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Local Better Regulation Office (Dissolution and Transfer of Functions, Etc.) Order 2012

Volume 734: debated on Monday 16 January 2012

Considered in Grand Committee

Moved By

That the Grand Committee do report to the House that is has considered the Local Better Regulation Office (Dissolution and Transfer of Functions, Etc.) Order 2012.

Relevant document: 36th report from the Joint Committee on Statutory Instruments.

My Lords, there are two main purposes of this order: to dissolve the Local Better Regulation Office and to transfer its continuing functions to the Secretary of State and Welsh Ministers. The legislation that is amended by this order comprises: the Regulatory Enforcement and Sanctions Act 2008; the Parliamentary Commissioner Act 1967; the Superannuation Act 1972; the House of Commons Disqualification Act 1975; and the Freedom of Information Act 2000.

The order achieves three equally important things: first, greater transparency within the delivery of better regulation policies; secondly, greater accountability within the process of formulating better regulation policy, which, in combination, gives rise to ensuring that a strong voice for regulatory reform can be heard, supported and championed at the heart of government; and, thirdly, the opportunity to realise savings in public expenditure. In the specific instance of the LBRO dissolution, these savings are modest; however, they contribute to the greater efficiencies to be realised through our wider public bodies reform programme.

I feel it is important to reassure my colleagues from the outset that the primary authority scheme, currently being effectively led and run by the Local Better Regulation Office, will continue seamlessly when this order comes into force. The LBRO is a small unit with fewer than 30 employees, but its effectiveness has led stakeholders to hold the primary authority scheme, and its other work, in high regard. The Government wholeheartedly support the continuation of this work; indeed we propose to extend it, and intend to bring forward separate legislation to do so.

Delivering regulation in the right way supports business growth and it is right therefore that we should maximise the opportunities that good regulation can bring. This Government remain focused not just on reviewing the volume of regulation, but on ensuring that the way in which regulation is delivered is appropriate, effective and efficient. Improvements in the delivery mechanisms for regulation are of vital importance to the businesses that experience the enforcement of these regulations on a daily basis. Good regulation supports economic prosperity and consumer protection. The Local Better Regulation Office has been driving improvements in these areas since it was established as a non-departmental public body via the introduction of the Regulatory Enforcement and Sanctions Act three years ago.

Regulation provides essential protections to society and brings invaluable benefits. A fair, efficient regulation system sees an expectation of equal treatment for all those affected by regulation, allowing our businesses the freedom to grow and to prosper with an understanding of what is expected of them and what they are expecting from regulators. Good, sensible, proportionate regulation is also consistent and appropriately targeted. I feel it is right that our businesses expect good regulation as the norm. Within this environment, we need to remain aware of the need continually to drive improvements, to ensure consistency and, as a Government, to lead quality regulatory reform, creating a supportive environment in which our businesses can grow and prosper.

In October 2011, the Minister for the Cabinet Office announced proposals for reform of 901 public bodies, to increase accountability, to cut out duplication of activity, and to discontinue activities that are no longer needed. The proposals are a fundamental part of the commitment made by the coalition Government to increase radically the transparency and accountability of all public services and to reduce the number and cost of public bodies.

This is a part of a wider programme of public sector reform aimed at giving a better deal for taxpayers, which is essential in these times of austerity, ensuring resources are targeted where they are needed most and using transparency to help the public hold the Government to account. The reform process aims to reinvigorate the public’s trust in democracy and also to ensure that the Government operate in a more efficient and business-like way.

The review of the LBRO considered two main issues: first, whether all the current functions of the LBRO were still required and, secondly, how these functions could be best delivered, including whether the LBRO met the tests for continuing as an arm’s-length body. The review considered LBRO’s three core functions of administering the primary authority scheme; simplifying the national framework for local authority enforcement; and directly supporting local authority improvement. The first two were identified as being of clear and continuing value. However, delivery of those functions via a non-departmental public body was not felt to be the most appropriate or effective organisational structure.

Various organisational options were discussed within the review process. The conclusion reached to ensure the best combination of independence, transparency, accountability, flexibility and stakeholder confidence, as well as value for money, was that LBRO’s work should be taken forward by a streamlined unit within the Department for Business, Innovation and Skills. This new unit would be called the Better Regulation Delivery Office and would continue LBRO’s excellent work with national regulators, policy departments, local authorities and business.

A consultation on this policy proposal was held between June and September of 2011. Some 86 responses were received from LBRO stakeholders, including businesses, trade associations, local authorities and other local regulatory bodies, national regulators and professional bodies. The majority of responses received were positive and supportive of the proposed administrative changes. That indicates that we have navigated the right course in our proposals: taking into account the views, concerns and needs identified throughout the course of the review process.

It should be noted that those responding took the opportunity to praise the expertise of the LBRO staff for representing their views and experiences in an effective way and for running the primary authority scheme with efficiency and effectiveness. This was especially true of business representatives. Professional bodies including the Chartered Institute of Environmental Health and the Trading Standards Institute commented on the expertise and delivery capability of LBRO and welcomed LBRO’s approach of working with them to improve professional standards and provide support to regulatory offices. The changes that the order will enact will see all that expertise retained while enabling a major step forward in taking regulatory reform to the heart of government, ensuring protection and growth for our businesses.

Turning to the specifics of today's order, the order dissolves the Local Better Regulation Office and transfers its continuing functions of administering the primary authority scheme and simplifying the national framework for regulatory enforcement to the Secretary of State and the Welsh Ministers, as appropriate. It provides that the Secretary of State and the Welsh Ministers shall enter into a memorandum of understanding, which will set out in detail how the two Administrations will operate the transferred functions. That will ensure a closely co-ordinated approach across the territories, which is essential for our businesses working across geographical boundaries.

The order will also provide for the transfer of all LBRO’s property, rights and liabilities to the Secretary of State. It provides for the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 to the transfer of LBRO’s rights and liabilities relating to its employees. It provides the necessary repeals and amendments to the Regulatory Enforcement and Sanctions Act 2008 and other legislation that is consequent on the LBRO’s dissolution and transfer of its functions, property, rights and liabilities to the Secretary of State or to the Welsh Ministers. It also provides transitional provisions and repeals to the power to enforce guidance given to local authorities.

The administrative changes set out in this order ensure that stakeholders of the Local Better Regulation Office receive the same excellent level of service from the existing experts that they have built strong relationships with over the past three years. It will increase the transparency and accountability of its work, increase the impact of this work at the heart of government and make savings to the public purse.

Most of the current LBRO experts will move into the Department for Business, Innovation and Skills on 1 April 2012 to form the Better Regulation Delivery Office. This distinct unit will sit within BIS alongside the Better Regulation Executive. The BRDO will have a clear delivery focus, working with businesses and regulators to simplify and improve the implementation of regulations. That will supplement BRE’s focus on how Whitehall generates and designs regulation. Bringing these two elements together within government will strengthen the overall package of regulatory reform.

The BRDO will continue the operation of the successful primary authority scheme and provide support and evidence-based advice to regulators and to the UK and Welsh Governments. During consultation, the independence of LBRO in operating the primary authority scheme was repeatedly praised. I would therefore like to stress that this operational independence will continue. As Ministers, we will rightly want to satisfy ourselves that the scheme operates effectively, efficiently and fairly. That said, we will not generally become involved in the day-to-day operation of the primary authority scheme, or in individual primary authority partnership decisions. This operational function will be exercised by the experts who have been delivering this scheme so successfully for the past three years.

A full impact assessment has been completed and there are no new burdens on business as a result of this order. Stakeholders prize the work of the Local Better Regulation Office. The changes enabled under this order will see the new Better Regulation Delivery Office build upon its work to date to continue to reap benefits for businesses. By ensuring consistency and continual improvement in the regulatory landscape we can strive to provide an even stronger, more supportive environment in which our businesses can strengthen and grow for the benefit of our whole economy, while still providing necessary protection for citizens and communities. I therefore commend this order to the Committee.

I thank the Minister for her comprehensive statement. In the beginning she said that there would be greater transparency and accountability. I noticed the assertion but I am not sure that I necessarily saw the evidence of that. This is an interesting NDPB and the impact assessment or the review showed that it was one that was highly regarded, which I think is important. When the Minister talks about greater transparency and accountability in a body that is being absorbed into BIS, I think we are entitled to some validation of that statement.

The Minister also said that the primary authority scheme will continue. However, paragraph 8.5 of the Explanatory Memorandum states:

“In line with the conclusions of the BIS led (public bodies) review of LBRO, the power to direct local authorities, and the power to enforce service improvement will be stopped. However, the power to issue guidance to local authorities will be retained, as will the requirement that local authorities must have regard to that guidance”.

Therefore, while I hesitate to use the word “disingenuous”, I think that the Minister did not give quite the whole story when she said that the primary authority scheme will continue. The primary authority scheme will not continue in its present form; it will be modified. Instead of there being a power to enforce, there will simply be guidance issued to local authorities. Given that that aspect of the operation of the LBRO was highly regarded, that is a not unimportant issue that requires some clarification.

Before moving on to the comments of the Federation of Small Businesses, I want to make one other comment. What assurances can the Government give that the better regulation delivery office will retain the independence and technical expertise that the LBRO had? Can the Minister assure us that the office’s important work will continue with the same vigour within BIS? It needs to be strengthened rather than weakened.

Interestingly, the Federation of Small Businesses has articulated concerns about the abolition of the LBRO, which it says plays a “vital” role in tackling regulatory burdens:

“LBRO must not be scrapped but overhauled if small firms are to truly see a reduction in regulation”.

The Federation of Small Businesses has also said:

“Raising the standard of inspections and making the process of inspection a positive experience is the cheapest and fastest route to improving the overall perception of the regulatory burden. The FSB believes the Local Better Regulation Office (LBRO) has a pivotal role to play in this process”.

I think that the Government have quite a way to go to convince everybody that the better regulation delivery office will be as good as the Minister has asserted.

There has also been a bit of an argument about the representative steering group. The Explanatory Memorandum states:

“Responses on the question of the proposed membership were evenly split, 50-50. The basic proposition to establish the group was supported, half the respondents agreed with the proposed membership, but others wanted to see the balance changed”.

The role of the representative steering group will be important. Given the assurances on transparency and accountability, I would welcome an assurance that the notes of the meetings of the representative steering group will be published.

I eagerly await the Minister’s response to some of those questions.

My Lords, I wonder whether I might intervene at this point. I am very disappointed with the order and its accompanying Explanatory Memorandum. It is very useful to have the Explanatory Memorandum, but an examination of it reveals—as my noble friend Lord Young has shown—that it makes a number of points that stress almost the opposite of the objectives and successes that the Minister has claimed for this order. For example, the Minister talked about the greater transparency, accountability and strength that will be provided. However, I am not sure that there will be greater transparency when the body is transferred inside a government department, where its work and effort will no longer be as clear as that of an NDPB. The savings that are claimed are said to be modest, which is not a very great strength for the change, while the response rate for the consultation on the order is also said to be low.

The start of all this came, of course, with the very rash and widely complained- about Public Bodies Bill, with its great list of bodies that departments had to come up with in order to make a comprehensive survey across the whole field of government. It was overambitious and has been much changed since. The excellence of the present scheme, referred to by my noble friend Lord Young just now, was also referred to by several of the consultees. Indeed, in all fairness, the Minister indicated that many of the consultees praised the work of this NDPB, the LBRO, as it stands. If the work of the LBRO is transferred to the business department, this will be in accordance with what I might call a government fashion at present; something that is being done, being attempted or being at least suggested all over the board—across all sorts of departments, quite apart from the business department. Claims are being made for how valuable the change would be in terms of transparency and accountability in each case. The Government, however, are having some difficulty, as they are in this case.

Take the work of the LBRO in relation to the primary authority. The whole idea, which goes back several years and started on a voluntary basis, was that where there were local authorities and major businesses—major supermarkets, for example, operating in most counties all over the country—instead of each local authority taking the responsibility for enforcing environmental or trading standards requirements, local authorities would get together and enable one particular authority to be the primary authority and take the main responsibility for any prosecutions that were needed. Before any prosecutions are made, of course, there is no doubt a lot of useful discussion that leads to changes in commercial practice. The excellence of the current way of running things has been recorded by a number of people who have taken part in the consultation. My noble friend Lord Young referred to one matter on which the memorandum itself says that there was complete disagreement across the board. In paragraph 8.3:

“The consultation gained majority support for … the proposals bar one. The … exception was the proposed membership for the Representative Steering Group”.

I would be glad if the Minister could say something about that split in responses and indicate where they are in their thoughts and discussions about that steering group. As a whole, therefore, I am not at all convinced by the Explanatory Memorandum which justifies this order. It is more a matter of following, as I say, current government fashion in this field; pushing things into government departments which do not carry—and cannot carry with the outside world and with the groups that are concerned about this—the same degree of independence and trust as an independent NDPB has done, and in this case has been doing very well.

My Lords, I support my noble friend on her proposals regarding this order. Whereas I sympathise with the remarks of the noble Lord, Lord Borrie, that this is government fashion, behind that fashion lies a fundamental democratic principle. There are a lot of us who believe that one of the problems with the proliferation of the creation of these bodies over the last 10 to 15 years is that the democratic accountability of what they do was lost.

I can give an example to the noble Lord, Lord Young, about the difference: were this order not to be passed so that this organisation were kept in place, when he stood up to ask the Minister a question about the activities or the proposals that he has concerns about, she would, quite rightly, have said that it was not a matter for her but for this body. In future, when he has a concern about what happens, because it is within the department, she will be accountable for the activities of the people concerned. I know that, as the noble Lord, Lord Borrie, said, it is the fashion of this Government to abolish as many of these bodies as possible, either entirely or bringing their activities within the relevant ministry, and I have some sympathy with his view that the Bill tried to attempt too much and that far too many bodies were initially included, but my fundamental belief is that wherever possible these bodies should be democratically accountable. That is particularly the case here.

I have three questions, one of which has been touched on by noble Lords on the Labour Benches. First, one of the things that are clearly emerging is that a lot of the bodies being abolished, or whose activities are being brought within the relevant department, have a lot of property assets. In this case, is there a significant property asset that will be released or sold, and do we know its value? Secondly, the Minister indicated that from April most of the staff within the organisation will be transferred to employment within the department. Have they signed up to do that or do we just hope that they will? My third point follows up the point that both noble Lords made about the representative steering group. The document indicates that there was a 50:50 split in the consultation over what should happen. Where do we think we are? What is the timing of the decision to decide what that representative steering group should be?

I am trying very hard to make sure that I can answer as many questions as possible. It does not seem that long ago that I was standing in this Room—perhaps it was a couple of years ago—at the birth of the LBRO. At that time, I wondered whether we needed another organisation. Here I am now saying that we do, but that we are going to keep it to ourselves and I am going to be responsible for it, whatever it does. I thought that I had made a very long and detailed speech to try to cover as many points as I possibly could this time round, but obviously all I have done is to provoke people with expertise in this area to come back at me with questions. I hope that I am going to be able to answer them.

The noble Lord, Lord Young, talked about the Federation of Small Businesses. Small businesses want to see greater benefits. One is that we have announced that we will make assured guidance available to them: a benefit of the primary authority. He also asked about the primary authority. The power to direct remains in the case of the primary authority; it is in other guidance where the power to enforce will be removed. He also spoke about the RSG minutes. We have not yet considered publication of the minutes, but we will look at that proposal. It was not raised in consultation, but I see no reason why they should not be published. If there is no great objection, I do not see why he should not have what he has asked for.

The noble Lord, Lord Borrie, said that the savings will be very modest and will not in themselves address the deficit. That is not quite what we meant. The savings, which will be £6.4 million over 10 years, are not insignificant given the financial situation we find ourselves in. I hope I was very clear in my statement that we want to make sure that the excellent work that the LBRO has done continues, but any money at all that we can manage to save by reorganising should be saved. We hope to be able to continue with the same people and do the same work while cutting the overhead costs.

The noble Lords, Lord Borrie and Lord Razzall, talked about the representative steering group’s split responses. The role of the RSG was supported by 80 per cent of respondents and any split responses reflected a debate as to the membership, with many of the respondents actually wanting to be on it themselves. That was the real balance of the argument there.

In reply to the noble Lord, Lord Borrie, on accountability, the RSG will represent a balanced range of stakeholder perspectives and aim to strike the right balance between the regulators and those whom regulation seeks to protect; to provide advice on the strategic direction and approach of the organisation; to provide oversight of the operation of the primary authority to ensure that due process is followed; and to have its membership reviewed regularly and refreshed to open up engagement and encourage new perspectives. It will be no more than 12 individuals, not operate as a formal body and not oversee day-to-day operations of the BRDO, which we hope will add even more to the great work that it has already done.

The noble Lord, Lord Razzall, talked about the property assets. In answer to his question, no—lease transfers will be consolidated with other BIS estates. Sadly, we do not have very expensive property assets that we can get rid of. I note that the noble Lord supported what I introduced today in this regard. On his question about whether employees have agreed to come, yes, all the employers in post at the date of transfer have agreed to be transferred to the department and will continue to work from Birmingham for the foreseeable future. The noble Lord also asked about business sign-up. As he suspected, business had some concerns. We have certainly attempted to listen to those; the operational independence in the primary authority is an important element of that, and keeping the business reference panel is also important. Businesses have questions, but are broadly supportive of the proposals. We will of course continue to listen to their questions and worries as we go forward.

Consistency and continual improvement in the regulatory landscape are essential if we are to progressively strive to provide an even stronger, more supportive environment in which our businesses can strengthen, prosper and grow for the benefit of our whole economy. The needs to support greater transparency and accountability, to create a more effective regulatory policy on development and to provide a strong voice for regulatory reform at the heart of government are not in dispute. This order underpins those objectives, and I therefore commend it to the Committee.

I may have misheard the Minister when she said that the power to direct local authorities will remain. That is what I thought I heard, but I would like some clarification, because the Explanatory Memorandum is quite clear that the power to direct local authorities goes and the power to enforce service improvement will be stopped. What then remains is just a question of guidance to local authorities, so I would like some further clarification.

I thought that the answer I gave was that the power to direct remains in cases of primary authority and it is other guidance where the power to enforce will be removed. I shall see whether I can get a clearer response for the noble Lord.

The powers of enforcement are in Part 2 of the Act, and they remain. In the Regulatory Enforcement and Sanctions Act 2008, Section 7 is repealed, if I have that right. If that is not clear—

Perhaps I can try to be helpful, because I do not want us to take up more time than we need to, but that is not quite what it says in the Explanatory Memorandum. I notice that the Minister’s officials are nodding. Perhaps the best thing that the Minister could do is to write to us and clarify the situation.

Perhaps the Minister could specifically explain, when she writes, how what she said relates to paragraph 8.5 of the Explanatory Memorandum, which seems to suggest that,

“the power to direct local authorities, and … to enforce service improvement will be stopped”.

It does not seem to reflect that, but that is actually what it says.

My Lords, I am always reluctant to say that I will write because it sounds like a cop-out. I always try if I can to get the answer on the day, but I am obviously not giving as clear a response as is required by your Lordships. I will, of course, write, if that is acceptable.

My Lords, the power to direct local authorities to comply with guidance is repealed; the power to enforce the primary authority remains. That is what I thought that I had made clear in the first place.

Motion agreed.