Clause 26
Regulatory Enforcement and Sanctions Bill [Lords]
12:45 pm

Mark Prisk (Shadow Minister, Business, Enterprise and Regulatory Reform; Hertford and Stortford, Conservative)

I beg to move amendment No. 16, in clause 26, page 13, line 3, at end insert—

‘(c) the regulated person gives 3 months notice that it wishes to terminate the nomination’.

The central purpose of this probing amendment is to enable businesses to terminate the primary authority nomination. As Members will be aware, clause 26 deals with the nomination of primary authorities, but, under subsection (5), it also deals with revocations, which are permitted by the LBRO either where the LBRO considers an authority to be “no longer suitable” or where

“it considers it appropriate to do so for any other reason”.

The latter provision is found in subsection (5)(b). Amendment No. 16 would give a business the ability to indicate its wish to end that nomination. After all, clearly primary authorities will secede only if there is a two-way relationship. It is important for a regulated business to know that, if it no longer wishes to proceed  with that relationship, it has the ability to seek a termination, but the clause does not make that clear. It would be most helpful to the businesses concerned if the Minister assured us that subsection (5)(b) will give them that ability.

Lorely Burt (Shadow Minister, Department for Business, Enterprise and Regulatory Reform; Solihull, Liberal Democrat)

I have growing concerns about the clause. The problem is that the LBRO can nominate a local authority to be a primary authority without its consent. Under the clause, a democratically elected local authority will not have the right to decide on the service provision that would best suit the needs of the local population and economy. Does the Minister agree that the LBRO having the power to decide how a local authority should deliver services is an undemocratic and unnecessary centralisation of control, which runs counter to the principles of the system of local area agreements? Furthermore, surely a forced relationship between a council and a business would not be productive or effective for either party. Surely, a primary authority relationship will work only if both parties want to participate.

Pat McFadden (Minister of State (Employment Relations and Postal Affairs), Department for Business, Enterprise & Regulatory Reform; Wolverhampton South East, Labour)

This is an important discussion, because how such relationships will work is at the heart of part 2 of the Bill. As the hon. Member for Hertford and Stortford pointed out, the clause deals with how the establishments are to be set up and revoked. They could be ended for several reasons. For example, LBRO might consider a local authority to be no longer suitable for the task, or a business might relocate its headquarters from one local authority area to another and request  that a nomination be revoked so that it could enter a new primary authority partnership. There might be a takeover of one supermarket chain by another, as has happened in the past, in which the supermarket that is taking over the other already has a relationship with a primary authority. Alternatively, a business and its primary authority might be abusing the provisions and LBRO might wish to change their partnership.

This issue was raised on Second Reading when sweetheart deals, in which relevant businesses and local authorities have cosy relationships but enforcement authorities have a problem, were discussed. There has to be a mechanism for dealing with such situations, but the amendment would not put LBRO under a duty to change the situation. The examples that I have given involve situations in which a business or a regulated person requests that a nomination be revoked and it is open to LBRO to do that. The amendment would not put LBRO under a duty to do so, but would allow it to. That is already within its power, but it raises questions about whether there are circumstances in which LBRO could refuse a request from a business to put an end to a partnership. The Bill should allow LBRO flexibility to work with a business and a local authority to put a matter right if the relationship is not working. It would not be helpful, in all cases, to have a statutory requirement on LBRO to put an end to a partnership without question. I understand what the amendment is trying to do, but I am not sure that that is the right way to do it.