Read a third time.
Clause 7 [Guidance to local authorities: enforcement]:
1: Clause 7, page 4, line 26, at beginning insert “Subject to subsection (1A),”
The noble Viscount said: My Lords, before introducing my amendment, I need to alert the House to a printing error. In the last line of Amendment No. 2, which is in this group, the figures “5” and “6” have been transposed. It should read “6(5)” and not “5(6)”. The Public Bill Office is aware of this printing error and I understand that it in no way precludes me from proceeding with moving my amendment.
My Lords, I shall certainly do that for my noble friend Lord Elton. There is a printing error on the Marshalled List. In the final line of Amendment No. 2, “section 5(6)” should read “section 6(5)”. The Public Bill Office has been alerted to this and I understand that I need do no more than draw it to the attention of the House.
My Lords, the purpose of my amendments is twofold: first, to look for clarification on the Government’s expectations which follow from the LBRO’s power to issue directions on its own behalf and on behalf of Clause 12 regulators; and, secondly, to set out a rule of engagement for the process leading up to a decision to direct or not to direct by including the period of one year between LBRO publication and direction.
As background, two arguments have been made by the Government for this LBRO power. The first is that it has been done before in Chapter 16 of the Food Act. It is true that the Food Standards Agency has the power to issue directions to local authorities about the implementation of food law. The 400-page code-of-practice documents are all about how to apply EU and domestic food law—not about guidance LBRO style. No direction has yet been issued and none is expected, despite the frequent enforcement of law. Law is often enforced, but guidance, in this way, has never been before. Secondly, the Government have said that others want them to introduce this power of enforcement. One in five said something along those lines during consultation; four in five said, “No, thank you”; so the one in five is winning the day—some consultation.
The Bill is the Government’s responsibility—not the responsibility of others—and so my first question is: what do the Government expect to happen under Clause 7 as it relates to Clauses 5, 6 and 11? How will the LBRO be expected to progress from its objectives, guidance and priorities to enforcement? In asking those questions, I rely on the assurances given that directions are a reserve power, which will be in prospect only when there is identifiable recalcitrance and/or a persistent disregard of guidance. Recalcitrance and disregard are clearly against the public interest. May we be assured that that definition is in all essentials correct?
Perhaps I may say a few words about recalcitrance. It does not seem likely that just one authority will stick it out when 399 agree. It seems much more like that when and if recalcitrance is encountered it will be by a group of local authorities—safety in numbers. My amendment sets a period of a year as the time between the LBRO publishing guidance and the enforcement of that guidance by direction. It thus deals with Clause 7(1)(a) and Clause 6(5). It does not deal with Clause 7(1)(b). I shall explain why.
Clause 7(1)(b) reads:
“(1) LBRO may at any time, … direct one or more local authorities … to comply with— …
“(b) any guidance given under an enactment by another person which relates to the exercise of a relevant function”.
Therefore, Clause 7(1)(b) refers to regulators. It is that subsection which so exercises the Delegated Powers and Regulatory Reform Committee. It involves many parties: the local authorities concerned, the relevant regulator seeking enforcement, the LBRO, the Secretary of State and such others as the LBRO considers appropriate—LACORS or the Cabinet Office, for example. Is there a demand from Clause 12 regulators for enforcement action to be taken by the LBRO because they do not have the relevant powers in existing legislation? If there is a demand, what is it? How detailed have discussions been to date between regulators and the LBRO? Of course, if there is no demand, so much the better.
One example of Clause 7(1)(b) in operation might be as follows. Let us suppose that the Food Standards Agency goes, as it could, to the LBRO and, considering it to be the appropriate body, asks that it issues a direction under Section 40 of the Food Act 1984 to 20 local authorities. Then the LBRO will look for evidence of recalcitrance and/or persistent disregard on their part. Consultation and negotiation will take place and 10 local authorities may satisfy the LBRO that they are back in line, and 10 not so. Indeed, these 10 may be preparing legal action because of the legislative nature of the Food Standards Agency using the LBRO powers as a supplement to its own. Meanwhile, the Secretary of State is preparing an order which needs a 12-week consultation period and to follow the 21-day rule for parliamentary scrutiny. Due diligence and reasonableness is required of one and all. From past experience of being the chief executive of one non-departmental public body and the chairman of another, this hopelessly wasteful and bureaucratic exercise about guidance is bound to take at least a year; the multitude of variables will ensure it.
We do at least have track records for the regulators. The position with the LBRO’s own guidance is very different. It has, as yet, produced no drafts of guidance. Consulting the LBRO’s website is not much help. A 21-page strategy paper went out to stakeholders in November; its comments on guidance were very general. Answers were due on 14 March. The website was last updated on 12 February. What has been the stakeholders’ response? As yet, we know very little about the LBRO’s intentions, but we know that it is to be a small organisation which leads us to speculate about what its priorities will be. What will its guidance policy be? I suspect that the arrangements set out for primary authorities in Clauses 24 and 25 will be an LBRO priority, which will itself be a large, nation-wide task. As to its duty to set priorities for local authorities, included in Clause 11, I expect that it will follow Rogers.
However, what do the Government expect its work programme priorities to be when matching resources to its statutory duties? Where is guidance in all this? We have no idea how the LBRO will approach this task, or of how its consultations have gone to date. Will the LBRO go down the philosophical, readily disputable, route and try to define “transparency” for all 400 local authorities, set out to decide for all time how to calculate whether or not an unnecessary burden is being created and determine how to be sure that targeting leads only to necessary action? All are subjects for the prolonged discussion of differing views, rather than for “must comply”. Or will the LBRO go down another less complicated route? Will it determine its preferred allocation of local authority resources of regulation money and staff leading to solutions fit for all 400 and to local authority league tables of bureaucratic compliance? There are worrying hints of that mechanistic approach between the lines of the strategy document.
At one end of the guidance scale, it could be thought to be good public policy to bring a supposedly recalcitrant authority into line as quickly as possible by direction as a result of perceived disregard of Hampton to date. Is there such an authority to be used as example, as per Admiral Byng? At the other end of the scale, it could be good public policy if a direction were never issued—taking a leaf, so far, out of the Food Standards Agency’s book—instead, pursuing co-operation and continuous improvement, thus building public confidence in the achievement of better regulation while lessening burdens. What is the Government’s position? Is it that there are local authorities that need to be brought into line as quickly as possible or that a true measure of the LBRO’s success would be that no direction was ever issued? The Government have decided to give this untried temporary body the draconian, centralising and authoritarian power of direction. Surely a year to find out whether such a power should be used is only to be expected. It is realistic and should be accepted. I beg to move.
My Lords, I support the noble Viscount. He did not explain that the error in the amendment was not of his making. He is to be congratulated on his reticence. This is a modest amendment and makes a reasonable brake on the use of direction by the LBRO and, I suppose, the Secretary of State because they will have to work in tandem. My objection to the power of direction in Clause 7 is not just semantic. I have never been comfortable with the notion of a direction to comply with guidance—the underlying thought about a power of direction is a particular issue—because guidance should be something that one has regard to, but is not bound by. The noble Lord, Lord Borrie, objects to my criticism of the wording. The substantive point about the extent of the power of direction is important. We and the noble Viscount have had problems about it throughout the passage of the Bill. At Third Reading, the noble Viscount has quite properly not taken us back to the objection to the whole of the matter but is proposing a reasonable brake on the use of the power. He has built on what we have heard so far. I hope we can get some assurances from the Government on the use of the power. In principle, we support what the noble Viscount said.
My Lords, I apologise to the noble Baroness, Lady Hamwee, for making visible on my face that I disagree with what she said. It was partly because Clause 6 states:
“A local authority … must have regard to any guidance given to it under this section”.
That is an important part of Clause 6. Without a back-up or reserve power of some sort, as there is in Clause 7, it would be very odd. To avoid that oddness, it seems quite right that in Clause 7 the LBRO may direct a local authority to comply with guidance. As the noble Baroness herself said, the Government and the LBRO must work together—I think that that is a fair way of putting it—because of the provision in Clause 7 that:
“LBRO may not give a direction … without the consent of the Secretary of State”.
That is a useful safeguard for those who, like the noble Viscount, feel that we have here an untried body that might ride roughshod over local authorities.
I return to the basics of Clauses 6 and 7. The whole point of the Local Better Regulation Office is that it has some degree of surveillance over local authorities and can give guidance to them, especially in the use of their regulatory powers. That beneficial power is the basis of Part 1.
The noble Viscount is not being as root and branch in his opposition as he was at earlier stages. I am glad of that. Perhaps he accepts, as I think that he did in his speech today, that there might be such a thing as a recalcitrant local authority that does not comply, will not comply and is determined not to comply with the guidance offered by the Local Better Regulation Office. I oppose his amendment to delay the effect of any enforcement until a year has passed because, if the local authority is recalcitrant, it may be recalcitrant right from the word go. It may be determined from the word go not to comply with particular guidance. In those circumstances, what is the point of having a year’s delay before the LBRO can enforce the guidance that it thinks right to give? Imposing such a time limit would be an unfortunate hobbling of the new body and not at all beneficial to the public interest and the interest of the electorate in the local authority areas concerned.
My Lords, like the noble Baroness, Lady Hamwee, I support my noble friend Lord Eccles in his amendments to Clause 7 and the powers that it gives to the LBRO to issue guidance on behalf of the regulators. I share my noble friend’s nervousness over whether the LBRO should be given that considerable power, especially as there has been no adequate definition of what such guidance will entail. The need for a definition is even more pressing given that the LBRO has now been in existence for close to a year.
Will the Minister reassure the House on the few details demanded by my noble friend, details that are needed to ensure that the Bill works? What makes us on these Benches nervous is that the Bill proposes that what is only guidance can lead to enforcement. Is it not clear that such a premise changes the nature of guidance from being a nudge back in the right direction to becoming something that businesses fear as part and parcel of a draconian enforcement regime? To approach guidance in such a way is to blur the boundary between guidance and enforcement.
That leads me to ask: how much enforcement do the Government expect there to be? If guidance and enforcement become one and the same, will there be adequate checks to prevent draconian punishment of businesses? I very much hope that the Minister will offer us some concrete reassurance at this stage, as it is important that we all recognise that the best regulation is when businesses and regulators work in co-operation together.
My Lords, the House is grateful to the noble Viscount, Lord Eccles, for the concerns that he has expressed throughout our proceedings—at Second Reading and at various stages since then—about the power of direction in Clause 7. His amendments today would curtail significantly and in a new way the scope of the direction-giving provision.
There are some technical difficulties with the amendments. Although I will talk mainly about the substance of what the noble Viscount has argued, as that is what we have difficulty with, I will set out briefly what those technical difficulties are. We suspect, having heard the noble Viscount, that the amendments are intended to ensure that directions to comply with guidance may not be used until the guidance in question has been published for a year. However, the amendments would simply freeze the LBRO’s ability to give directions until the first anniversary of its very first set of guidance, whatever that might be and whatever it might affect.
Amendment No. 2 specifies that one year after guidance—any guidance—has been issued under Clause 6, specifically, to quote the amendment,
“since the publication of guidance under section 6(5)”,
the LBRO may start using its direction-giving power under Clause 7. We do not believe that that is what the noble Viscount intends, but we are afraid that it might be the effect of his amendment. We have looked at Clause 7(1) many times in this House. The subsection makes it clear that the LBRO may give directions to local authorities to comply either with its own guidelines issued under Clause 6 or with other relevant statutory guidance issued by another body.
The noble Viscount said a few minutes ago that he deliberately omitted Clause 7(1)(b) from the effect of his amendment—he is nodding. If he meant to refer to Clause 6 guidance—and of course he did—the amendment makes sense only if read as meaning the first guidance that the LBRO publishes under Clause 6. In effect, therefore, the countdown to the LBRO’s power of direction in Clause 7 would start on the day on which the LBRO publishes its first guidance under Clause 6. Once a year has elapsed after that event, the amendment would in practice have no further effect. There are therefore technical difficulties with the amendment.
Let me move on to the points of substance that the noble Viscount has raised. In Committee and on Report, I quoted—I do not intend to do so again today—many of our major stakeholders who fully support the clause and the necessity that the LBRO should have a power of direction. Those stakeholders include the CBI and, on the non-business side, the National Consumer Council and the Trading Standards Institute, which believe that this is an important backstop—I use that word advisedly—to ensure that the guidance has impact. If there is no backstop, what is the remedy if a local authority does not follow the guidance that is set?
We have also discussed the closest precedent for this provision: the powers conferred on the Food Standards Agency to give directions to a local authority requiring it to comply with its code of practice. The primary restriction on the Food Standards Agency’s power is that it should consult Ministers before exercising it. That is not the position in the Bill. When we introduced the Bill, the key restriction was that the LBRO’s exercise of the direction-making power—the Clause 7 power—required the consent of the Secretary of State. That goes further than our precedent, but we added two further safeguards in Committee and on Report.
First, we accepted in full the recommendations of the Delegated Powers and Regulatory Reform Committee of this House that, where directions apply to more than one local authority, parliamentary consent is needed by way of an order subject under Clause 7(4) to the negative procedure. Secondly, we have been persuaded by the case made by the noble Baroness, Lady Hamwee, that local authorities should be consulted before the LBRO uses this power. Noble Lords who have read the list of amendments will know that, shortly, a government amendment on this will be moved and, I hope, carried. I argue that those are significant concessions, which mean that the LBRO’s ability to issue directions will be subject to three important safeguards. The LBRO will need to pass a number of hurdles before it can issue directions under Clause 7.
Let us suppose that guidance has been issued but that it becomes clear, alas, that some local authorities have decided to ignore the guidance, which places the public at risk or places a significant burden on the regulated community. Under government Amendment No. 3, the LBRO will be required to consult the local authorities involved regarding its proposal that the authorities be directed to comply with the guidance. To meet its statutory duties, the LBRO will have to do so in a meaningful way and give the local authority the time and opportunity to respond. The next step will be that the LBRO must prepare a case for intervention to the Secretary of State. The LBRO must wait for the consent of the Secretary of State—consent that will certainly not be given lightly. Finally, if the directions apply to more than one local authority, orders will have to be drafted and approved by Parliament.
The point of going through that rigmarole is to show that the existing safeguards in the Bill simply will not allow the LBRO to issue a direction with undue haste unless there is a good reason for it to do so. We believe that the amendment is unnecessary, but we go on to argue—this is the kernel, the heart, of our case—that the amendment is unhelpful, for two main reasons. First, the power in Clause 7 is included to ensure that local authorities do not ignore the LBRO’s guidance in practice. Adding a year’s delay could simply give a year’s grace to those authorities that might seek wilfully to ignore guidance. To put it another way, it would preclude the LBRO from issuing directions even where a local authority was flagrantly disregarding guidance from the day of publication; the LBRO would be powerless to act for one year. In our view, that cannot be sensible.
Secondly, directions will not be used in trivial cases. If it makes sense for the directions to be applied, it will almost certainly make sense for them to be applied quickly. As we have seen, delay is inherent in any effective system of safeguards, but there is no justification for building delay into the system for its own sake. We have dwelt in some depth throughout our deliberations on a directions clause, which we believe is unusually well safeguarded. We have focused closely on the Food Standards Agency example, but noble Lords may be surprised to hear that the LBRO’s powers over local authorities fall well short of those exercised by comparable bodies in other respects.
I shall end by saying that we are grateful for the care with which the noble Viscount has scrutinised the Bill, but we believe that we need to get this very limited power—this backstop power with its many safeguards—into perspective. We do not want to see the LBRO directing local authorities as a matter of routine, but these are backstop powers and we have amply provided against misuse.
I have been asked a number of questions and I shall do my best to answer some of them. The noble Viscount asked about the LBRO. He said that it is untested and that we are giving it draconian powers. However, if the government amendment in the next group succeeds, there will be a review of the LBRO after three years. Noble Lords will recall that there were discussions about that on Report. The noble Viscount said that the FSA powers have never been used. The FSA has made it clear to, I think, the noble Viscount that, although the powers have not been used, they nevertheless provide,
“an important safeguard to ensure that consumers are protected through enforcement of food law”.
We hope that the LBRO’s powers will not need to be used, but that does not mean that the clause is unnecessary. The noble Viscount suggested that other guidance could include anything. Our answer to that is, no, it could include only statutory guidance relevant to the scope of the LBRO’s objectives. He also raised other issues, which I shall be happy to answer in writing in due course.
Perhaps I may summarise why we disagree with the noble Viscount on this issue. First, let us forget for the moment the technical aspect of his amendment, although we think that that is important. If his amendment were passed, it could give local authorities the impression that it is acceptable not to take any account of the guidance in the first year after publication. Secondly, the LBRO will use its power of direction only in serious cases. The levels of safeguard in place are testimony to that. If a case is serious, the LBRO may need to act urgently and, frankly, a year is too long. Thirdly, the power is surrounded with significant safeguards and already includes the requirement to have the consent of the Secretary of State. Lastly, the existing safeguards, including the one that we hope will be carried in the next group, mean that there will be a significant period between local authorities’ first exposure to the guidance and the LBRO’s ability to apply directions.
I have done my best to respond to the amendment tabled by the noble Viscount and I hope that, after he has considered what I have said, he will consider withdrawing it.
My Lords, the noble Lord, Lord Bach, and I occupy such different ground that it is difficult to know how we can meet in the middle. However, I am grateful to the noble Lord, Lord Borrie, for his persistence in scrutinising this aspect of the Bill.
First, no one is against the words “must have regard to”. I think that there is general agreement that that is a perfectly reasonable phrase to use in relation to guidance given by a body entrusted with the statutory duty of knowing how to achieve better regulation under Hampton principles and putting out guidance on how that is to be done. The contributions of the Minister and the noble Lord, Lord Borrie, would lead one to conclude that one could not test whether the local authority has had “regard to” the guidance. However, one can do that by going to court and asking whether or not the authority has given proper regard to the guidance and whether it has acted reasonably. According to the Minister and the noble Lord, Lord Borrie, one would assume that no such remedy was available. It is indeed the case that directions take a matter out of the purview of the courts, which is at the root of our worries about the provisions in this part of the Bill.
Secondly, no evidence has been produced to show that there is out there a recalcitrant local authority getting ready to thumb its nose at the LBRO. In fact, no evidence has been produced to show that any authority is now persistently disregarding Hampton, and the Hampton principles have been in existence for quite a while. Moreover, what constitutes persistent disregard? How do you judge such behaviour on the part of an authority and for how long does it have to go on? Is it for only a week? I have suggested a year. The break, as the noble Baroness, Lady Hamwee, pointed out—I am grateful for her contributions—and as my noble friend Lord De Mauley, said, is a modest one. It is not draconian, unlike directions. It offers time to pause for thought. Here I refer to my experience of non-departmental public bodies—I did not mention the then Monopolies and Mergers Commission, about which the noble Lord, Lord Borrie, knows a great deal. We did not get a great deal done between the OFT and the commission in a year, as I remember it. It usually took rather longer to come to a judgment about what was and was not in the public interest.
On the technical matters, luckily the Bill still has a long way to go. It is going to another place and, if there are technical problems, they can easily be put right, so that is not an argument against my amendment. I wish to test the opinion of the House.
3: Clause 7, page 4, line 39, at end insert—
“(za) the local authorities in England or Wales to whom the direction is to be given;”
The noble Lord said: My Lords, I shall speak also to Amendments Nos. 4, 5 and 6, all of which are government amendments which address a number of issues raised by noble Lords on Report.
We discussed the matter raised by Amendment No. 3 in our previous debate. The noble Baroness, Lady Hamwee, put forward an amendment on Report that would have required the LBRO to consult local authorities before the exercise of its power to give directions. We agreed that it was an important safeguard in the use of this power and took it away for consideration. We are pleased to say that Amendment No. 3 will give effect to it.
The noble Lord, Lord Cope, who has played a very active role on the Bill, argued in Committee and on Report that the LBRO should have a role in advising government on the development of regulations and legislation. We share his belief that much of the LBRO’s value as an adviser to government will come from its ability to help to shape legislation and regulations before they are enacted. Amendments Nos. 4 and 5 will make it absolutely clear that the LBRO will be able to do so when it is advising UK and Welsh Ministers respectively. We thank the noble Lord for having raised that issue with us.
Amendment No. 6 fulfils a commitment that we made on Report to provide for a statutory review of the LBRO three years after the Bill has effect. The amendment will require the Government to conduct a review into the extent to which the LBRO has met its objective and the extent to which it has functioned efficiently and effectively. The review must be published and laid before Parliament and the Welsh Assembly. I hope that there will be a general welcome for the amendment around the House. It will create a structure for an effective review of the way that the LBRO operates in practice, without the uncertainties that a sunset clause would have created for businesses and local authorities alike.
These are the last amendments to Parts 1 and 2 of the Bill. The Government thank noble Lords on all sides of the House for the part that they have played in improving Parts 1 and 2 in Committee and on Report. We hope that this penultimate set of government amendments will put the Bill into the best possible shape as it moves to the other place. I beg to move.
My Lords, I am glad to see Amendments Nos. 4 and 5 and grateful to the Minister for moving the amendment and for his remarks. He was sympathetic to amendments along these lines both in Committee and Report. I was not the first to put forward this point; the noble Lord, Lord Haskins, made it at Second Reading. He said, rightly, that this aspect of the LBRO’s work will be one of its most useful functions as time goes on. I also welcome the new clause in Amendment No. 6, as far as it goes. However, I have two questions with regard to that amendment.
The review, as the noble Lord, Lord Bach, said, must take place after a period of three years. Is that when it is expected that the LBRO will have achieved its objectives? The Minister will recall that at Second Reading the noble Lord, Lord Jones, who was then leading on the Bill, said that it would be wound up when it had achieved its objectives and implied that that would be in the not too distant future. Is three years the Government’s estimate for when that may happen? I was surprised by the remark at the time and have referred to it a number of times in the intervening period in our debates, without ever really getting a satisfactory answer.
Will the review include the functions under Part 2 as well as under Part 1? I have two reasons for a slight doubt on this point, which is why I would like the Minister to clear it up. First, subsection (3)(b) of the new clause refers specifically to the earlier parts of the Bill—to Part 1, effectively. Secondly, this is being inserted at the end of Part 1 and not Part 2. That made me wonder whether Part 2 was included. The Minister will know that I am rather cynical about the desirability of some aspects of Part 2. I do not want to develop the general argument again at Third Reading, but I am cynical about making compulsory what now takes place voluntarily by way of co-ordination, and about taking the powers away from local authorities and giving them to a quango. Will the functions of the LBRO under Part 2 also be encompassed in the review?
My Lords, I have a problem with Amendment No. 4, although no doubt it is my own folly in misunderstanding it. A clear distinction is drawn between subsections (1) and (2) of Clause 9. Subsection (2) says:
“LBRO must give advice or make proposals to a Minister… on the matters referred to in subsection (1) if requested to do so by that Minister”.
So it must follow—and it would be the natural reading of subsection (1)—that no request whatever has been made by any Minister of the Crown for advice. In that context, what does “proposed legislation” mean? Is it something that has been mentioned at a party conference? I took that example merely by way of illustration. Is it some document that has been passed to the LBRO? If it is the latter, it would seem to fall within the “if requested to do so” category. I may be making some foolish error, but I do not understand why this is being dealt with in this way or what “proposed legislation” means.
My Lords, it would be churlish of me not to thank the Minister and the Government for the first of the amendments in this group. It is always gratifying to be able to help the Government to work out what they are going to say by continuing to rabbit on for a moment or two—but it is also gratifying to see one’s small amendments appear in legislation.
My Lords, I am grateful for the welcome for these amendments and the contributions to them. I will do my best to respond to the points that have been made. I am not sure whether the noble Lord, Lord Cope, was speaking tongue in cheek, but he asked whether the period of three years before the review takes place was chosen because it was hoped that by that stage there would be no longer be a need for the LBRO and its services. I am an optimist, but I am not as optimistic as the noble Lord. I would be very pleased if there were no need for the LBRO after that time because everything was working perfectly, but I fear that we will need LBRO for longer than three years. I, too, remember the debate that we had on that in Grand Committee.
The noble Lord also asked about Part 2 being part of the review. I am happy to say that, in so far as the LBRO manages the primary authority scheme, the review will take into account and report on the effectiveness and efficiency with which it has administered the scheme. I hope that the noble Lord is satisfied with that answer.
On the contribution of the noble Lord, Lord Neill, I am advised that the,
“if requested to do so”,
by the Minister to be found in Clause 9(2), to which he referred, means any request for advice by a Minister formal, informal, written or spoken. In relation to the point about future legislation, we know when we see what legislative proposals are intended what future legislation may bring. In those circumstances, what the noble Lord, Lord Cope, asked for would be advised on. If I am wrong about that, I intend to write to the noble Lord with a rather fuller answer than I have been able to muster at this short notice.
My Lords, perhaps I may briefly interrupt to help either the Minister or the noble Lord, Lord Neill. The noble Lord, Lord Neill, asked, perhaps somewhat lightly, whether proposed legislation included something proposed at a party conference. In that context, I thought that proposed legislation meant something proposed by the Government in a fairly definite form such as a White Paper or draft legislation, and not something that the government party was thinking or something at an early stage of thought put forward by the party conference or by the Law Commission.
My Lords, not for the first time during the passage of the Bill my noble friend Lord Borrie has helped me out. Listening to what he had to say, I am fairly certain that that is what is intended here. If not, of course I will write to the noble Lord. I do not think that his example of something stated at a party conference quite fulfils the requirement here.
My Lords, that is still a little puzzling because it involves the LBRO going through White Papers and so forth to pick up anything where a contribution might be needed. If that is what is intended it would be nice if the Minister could spell that out.
On Question, amendment agreed to.
Clause 9 [Advice to Ministers of the Crown]:
4: Clause 9, page 5, line 19, after “legislation” insert “(or proposed legislation)”
On Question, amendment agreed to.
Clause 10 [Advice to Welsh Ministers]:
5: Clause 10, page 5, line 33, after “legislation” insert “(or proposed legislation)”
On Question, amendment agreed to.
6: Before Clause 17, insert the following new Clause—
“Review of LBRO
(1) The Secretary of State must in accordance with this section review LBRO’s discharge of its functions.
(2) The review must take place as soon as practicable after the end of the period of three years beginning with the day on which this section comes into force.
(3) The review must in particular consider—
(a) whether LBRO is discharging its functions effectively and efficiently, and(b) the extent to which LBRO, in discharging its functions under sections 6 to 10, has attained the objective in section 5.(4) In conducting a review under this section the Secretary of State must consult—
(a) the Welsh Ministers, and(b) such other persons as the Secretary of State considers appropriate.(5) The Secretary of State must publish the results of a review under this section.
(6) The Secretary of State must lay a copy of a review under this section before Parliament and the National Assembly for Wales.”
On Question, amendment agreed to.
Clause 35 [Power to make orders providing for civil sanctions]:
7: Clause 35, page 16, line 17, leave out paragraph (a)
The noble and learned Lord said: My Lords, I welcome the noble and learned Baroness the Attorney-General. I am very honoured that she should be here. I thank her and her noble friend Lady Vadera for their courtesy in seeing me on Friday. I hope to prove more persuasive today.
I move Amendment No. 7, which seeks to leave out Clause 35(1)(a), which provides for fixed monetary penalties, and speak to Amendment No. 8, which seeks to leave out Clause 38(1) on the same topic. I will also say a word about Amendment No. 9, which I cannot move for technical reasons but which would give regulators the power to impose variable monetary penalties of unlimited size. I have carefully left in the regulators’ power to make stop orders and compensation orders; otherwise, my remarks apply in principle also to variable penalties.
The purpose of all these amendments is to urge the Government to think again about the blanket nature of the powers that the Bill gives to regulators, and which both the Constitution Committee and the Delegated Powers and Regulatory Reform Committee of this House have described as unprecedented. The Bill as drafted will, subject only to a final resort to and appeal to a tribunal, enable the Government to give every regulator in this country the power to be investigator, prosecutor, judge, jury and sentencer in their own cause. The way this is done in the Bill is unnecessary and disproportionate. Sensible alternatives are promoted by the Government in another Bill before this House which were suggested by the Delegated Powers and Regulatory Reform Committee. I suggested them in Grand Committee and on Report. I very much hope that the Minister—I think it may be the noble and learned Baroness the Attorney-General—will address in her reply what I believe is a thoroughly constructive suggestion. The noble Baroness, Lady Vadera, shakes her head but whichever Minister replies, I should be very grateful if the point is addressed.
I make it clear once again that I am in favour of sensible and proportionate regulation and regulators having what Professor Macrory described as a toolkit, provided it is reasonable and proportionate. I believe that his approach has a good deal to recommend it. Unfortunately, I believe that the Government have simply passed the Hampton report, which I also commend, and the Macrory report to parliamentary draftsmen and told them to provide for blanket powers to construct whatever system the Government choose, much of which—for example, the size and variety of fixed penalties—they acknowledge that they have not yet thought through.
The doctrine of separation of powers and the entitlement to due process before a citizen or business is punished for an alleged crime are both part of the bedrock of a free society. These powers are being given to 62 regulators identified by Hampton and 56 identified by Macrory, as well as to more than 400 local authorities with regulatory responsibility. I am grateful to the Government for those figures. This adds up to tens of thousands of regulators. The blanket powers are justified on the grounds of efficiency. Highly authoritarian powers given to the state are typically justified on these grounds but for a free and fair society there must be adequate checks and balances. Those have not been provided.
I am not against civil penalties in principle. They are proving their worth for minor offences such as parking and speeding and for some time, and sensibly, they have been part of the powers of major regulators such as the Office of Fair Trading, Ofwat, Ofgem and other utility regulators and the tax authorities, whether for ordinary taxes or VAT. Those who are regulated—and they need regulation—are rich and powerful in those areas and often enjoy near monopoly status. They have teams of high-quality executives and abundant access to lawyers. They can well cope with the system with equality of arms. Likewise, we are learning to have to live with the smaller penalties, where court procedures would indeed be too cumbersome and expensive.
It is in the intermediate range that the Bill, if allowed to go unmodified, is in danger of leading to injustice and oppression. The problem does not lie in the tribunals themselves, to which there is an ultimate right of appeal. Those tribunals will, I am sure, be competent, fair and I hope skilful. But for the smaller business or individual, the whole process of notice, letters in opposition, imposition of the penalty by a public servant, internal appeal to that regulator, confirmation of the penalty and ultimate right of appeal to a tribunal which, however expert, may well seem distant and daunting, is likely to prove expensive. Nor is it a process that the citizen can stop. Until that final stage, when they get before the tribunal, which I am sure will do its utmost to be fair and helpful all around, the whip hand is always with the regulator.
The model does not have to be so unbalanced. The Delegated Powers Committee referred to the simpler model in which the citizen, in its example a shopkeeper accused of selling alcohol to a minor, can accept a modest penalty without being taken to court. That same opportunity applied in the recent, much televised example of the half-open dustbin lid in Cumbria. There, the citizen was given an opportunity to pay a fixed penalty of £110 but chose, rather unwisely, to refuse, and was taken to a court which fined him £225. Though the photograph was grainy, the dustbin clearly was overfilled, and the citizen had to have been given a number of warnings; fair enough. Why cannot the Government be satisfied with a similarly proportionate approach in these cases?
If the Government were as joined up as they rightly exhort themselves to be, they would realise that they are concurrently in this House bringing forward just such legislation in Clause 82 of the Health and Social Care Bill, where the regulator can impose a fixed penalty of a maximum of 50 per cent of the potential fine, which the citizen has a right either to accept or to choose to be taken to court. We in the Opposition are suggesting that this method could be improved by introducing the same initial notice that the Government have kindly accepted in this Bill; and I welcome that aspect. This is a constructive way ahead. My proposals—although at this stage I cannot rewrite their Bill for them—are intended to be constructive and proportionate.
I will just say a word about the tribunals, which I have described as having great qualities but as potentially being rather distant. Along with the noble and learned Baroness, Lady Butler-Sloss, whom I am delighted to see in her place, I have received a helpful letter from Lord Justice Carnwath, the Senior President of Tribunals, in which he makes it clear that the system of tribunals, with a number of chambers and jurisdictions, is not finally settled. He has kindly written to offer to discuss our concerns, and I should be glad to take him up on that. I am sure that they have an important role to play, but there are also magistrates’ courts all around the country. They have been unfairly criticised in the context of this Bill where, in my view, the fault has almost certainly lain with inadequate explanations by regulators or prosecutors. I therefore very much hope that the Minister in her reply will be able to demonstrate a willingness to give serious and constructive consideration to these suggestions. I beg to move.
My Lords, the amendment of my noble and learned friend Lord Lyell of Markyate, proposes to remove Clause 31(a), which provides for fixed monetary penalties, and his Amendment No. 8 on the same topic would remove Clause 38(1). I urge the Minister to consider these changes, especially in light of the fact that they have been advocated by the Delegated Powers Committee and the Constitution Committee of this House.
I agree wholeheartedly with my noble and learned friend that we cannot give the unelected, unaccountable Civil Service of this country the powers to be investigator, prosecutor, judge, jury and sentencer in its own cause. The Bill leaves businesses with only the final resort of an appeal to a tribunal. This goes against years of English legal practice, in which people, once accused, have had the right to appeal to the courts, which have the best expertise and training to pass judgment—judgment that the Civil Service does not have. The business or person accused must have the power to question the process of sanctioning before it reaches the final stage in which a tribunal is brought into the equation. I very much hope that the Minister might reconsider her past decisions this afternoon.
My Lords, we have heard an important speech by the noble and learned Lord, Lord Lyell of Markyate, as we have done on previous occasions. I was, however, somewhat disappointed that both he and the noble Baroness, Lady Wilcox, repeated what I think is a false illustration of procedure when they referred to the regulator as being, in one and the same case, prosecutor, investigator, judge, jury and sentencer. That is a false illustration because we are talking not about criminal trials in which that little list would be most inappropriate. Indeed, it would be completely against the traditions of this country if a criminal trial were to be conducted on the basis that the same person, the regulator, had all those different roles.
We are talking not about criminal trials but about alternative procedures which the noble and learned Lord knows well, from the Macrory report and elsewhere, are more suitable and more proportionate, depending on the problem at issue, whereby civil sanctions, fixed penalties, discretionary penalties and various alternatives are put forward. That range of powers is designed to ensure not just greater flexibility for the regulator, but a greater opportunity for the trader, the businessman at the other end of the action, to take a course by his own choice to influence the regulator.
If I may say so, I found it somewhat inconsistent for the noble and learned Lord, Lord Lyell of Markyate, to attack the system for being prosecutor, judge, jury and so on, all at once, and to criticise the detailed complexity of the procedure that this Bill introduces in order to provide adequate opportunities for the businessmen trader—the regulated person—to put his case and advance his proposition. The greater complexity exists now, as the Bill has been amended, in accordance with some of the useful propositions put forward by the noble and learned Lord and others, such as the noble Lord, Lord Goodlad, to make it quite clear or establish that the regulator cannot rush in, even with alternative civil sanctions. He must issue a notice of intent, there must be an opportunity for defence, an opportunity for each side to answer the other side’s case, and so on—and, of course, there must be an opportunity for an appeal to the tribunal. “Proportionate” is a most useful word which we hear from both sides of this House to indicate what we want to achieve.
In relation to fixed penalties, perhaps I may quote from paragraph 34 of the government guide to the Bill. In answer to the question, “What is a fixed monetary penalty notice?”, it says that they are,
“fines for relatively low fixed amounts that are intended to be used in respect of low level, minor instances of non-compliance”.
What are the advantages? To bear out my point that we are not talking here about criminal offences, convictions and stigma, that paragraph goes on to say:
“We see fixed penalty notices as enabling regulators, in suitable cases, to enforce less serious offences in a more proportionate way than a prosecution. FMPs can remove the stigma and adverse publicity of a criminal record and could be used, for example, where no intent was present”.
The point about fixed monetary penalties, which the noble and learned Lord is homing in on in his amendment, is that they deal with relatively minor cases in a way that does not impose criminal penalties and the stigma thereof, and they are one example of the more flexible approach in Part 3 of the Bill. For those reasons, I recommend that the House does not accept the amendment.
My Lords, I made a point in Committee which the noble Lord, Lord Borrie, has not addressed. As I understand it, the Bill intermingles the concepts of criminal and civil law in a virtually inextricable way. Clause 38(1) states:
“The provision which may be made under this section is provision to confer on a regulator the power by notice to impose a fixed monetary penalty on a person in relation to a relevant offence”.
Then, for good measure, it adds a criminal burden of proof in subsection (2):
“Provision under this section may only confer such a power in relation to a case where the regulator is satisfied beyond reasonable doubt that the person has committed the relevant offence”.
Therefore, we are dealing with things which have been treated and held to be offences to the high standard of criminal law, and that is a subject to which the noble and learned Lord’s amendment relates and it is the point that he is making.
My Lords, I rise with some diffidence, not having taken part in earlier stages of these fairly extended proceedings. When I read the report of the last round—that is, Report stage on 31 March this year—I noted that the Minister accurately quoted the views of the Administrative Justice and Tribunals Council, formerly the Council on Tribunals, which I have the privilege of chairing, in support of his arguments. He also, rather less helpfully, adverted to the fact that I was not in my place at the time, and I thought that I would make up for that deficiency by ensuring that I was here on this occasion. I can confirm that what the Minister said about the position of the council which I chair was accurate and that it supports both the broad approach set out in the Macrory penalties review and the approach set out in the Bill on this particular point. I will repeat the specific words that the Minister quoted on the previous occasion from our response of 16 August 2007:
“The Council does not think it appropriate, in the context of the Macrory review, to continue to use the criminal courts for hearing appeals”.—[Official Report, 31/3/08; col. 831.]
Against that background, I was very pleased to hear what my noble and learned friend said about the merits of tribunals. Tribunals already do a great deal of work in comparable matters, including, not least, the Financial Services and Markets Tribunal, with which the noble Lord, Lord Borrie, will be very familiar from his former role.
I do not wish to labour the point, but in general I think, as does the senior president, Lord Justice Carnwath, to whom reference has been made, that tribunals are very well equipped to carry out the kind of work envisaged here, with the specialist knowledge and expertise, which they bring to so many areas. I have a great deal of sympathy with the arguments put by the noble Lord, Lord Borrie, and I hope that, against that background, my noble and learned friend will understand that if he were to test the opinion of the House I might be in some difficulty in following him.
My Lords, I would like to refer to a point raised by the noble and learned Lord, Lord Lyell of Markyate, and by the noble Baroness, Lady Wilcox, in relation to tribunals. On Report, I was concerned about what sort of tribunal would try these offences, as the noble Lord, Lord Neill of Bladen, has pointed out. None the less, it is a civil tribunal. I was very comforted to receive a letter from Lord Justice Carnwath, which has eased my mind considerably. I was even more pleased that the Minister, to whom I am extremely grateful, has accepted my view that expressions in Clause 53—the appeal clause—were infelicitous, and is making it clear that it is intended that one of the tribunals will be under the overall control of Lord Justice Carnwath.
The tribunal system, which has had a huge makeover in previous years under the aegis of Lord Justice Leggatt, provides an extremely good service for the public in these sorts of cases. My concerns are certainly allayed. Although I would not like to feel that the magistrates have been criticised in any way, following what the noble Lord, Lord Borrie, says, I do not continue to hold my previous views and I am very happy with the proposed new appellate system.
My Lords, I have some considerable sympathy with the remarks of the noble and learned Lord because those of us who have been through the Committee and Report stages of the Bill, let alone Second Reading, will be aware that he is attempting an impossible task. He feels that the Macrory recommendations should not apply at all. As a noble and learned Lord, he has spent many learned hours attempting to find amendments that will fit into the Bill to try to improve it. Those of us who have listened to what he has said on a number of occasions, in Committee and on Report, are in no doubt about his views, that the system does not work. I suppose he should have produced an amendment that Parts 3 and 4 should not form part of the Bill. The substance of his amendment here cuts through to the very heart of the Government’s Bill.
The Bill went through considerable pre-legislative scrutiny and considerable lobbying from all sorts of organisations before it came to your Lordships for consideration. Members of your Lordships’ House have to decide whether they support the recommendations of Professor Macrory. I understand perfectly the noble and learned Lord’s view and that, like the noble Lord, Lord Neill, he does not accept the recommendations of Professor Macrory. We on these Benches do not agree. The pass has long since been sold on whether regulators need to go the criminal or magistrates’ courts to enforce regulation. The best example I can use is the current operation of the FSA. Do the noble Lord, Lord Neill, and the noble and learned Lord, Lord Lyell, really suggest that the FSA, which imposes considerable sanctions and penalties on individuals, should not be allowed to do so? The philosophical thrust of their amendments is that that would be the case.
We on these Benches have considerable sympathy with what the noble and learned Lord is trying to do, but it does not work. You can throw out Parts 3 and 4 of the Bill entirely, but you cannot amend them. You must accept that we are implementing the Macrory recommendations or not.
Finally, I will make one point on what was said by the noble and learned Lord and the noble Baroness, Lady Wilcox, before it is forever implanted in Hansard. I am a member of the Delegated Powers Committee, and when the Bill first came to us we had a number of reservations which were expressed to the Government. We have considered them again. My noble friend who chairs the committee is not in his place but, as far as we are aware, all those recommendations have been implemented in the Bill. However, both the noble and learned Lord and the noble Baroness, Lady Wilcox, said that the Delegated Powers Committee, in its recommendations, had made these points. We did make those recommendations, but the Bill now reflects them. I cannot speak for the noble Lord, Lord Goodlad, who chairs the other committee that looked at this and who produced amendments either on Report or in Grand Committee. I understand that he is also satisfied with the implementation of the recommendations. As a member of one of those committees, I thought that that ought to be on the record. However, for the reasons I have indicated, I fear that we cannot support the amendment.
My Lords, I am grateful to the noble and learned Lord, Lord Lyell, for his contribution to this debate. I have sent him a full reply to the points he raised on Report and, as he mentioned, I met him on Friday with my noble and learned friend Lady Scotland and my noble friend Lord Bach. We discussed his concerns in more detail and, having understood each other well, he will not be surprised to hear that we strongly disagree with his amendments and the intentions behind them.
The points that I wish to make have been eloquently made by my noble friend Lord Borrie and the noble Lords, Lord Newton and Lord Razzall, and I am very grateful for the intervention of the noble and learned Baroness, Lady Butler-Sloss. However, I shall provide clarification of the Government’s views, which, because of the lateness of our previous debates, have not been on the record.
I start by restating the case for these measures. We live in a world of fierce global competition. It is imperative that we create the most competitive environment for our growing businesses. They need to be able to get on with what they do best: creating wealth and jobs; a sentiment in which I know those on the Opposition Benches strongly believe. The burden of disproportionate regulatory enforcement is a central issue for business, yet we still have a system of regulatory enforcement born out of Victorian times, protecting workers from the onslaught of industrialisation. We now live in an age where this has been delivered in the main. We now have informed customers, empowered employees and enlightened companies. Above all, they value their reputation and their brand. We do not need to criminalise all of them for every regulatory non-compliance, or even for most of them. I make absolutely no apology for that. This is not a stigma that they deserve in every instance, or that will assist them to compete effectively for Britain.
The noble and learned Lord has made a number of detailed points over the course of Committee and Report, and I would like to go through some of them as briefly as I can. The noble and learned Lord implied that the new sanctions represent a significant constitutional change, violate the separation of powers and oust the jurisdiction of the courts. They do not represent constitutional change or undermine the courts. Civil sanctions have been long established. There are precedents from the 19th century relating to Her Majesty’s Revenue and Customs and there are those today that the noble Lord, Lord Razzall, referred to in the Financial Services Authority, Ofwat and the OFT. Some civil sanctions clearly operate to divert cases out of the criminal courts; for example, conduct concerning market abuse or evasion of VAT can attract both kinds of sanctions. This kind of scheme has attracted wide support from the public and business. Even the Court of Appeal, in the Han case, has endorsed such schemes. Civil sanctions also supplement criminal prosecution in areas such as anti-social behaviour orders, serious crime prevention orders and orders under the Proceeds of Crime Act 2002. There is evidence to show that they lead to improved outcomes in terms of changing behaviour and promoting compliance.
Civil sanctions do not in any way undermine the role of criminal prosecution. As noble Lords should by now be well aware, the Bill ensures that criminal prosecution remains the alternative preferred approach for the more serious cases, especially those where there is deliberate intent or repeated negligence. Doing so enables the courts to concentrate on the more important cases that merit prosecution and would increase the stigma and reputational harm and therefore the effectiveness of criminal prosecution.
The noble and learned Lord has on occasion implied it is not a matter of precedent but of the scale of cases transferring away from courts. Of course we are seeking to widen the potential use of civil sanctions, hence the Bill. We are seeking this in a measured and targeted way for effective regulators, and I shall come on to talk about that. I wrote to the noble and learned Lord on 21 April giving him the results of a thorough review of the statistical evidence undertaken by my officials. We estimate that there are currently between 30,000 and 40,000 prosecutions for regulatory offences that could potentially be dealt with in future by one of the new sanctions. That is higher than the estimates originally made by Professor Macrory, but I shall give noble Lords a sense of the scale: this is still only 2 per cent of all prosecutions in criminal courts.
The noble and learned Lord implied on a number of occasions that we are putting businesses at the mercy of junior civil servants with a tick-box mentality, a sentiment that has been echoed by the noble Baroness, Lady Wilcox. I shall make a case that I believe in very strongly. The advances in technology that have driven globalisation have also fragmented the supply chain in production and services, which means that we have niche businesses and very specialised businesses on a scale that we have previously never had in our economy. Britain in particular has benefited from this trend because of our openness to globalisation, an issue on which I believe there is cross-party support. In this environment, I defend, not condemn, the role of experts in a modern economy, and that includes the role of expert regulators. Instead of a magistrates’ court, which Hampton said hears, on average, a health and safety case only every 14 years or an environmental case only every seven years, businesses value a regulator whose job it is to understand their business, their market, the detailed regulations and therefore the nature and seriousness of the non-compliance with those regulations. They value a move away from adversarial and confrontational prosecution to co-operative and consensual regulation which encourages buy-in, better compliance and therefore a better outcome for the stakeholders who regulations are seeking to protect.
My Lords, will the noble Baroness address my point about the Health and Social Care Bill, which is going through this House at the moment? It legislates for precisely what I suggest: the regulator should be able to offer a penalty that the citizen, whether business or individual, can accept. If it is accepted, it is a civil penalty—an administrative penalty—which does not involve a criminal conviction, but the citizen continues to have the right to say, “No, I won’t accept this. I want to be taken to a court and have the matter proved against me ab initio”. The Government’s policy is to do that in that area and in relation to alcohol, as the Delegated Powers and Regulatory Reform Committee suggested. That is reasonable and proportionate and fulfils what the noble Baroness said, which was that we do not want to criminalise everything. Why not go away and think carefully about doing that here?
My Lords, I was going to come on to that point, although I should say that we are discussing this Bill and its structure, which has been consulted on. It applies to a wide set of regulators, as the noble and learned Lord has said on many occasions; it is not a narrow Bill that applies only to a certain set of regulators. I will come on to address the point of the alternatives between civil and criminal penalties, if I may first finish the point that I was making.
The point that I was attempting to make was about knowledgeable regulators being able to lead to a better compliance outcome. In that context, the noble and learned Lord expressed the fear that regulators will hand out fines disproportionately. There is no evidence to suggest that that will be the case and all the evidence to suggest that it will not. In addition to being expert, they are bound by the regulators’ compliance code and have to act in a way that is proportionate, accountable, transparent, consistent and targeted. They will not be granted the new powers unless the Minister is satisfied when a Hampton review is undertaken on each regulator that they are capable of acting in such a way. Their detailed powers will be subject to an affirmative order requiring a debate in both Houses and they could have their powers taken away if they misuse them.
The noble and learned Lord suggested that we are seeking to pursue the Bill in preference to improving the performance of magistrates’ courts by instead taking cases away from them. We are not. We are implementing all the recommendations of the Macrory review, including those outside the scope of the legislation, which give courts the necessary tools to tackle regulatory offences more effectively than currently. I have already provided details of that in writing to the noble and learned Lord.
The noble and learned Lord and the noble Lord, Lord Neill, have questioned whether the Bill is compliant with the European Convention on Human Rights, especially Article 6. It is. As we discussed on Friday, the Government firmly believe that the safeguards in the Bill satisfy our obligations under the ECHR. Indeed, I should point out that the European Court of Human Rights has itself recognised the benefits of removing certain forms of conduct from the category of criminal offences under domestic law. In the case of Ozturk v Germany, the European Court of Human Rights said that such measures could serve the interests of the individuals as well as the needs of the proper administration of justice.
The noble and learned Lord implied that regulators will be acting as judge, jury and sentencer, in a phrase expanded by the noble Baroness, Lady Wilcox, and has in the past drawn an analogy with traffic wardens. Traffic wardens do not have to give notice of intent, hear representations and be satisfied to the criminal standard of proof before issuing a parking fine. I have enumerated several times the checks and balances in the Bill, so I will not repeat them now.
I say in response to the query from the noble Lord, Lord Neill, that he will know that, where serious assertions are made in civil proceedings, the burden of proof will follow the gravity of the assertion. Therefore it is not at all unusual for the balance of proof to be determined with little difference if the assertion is serious.
I stress again that there is a right of appeal against the new sanctions to an independent, impartial and expert tribunal. The details of this were discussed in particular by the noble and learned Baroness, Lady Butler-Sloss. There was some confusion on Report about the membership of the tribunal. I clarify that we envisage that the tribunal will be chaired by a tribunal judge and not by a civil servant. We have clarified the drafting, which we will come to later.
I shall clarify comments made by my noble friend Lord Bach on the last day of Report. The tribunal will have powers to confirm, to overturn or to substitute a regulator’s sanctioning decision. Its role will be similar to, but not the same as, that of the Court of Appeal Criminal Division. It will examine not whether the sanctioning decision is safe or unsafe but whether there are grounds for overturning the decision. Wide grounds of appeal have been provided for each sanction, which in some ways will allow for a fuller examination of the decision than the Court of Appeal, as it specifically allows for the examination of matters of fact. The Court of Appeal is generally reluctant to overturn the jury’s findings of fact.
The noble and learned Lord, Lord Lyell, talked about current Bills and mentioned the wheelie bin case, which I believe involve the same question of whether business should have a choice whether to accept the civil sanction or whether to opt for a criminal prosecution. It cannot be for business to choose how it will be treated. Allowing a business to do that would leave the system open to abuse. The business could, for example, attempt to delay the enforcement process by going down one route and then opting for another. For the new system of civil sanctions to have the confidence of the public, it must be swift and effective.
Furthermore, in a proportionate sanctioning regime, criminal prosecution should be reserved, as we have said, for the most serious cases. This can be assessed by the regulator only in view of all the cases before it. Therefore the choice between civil and criminal sanctions must remain at the discretion of the regulator and not the offender. What might be appropriate in certain limited cases might not be appropriate for the Bill and its structure, which we have discussed and consulted on at length. We have already set out that the route that the regulator chooses will be determined by a number of factors such as the nature of the offence, the characteristics of the case and what is set out in the regulator’s own enforcement policy, which will be public.
The noble and learned Lord questioned the blanket nature of the powers under the Bill and, on occasion, the lack of detail of things such as the level of fixed monetary penalties. He also detailed procedures of the new tribunal. This is an enabling Bill and, given the complexity of businesses and the differences in various regimes of regulation, we can hardly have one size fits all in this primary legislation. Details will be in the orders that grant powers when the Minister is satisfied that they are warranted and to the level needed, and they will be available and the subject of debate and affirmative order by both Houses.
I am grateful for the confirmation by the noble Lord, Lord Razzall, that we have satisfied the Constitution Committee and the Delegated Powers and Regulatory Reform Committee. They indeed raised concerns, which we have made amendments to address. We have, for example, introduced a notice of intent for fixed monetary penalties and have capped the level of them. I understand that the Constitution Committee is now content with what it calls the balance in Part 3 between effective sanctions and due process.
Finally, the noble and learned Lord said that only big business will be able to operate this sanctions regime. I am the Minister for small businesses and for regulatory reform. That joint responsibility is not a coincidence, because the impact of regulation may be felt disproportionately by small businesses. I strongly refute the view that the noble and learned Lord has expressed. Small businesses have supported this Bill fully. The only concern that they have expressed is that during the passage of the Bill we will it water down. They want something less daunting than criminal prosecution for minor and unintended offences for their mainstream businesses and they want a level playing field where rogue traders are punished proportionately so that they do not gain a competitive advantage. The Federation of Small Businesses says that it,
“supports the use of alternative sanctions rather than the use of criminal prosecutions, which should only be reserved for the most egregious offenders and offences”.
We are not in the business of maintaining the status quo if it can be improved. The Government’s job, which should be supported by all parties, is to modernise regulatory enforcement, to make it fit for the 21st century and to create the most competitive environment for business without affecting the outcomes for society as a whole. I am therefore pleased that we have managed to satisfy the noble and learned Baroness, Lady Butler-Sloss, the noble Lord, Lord Razzall, and the committees. I am saddened not to have satisfied the noble and learned Lord, but I hope that he will feel able to withdraw his amendment.
My Lords, I am grateful to the noble Baroness. I shall try to be succinct and to restrict myself to a small number of points, although she has raised a large number of points. First, I think that the noble Lord, Lord Razzall, has completely misunderstood me. That is obviously due to the boring nature of my delivery, because I have never said that Macrory should not apply or that there should not be civil penalties. The issue is the mode of doing it.
The noble Baroness said that the structure of the Bill had been consulted on, but I do not think that it has. We consulted on the Hampton report and on the Macrory report. Macrory—as I think he said to a meeting at which I was not present, but it is abundantly clear from reading his report—did not set down the structure of the Bill. My complaint about the structure is that the parliamentary draftsmen have been allowed to give us every power under the sun, including the kitchen sink, and we will have to see what we will do when we have worked it out.
I suggested that the citizen should be able to say, “No, stop. I do not want to pay an administrative penalty. Take me to court and prove it against me”. Most citizens will want to compromise on an administrative penalty, which would be thoroughly sensible. But, to my astonishment, the noble Baroness has been put up to say that we cannot allow the businesses to choose. If we cannot allow the businesses to choose in this Bill, why can we allow them to choose under the Health and Social Care Bill, which is being put through by this same Government in the same months?
It is suggested that I have criticised the tribunals. I have not. I am much looking forward to talking to Lord Justice Carnwath. I am sure that he will produce an excellent system of tribunals, but there are far more cases than the Government initially recognised. They thought that there were 15,000. They now acknowledge that there are 36,000, which, on the figures that I gave the Government and which they have now pretty well confirmed, deal only with the 28 regulators covered in Schedule 5. We just do not have a figure for all the other regulators. There are likely to be a large number of cases and it is not clear that the tribunal system has been geared up for that many cases. However, the Government say that 40 per cent of these cases are likely to go to appeal, whereas I think that that is far more than is likely and that many fewer will go to appeal.
The bedrock here is that it is the right of a citizen in this country to have a case proved against him. It is worrying to hear the noble Baroness say that what will be available before the appellate tribunal might be comparatively limited. There are important principles in this matter and since, unfortunately, I do not think that I have gained any ground with the Government, I wish to test the opinion of the House.
Clause 38 [Fixed monetary penalties]:
[Amendment No. 8 not moved.]
Clause 41 [Discretionary requirements]:
[Amendment No. 9 not moved.]
Clause 53 [Appeals]:
10: Clause 53, page 27, line 11, leave out “any person to whom” and insert “the tribunal to which”
The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 11 and 12. On Report we had a long debate about the tribunal provisions in the Bill. As noble Lords will know, Clause 53 requires appeals against new sanctions to be heard by statutory tribunals. Clause 53(3) and (4) contain three references to a “person”, which by virtue of Clause 53(1) must be taken to mean a tribunal. However, these references have caused some confusion, and I thank the noble and learned Baroness, Lady Butler-Sloss, for pointing that out in our meeting on 25 April. I have tabled these amendments to make clear that the references in fact mean the tribunal. I hope noble Lords agree that they improve the drafting of the Bill. I beg to move.
On Question, amendment agreed to.
11: Clause 53, page 27, line 13, leave out “person” and insert “tribunal”
12: Clause 53, page 27, line 15, leave out “person to whom” and insert “tribunal to which”
On Question, amendments agreed to.
An amendment (privilege) made.