Simon Hughes (Party President, Cross-Portfolio and Non-Portfolio Responsibilities; North Southwark & Bermondsey, Liberal Democrat)

It would be helpful if I may make points that significantly and substantially belong here and, although they touch on the information provision that we dealt with, I did not want, as it were, to make overlapping points on two separate provisions.

The financial penalties provision is really important. It allows a licensing authority to

“impose on a licensed body, or a manager or employee of a licensed body, a penalty of such amount as it considers appropriate.”

It then, quite reasonably, says that there will be

“rules prescribing the maximum of a penalty which may be imposed under this section”,

and that those rules will need the consent of the relevant Minister, the Lord Chancellor. That is entirely proper, in so far as it is set out as a structure for action, and the money would go to the licensing authority. What nobody has yet said as far as I can see, and notes on clauses do not say it, is how much we are talking about in terms of the maximum penalties that are in the minds of Ministers. I appreciate that we must have further debate, but want to know that we are talking about a maximum that is pretty high, and that the fines, from the beginning, will be sufficiently stiff to be a real deterrent and threat to people who do not do their job properly and competently—whether as a firm or as an individual—and to ensure that they are going to bear a relationship to the turnover and profit of the company in question.

I represent in my constituency the headquarters of the Health and Safety Executive, which has been given powers in legislation by Parliament to police health and safety. If there are breaches of health and safety regulations——something with which the hon. Member for Beaconsfield (Mr. Grieve) is familiar because he has done much work in this area——there is a power to fine a  company for breaching them. I am absolutely not somebody who argues for overly regulated businesses, but I am very clear that if we are regulating building in Canary Wharf or the City, or in my own borough around London bridge, we need very tough penalties for people who breach the health and safety regulations and put lives at risk. We know how dangerous those jobs can be, and how people are still killed and injured. There has been a long debate, but health and safety powers are not sufficient. We are debating corporate manslaughter elsewhere in this building. Why are we having that debate? Because there was not thought to be sufficient liability in respect of companies running cross-channel ferries or, potentially, boats on the Thames, when they were negligent, and insufficient penalty if they were in breach.

My question here is again a consumerist point. If the public are to be really protected, the people going into that market must know that they will only breach the regulations, or fail in that respect, at their peril. I want some clear indication of the top-level thoughts in the minds of Ministers for individuals and for companies. In relation to those issues, the one thing that most frequently comes up as an area where things can go wrong and people can fiddle the system, is in finances. There is always concern about the accounts of firms, and law firms, and many of the firms complained about, have been complained about because they put their money in the wrong account, and then moved money around to the wrong places in the solicitors’ firm.

Are the systems are intended to make life as easy and transparent for people, both the firms and the customer, as possible? For example, at the moment, a company would need to have an annual audit. Rather than having two different processes for providing the financial information to show that the company is behaving itself—which would be absolutely necessary if there were no threat of an investigation with a view to saying something that something improper had happened—is there a way of ensuring that one bit of work is done rather than two? In other words, the money would be collected for the audit and, at the same time, for the purpose of satisfying the licensing authority, so that the company had to produce only one set of figures every year, with one lot of people overseeing it and one occasion on when it was inspected. It would all be done in a way that gave a clean bill of health both in accountancy terms and in licensing terms.

It is no good having a licensing regime or a regulatory regime unless it has teeth, and the teeth are the financial penalties, which need to be large enough. As far as I know, the figures have not been made public, and I should therefore be grateful if the Minister would tell the Committee what the Government envisage will be their advice when the Legal Services Board is set up.

Bridget Prentice (Parliamentary Under-Secretary, Ministry of Justice; Lewisham East, Labour)

There is no actual figure in my mind at present that would be appropriate. I agree with the hon. Gentleman that there must be appropriate fines. However, fining is only one of the available tools; punishments such as suspending, revoking the licence, referring people to other regulators and disqualification from holding specific positions are also available. It will be for the authority to consider which of those is most appropriate in the circumstances of the case.

As the hon. Gentleman said, some organisations are far bigger than others, so the fines need to be appropriate in that respect, too. It brings to mind that to fine premiership footballers £5,000 a week is a drop in the ocean for most of them and does not make a great deal of difference to their subsequent behaviour. I therefore have some sympathy with the hon. Gentleman’s view that the fine must reflect the ability to pay.

This part of the Bill will not come into force until 2011 and between now and then we will look at benchmarks elsewhere and consult stakeholders, who include consumers, so I will not give a figure at the moment. I simply say that the hon. Gentleman is right: from the consumer’s point of view, justice has to be seen to be done, as well as being done. The perception that a person is being fined appropriately is crucial to the consumer’s confidence.

Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

Subsections (3) and (4) of clause 95 state that the board will make rules, which will be agreed by the Government. It will be appropriate at that time. That is the method by which this will all be worked out.

Simon Hughes (Party President, Cross-Portfolio and Non-Portfolio Responsibilities; North Southwark & Bermondsey, Liberal Democrat)

That was what I said.

Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

I do not understand what it is that the hon. Gentleman does not understand.

Bridget Prentice (Parliamentary Under-Secretary, Ministry of Justice; Lewisham East, Labour)

It is not for me to explain to my hon. Friend how the mind of the hon. Member for North Southwark and Bermondsey works. All I can say is that I do not have a figure in mind, for the very reason that my hon. Friend gave: the matter will be looked at over the next few years in consultation with stakeholders, which will, as I said, include consumers. We will consider the benchmarks set in other situations. The board will come to a conclusion, and, as my hon. Friend rightly points out, that will go through the Lord Chancellor. I cannot be more explicit than that.

It is sensible to check financial propriety but, again, there are detailed arrangements that the board and the licensing authorities will want to consider. The decision will be for them.

Simon Hughes (Party President, Cross-Portfolio and Non-Portfolio Responsibilities; North Southwark & Bermondsey, Liberal Democrat)

If the hon. Member for Wirral, West had been listening earlier, he would know that I particularly cited the two subsections to which he referred. I am fully aware of the process, but it is none the less important to flag up the importance of the issue now to make the point, which the Minister picked up, about fines needing to be proportionate to ability to pay, in terms of turnover, capital and other financial considerations and to see whether the Government have addressed the issue. Ministers said that they had not done so yet, which is a half-reasonable answer. The sooner the Government start to share their thoughts on this issue, the sooner people will understand the real implications of the Bill and whether the legislation will have teeth.

I end where I began: these are important issues, and unless the fines can be made big enough, this sanction will not be the sanction that the Bill potentially allows it to be.