Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

I beg to move amendment No. 25, in clause 27, page 21, line 22, at end insert—

‘()In section 189 of that Act (definitions) after subsection (1) insert—

“(1A)In sections 36E(3), 70(4), 73(4) and 75(2) and paragraphs 14 and 15 of Schedule 1A ‘costs’, in relation to proceedings in Scotland, means expenses.”.’.

Derek Conway (Old Bexley & Sidcup, Conservative)

With this it will be convenient to discuss amendment No. 30, in schedule 4, page 69, line 38, at end insert—

‘(aa)the definition of “costs”;’.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

This is a technical amendment to make it clear that the definition of costs applies only to those of legal proceedings in Scotland. When costs apply to other things, such as those involved in collecting money to set up the FOS, the amendment makes it clear that the definition in section 189 of the 1974 Act is not relevant. That also applies to amendment No. 30.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

We move on to issues relating to the Office of Fair Trading. Licence applicants will be required to pay a charge towards the OFT’s costs of carrying out its functions. That is the same as under the current system. Payment will be required on application and periodically after that, probably every five years.

The OFT will issue a general notice setting out the level of the charges and it is likely that the licence charge will increase from its current level. Approval of the Secretary of State and the Treasury will be required before charges are set. The OFT may set licence charges according to the category or sub-category of activity entered into. That will reflect the cost of monitoring. Narrow licences may attract a reduced charge, but licences in high risk sectors may attract a higher charge and some types of licensees will not have to pay an application or maintenance charge.

The increased charge will fund more effective monitoring of licensees. That will ensure that they remain fit to hold a licence, including visits to premises when appropriate, and will enable the OFT to use the additional powers in the Bill to investigate applicants and licensees.

Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)

I am grateful for the chance to ask some questions. The Minister said that the OFT will consult widely, but who will be consulted once the charges are set? Will there be a right of appeal if firms believe that the charges are too high? Can the Minister give a clearer idea of what the level of the licence charges may be? He said in ministerial-speak that they will increase from the current level. Everything increases under this Government and goes up. Can he give us a ball park figure? Will the increase be £500, £5,000 or £50,000? At the moment, we do not have a feel for what the figure will be, other than that it will be rather more than at present.

Will the Minister also comment on the need to fund the activities of trading standards services? The guidance from the OFT says that the new work for trading standards services will require new money. Paragraph 12 of the guidance states:

“It is therefore envisaged that costs related to these new powers and functions will represent additional costs to the system.”

Does the Minister expect that some of the licence funding through the OFT will also fund the trading standards services? If not, where will that funding come from? Can he indicate what costs will be on trading standards offices? We are all aware that local authorities are consistently anxious about additional responsibilities being put on them without funding being provided to pay for those services. It seems that this may be another of those responsibilities and that they will be expected to take on new staff, which will involve training and additional running costs. Where will the money come from to pay for the extra activities of the trading standards offices?

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Again, those are legitimate questions, but they were not asked in a friendly way. Attacking the Government’s record on rising costs is unfair. All the costs are proportionate to the requirements and in keeping with our better regulation approach.

Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)

Can the Minister tell me one charge that has gone down in the past eight years?

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Not immediately, but I am sure that I can find one for the hon. Gentleman. I undertake to write to the hon. Gentleman about that.

The clause explains how the charges would work and the OFT’s responsibilities. We are not talking about a repetitive licensing regime, in the sense that once a license is issued the OFT has the opportunity to look at the people who are not operating appropriately. To return to the earlier point of order, I set out lots of information for members of the Committee because I knew that they would be interested in many of the issues that have been raised. There is a note in the material that we sent out on the charges that the OFT is likely to charge. I refer the hon. Gentleman to that note.Even if charges doubled, that would only take the cost for limited companies to £550 for five years. The charge compares favourably with those set under other licensing regimes, and will help consumers and fair-dealing businesses to reap financial benefits.

I am pleased that the hon. Gentleman raised the role of trading standards, as there are lots of issues concerning the future of trading standards. It is worthwhile saying how much the Government appreciate the work of trading standards. That is why the Hampton review is considering a consumer and trading standards agency, which will highlight further the work of trading standards. There will have to be discussions with local government about the funding of trading standards work, and the costs of the licensing regime should reflect the ability to fund such work. There will be more detailed discussions once the consultation document on the proposed consumer and trading standards agency goes out, and that will include discussions with local government about how to take things forward. Again, like the hon. Gentleman, I am very appreciative of the work that trading standards does.

Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)

May I push the Minister a little further? Is he saying that new money will be provided to local authorities for the extended role for trading   standards? Without a guarantee of new money, local authorities will have to cut services elsewhere or consider raising council tax. That will be a great concern to councils that are already hard pressed.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Clearly, we do not want to do that. The licensing charges will reflect the costs to the organisations involved, which will include trading standards. I am making a more general point about the future of trading standards, which the proposed CTSA, through Hampton, will affect.

Michael Penning (Hemel Hempstead, Conservative)

Can the Minister clarify further how the mechanism will work? Will money be taken through one licence and given to trading standards officers in our local authorities, which, as my hon. Friend the Member for Wealden said, are stretched to the limit already?

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Do not become upset and confused that we are going to transfer the powers across. The money will go to the OFT, which will then look at the requirements and the resources that are needed. The money will come through the OFT, through the licensing charges. The OFT will pay the full cost to the trading standards authorities involved.

Michael Penning (Hemel Hempstead, Conservative)

Just to clarify the point, will the OFT fund local authorities in that respect?

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Certainly not. The OFT will fund that element of the requirements.

Michael Penning (Hemel Hempstead, Conservative)

That is what I am saying.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

I thought the hon. Gentleman was saying that the role of trading standards would be funded. The OFT will fund the aspect that I described, through the licensing fee. The OFT will pass on the money to trading standards.

However, there is a more general point about the future. The hon. Member for Wealden raised the issue of where trading standards fits, although not in specific detail. I was trying to help by pointing out that we acknowledge and recognise the work of trading standards. We acknowledge that local authorities have a keen interest in the future of trading standards. In the general debate that we shall have over the coming months about the future of the proposed CTSA, which came from the Hampton review, the issue of local authority funding relating to trading standards will be high on the agenda.

Michael Fabricant (Whip, Whips; Lichfield, Conservative)

To follow on from the points that my hon. Friend the Member for Wealden made, and for the avoidance of any doubt, is the Minister saying that there will be no further financial burden on trading standards, following resolutions passed in the Bill?

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Yes.

Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)

I am fascinated by that because the advice that the Minister referred us to a little while ago from the Office of Fair Trading and which I read, as he suggested, states:

“It is also expected that the OFT will work closely with Trading Standards Services to implement the Bill. Additional work which may be carried out by trading standards services under new information gathering powers...will require new money in order not to adversely impact other obligations at local level (such as food safety inspections)”.

So, although he said to my hon. Friend the Member for Lichfield (Michael Fabricant) that there will be no additional work, it appears to me that there are new obligations on trading standards services, but they will not now be guaranteed the money from the Minister to ensure that they do not have to cut back in other areas to carry out those responsibilities.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

That is very wide of the mark. We are referring to the clause relating to the licensing fee. All that affects the clause under the licensing fee will be funded by the additional fees. I will regret that I did this, but turning to the wider issue of trading standards, there is a discussion to be had in the future relating to the Hampton review—I am sure that the hon. Gentleman will quiz me on that over the summer and into the autumn—on trading standards. That will have an effect on local government. I want to reassure local government that the Government are keen to have discussions about the future in terms of where the CTSA and local government fit in. There will be no further burden on local government in relation to this clause.