require a business to cease all activity or likely activity that has given rise, or is likely to give rise, to a significant risk of serious harm. Finally, enforcement undertakings will allow for a more fundamental change in the traditional relationship between the regulators and business.

The provisions in Part 3 are enabling powers. Before making an order giving the regulator access to the new powers, the Minister must be satisfied that the regulator is acting in a way that is compliant with the principles of what we are trying to achieve and with the Hampton report. I wish to recognise the contribution that the Government’s partners have brought to developing the Bill; throughout the consultation, representations were made to us that there was a need for more safeguards and detail to be provided in the Bill. The Bill before the House today reflects a number of changes in response to that public consultation.

Finally, Part 4 will create a power for Ministers to apply a duty to regulators requiring that they do not impose or maintain unnecessary regulatory burdens. It is envisaged that this will be used where the duty will help promote a regulatory approach which is more consistent with less and better regulation. This part of the Bill will help to deliver an efficient regulatory system with greater accountability, potentially giving regulators a statutory duty not to impose or maintain unnecessary regulatory burdens. That is new.

Regulators have committed themselves to an ambitious programme of regulatory reform in the past few years, some of the results of which, for many of them, will be published shortly. Many will also now be required to have regard to the principles enshrined in the compliance code. Compliance with the duty in Part 4 would require that a regulator should review the burdens that it imposes in its work, and act to minimise any burdens that are found to be unnecessary. It must then report on the action taken.

Regulators who have worked with us during an informal consultation period in recent months to finalise the provisions have pointed out the need for proportionality in removing burdens and to ensure that the benefits of any action outweigh its costs. The duty therefore requires the removal of unnecessary burdens only where it is practicable to do so. The intention is to provide for more effective enforcement of the regulations that Parliament has decided should be created. The statutory instrument to apply that duty will be subject to the affirmative procedure. There will be an opportunity to examine each one fully. This measure will ensure that the critical protections that regulations provide, and which the regulators expertly enforce, are carried out in a way that sets the best possible framework for British business to carry out its work and, crucially, to remain competitive in the global environment.

I close by paying tribute to the hard work and expertise that all our stakeholders have brought to scrutinising the draft Bill: from business, from the enforcement community and from national regulators themselves. This is an excellent foundation for further work between us on the basis of the reforms in the Bill. It will help to create a modern system of regulatory enforcement. It sets the framework for greater effectiveness of our regulatory system, securing better protections for all of us. It allows for more proportionality in the way in which businesses are regulated, securing more certainty and competitiveness for decent, honest businesses. It secures more accountability for the way in which regulators go about their work.

My time as director-general of the CBI enabled me to see at first hand time and again how something that is, on the face of it, a well-intentioned piece of regulation goes on to cause unnecessary expense, bog down wealth creation, kill enterprise—specifically small businesses—and drive commercial activity into a mire of bureaucratic compliance. The regulation itself loses credibility among the very people who should respect it and it ends up not only being a red tape sledgehammer cracking the occasional nut but reducing global competitiveness, debilitating the businesses of the country, and making the lives of regulators and the officers of local authorities impossible. The Bill is designed to put an end to all of that and I commend it to the House.

Moved, That the Bill be now read a second time.—(Lord Jones of Birmingham.)

My Lords, I would like to begin by thanking the Minister for introducing so thoroughly the Regulatory Enforcement and Sanctions Bill. We on these Benches are in full support of its stated aims; namely,

“for the reduction and removal of regulatory burdens”.

However, I am yet to be convinced that, as drafted, the Bill will be able to achieve those covetable aims.

As I said in the debate on the Queen's Speech, Her Majesty’s Government’s past record on deregulation does not give me much hope. This is the third piece of supposed “deregulatory” legislation to pass through Parliament since 2000. In 2001, Her Majesty’s Government introduced an Act that produced only 27 deregulations in four years. In the same period, more than 600 new regulations were introduced. Can we really now be confident of a Government with such an abysmal regulatory record? Perhaps the freewheeling new Minister, the noble Lord, Lord Jones, will surprise us all. He has certainly thrown around a lot of numbers today.

The first major proposal of the Regulatory Enforcement and Sanctions Bill is to establish the Local Better Regulation Office. I understand from what the Minister said that it is known as the LBRO. The Department for Business, Enterprise and Regulatory Reform tells us it will be central to,

“the co-ordination of regulatory enforcement by local authority”.

I welcome that, but I am nervous that the Department for Business, Enterprise and Regulatory Reform is in fact fobbing all concerned parties off. There is an apparent mismatch between the purpose of the Local Better Regulation Office described in the consultation document and that defined in the draft Bill.

In the former, the Local Better Regulation Office is to,

“support local authorities to regulate more effectively”,

while in the second, the Local Better Regulation Office is,

“securing that local authorities exercise their relevant functions more effectively”.

So, already, the Local Better Regulation Office has been reduced from a co-ordinating organisation to having a policing role. Will the Local Better Regulation Office have sufficient power to achieve the Bill's brave objective of administering consistent, uniform regulation? We on these Benches are sceptical, and we will be moving amendments to reinstate the Local Better Regulatory Office with at least enough power to perform some role of co-ordination.

What the Bill really manages to be consistent in, however, is confusion. New bodies are named but not properly defined, and the result is that these new hazy bodies seem to tread on the toes of existing regulatory enforcement bodies. It is left unresolved if a nominated primary authority will replace or just grate alongside the current home and lead authorities. This will inevitably create conflict and duplication of effort. Maybe the Government need to relearn that nursery lesson that too many cooks spoil the broth.

In the government response to the Bill, less than half of the responses approved of how the Bill handled communication between primary and enforcing authorities. The primary authority partnership is a system whereby a business located in one or more different local authority areas can select an authority with which it should deal on all regulatory and enforcement issues, which sounds great. But I worry that one local authority is not going to take kindly to another authority intruding into its traditional business remit. Let us imagine one of the Digby coffee shop chain has broken a fire regulation in Grimsby but the Digby Coffee Company's primary authority is Kensington and Chelsea, so it is therefore the latter's responsibility to fine, and claim the fine, of the offending Grimsby shop. Following the objection from local authorities co-ordinators of regulatory services that a business's “power to nominate” a council to act as a primary authority interferes with a council's right to decide on its service provision, I cannot see that Grimsby council will not be aggrieved that Kensington and Chelsea is removing its former right to fine. And furthermore, if it is no longer Grimsby's responsibility that the premises of the Digby Coffee Company are flouting regulation, why should it then inform Kensington and Chelsea 200 miles away? This seems a hideously complex way of improving the way that a local authority regulates.

My fictional example involving the Digby Coffee Company highlights how the primary partnership offers local authorities the chance of making money through being a primary authority. Of course, I see the advantage in creating a financial incentive to improve local authorities but I believe that the disadvantages are far greater. There is the likelihood that big, multi-site businesses will start bidding for the biggest, richest councils to get the best resources for their trade. This will leave the small single-site businesses unable to nominate a preferred council. As the Federation of Small Businesses anxiously points out, the Regulatory Enforcement and Sanctions Bill will result in small business trading at a disadvantage. We will be laying amendments to insist that the Local Better Regulation Office prevents local authorities from siphoning off resources to serve the large business community. DBERR advertises the Bill as a means of saving business “over £100 million”. Are these figures right? And besides, should not the model authority be the one that helps small business most by imposing the lightest regulation, and not the lowest cost? Will the Minister forward amendments to guarantee that at least?

The Confederation of British Industry, of which the Minister was the chief executive until so recently, flexing its muscles of independence, writes:

“The CBI fundamentally disagrees with the introduction of charges on business to recover costs for the Primary Authority and the use of discretionary requirements and stop notices”.

The British Retail Consortium makes the concern even more explicit, arguing that a primary authority might exert upon a business a double taxation. Not only does business pay for enforcement services in its local rates, but it might also have to pay again as the Bill allows primary authorities to charge for their services. I wonder how the Minister will respond to his old ally's criticism of the Bill.

To me, all the Bill does—if I may reiterate the initial concerns voiced from these Benches at the Queen's Speech—is to introduce more regulation in an optimistic bid to mend a broken system, and get business to pay for it. DBERR is the ministry where the needs of the consumer are also supposed to be addressed. As the former chairman of the National Consumer Council, as president of the National Consumer Federation and vice-president of the Trading Standards Institute, I am alert to the need of the consumer to be represented and of the disadvantaged consumer to be protected. So, I am uneasy. This Bill seems to have pretty much forgotten that the consumer even exists. As a typical piece of Whitehall legislation it takes a top-down approach, ordering a plan of action to an unprompted audience.

The Bill needs to reflect and enable a dialogue and response to people's actual needs. It is not good enough that it is intended only that the board of the Local Better Regulation Office will include consumer representation. Consideration for the consumer needs to be written on the face of the Bill. We will be advancing amendments to specify more precisely membership of the board, making sure that it includes members who between them all have experience in a range of areas, including consumer affairs. We on these Benches will not let Her Majesty's Government wriggle out of its apparent intention, accountability.

Throughout the code, little connection seems to be made between consumer interests and regulatory outcome. Do I really have to point out to the Government a basic point that without consumers there would be no business demand and therefore no call for regulation? The connection between consumers’ interests and regulatory outcomes is given insufficient weight throughout the code. Her Majesty’s Government would do well to keep in mind that it is not just business that gets unhappily entangled in the red tape of regulatory confusion, but the consumer.

During the debate on the Queen's Speech, the noble Lord, Lord Jones, indicated he was going to rip off his jacket and rip into regulation. Can he then tell the House how many regulations will go as a result of the Bill? Where is the power for business to challenge regulation and instigate their removal? Where is the regulation ration for government departments? Where is the system for reversing the costs of unnecessary regulation on the bureaucracies that produced them? Where is the parallel to the Paperwork Reduction Act, or any of the specific deregulation proposals in other legislatures? Where, in fact, is the beef? The noble Lord has not been five months in government and Whitehall has drawn the teeth he once bared for British industry and small business. His department is riddled with kryptonite and he needs to root it out. This Bill is all process and no action. It would have made a brilliant episode of “Yes Minister”. What we had hoped for from the noble Lord, Lord Jones, was a tad more “No, Sir Humphrey”.

In a consultation document for the Bill, Her Majesty’s Government declared that they aimed to regulate,

“in a light touch way”.

I do not see that this Bill manages this in any shape or form; rather, it introduces yet more regulations and more enforcement bodies, making tasks more and more onerous. Business and the consumer are being bound so tight they have no real place to move. Having read this Bill from cover to cover, all that I can ask the Minister is: is this really the future of regulation that he dreamed of when he was running the Confederation of British Industry? I dare say that it is not.

We on these Benches, however, are in full support of the stated aims of this Bill and we will strive over the coming weeks to help the Government fulfil them—bruising though that experience may turn out to be.

My Lords, the length of time that the Minister took to introduce the Bill indicates the importance that the Government afford to its topic. How to get right the balance between protection of the public, to which the Minister and the noble Baroness, Lady Wilcox, referred, and the reduction in what I could describe as the industry of bureaucratic regulation is a problem that has bedevilled all Governments since the Second World War—this Government no less than their predecessor. I have no doubt that when the issues of lost CDs and illegal donations are long forgotten, the noble Lord, Lord Jones, will still be dealing with the issues touched on by the Bill.

From these Benches, as a party, we have long campaigned for significant reduction in regulation of business—you might say that opposition parties always do. In our past two election manifestos, when I was in charge of those elections, we listed a series of regulations that we wished to abolish. We have regarded this as an issue dear to our hearts. However, we share the fear of the noble Baroness, Lady Wilcox, that the Bill will represent a missed opportunity in its effect on the dead hand of regulation. Rather like her, I wonder how many regulations in three or four years’ time will have been affected or reduced either by the implementation of the Hampton principles, which we dealt with in orders last week, or by this Bill.

I understand the Government’s problem. I do not know whether any noble Lords listened to the “Today” programme earlier this week when the issue of rotten meat in Essex came up. Indeed, it seemed to be the major item on the programme that day and, from the way in which the story was portrayed, it appeared that the rotten meat would cause the entire population of Essex to be dead by now. I do not know whether any noble Lords are not in their place because they ate that meat. If he heard the programme, the Minister will remember that when the unfortunate regulator, from whichever regulatory body it was, was asked why he had not done anything about the rotten meat in Essex, he kept repeating that under the Hampton principles there should be no random inspections without evidence. That did not provide any defence to the inquisitor-general’s deputy on the “Today” programme and the public were left with the impression that the burghers of Essex were completely in danger from the burgers and from the absence of regulation. When that sort of broadcast takes place, it is clearly a nightmare for any Minister to have to deal with on one hand the implementation of these principles, and on the other the reduction of regulation, so I sympathise with the Minister in his task.

Having been generally critical of the principle behind the Bill, I want to add my congratulations to the Government on what they have done in one or two areas. First—I have made this point before from these Benches when the Minister’s department was more sensibly called the Department of Trade and Industry—the method of legislation followed by the department on previous significant Bills and this one is to be commended. His department appears to have learnt the lesson that you do not legislate without consulting widely with stakeholders and people who are interested. Of course, one problem that he now has—it is always a problem with consultation—is that, when those who are consulted disagree, they then strongly lobby the opposition parties and the Government. I notice the Minister nodding. Often, when he was running the CBI and was consulted by the Government, if they did not do what he wanted, he did not stop complaining. He is now having to deal with that here. Nevertheless, I hope that does not mean that the department will not follow that process; clearly it is sensible to consult as many people as possible before legislation is brought in, and it provides a much better informed debate when teasing out the issues with which the stakeholders disagree.

Secondly, it is very easy for opposition parties to criticise the Government for failing to deal with this issue, because it will always be with us. I look forward very much to the remarks of the noble Lord, Lord Haskins, who battled very strongly within government to do something about overregulation with what I think in his day was called the Better Regulation Task Force, or some body of that nature. I am sure that noble Lords very much look forward to his contribution to this debate.

Thirdly—I know that the noble Lord, Lord Bach, will smile at this—I congratulate the Government on conceding an argument that has been made from these Benches for some time on the implementation of regulations. We have long argued that every regulation should have an impact assessment before being introduced, and it appears that that will now be the Government’s normal practice. It is certainly going to be the normal practice of the Minster’s department; whether it will be elsewhere is outside his control.

We have also argued from these Benches that every regulation should have a sunset clause on the face of the relevant Bill. The Government are not quite there. They seem to be moving towards the solution that certainly every regulation should state on its face when the Government will reassess it, so they are moving towards the principle of a sunset clause, which I suspect structurally will do something about the reduction in regulation.

Apart from the overall concern about the impact of the Bill, which I share with the noble Baroness, Lady Wilcox, we have a number of specific concerns. My noble friend Lady Hamwee will deal with Parts 1 and 2, but a number of concerns have been raised by the business community with regard to Parts 3 and 4. I cannot avoid joining the noble Baroness, Lady Wilcox, in teasing the Minister about the number of reservations produced by his previous organisation. It is often forgotten, when talking about regulation, that it is not only large businesses that are affected. We should remember that quite often the impact of regulation is most felt by small businesses that do not have the resources necessarily to employ people to deal with regulatory issues.

Our first concern, which I dare to suggest is also a CBI concern, is that the aim of the Bill is to instil the principles of better regulation into every part of the UK regulatory environment. Obviously a coherent and consistent approach to enforcement decisions will encourage compliance by business in a positive way. The intention, as we understand it, is that regulators must demonstrate their ability to conform to the Hampton principles of better regulation, and only then should additional powers be awarded to regulators. As the CBI points out:

“There is a lack of clarity … over how sanctions will be awarded to regulators, and how they will operate in practice. The Bill leaves far too much important detail to be determined by secondary legislation and regulator’s guidance”.

It continues:

“The Government’s response to the … consultation details the process of awarding the additional sanctions to regulators. However this important mechanism to ensure that regulators are Hampton compliant is left off the face of the Bill”.

We believe that to be wrong and would like to table amendments to restore it to the face of the Bill.

Secondly, as the noble Baroness, Lady Wilcox, touched on, we share some of the concerns of the British Retail Consortium regarding the process of the imposition of penalties, which we think raises civil liberties issues—particularly, ignoring,

“the right of a business to make representations as an innocent party—and to cross question its accusers”.

The consortium continues:

“Under the Bill, there are different procedures for a fixed monetary penalty and a variable monetary penalty … but in both cases the effect is similar. The business on which it is proposed to impose a penalty can only make written submissions to the … regulator that intends to impose the penalty”.

I know that under the documents circulated today, it is intended that that should be a different individual; nevertheless, the regulatory authority becomes the policeman, judge and jury. We shall table amendments to improve on that.

Our third concern is stop notices, which clearly bring in significant sanctions for a business and lead to loss of revenue. Under the Bill—I think Clauses 44 to 47—once the business has rectified the problem it has to wait up to 14 days to be granted a certificate to operate again. We think that 14 days is an unacceptable delay.

Fourthly, on a wider and more general point, we are concerned about the fixed monetary penalties. The whole object is to catch rogue traders, not penalise small businesses which for one reason or another innocently fail to comply. We are concerned that the fixed monetary penalties will simply be regarded rather like the parking fine—as a toll charge that people, or at least the other Opposition, pay when they want to go shopping in Harrods—rather than a penalty that will lead to better behaviour.

The Minister will think that I am being overharsh in my comments on the Bill; I have the shelter that I have not perhaps been quite as harsh as the noble Baroness, Lady Wilcox. Of course, the proof of the pudding will be in the eating. Will the impact of regulation be reduced by this Bill? I doubt it, but we shall see. In any event, the noble Lord, Lord Jones of Birmingham, is not the first or last Minister to be caught between the rock of our risk-averse society and the hard place of the clamour of business for less regulation.

My Lords, I fully understand the enthusiasm of the noble Lord, Lord Jones of Birmingham, for reducing the burden of regulation on business. I do not want to address that; I want to look at it from the point of view of one of the sets of regulators, the local authorities. I speak as a member of the Office of Surveillance Commissioners who goes around inspecting regulators such as the local authorities under the Regulation of Investigatory Powers Act 2000. I suppose that I have talked about regulatory procedures with several hundred local authorities all over the country.

I notice from the impact assessment that the Government have not been able to obtain much in the way of solid figures about benefits and disbenefits resulting from the Bill. I will therefore explore this in a little more detail. I take an example not, like the noble Baroness, Lady Wilcox, from Kensington, but from the Minister’s own area in the West Midlands, so I am sure that he will appreciate it all the more. It is, of course, like the example given by the noble Baroness, entirely mythical.

A chain of pizza restaurants in the West Midlands has its headquarters in Dudley but an outlet in all the other boroughs. One day, customers at the restaurant in Walsall start falling ill with food poisoning. By this time, the Government have acted and brought in provisions under Part 3 to enable stop notices to be issued and the Local Better Regulation Office has arranged for Dudley to be the primary authority for the chain of restaurants. Before Walsall can do anything, it must look at the guidance about kitchen inspections that has been issued by Dudley and is seriously restricted in how often it can do inspections. This is not unusual; there is usually a local rule that local authorities impose on themselves about inspections because they appreciate that they do not need to be too heavy-handed about these things.

Walsall’s hands are tied without the consent of Dudley. It would like to issue a stop notice but has no powers to do so without going to Dudley first. It must inform Dudley, which has five days to respond. Let us suppose that this happens three weeks tomorrow, on 21 December. As a result of the Bill, the five days do not include weekends, Christmas Day, New Year’s Day or any of the bank holidays, so the five days grows to 11 under these provisions. However, Dudley then agrees to the stop notice. Perhaps there will be a statutory instrument dealing with this sort of emergency. Of course, that is not in the Bill but only in some statutory instrument about which we know nothing.

Walsall proceeds to serve the stop notice and tells the restaurant chain that it can appeal, which it does. This goes to a first-level tribunal, an organisation set up under an Act passed earlier this year, about which I think people know very little and I know nothing. At any rate, we do not know how long that tribunal will take to decide. In fact, it decides that the restaurant should be closed, as it is in, shall we say, February. At present, it could have been done on Saturday 22 December. At least, I think that that is the case, because when I look up the Food Safety Act I find that two pages of statutory instruments have been made under the section concerned and if one looks some of them up—I have not looked them all up—one sees that a lot of them suffer from the well known defect that they introduce European Union legislation not by stating the offence but merely by giving a cross-reference to paragraph 45 of the directive concerned, so nobody has any idea without looking at the directive what it is that one is not allowed to do. However, I think that the stop notice could have effect the following day.

The next thing that happens is that the firm claims compensation under the Bill, as it can. It says that it was far too long after the event. However, we will need another statutory instrument before we know the bases on which compensation can be claimed. The firm’s compensation claim is refused and it appeals against the refusal, again to the first-level tribunal. Let us say that it loses again. What about the costs? Walsall can claim the costs up to the date when it went to the tribunal the first time, but not after that, unless the tribunal says so. I do not know whether the tribunal has powers to award costs; the Bill certainly does not say so. The Bill may reduce burdens on restaurant owners, but it does not look to me as though it reduces many burdens on members of the public who fall ill from eating food—not the meat in Essex used as an example by the noble Lord, Lord Razzall, but pizzas in the West Midlands—and it certainly does not reduce the burdens on the local authorities concerned. I wonder whether, with that sort of example, this legislation is producing the results that the Government wish to achieve.

Another point arises out of the legislation that I helped to supervise. As the noble Lord said, civil sanctions are a very good idea. A lot of local authorities already use the enforcement concordat. It has a gradation of penalties and disciplines that they can impose if they find that there is something wrong in a regulatory context, and prosecution is usually the last resort. We now have a situation where the Government can not only introduce civil sanctions as a compulsory method of dealing with these cases, but say to local authorities that they must use one of them instead of a prosecution.

This is a very serious situation for a most obscure reason. I am not sure what is going to happen about the list of regulatory duties that local authorities must set out under Clauses 61 and 62 and the sanction that they are going to have to use. To start with, I wonder whether central government are going to help local authorities to make a list of all the regulatory requirements that will have to be set out in this guidance. There are thousands of them and it will not be easy to make up a list, let alone decide the level of sanction that ought to be imposed.

The real dilemma is that under this legislation the council’s officers can use any of the civil sanctions only if they are satisfied to the criminal standard of proof that there is a case to go ahead on that basis. To get that sort of satisfaction, it is necessary to carry out investigations, some of which may have to be covert. That is what the Regulation of Investigatory Powers Act is all about. The Home Office has now made it clear that authorisation to carry out covert surveillance can be given only in a case where it is desired to prevent or detect crime. The Government have ordained that this should not be crime; rather, the situation is to be dealt with by way of civil sanction.

Can covert surveillance be used? I do not suppose that the noble Lord knows the answer; I certainly do not. This is not the first time; it has happened from the commencement of the 2000 Act in relation to misfeasance, malingering and moonlighting by employees of public authorities. No one has ever known until recently whether that was to be dealt with by disciplinary proceedings, as it usually is, or whether it was technically a crime—fraud, theft or something of that sort—and therefore susceptible to being dealt with by covert surveillance. The other day, the Investigatory Powers Tribunal, also set up under the 2000 Act, finally put that matter to rest. It said that activities of that sort by public employees are not susceptible to being dealt with under RIPA, as the Act is commonly known; they are outside its sphere and must be dealt with in common law.

The Government will have to make up their mind about that. Either they must persuade the Home Office to extend the grounds on which covert surveillance can be used, in order to carry out the necessary investigations to implement the civil sanctions, or they will leave a large area of doubt. A substantial bureaucratic burden is being imposed on local authorities and their officers and a uniformity that may not suit the place that the local authority tries to organise and superintend. Insufficient notice has been taken of the views of local authorities or of the difficulties that they will face.

My Lords, I declare an interest in the same form as the noble Baroness, Lady Wilcox, as a vice-president and former president of the Trading Standards Institute, which represents hundreds of dedicated public servants who are employees of local authorities and responsible day to day for enforcing numerous items of consumer protection legislation. I have long been an enthusiast for effective, consistent and proportionate enforcement by trading standards officers, environmental health officers and others, and sought to promote such during my lengthy term of office as head of the Office of Fair Trading.

My noble friend has a past, too. As he and other speakers have reminded us, during his period as director-general of the CBI he inveighed long and hard against the burdensome nature of many regulations imposed on business. In the present Bill, which my noble friend is bringing forward, I feel that he is being extremely broad-minded and fair-minded in drawing out his concern for overburdensome regulation but, alongside that—with which I can find much common cause—he wants regulators to focus their efforts on those mischiefs that pose the greatest risk to consumers. In the Bill, he articulates the value of consistent, proportionate and effective enforcement. I think that enforcement officers will value the greater flexibility introduced by the Bill, which, as my noble friend outlined, will give them a range of alternative sanctions for enforcement besides the familiar and traditional sanction of criminal prosecution. I should say, however, because no one else has quite said it so far, that I am certainly not one of those who is opposed to criminal sanctions in this field of trading malpractice. The statutory offences in the Trade Descriptions Act 1968, for example, have for nearly 40 years proved invaluable in keeping traders, big and small, up to the mark in terms of honest and fair behaviour. One of the great merits of criminal prosecution in the courts, usually the magistrates’ courts, and the spotlight of publicity given to court cases is that they have proved a useful deterrent against false and misleading descriptions of goods and services.

The Minister cited Professor Richard Macrory’s report on regulatory justice, on which the Government rely in their Explanatory Notes as part of the background to the Bill. I, too, quote Professor Macrory, who said that the Bill recognises that:

“The criminal law still has an important role to play in achieving regulatory compliance”.

With regard to a wider range of possible sanctions, Professor Macrory uses the phrase, “Evolving the sanctioning toolkits”. I am still trying to work out exactly what that means, but surely it should be welcomed by enforcement officers up and down the country, by enforcement agencies, and—I should say to the noble Baroness, Lady Wilcox—by consumer organisations and consumers. None of these regulations against trading malpractice is there for the sake of the regulators. The regulations are there for the sake of the consumers, and surely it cannot be correct that consumers are left out of consideration, given the clear purposes of the Bill for more effective enforcement.

Part 3 provides for fixed monetary penalties, variable monetary penalties, stop notices and compliance notices requiring certain actions to be taken. I have no doubt—I think I noticed this in the useful remarks by the noble Lord, Lord Razzall, on this matter—that Clauses 37 to 39 on the procedures for imposing fixed monetary penalties should receive the close attention of this House, bearing in mind the absence of any involvement of the courts unless there are limited so-called judicial-review grounds of challenge. We all know in this House, whether we are lawyers or not, that the normal requirement on a prosecutor for a criminal offence is that he proves to a court beyond reasonable doubt that the defendant has committed the offence. Under Clause 37, the requirement on a regulator before imposing a fixed monetary penalty is merely that he satisfies himself. He does not have to satisfy any external body, court or otherwise; he merely has to satisfy himself beyond reasonable doubt that the offence has been committed.

I have always understood that one of the grumbles about regulation made by major retail companies—I am delighted that the speaker following immediately after me is the noble Lord, Lord Sainsbury of Preston Candover, who will surely mention his own great retail concern—with outlets in many different parts of the country has been that, with enforcement in the hands of local authorities in hundreds of different local areas, there may be a high degree of inconsistency in enforcement between one local authority and another. Major supermarkets often complained to the Office of Fair Trading when I was there that enforcement was tough in one area and lax in another, and that conflicting advice about what was permissible under the law was given by local authority offices in different areas.

Thirty years ago—I mention the number of years because it is quite a long-standing practice now—local authorities sought to respond to that complaint through adopting the home authority principle, so that the local authority where the headquarters of the business concerned was located would be the enforcement authority wherever the alleged offence took place. That has worked well to a surprising degree, but the location of a company’s headquarters is often incidental to the company’s principal geographical areas of operational activity.

The Government’s plans in the Bill for the establishment of the Local Better Regulation Office with statutory powers to promote greater consistency between local authority enforcement are very important. They provide for considerable oversight and surveillance—words which I think are broad enough to cover what is being required—over local authority departments, for the need for this new office to consult with trade bodies, such as the Trading Standards Institute and the Chartered Institute of Environmental Health, and for working together with national regulators, such as the Environment Agency—about which, no doubt, the noble Baroness, Lady Young of Old Scone, will talk—the Food Standards Agency and the Office of Fair Trading.

Clauses 23 to 28 carry forward the idea of the home authority principle, but with greater flexibility, by enabling the LBRO to nominate a local authority as the primary authority for the exercise of particular regulatory functions. The primary authority idea is surely a natural successor to the home authority principle, and puts it on a statutory basis. I have noted the concerns of the Local Government Association that it reduces local authority autonomy. I cannot deny that it does. If a body is supervising and has different views from a local authority determination, of course it interferes with its authority. The case for reducing local authority autonomy, based on the working of the home authority principle over 30 years, is made out by the Government’s Bill.

I am doubtful about Part 4, which is quite short and looks as though it has been tagged on. Perhaps I may say to my noble friend that it smacks more of old-fashioned CBI rhetoric from the 1980s than carefully drafted legislative policy. Anyone exercising a regulatory function must ensure that he does not impose an “unnecessary” burden. Do we think that we know what “unnecessary” means? The provision applies only if the Minister has by order applied it to a regulatory function, but I looked in vain for an interpretation clause which might define “unnecessary”.

It is not surprising that a responsible body such as the Food Standards Agency should say of Part 4 that it could limit a regulator’s ability to protect the public. Once more, I say to the noble Baroness, Lady Wilcox, that whether consumers get enough specific mention is a moot point. But, ultimately, the intentions are that the consumer should benefit throughout. The greater powers of the LBRO, the co-ordination of local authority regulators and so on, has got that end in mind. Because of that, I support most of the Bill and, therefore, commend it.

My Lords, reducing the regulatory burden has been the declared objective of Governments past and present for many years, but despite those good intentions—reiterated by the Minister today—year after year, we have witnessed the opposite, an ever increasing burden. Whether it be from Brussels or Whitehall, the number of regulations increases. Regulations imposed over the past 10 years are said to have cost business more than £50 billion. That is the background we should have in mind when hearing the welcome news about the savings to which the Minister referred in his speech.

How often are regulations cut, amended, simplified or brought up to date to reflect changing needs or to make them less bureaucratic and perhaps more effective? To state the obvious, we live in fast-changing times. Many of the regulations established, say, 20 years ago may well be inappropriate or obsolete today. They may need to be cut or amended to be effective. In other words, in one way or another, a great number must be out of date, and indeed some must be unnecessary. Successive Governments have failed to give regulations sunset clauses, giving them a limited life that would require them to be reviewed and reconsidered after a stated period. That is what I believe is needed and would better serve the interests of those whom regulations are designed to protect, be they consumers, employees or ordinary citizens.

The Bill before us has some worthy objectives. They are based on Philip Hampton’s report, a very good report given that his brief was concerned only with regulatory inspections and regulatory enforcement. However, I suggest that what is needed is not only more sensible, more proportionate and—as Hampton advocates—more risk-based enforcement, but a far more risk-based, effective, smaller, up-to-date regulatory regime.

There is, inevitably of course, a vested interest in most regulatory bodies to have more and not fewer regulations to enforce. Their jobs are then bigger and the rewards greater. There is also in the world of Whitehall a reluctance to take on the task of reducing, modernising, amending or cutting unnecessary regulation. There are not many rewards for doing that, as I personally found when in 1993 I was advising the Government on deregulation. Far more attractive and popular with Ministers, it seems, is to devise or gold-plate a new regulation.

So, I have to say that this Bill is a missed opportunity, concerned only with enforcement. The Minister proposing it has extensive experience on how the commercial and industrial world is overregulated. He surely knows better than most how fast the business world is changing, and therefore how great the need is to keep the regulatory regime up to date so that it can be effective in the protection it offers while minimising the burden that puts up costs and reduces our country’s competitiveness. Is it not possible for the Bill to be amended so as to give the Local Better Regulation Office an added duty to recommend to government the reform of regulation that it believes would be in the public interest, leading to fewer regulations without loss of the needed protection of the public? Sometimes that would involve the amendment, simplification or removal of regulations that were no longer needed for public protection. It is, I admit, better to have bad unnecessary regulations not enforced—or what is now called “a light touch”, as is intended in the Bill—than to have their unnecessary inspection and enforcement. But surely much better than that is to have the regulations themselves removed or amended. I suggest that the Local Better Regulation Office will be well placed to be an agent of reform, making a contribution to easing the burden of regulation by recommending to the Government and Parliament changes or the removal of regulations—and the Minister is very well placed to judge the value of such reform.

My Lords, the noble Baroness, Lady Wilcox, and the noble Viscount, Lord Colville, have done a fairly effective hatchet job on Parts 1 and 2 of the Bill; I shall try to do a hatchet job on Parts 3 and 4. I speak as one of the big five regulators, as chief executive of the Environment Agency. I have also led a smaller regulator and have been involved in a range of businesses that have for their part been regulated. I hope that my track record speaks for itself in that I have helped champion the cause of better regulation in this country for almost 10 years.

I was dead keen on the Bill when I first saw it because Philip Hampton did a very good job in his report and Richard Macrory did excellent work in devising a much more flexible range of penalties. Indeed, we were anxious to get the legislation through as quickly as possible so that we could get our hands on these penalties because, along with business, I believed they would be much more flexible and apt. Many businesses get seriously fed up of waiting considerable periods of time to be prosecuted for an offence that they know they have committed. It is a fair cop and they simply want the penalty to be applied and to move on to a better performance level. They would like these faster, more flexible, penalties.

It was all looking rather splendid until we received the greater detail of the Bill following consultation. There it was clear that the Bill had been considerably hijacked. In fact, the hurdles that are now in the Bill—I am referring to Part 3 on access to the new flexible penalties—are so high that they are almost unscaleable. First, regulators have got to be Hampton-compliant. We all want to be Hampton-compliant, so I am sure that is not a hard job. But they then have to get their sponsor body to agree that they should have access to the penalties; they have got to get cross-government departmental approval; the matter has to go to consultation and, if there is any significant change in what has been proposed, it has got to go to reconsultation. To be frank, at the end of all that one might well lose one’s will to live.

If one does get access to the penalties there is then a process of implementation. This will be no small job. Staff throughout organisations, particularly the larger organisations—and, indeed, in local authorities, where there are many of them—will need retraining. It will be a big job resetting procedures and bedding this in so that the penalties are used effectively and properly in line with the guidance that is going to be issued with the Bill, and in line with the Hampton principles. Alas, at three years there will be a review of how the regulator has operated those penalties. I suspect that at the end of the first three years it will be unlikely that most regulators will have fully bedded-in the implementation of these penalties because they are very complicated and will take some time to settle. At that point, if more than one example of falling from grace is given—although I gather that the guidance that has recently been issued with the Bill makes this slightly less severe—you could find as a regulator that you are having the penalties removed from you as a mechanism you can use. It is like the Grand Old Duke of York: you march your men up to the top of the hill and then you march them back down again.

There are other problems with the penalties regime. I was interested to hear that the CBI and the British Retail Consortium were not keen on the costs that can be raised for some of the penalties. Certainly the regulators’ anxieties are that if costs cannot be raised for the fixed monetary penalties or for the enforcement undertakings, it simply will not be financially worth while for them to apply those penalties because they will not be refunded for their work in doing that. Generally speaking, I would not be alone among the major regulators in saying that the range of bureaucratic controls that have now been put around access to those penalties are so large that, frankly, I doubt whether many of us are going to rush to apply for them. That is a shame because Richard Macrory’s propositions were good ones and would make a major contribution to better, more risk-based, more proportionate, more light-touch and faster regulation for many businesses in this country.

Part 4 is a late player in the game. It was not in the Bill when the first consultation went out, so it has not had the benefit of the 12-week consultation before anything came into being that the Minister boasted of as being so admirable. That was not the case with Part 4 with regard to how it impacts on the regulators. For me it was not, as the noble Baroness, Lady Wilcox, said, like “Yes Minister”. I found that Part 4 was more like Alice Through the Looking-Glass. It is what I would call the nuclear option. Basically it says that if regulators are so naff that they are deemed to be failing, they will be put in special measures. They will then have to demonstrate on a continuous basis that all the regulations they apply do not involve unnecessary burdens. I do not want to quote from the Environment Agency because I am speaking here in my rounded right as having come from a range of backgrounds, but in the case of that agency it would mean reviewing 160 regulatory regimes on an annual basis and trying to prove a negative—that is, no unnecessary burdens—in the absence of any definition, as the noble Lord, Lord Borrie, said, of what is defined as “unnecessary” or any indication of who will define it.

Then there is the whole issue of how the nuclear option in Part 4 will be applied. The process is tortuous and overengineered in the extreme. If it was deemed that the regulator was failing and needed to be put into special measures, there would be wide consultation with a huge variety of commentators—half a page of the guidance accompanying the Bill consists of a list of the people who would have to be asked. It would then go to the Panel for Regulatory Accountability. I cannot remember if that panel is still chaired by the Prime Minister, but it used to be. There would then be a statutory instrument, which would come through your Lordships’ House by affirmative resolution, simply to say to a failing regulator that it was no good and it had to look at its unnecessary burdens. To be frank, were I the chairman or the chief executive of an organisation that had got that far, I would probably have got the hint that I was not going to be in my job for much longer. Indeed, were I the Minister responsible for a regulator that had got that bad and had to have that panoply of measures applied to it in order to put it into failing status, I might have had a quiet word with the chief executive and the chairman of that body long before we went through the rigmarole outlined for Part 4 in both the Bill and the guidance. Part 4 is very, very silly law.

Apart from that, we must think about some of the bureaucratic controls that have been introduced since the consultation on the Bill, taking it from being quite a good Bill to being rather a bad one. I was pleased to hear the noble Baroness, Lady Wilcox, say that perhaps this indicates that we are losing sight of what regulation is for. Regulation is there to deliver social and environmental benefits, as well as to help promote business. A couple of days ago the Prime Minister himself helped to launch a report which said that high environmental standards and a loud, long and legal proclaiming of the framework within which businesses needed to deliver for those environmental standards were fundamental to helping to create investment in environmental technologies and to create global markets. There is a great deal of evidence globally that high standards for a variety of outcomes, social and environmental, help to drive innovation, reduce risk, create markets, and are good for business. The report of the innovation unit in BERR, when it was known as the DTI, confirmed that.

We should pause and think about why all the regulators who have worked their socks off for the past few years to implement better regulation, reduce regulatory burdens, streamline regulation and do many of the things that the noble Lord, Lord Sainsbury, was keen to see have all of a sudden become mad, starey-eyed, bad and dangerous to know, lusting to stamp on the neck of British business and therefore having to be kept firmly under control.

This would have been good legislation had we not, alas, overengineered it and made it excessively bureaucratic. It certainly does not represent better regulation of the regulators; it represents rather poor regulation of the regulators. I hope that your Lordships will treat it thus in Committee.

My Lords, I am concerned about the impact of the Bill on small businesses. I have not spoken about them for some years because I have been engaged in other matters of one kind or another. However, I have been a strong supporter of small businesses for all my political life and before it—before even the Bolton committee report was written. I also struggled with improving and diminishing regulations as a Minister in several guises.

Small businesses are essential to the functioning of the economy, both new small businesses which grow into great ones, as some do—we have plenty of examples of that in this House—and those continuing businesses which will always remain small, but which have found their niche. Small businesses give freedom for the proprietors and choice for their customers—after all, if they are not liked by the customers, they fail and that is that.

The bane of the life of any small business is regulations. We all know that regulations are necessary and important for the protection of the public and consumers—that case has been made today—but it is the total amount of regulations and regulators and their complexity that cause the problems. I do not take the extreme view of regulators that the noble Baroness just expressed, but the number and complexity of regulations create great difficulties for small firms. Regulation for large firms takes up the time of specialists. They may be accountants like me; they may be health and safety or human resources specialists and so on—it is another overhead that the large business has to carry. For small firms, however, regulations take up the time of the boss, who after all is the dynamo of the business.

We used to have a deregulation taskforce, but the Government turned it into a Better Regulation Task Force. Their priority changed from trying to reduce the total burden of regulations to trying to make them easier to live with. Better regulation is highly desirable, but it is second best to deregulation. For that reason, I welcome Part 4. I realise that it is a late addition. Like the noble Baroness, I wondered whether it had been made by the noble Lord, Lord Jones. It is potentially the most important part of the Bill, and I shall as a result look carefully at the efforts of the noble Lord, Lord Borrie, and the noble Baroness, Lady Young, to modify it should they set about that process.

The Minister knows the effect of undue regulation on business. As has already been pointed out, he used to argue about it in his previous guise as the bosses’ nark and before he became a member of a bossy Government instead. The Labour Party, too, knows that people worry about overregulation, which is why it has made promises in its manifestos over the years—as we all have. But then each year we have many more regulations than cancelled regulations, and far more elaborate ones. We have new regulations at about the rate of 14 every working day. The British Chambers of Commerce has an excellent “burdens barometer”, which estimated the cost of regulations to business as more than £55 billion since 1997. I believe that that was the figure to which my noble friend just referred.

With that background, what does the Bill seek to achieve? More importantly, what will be the unintended consequences of this legislation, which are often more powerful than the intended consequences? Its primary purpose is to help regulators to regulate and to help to help central government regulators to regulate local government in their regulatory functions. That is what it does. Part 2 in particular is intended to make it easier for big businesses to comply with local authority regulations by letting them choose which local authority will regulate all their premises. That has already been discussed this afternoon.

I am not sure how this will work out in practice. A large chain of centrally owned sandwich bars—and I read in the Bill that they must be centrally owned; I do not think that the provision will apply to franchises, which a lot of those operations are, as they are individual businesses rather than centrally owned—may have hundreds of outlets in the UK. Presumably it will sit down in headquarters and work out which local authority it regards as the easiest to work with and then try to get that local authority established as its primary authority. Then all its sandwich bars all over the country will be regulated in effect by that one authority, which may be in a distant part of the country. I do not think that the LBRO will want to designate only London authorities; it will designate them to ensure a neat pattern all over the country. On the other hand, a local sandwich bar with only one or two outlets will have no such choice. Its regulator, by definition regarded as more difficult to deal with by the big boys, will be in sole charge. Similarly, local independent convenience shops will not have the advantages of the new small shops that the supermarkets are setting up in various places. The Federation of Small Businesses has made those points.

There is also the position of the citizen. I agree with those who have said that we must always think of the consumers in these matters. Many high streets and industrial estates will before long have a variety of different local authority regulators covering the same aspects of the various businesses along the high street or in the estate, particularly as each high street now contains a similar menu to some degree of national chain shops. The citizen may complain to the town hall about something or other, and the town hall will reply that it regulates only the locally owned shops and that is what it is responsible for. The nationals are regulated by other authorities over the country, miles away—authorities for which the citizen did not vote. The local authority will say that of course it is tougher, which is why the national chains have avoided it, and that it may argue with the primary authority but the primary authority can overrule the local authority and stop it enforcing regulations on national chains. However, the local authority will say that it can enforce the regulations on the small businesses and it will jolly well do so, to prove that it is a tough authority on the side of consumers. But as far as the branches of the national chains are concerned, the Pontius Pilate district council will wash its hands of responsibility. Meanwhile, the distant authority will collect more money and hire more regulators. I am concerned that, in practice, these clauses could work against small business of all kinds. I want to see how we can protect them.

Part 3 contains the enforcement power to fine businesses in private rather than in public in the courts—the parking-fine approach to regulation—and other ways of giving regulators more teeth. These, too, are in danger of hitting small businesses harder. For example, larger businesses will have greater opportunity when fined, for example, to appeal to the new tribunals, looking up the precedents and studying the annual reports about burdens, whereas small businesses are much less likely to be able to reach for their lawyers and advisers. I therefore believe that, in practice, appeals will come much more often and effectively from the larger companies. The noble Viscount, Lord Colville of Culross, gave an example of the delays in enforcement that might occur in cases involving a chain of outlets. By contrast, as I read the provision, enforcement of the Bill’s provisions on a small local business could, subject to the appeal provisions in the procedure set out by the noble Viscount, bite much more quickly or almost immediately.

As the Bill proceeds through Committee and its later stages my purpose will be to try to mitigate the biases which I have detected against small businesses. I think that these businesses deserve our protection and our thought.

My Lords, I, too, want to concentrate on Part 4. My noble friends Lord Borrie and Lady Young clearly thought that Part 4 was an add-on, and I agree. I want to address the issue of Part 4 in relation to the large economic regulators largely regulating monopolies. The problem with which I have to start is that I am not sure which of the regulators are covered by Part 4, because Schedule 5 refers to Part 3. In passing I should say that Schedule 5 is an interesting list because it contains all the usual suspects except for Ofgem. Perhaps energy is unregulated in this respect, or has a different process, but there are many similarities between energy and railways, which I shall concentrate on. Perhaps my noble friend can explain not only what has happened to Ofgem but, even more importantly, which regulators are covered by Part 4—or is it any future regulator we can think of? I do not know.

I want to concentrate on the possibly unintended effects of the large economic industries and regulators, particularly those concerned with the railways. I declare an interest as chairman of the Rail Freight Group. We are talking here about what could be major confrontations between the regulators and the industries they regulate. These big industries have access to massive legal support and can run up enormous costs. On the whole, they do not like being regulated. The biggest case in recent years has been a little spat between the Directorate General for Competition and Microsoft, which must be one of the biggest monopolies in the world. The case has gone on and on, and I am happy when DG Competition wins. Perhaps one day I can have a computer that actually works rather than this awful Vista—the only system you can buy these days in a computer—which does not really work.

There are big battles not only with Microsoft but in energy and on the railways. Some noble Lords may have read the Commission's recent White Paper on energy. I was struck by a comparison made in the Financial Times, I think, between the energy regulatory regimes in the UK and in Germany. The Commission is basically trying to impose EU-wide the EU model, which separates the production and the distribution of energy. The article pointed out that although wholesale energy prices in the UK are 30 per cent higher than those in Germany, our retail prices are 30 per cent lower. The inference is that regulation here is much more effective than it is in Germany, where it tends to involve going to court with hundreds of lawyers and grinding the regulator down.

On the railways, there is a big concern that the provisions of Clause 68, the first clause in Part 4, could be used by the regulated industry to frustrate the work of the regulator, whose duty is set out in Section 4 of the Railways Act as amended. He is required to balance regulatory burdens and sanctions with the ability for persons to continue to plan their businesses with a reasonable degree of assurance. I have had a number of representations on this from the industry as well as from the regulator. The industry investing in the railways—and this applies to energy just as well—relies on the regulator to ensure that all parties are treated equally and fairly and is also treated thus by the regulated monopoly itself. The problem is that the Bill would allow a regulated industry which believes that its regulator is imposing or maintaining unnecessary burdens to go through this rigmarole of publishing a statement justifying this so-called problem. But the problem is that a burden to a regulated industry might be a lifeline to a new entrant or even to an established train operator. The difference, as the noble Lord, Lord Cope, will probably recognise, is that the big regulated industries have access to unlimited legal funds that can frustrate the regulator’s work.

Clause 69 is even more important as it allows Governments to do the same and effectively to interfere in the work of regulators. I remind noble Lords that independent regulators are the bedrock of ensuring efficient operation of the monopoly and encouraging private sector investment. The Office of Rail Regulation and energy regulators are, as I have said, particularly successful in that. Government interference in the independence of regulators will destroy the confidence of industry. I am afraid that, on the railways, Governments have a pretty poor record of trying to interfere with the regulator’s activities. The latest instance is the Crossrail Bill, which I believe will come to your Lordships' House in the new year. As currently drafted it contains 24 clauses that allow the Government to direct the regulator to do something if they do not like what the regulator would have recommended on his own. The power is to do with access to tracks, but I will not go into any detail on that now. That is interfering in the due process of the regulator’s activities. I believe that Clauses 68 and 69, in Part 4, will make it more rather than less easy for large economic regulators to do their job properly.

I have to ask the Minister why such provisions are included, if they are. Who asked for it? The noble Baroness mentioned the lack of consultation. I would just like to know who—be it the regulators or the companies regulated—has actually asked for this? Most of them seem to accept that the regulators need independence and the confidence that that brings. They do not want regulation that allows or even encourages the regulated industries or government to frustrate their work.

In conclusion, my noble friend said in his opening remarks that the burden of red tape killed enterprise. I suggest that Part 4, if enacted, would kill enterprise. These clauses are unnecessary in respect of major economic regulators, especially the railways. These regulators already have the powers and duties that allow them to do their work in regulating major monopoly companies. I expect, along with colleagues, to see whether we can make some changes in Committee to improve the Bill.

My Lords, one of the difficulties in any discussion about regulation is that it polarises those who believe that everything is bad and those who believe that regulation is the answer to every maiden's prayer. We have observed some examples of those extremes this afternoon, albeit expressed with great courtesy. The reality is that the least regulated countries are also the poorest and least healthy because, for example, there are no adequate regulations to ensure safe water or safe transport.

On the other hand, overregulation has always been a characteristic of totalitarian states, Stalin's Russia, Hitler’s Germany and Mao's China being three frightening examples. Regulation, like taxation, is the price that we pay for democracy and civilisation, and we need regulation to protect our citizens from harm inflicted on them by others, including the state—but also, in this complex modern world, to help citizens to understand their obligations towards each other and, for example, towards the environment.

I welcome the Minister’s balanced assessment of regulation in his opening speech, but I also view with suspicion Whitehall's capacity to measure the savings so substantially and precisely—where it gets a figure such as £124 million defeats me. Equally, I treat the British Chambers of Commerce’s off-the-cuff £80 billion with a pinch of salt. The Bill, therefore, must be judged on its capacity to improve the quality of existing regulation and enforcement and to root out overregulation and bad enforcement.

In this respect, it would be uncharacteristically modest of me not to refer to the five principles of good regulation that I helped to establish when I was chair of the Better Regulation Task Force—not the deregulation taskforce—a few years ago, and which are generally endorsed by both the UK Government and the European Union. They are accountability, proportionality, consistency, transparency and targeting. By and large, if those who create and enforce regulation adhere to those principles, they will achieve good regulation and good enforcement. At the same time, these principles will expose overregulation and bad enforcement.

The proposal in the Bill for a Local Better Regulation Office is a good one because most citizens experience regulation at local rather than national level, particularly through local authorities and their agencies. But I hope that this new quango is not just a creation of central government, following the usual flawed top-down approach. The local LBRO must also be empowered to challenge regulatory proposals from the Government before they are introduced, and be satisfied that such proposals are effective and necessary. Indeed, I hope that the LBRO spends at least as much time taking issue with the regulatory proposals from central government as it does improving the regulatory improvement and poor performance of local authorities. Will the Minister elaborate on that?

The Government are no doubt aware that in creating the LBRO they are setting up a new bureaucracy to add to existing bureaucracies—a long established Whitehall stunt. How independent will the LBRO be? Will the board have a strong element of outside members to prove its independence? The Bill intends to strengthen the primary authority principle. That certainly will be welcome to national businesses because they will need regulatory clearance only from one authority rather than 400. As the noble Lord, Lord Borrie, pointed out, the home authority principle has been in existence for 30 years and most businesses have found it a good one.

My worry, which is shared by the noble Lord, Lord Cope, is about regulatory burdens that have to be carried by small companies rather than large ones. They will have to go through the process at local authority level with all the problems there. Indeed, many large companies welcome regulation as a way of reducing the competitiveness of smaller businesses, because the cost of compliance is much higher for smaller businesses compared with large. It is important to make sure that this Bill does not increase the disadvantage suffered by SMEs and concentrates on improving the way that the 400 local authorities deal with regulatory issues for those small companies.

There is another serious problem for small businesses. Unfortunately, all the evidence suggests that when dangerous regulatory failures occur in, for example, the food industry, they are most likely to be traced to small rather than large businesses. That is because large businesses have more resources to train their staff and have a huge interest in maintaining the reputation of their brands. Smaller businesses often get into trouble because they do not understand their regulatory obligations. Will the Local Better Regulation Office help in tackling that problem?

The Bill intends to give regulators new sanctioning powers. Businesses will view that with some suspicion, but I am glad to read that regulators will no longer be allowed to retain for their own use fines that they recover from manufacturers. It has always seemed wrong that regulation should be a source of income, and therefore incentive, to enforcers. They should be allowed to cover their costs, but only that.

I notice that the regulator will be asked to tackle unnecessary burdens imposed in carrying out their functions. But is that not like asking McDonald's to ban hamburgers? This aspiration on unnecessary burden has been around even since the day of the noble Lord, Lord Sainsbury, but to little effect. The answer is for legislators not to create the unnecessary burdens in the first instance.

This Government have probably been the most prolific creators of new laws in the nation's history. Too often they have preferred to introduce new legislation rather than try to make existing legislation work better. Can we be sure that this legislation is absolutely necessary and that its effect will live up to their aspirations? If the Minister and the Government can justify the need for this Bill and demonstrate that the cause of better regulation will be enhanced and the excesses of overregulation reduced, I believe businesses will go along with it. But let me conclude by referring to the most important principle of better regulation—proportionality. I remind business and government that despite our many shortcomings, Britain is, according to the OECD, among the least and best regulated countries in the world, as the Minister said. There is no room for complacency, but businesses should not blame their competitive strategy shortfallings on regulation. Those shortfallings usually lie elsewhere and most are self-inflicted, rather than the fault of government.

My Lords, when I began my reading for this Bill I noticed what a pile of paper there was in the Printed Paper Office. I am all for wide consultation, but how many trees died in the cause of this Bill? I also wondered how one could oppose in principle a Bill that made provision for the,

“co-ordination of regulatory enforcement by local authorities”,


“for the reduction and removal of regulatory burdens”.

However, it all sounded strangely familiar. I had in mind that phrase that I think was coined by a football club manager—a sense of déjà vu all over again.

Then I remembered where I had heard it all before—in the Moses Room last Tuesday when we discussed and indeed approved, along with the noble Lord, Lord Bach, who I am delighted to see on the Front Bench, the Legislative and Regulatory Reform (Regulatory Functions) Order. This is drawn up under the Regulatory Reform Act and establishes a regulator’s compliance code—Hampton principles and all. Indeed, my sense of déjà vu was reinforced because large chunks of what the noble Lord, Lord Bach, said last Tuesday were completely interchangeable with what the Minister has been telling us this afternoon. Even the structure of the document is the same. The code covers a long list of authorities, bodies and statutes, UK and European regulations and so does the Bill. The Explanatory Note to the order could easily come from the Bill. It requires regulators to carry out their duties,

“in a way which is transparent, accountable, proportionate and consistent”.

These are not just pious words, because the measure imposes a duty on any person exercising a regulatory function to have regard to the code. It does the same where regulators are to exercise the,

“function of setting standards or giving general guidance”.

So my first question to the Minister is: apart from creating another layer of bureaucracy in Part 1 with a Local Better Regulation Office, and some civil sanctions in Part 3—which are either inaccessible, according to the noble Baroness, Lady Young of Old Scone, or inappropriate, according to the noble Viscount, Lord Colville of Culross—what is this Bill actually achieving, apart from duplicating what we already have? As a past Member of Parliament for Walsall, I regret only one thing about the noble Viscount’s remarks; namely, that it was Walsall where people were dying from eating pizza, but never mind.

The Minister has failed to understand the range of sanctions that exist. Why do we need more sanctions? Local authorities have sanctions. Last year the Government imposed—much to the Minister’s regret when in his previous incarnation—specific duties on directors of companies. Nobody has mentioned the enormous damage that occurs to one’s reputation from failure to comply with proper procedures. The Minister will know all too well that in business life the solution to a problem can quickly become part of the problem itself. I would like the Minister to explain why this Bill is necessary. Is it not just increasing the regulatory burden rather than reducing it?

My second point concerns costs. Paragraph 169 of the Explanatory Notes states:

“An impact assessment related to the provisions in the Bill has been completed. The Impact Assessment concludes that the Bill will have significant net benefits for business”.

Surprise, surprise. I accept that the regulatory impact assessment is drawn up in a much more professional way than has been the case hitherto, although the basis on which the assumptions are made can be argued about. However, when you look through it, you find that it is not to do with the Bill but with the code spoken to by the noble Lord, Lord Bach. That is where the benefits come from. Most of the regulatory impact assessment costs come from the Bill; the benefits come from the measure which the noble Lord, Lord Bach, so successfully took through the Moses Room last week. When it comes to trying to attribute benefits to this Bill, the Minister is on a wing and a prayer. The costs will be certain and will last for ever, and the benefits may or may not happen. I would like the Minister to explain why the code for regulators will not achieve the objectives without additional bureaucracy.

My third point concerns follow-up, and here I follow my noble friend Lord Sainsbury of Preston Candover and the noble Lord, Lord Razzall. There is no sunset clause, so we need a guarantee of scrutiny. The Merits of Statutory Instruments Committee said:

“We welcome the Code as a clear written expression of the ‘better regulation agenda’ in the context of regulatory activity, but it will be important that the Government monitor what it in practice achieves, not least in the face of competing legislative requirements”.

What applies to the code applies doubly to this legislation. I hope that the Minister will be able to reassure us about that when he winds up.

My fourth and final point concerns extent. I was very encouraged by paragraph 12 of the Explanatory Notes, which states:

“The Bill extends to England and Wales, Scotland and Northern Ireland”.

But when I turned over the page, I noted at paragraph 17:

“LBRO’s functions under Part 1 of the Bill do not apply in Scotland. Parts 2 to 4 apply in Scotland but only in respect of reserved matters”,

and paragraph 19 has the same proviso in respect of Northern Ireland. The noble Lord, Lord Bach, knows the point that I shall now make—that on page 47 of the Bill, Schedule 5, headed “Designated regulators” includes the Charity Commission for England and Wales. In his opening remarks the Minister referred to charities as being an area that needed to benefit from the Bill. Charity law is a devolved matter. In Scotland it is operated under Scottish regulations by the Office of the Scottish Charity Regulator. The Scottish Parliament is passing regulations, which are now being enforced by OSCR, and it is doing so without any co-ordination with the Charity Commission for England and Wales in London. So a national charity, operating UK-wide, will have to have regard to both sets of regulations. It will have to work to the most onerous if it does not wish to fall foul of the regulations in one country or the other. The Minister can talk about reduction and removal of the regulatory burden, but it will not happen in respect of companies or organisations that operate across the countries of the United Kingdom and do so in respect of devolved competence matters unless and until this Bill applies in Scotland—and according to Clause 54 it will not do so.

Next year there will be a Northern Ireland charities Act, so there will be an issue when that comes up. The Welsh Assembly is pressing for more powers in respect of charities based in Wales. I happen to know a bit about charities, having taken the then Charities Bill through this House, but I will wager the Minister a decent sum of money that if we went through this list of regulatory authorities we would have lots of examples of where the issue of devolved powers was set against what he is seeking to achieve in the Bill. Unless we can find a way to tackle this, it will essentially drive a coach and horses through a large element of what the Government have set out to achieve. Would it not have been better to start by achieving co-ordination with the devolved jurisdictions rather than all this LBRO guff, more sanctions and so on? Minimising the regulatory burden cannot be just an English concern. It must be a concern of all the countries in the United Kingdom. The Government have failed to take that issue forward properly.

When one reads the purposes of the Bill one is reassured, but, as one digs in, the doubts become greater. For example, it will not apply in Scotland or Northern Ireland. Why are further powers needed with regard to additionality? Doubts about the bureaucracy that will be created, the relevance of the RIA, the absence of any promised follow-up and sanctions lead to the suspicion that the Government may add to the problem of the regulatory burden rather than solving it.

My Lords, I welcome the opportunity to contribute to the Second Reading debate on this Bill and I am grateful to the Minister for his detailed explanation. I should declare my interests. I was for many years a member of the TUC General Council and a senior official in my own union, one of the founder unions of Unite. I understand that the TUC is broadly in favour of the principles behind the Bill, although it shares some of the reservations expressed by local authorities about the LBRO.

First, I wish to comment on regulation generally. Many regard it as a burden on business, and much of the discussion about it focuses on the implications for economic and business efficiency. Indeed, we have had many contributions on those lines this afternoon. Those issues are important, but I regard regulation somewhat differently. Of course, it should be as simple as possible and not too bureaucratic but I also see it as a means of protecting vulnerable people. It seems to me that it is absolutely essential in a free and unrestricted market. Protective legislation is necessary, as are sanctions to ensure that it is enforced. The sanctions must be sufficiently tough to act as an effective deterrent; they must not only punish employers who break the law and others who could harm employees but show that the Government are serious about tackling non-compliance. This afternoon, my noble friend the Minister explained in some detail the package of flexible sanctions, emphasising that they are different. We shall certainly look at them with great interest.

The TUC is concerned about penalties in the area of health and safety. In a way, this follows on from our debates in the previous Session on the Corporate Manslaughter and Corporate Homicide Bill. I and some of my noble friends were very much in favour of that Bill, but we thought that there should be provision for penalties with regard to senior executives who had perhaps been found responsible for the death of an employee. We wanted individuals to have to take responsibility. This was of course not acceptable at the time; the amendments that we tabled were rejected, as the Government said that that Bill was not intended to deal with individual responsibility but was about corporate responsibility. But some of us felt strongly about the issue of individual responsibility. We were, after all, talking about action or inaction that resulted in the death of an employee. I received a number of letters from families of individuals who had died in such circumstances; they were concerned about what they perceived as negligence on the part of management.

We were told at the time that individuals could be dealt with under health and safety at work legislation, although we pointed out that this did not appear to happen very often. We got the impression that the Government accepted the merits of our argument but believed that the corporate manslaughter Bill was not an appropriate vehicle. I ask now whether the Bill before us is an appropriate vehicle. The TUC is disappointed that the opportunity has not been taken to increase penalties for health and safety offences through this Bill. It believes that there is a general consensus that penalties in this area are not adequate and that the Bill is a suitable vehicle to take that proposal forward.

During the discussion on the corporate manslaughter Bill, we stressed that clear accountability of senior executives would ensure that adequate precautions were taken in future. As is well known, the level of industrial accidents is unacceptably high in certain industries. The construction industry has a bad reputation in this regard. Moreover, it is an industry in which there is a great deal of contract working, enabling employers to get away with lower standards. Immigrant workers, too, may not be aware of their rights regarding health and safety protection. In fact, immigrant workers are welcomed by some employers because, according to them, immigration deals with what they term “wage inflation”—a polite way of saying that you do not have to pay them as much. It is unlikely that employers with that sort of attitude will take health and safety obligations seriously. I am glad to say that my union is recruiting extensively among immigrant workers, which will ensure that they get full employment rights.

I hope that strengthening legislation and introducing penalties in this field will deal with some of these problems. In the mean time, I welcome the Bill. There will no doubt be further opportunities to explore some of these issues in Committee.

My Lords, I am a member of the Merits of Statutory Instruments Committee and the Delegated Powers Committee. The latter has not yet considered this Bill, so any views that I express on secondary legislation and the use of directions in the Bill are my own.

I will follow my noble friend Lord Hodgson by asking the fundamental question: why do we need this Bill and why do we need it now? The Minister, the noble Lord, Lord Jones of Birmingham, told us of his aspirations. I listened to his introduction and thought about how the Bill might work, but I came away thinking that there was a difference between impressions and reality. Obviously I had read the Bill wrong, as his description seemed to be strongly impressionistic. There was nothing about the secondary legislation, or very little; there was just a passing reference to the power of the LBRO to issue directions, but no comment either on their standing or on whether Parliament would have any chance of considering them.

That led me to think about my noble friend Lord Cope of Berkeley’s defence of small businesses and about the regulation story, which always seems to start in the same way. It starts with burdens and a plea for less regulation; it then slides from less regulation—which was the subject of an important report in 2005—into better regulation. The word “better” is subjective; what is better to some people is worse to others. A lot of effort was put in, particularly in 2005; we are told at the front of the Explanatory Notes to the Bill that Hampton and Macrory are the gurus who guide the Government. However, in Parts 1 and 2 we see the translation of the LBRO, which was formed as a company in May of this year, into a statutory corporation. I wondered whether that move by the Government could have been implied by either Hampton or Macrory, or both. Their themes were very much on the lines of co-operation, persuasion, data sharing between local authorities, data sharing between regulators and a targeted approach. They thought that any overarching body should be advisory, not executive. Indeed, the consultation appeared, as my noble friend Lady Wilcox said, to have been about an advisory and guidance body, not an executive agency or a statutory corporation. I think that Hampton and Macrory were looking for continuous improvement based on the present situation, which is not nearly as dire as the Government make it out to be. Improvement is going on, but, as many speakers have said, what is not going on is less regulation and there is no hope of there being less regulation.

Having decided that they did not think that the Hampton-Macrory approach was adequate, the Government went, as always, for centralisation and control. The regime proposed in the Bill is centralised and controlling—a top-down regime. The Local Better Regulation Office will have wide powers. Initially, it can use them to give guidance to local authorities, but, as the Minister hinted—at least, it was almost a hint—if the LBRO thinks either that the guidance is not quite adequate or that local authorities are not listening to it carefully enough, it can turn the guidance into directions. Local authorities must comply with directions. Here is an unelected body telling elected bodies that they must comply.

By then, however, the game is not the same, because under Clause 15 the Secretary of State has the right to give “general and specific directions”. Such directions are not subject to any parliamentary procedure, which leaves the Secretary of State able to change the rules of the game at any time he or she wishes. In effect, the LBRO is an executive arm of the department. It is not independent, as is proposed in the Bill, because of the directions clause. If the board of a non-departmental public body or a public corporation knows that at any time the Minister can change the rules of the game, that means that productive discussions do not take place between officials and members of the management of that body, because they can be made to do whatever the Secretary of State wants them to do. The best example of this to date is the relationship between the DCMS and the lottery funds and particularly between the DCMS and the Big Lottery Fund.

This structure whereby the Secretary of State has control and has only one body to which he has to give guidance and directions is of course convenient. It means that the Secretary of State does not have to talk to all the local authorities. That job is delegated to a single executive body. However, this creates a triangle because, as the Bill acknowledges in its reference to regulators in Parts 1 and 2, there is absolutely no doubt that the interests of the regulators are significantly affected, as well as the interests of the local authorities. Two’s company and three’s a crowd; it is certain that this system will not work very well and that it will create confusion. So, for today, to stay with Parts 1 and 2, it seems to me that the Local Better Regulation Office has powers that are too wide; it is dominated by the Secretary of State and it will cause confusion.

Many other provisions in the Bill also affect the constitutional boundaries that we are used to looking at. In this case, that is about giving more power to the Executive and therefore, by extension and particularly through the use of directions, less power to the legislature and certainly less power to bodies that are the subject of Acts of Parliament and have been set up to exercise their responsibilities without undue interference and with independence. There are many other matters in the Bill and I look forward to the Committee stage.

My Lords, I support the declared aims of the Bill, which the Minister described earlier in glowing terms. However, I wish to make a few general and specific points on the same theme as that raised by my noble friend Lady Turner of Camden.

No one, by definition, wants unnecessary regulation or regulation and enforcement which are out of all proportion to the outcome they are intended to achieve or to the act committed. The difficulty is that interpretations of what is meant by unnecessary and out of all proportion vary greatly, and there are differences of view about the extent to which regulation should apply only to economic and commercial issues and the extent to which it should also cover social and environmental objectives.

To some, measures such as the working time directive and statutory holiday entitlements represent unnecessary regulation, as does much health and safety legislation. Of course, if you are strong and powerful and used to being in charge, regulation can represent a threat to your ability or that of your organisation to do what you want when you want. If you are less strong and powerful—whether an employee, a consumer or a citizen—regulation can represent basic rights, protections and safeguards that could not realistically be secured through other means.

I hope that the new bodies, new range of sanctions, new procedures and new duties provided for in the Bill will not lead to the baby being thrown out with the bathwater when it comes to considering so-called unnecessary regulatory burdens. One person’s unnecessary regulatory burden may be another person’s basic rights and safeguards. What is regarded as a cost by one party may well be regarded as a significant benefit by another, whether it be through regulations protecting consumers, through health and safety regulation that leads to a reduction in fatalities to employees or through increased statutory holiday entitlements which benefit a large number of people.

Likewise, I hope that a declared aim of consistent and co-ordinated enforcement and a new expanded framework for regulatory sanctions does not, in reality, prove to be code for weaker enforcement and less effective sanctions across the broad range of regulators. I hope that my noble friend can give some reassurance on these points. It is, I know, a question of balance but, on the other hand, it is very easy to lose one’s balance.

I should like to make one or two more specific points related mainly to the potential impact of the Bill on health and safety. Concern has been expressed in some quarters about the ability of the Health and Safety Executive to maintain appropriate levels of investigation and enforcement in the light of recent job cuts. The number of fatal injuries at work rose in 2006-07 to 241 from 217 in 2005-06. The good intentions of this Bill will not be achieved if regulators, including the Health and Safety Executive, are not properly resourced. An internal HSE audit indicated that inspectors should be prosecuting in three times more cases than currently applies. In the light of the increase in fatalities in the past financial year and the findings of the internal HSE audit, do the Government believe that the Health and Safety Executive is properly resourced? What steps do they intend to take to ensure that regulators as a whole are properly resourced to carry out the duties and responsibilities placed upon them under the terms of the Bill?

The Bill also makes provision for fixed monetary penalties to be imposed by a regulator, apparently intended in respect of what are described as low-level instances of non-compliance. Can my noble friend say whether it is envisaged that this will apply in relation to health and safety issues where injury has been caused? In this area, one would have thought that financial penalties would need to take account of the circumstances of those injured, the health and safety breach, and the previous health and safety record of the employer.

Nor, I suggest, would it be desirable if low monetary penalties were used by a regulator as an easy option to avoid criminal prosecutions, particularly in the field of health and safety where significant injuries have been caused. Was consideration given to making monetary penalties proportionate to either a company’s annual turnover or its assets or both, as well as to the seriousness of the breach?

However, the bigger issue is the level of fines for breaches of health and safety law. According to HSE enforcement statistics, in 2005-06 the average penalty per conviction was £29,997. That figure included 13 fines in excess of £100,000, which, when removed, give an average of just £6,219. I believe the average fine levied by the Financial Services Authority, which does not deal with cases where people have been physically injured, was some two and a half times higher than the HSE quoted figure of £29,997.

The Macrory report on regulatory justice commented that the lack of an effective deterrent compromised the effectiveness of the regulatory relationship. It certainly does if some companies come to the conclusion that it is more expensive to implement effective health and safety policies than to pay the fines or incur other forms of sanction for any breach.

The Bill does not propose to increase penalties for health and safety offences, although a commitment to do so was, I believe, given in 2000. What is the current position on this score? In its draft response to the Bill, the Health and Safety Executive stated that it was working with the Department for Work and Pensions,

“to explore options to take forward the commitment to raise penalty levels”.

I wish the Bill well. I hope that its good intentions are realised and that they are not compromised by inadequate resourcing and by continuing inadequate, albeit broader-based, sanctions.

My Lords, I come fairly late to the issues covered by the Bill. This afternoon has been quite a seminar. I am not sure whether the Minister is still smiling—he is. I was going to start with the positive of recognising that the Bill has been preceded by a great deal of work; it has been long in gestation, and of course, consultation is a good thing; and the aim of reducing the regulatory burden without reducing or compromising standards is also good.

Like my noble friend Lord Razzall, I heard the repeated item on the “Today” programme about the burghers of Essex and the hamburgers. It also made something of the posh restaurants that were supplied, but I suppose in their case it was not burgers but steak Diane. Like some others today, I should have liked to see the regulatory equivalent of zero-based budgeting because it seems that we are putting on more layers. I refute the comment made by the noble Lord, Lord Haskins, who characterised those who comment on regulation as being either uncritical supporters or unquestioning opponents. Other noble Lords might say, “Well, I would say that, wouldn’t I, because I am a Liberal Democrat”.

Coming to the issue with what I hope is an open mind rather than a yawning chasm, and having read the Bill before reading any background material, the first notes that I made were “prescriptive” and “top-down”, which was a term used by the noble Viscount. The debate would have given me a number of additional, pretty uncomplimentary adjectives, particularly the attack by the noble Baroness, Lady Young. My remarks are particularly about Parts 1 and 2, and I hope that I will not sound overly defensive about local government. I suppose that I have form. The noble Lord, Lord Borrie, described it more politely as “past” in the case of other people’s experience in the business world; I have form in the local government world.

The burden on business seems to be reduced in part by increasing the regulatory burden on local authorities—a point made by the noble Viscount. We already have the LBRO company. I come—I was going to say fresh, but I am more truthfully well worn down—from the Local Government and Public Involvement in Health Bill, in which the Government were putting in place a legislative framework around arrangements that had already been made. It is fair to say that we all struggled with it, including the government side. I hope that the Minister can tell us why the Government pre-empted the legislation, what the company has done, what it will do before company No. 6237580 is dissolved and how successful that has been.

I looked at the website because some of the material gave the details. That told me that the LBRO is ready to listen and engage. It gave me a postal address and a phone number, and the information that the site was under construction and last updated in August 2005. If something has been going on that we ought to know about, I should be delighted to hear it.

Local government has long lived with the mantra, “economically, efficiently and effectively”, so being told, as the LBRO is tasked to tell it, to carry out its functions effectively is not new. I observe that all this coincides with attempts to reduce the targets and indicators that apply to local government. That is a lot of what we were doing not many months ago, so it is curious to find a Bill providing for an organisation that can direct local authorities to comply with guidance, given by it, or somebody else. The terms, “direct” and “guidance” do not lie easily together.

The LBRO—I started to write, “will be able to”, but in fact it must publish a list of matters to which local authorities should give priority when allocating resources in connection with regulatory functions. We have heard a great deal in the past few years in this Chamber about devolution, freedoms and flexibilities for local government, so can the Minister explain what efforts there have been to encourage or facilitate local government itself assessing its priorities? What weight will be given to the assessment of local priorities? I accept, of course, the needs of business for certainty, but do they outweigh almost to the point of elimination, as I read the Bill, local differences?

Local differences are not necessarily bad. Taken to its logical conclusion, uniformity in setting priorities for enforcement seems to be possibly another way of reducing standards that business has to achieve—the lowest common denominator. If it is necessary to prioritise, that suggests that the underlying issue is resources.

Other noble Lords will have heard from the Local Government Association, the Welsh Local Government Association and LACORS—the Local Authorities Co-ordinating Office on Regulatory Services—of their strong opposition to the LBRO imposing prescriptive controls. The primary authority principle, which would give businesses operating in more than one local authority the “right”—that is the term used—to a partnership agreement, has been commented on already. LACORS seems to have ideas for an alternative approach, which would be less bureaucratic and which I read as being a real attempt to compromise and not simply to restate the current position. No doubt we will explore that in Committee.

I do not dismiss the importance of consistency and certainty to business, but I do not believe that it automatically overrides the important characteristics of good, local, democratically based government—not administration of central government—which is necessarily varied.

The noble Baroness, Lady Turner, and the noble Lord, Lord Rosser, referred to health and safety provisions. I hope that we can pursue that in Committee. Health and safety is important. I felt that it was a real shame that the recent prosecution of the Metropolitan Police Service—obviously this is in connection with the events of 22 July 2005—was an inappropriate use of the legislation. That would have done an unfortunate amount to consolidate a lot of people’s disregard and disrespect for health and safety legislation. It does not have a very good name everywhere, which is a shame.

I have two further questions for now with regard to the LBRO. What experience and background do the Government expect LBRO board members to have? It will be fairly apparent that I am suggesting that some of that should be local. In particular, will the board include those who are able to put the local government perspective? What relationship, both formal and informal, will it have with the Audit Commission? There is quite a lot of scope for overlap, and possibly confusion about what is expected of local authorities by the different organisations that have a role in assessing them.

There is much in the Bill about who can direct whom, not least in relation to the Secretary of State’s powers. The noble Lord, Lord, Berkeley, referred to that. I am sure that it will make for an interesting Committee stage—interesting to the aficionados, anyway. There is a lot of interest in how the state is moving to the use of administrative tribunals and the application of some basic principles of justice. My noble friend Lord Razzall has already trailed that. I guess, too, that we may be looking at the objectives of the different categories of sanction. I was taken by the penalties principles in the Macrory review, one of which is that the aim of a sanction is to restore the harm caused by regulatory non-compliance—restorative justice, in other words. That is not something that I have been able easily to identify from the Bill.

The Minister is not smiling as much as he did when I started. I shall end for now by saying simply that the Bill is turning out to be much more interesting than I expected.

My Lords, I thank the Minister for introducing the Bill in such comprehensive detail, as I thank all noble Lords who have so ably and vigorously contributed to the debate we have just heard.

Her Majesty’s Government have frequently referred to the Bill during the consultation process, in their fashionable metaphor, as a “toolkit”. We are no doubt meant to see it as a series of spanners, screwdrivers and hammers for dismantling and reducing the burden of regulation. But, to my mind, it is a funny sort of toolkit, for it is without many tools: no spanners, no screwdrivers and only a few hammers. Even the noble Lord, Lord Borrie, while welcoming the toolkit, said that he was not sure what it meant.

The Bill may grandly pretend in its preamble to make provision, among other things, for,

“the reduction and removal of regulatory burdens”,

but the Local Better Regulation Office, the primary authority partnerships and the compliance code are all complex additions to the existing system of regulatory enforcement. As this debate has suggested, especially through the contributions of my noble friends Lord Sainsbury of Preston Candover, Lord Cope of Berkeley, Lord Hodgson and Lord Eccles, they are as likely to add burdens to the regulatory system as remove them.

As my noble friend Lady Wilcox has already commented, the Regulatory Enforcement and Sanctions Bill introduces much that is new: new bodies and new civil sanctions. Yet there is so little in the Bill that we come away from reading it with very little real information. We have no more idea, as my noble friend said, who will sit on the board of the Local Better Regulation Office, or, as the noble Lord, Lord Haskins, said, of its powers, than we do of how stringent the monetary penalties on regulatory offenders will be, or, as the noble Viscount, Lord Colville of Culross, said, exactly how the civil sanctions will work.

As the noble Lord, Lord Razzall, said, the Government have offered us a Bill whose effects will become truly visible to us only through secondary legislation, which may not in every case even require Parliament’s specific approval. Notwithstanding the comforting words of the Minister in opening the debate, last year Her Majesty’s Government passed into law an astonishing 55 Acts and 3,500 statutory instruments. My noble friends Lord Sainsbury and Lord Cope expressed their frustration with that.

I am pleased that the House is so carefully considering the Bill, because what can seem innocuous to the point of being vacant can be transformed into a nightmare at the hands of over-zealous regulators and drafters of secondary legislation. We on these Benches support, in general, the implementation of regulation by risk-based assessment. However, such an approach needs to be handled carefully, for there inevitably needs, at some level, to be a basic and unchanging law applicable to and understood by all. As the Bill itself is dependent on its interpretation, so is the enforcement heavily dependent on the regulators. It is for this reason that the Bill should include a requirement that no order to grant the powers under Sections 63 and 64 should be made unless there is independent verification that the relevant authority is observing this approach in principle and practice. We will look for amendments to achieve this. The Bill names one of its ostensible aims as “accountability”. We are committed to ensuring that this is given effect.

The Bill also suggests, as I read it, that if a monetary penalty is imposed on a business, that business can make written submissions only to the very regulator that intends to impose the penalty. That regulator thus becomes, as the noble Lord, Lord Razzall, said, policeman, judge, and jury. There is no chance to question the evidence or enter a plea and have the case heard by an independent person. If the regulator confirms the penalty, while an appeal is possible, it is an appeal by a person already convicted, so it is on the basis of the need to prove innocence, rather than of the accepted British custom of the need for the enforcer to prove guilt. That person or business is also deprived of its right to go to court to secure justice, the decision on whether to pursue this route being entirely in the hands of the enforcer. As the noble Lord, Lord Razzall, argued, this legal anomaly has a deeply prejudicial effect on small businesses. If accused of misconduct, they, unable or unwilling to pay the sizable costs of defending themselves in court, will find themselves being forced pay the imposed fine with no real option of contesting it. Is the Minister really content to let such a discriminatory appeals system be introduced into the regulatory arena?

My noble friend Lord Cope also focused his remarks on the effects of the Bill on small businesses and he expressed his grave concerns, with which I strongly agree, about the effect of over-regulation on them. The noble Lord, Lord Haskins, echoed those concerns. It goes wider, of course, than business. Today, Britain is regulation crazy. The noble Lord, Lord Razzall, had his teeth into rotten meat. In similar tone, the Sunday Telegraph last weekend reported the absurd but tragically representative story of a Britain bound in red tape. Hampshire teachers were to be barred from driving school minibuses unless they held a “passenger vehicle licence”, described by the county education officer as a “huge and expensive undertaking”. But, in barring teachers from driving minibuses, the overworked county education officer had failed to appreciate that the relevant EU directives specifically exempt teachers from the passenger vehicle licence requirement.

How can we expect the poor man to know every single regulation and directive if every year we pass into law more than 3,000 statutory instruments? This is one of many examples of how tangled has become the web of well intentioned regulation brought in during this Government's tenure, some of it, but by no means all, originating from the European Union but then gold-plated—the noble Viscount, Lord Colville of Culross, spoke of this—which confuses and complicates the lives of those unfortunate enough to have to live and work within it. My noble friend Lady Wilcox pointed out that these include not only businesses but also consumers and, as my example shows, teachers, schoolchildren and just about everyone else. My noble friend Lord Hodgson pointed out some serious concerns about the Bill in respect of confusion regarding devolved powers. These will need to be dealt with.

That tangled web is the nub of the problem of our regulation, which is why so many of your Lordships were so interested to see the noble Lord, Lord Jones of Birmingham, that well known scourge of over-regulation, taking the Bill through the House—although he will have heard the scepticism towards some of his grander claims for the Bill and the strength of feeling, and not just from your Lordships today. We look to him to bring a new rigour to the subject, and the Bill in particular. I have some sympathy for him; he must be feeling rather battered, with hatchets being exercised vigorously from the Cross Benches, the Liberal Democrat Benches, these Benches and even an element of damning with faint praise from his own.

The Minister will also be aware that this House should be listened to—my noble friend Lady Wilcox referred to this. Indeed, the House pointed out so much that was wrong in the Regulatory Reform Act 2001, of which the Government took little notice only for them to admit that it had failed. They then introduced what became the Legislative and Regulatory Reform Act 2006 to replace it. So, as my noble friend Lord Sainsbury said, those hatchets need to be exercised.

In summary, the Bill claims fine intentions. It follows our long call to reduce the burden of enforcement and to acquire consistency in regulation. But I fear that it may in practice achieve the very opposite of its claimed aims—transparency, accountability, proportionality and consistency—and instead produce confusion. It could also, as the noble Baroness, Lady Young of Old Scone, and others have said, mean more bureaucracy and, as my noble friend Lord Hodgson said, cost. I can but hope that sensible amendments make it workable.

My Lords, I am grateful for a good and interesting debate. I have thoroughly enjoyed it. I intend to summarise the contents of the past few hours and if I miss a point or a question that was asked of me, I ask noble Lords to write, and I will come back.

Yes, we have too much regulation and yes, there are occasions of disproportionate regulation. The noble Lord, Lord De Mauley, referred to one or two of them. I just observe that the one that everybody refers to when they talk about a sledgehammer to crack a nut is the Dangerous Dogs Act, which happened on another Government’s watch.

I can assure the noble Baroness, Lady Wilcox, that the Bill will make a difference. It will have the power, and I welcome the scrutiny that she has promised on every freewheeling day in the next few months. The noble Baroness mentioned the Digby coffee shop chain; in Grimsby, they talk of nothing else. I am amazed that she chose a seaside town such as Grimsby, not a seaside town such as Plymouth, from where she comes. However, would it not be great if, after the implementation of the Bill, Plymouth, Grimsby or Kensington and Chelsea developed a reputation as local authorities that are good at working with businesses, charities and public sector organisations and are good at implementing better regulation? There will be important exemptions by order to the requirement to contact primary authorities. Those exemptions will be applied—they can be applied for and then applied—so that we do not get the Grimsby/Kensington and Chelsea problem.

The noble Baroness talked about cost recovery for the exercise of the primary authority. The British Retail Consortium welcomed that, but only if it is paying for quality. That is quite understandable. I am amazed that the noble Baroness should expect the costs incurred by a local authority—there is no profit involved, merely cost recovery—to be borne by it, which would probably lead to hikes in council tax, rather than be reimbursed by the business that is benefiting from the fact that this is being worked out in such a way. She asked how many regulations would go because of the Bill. The Bill is not about that aspect of the Government’s better regulation and, as many of my noble friends have mentioned, deregulation programme, but better enforcement itself will lead to fewer regulations in the long term and less cost in the short term. However, I welcome the offer of help from all parts of this House to make this work.

The noble Lord, Lord Razzall, at least had the decency to say that this was never going to be easy, but it is easy to carp. At least the Government are doing something about an issue that has blighted so many operational aspects of our society for so long. Everybody goes on about business, but charities also suffer, and have noble Lords tried running a hospital, school or prison lately? Government is about having consultations and then making a decision in the light of them. That does not make everybody happy, but implementation is the key, and that is what we should be judged on. There is a duty on the Minister to conduct a review of any order three years after its implementation, which is a start, and a regulator will not be judge and jury because there will be an appeal to an independent tribunal. The noble Lord mentioned that my former colleagues in the CBI have come out against many aspects of the Bill, but I remind him that the CBI was wrong about the minimum wage way before I arrived, and it is wrong about the Bill way after I have gone.

The noble Viscount, Lord Colville, referred to a pizza parlour in Dudley, which is presumably near Culross. Whether the primary authority is Dudley or Walsall is important, and we have to ensure that the regulatory environment is clear, transparent, well understood and very speedy in implantation. However, no amount of regulation will ever stop every rogue pizza parlour doing something wrong. The key is what happens when that happens. In that, to concentrate on the 0.1 per cent of businesses that might get it wrong and bring all legislation to bear in the light of that 0.1 per cent, thus removing the opportunity to make life so much easier for 99.9 per cent of businesses, charities and public sector organisations, is not what government is about.

I assure the noble Lord, Lord Cope, that small business is at the heart of what we are trying to achieve. He referred to the British Chambers of Commerce’s assessment of the costs of regulation. It said that it is £55 million, but that includes the amount that people had to pay to comply with the minimum wage. It is not just the red-tape costs. The role of regulation in British society is different from what has to be paid to get there. The British Chambers of Commerce did not make that distinction.

My noble friend Lord Borrie heard the mention of Dudley and Walsall with interest because when I was just starting out in the law in Birmingham, he was dean of the faculty of law at the University of Birmingham. I am delighted that he referred to the wider, better toolkit that is available, and I have to remind the noble Baroness, Lady Wilcox, that consumers will benefit from the wider, better toolkit, not necessarily businesses.

The noble Lord, Lord Sainsbury, pointed to the absence of sunset clauses in this legislation. It is not intended that there will be sunset clauses, but Part 1 allows for the dissolution of the LBRO when its objective has been achieved. Automatic dissolution is as near to sunset as you will get. Part 3 contains a review clause that compels the regulator three years after implementation to review the way that sanctions are being used and allows for the suspension of some of them in many cases.

The noble Lord, Lord Haskins, talked about the LBRO being another quango, but it is different from a quango in one way because I have never known a quango at its inception allow for its dissolution when its objective has been achieved.

The noble Baroness, Lady Young, said that she was attempting to conduct a hatchet job. I find that very sad because to come to a bona fide attempt to improve the regulatory environment with that type of prejudice will get us nowhere. But I guess that regulators will always do that in their stout defence of the status quo and, as somebody almost said many years ago, “She would say that, wouldn’t she?”. The noble Baroness also mentioned that this is “very, very silly law”. Businesses up and down the land, every day and every way, have to deal with the very, very silly laws of unintended consequences of environmental regulation that were never changed because the regulator can hide behind the very walls that the Bill aims to knock down despite predictable bleatings.

I welcome the input from my noble friend Lord Berkeley. He can be assured that small businesses will definitely benefit from better, predictable enforcement. In relation to the last part of the Bill, I read with interest the recent report of the Select Committee on Regulators on the UK’s economic regulators and its recommendations relating to the impact of their work on business, in particular how any unnecessary burdens arising from their crucial role might be kept to a minimum. We might have a particularly useful debate on how this part can most effectively give voice to what has come out of that report.

The noble Lord, Lord Hodgson, can be assured that nothing in the Bill affects duplication with the compliance code. There is no duplication; this is not another layer. Indeed, if anything, it is bottom-up, not top-down. That is why it is different; that is why I am so personally interested in it. It is responding to what business wants. We consulted all the organisations—the IoD, the FSB, the BRC, the EEF and the CBI—and did what they wanted from the bottom up. We have talked to regulators. We have talked to local authorities. We have even listened to central government officials as well.

The Bill creates a degree of independence and a degree of transparency, and brings experts into the field. My noble friend Lady Turner raised some very serious issues concerning liability for breach of health and safety legislation. I hope that the Bill will make that field a little clearer and easier to understand for those who justifiably find it difficult. I remind her and my noble friend Lord Rosser that although I hope that the Bill brings a better balance between consumers, regulators, business and other organisations in the public sector, it does not remove exposure to criminal prosecution. That remains—and importantly so.

I say to the noble Baroness, Lady Hamwee, and the noble Viscount, Lord Eccles: therein lies the rub. How do you achieve the maintenance of local, democratic connection and at the same time provide, in a society and commercial world that must be globally competitive or die, a degree of predictability—a level playing field across the land? I assure the noble Viscount that the LBRO fulfils Hampton’s clear recommendation for the creation of an executive consumer and trading standards agency. The body is smaller than he envisaged, but it has a rather wider scope, so we very much picked up that recommendation.

In my opening speech, I mentioned that the draft of the Bill, published in May, was accompanied by the first of the new impact assessments, trying to set an example that we trust will be followed everywhere. In our department, we will try to bring as much pressure to bear on all other departments to do the same. In concluding this debate, I think that noble Lords may be interested to hear of the benefits that we set out in that first impact assessment. We anticipate benefits to business of up to £100 million a year, net benefits to regulators and central government of £50 million a year, and the net benefit to local authorities of up to £5 million a year. That is a real gain to our society, whichever way you look at it. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Grand Committee.