Clause 36
Regulatory Enforcement and Sanctions Bill [Lords]
5:00 pm
Pat McFadden (Minister of State (Employment Relations and Postal Affairs), Department for Business, Enterprise & Regulatory Reform; Wolverhampton South East, Labour)
If you will permit me, Mr. Chope, I will go slightly wider than may be appropriate and pause for a moment to talk about part 3. This takes us into the second significant area identified by Hampton in his report. The first area was inconsistency, and we talked about that a lot in parts 1 and 2 regarding the establishment of LBRO and the primary authority principle that we were debating.
We now turn to Hampton’s other significant criticism of the regulatory regime—inflexibility. This part of the Bill begins to address that issue, and gives greater flexibility to regulators in terms of the sanctions that they can impose. Some of those sanctions are monetary, some involve corrective actions or instructions for corrective measures to be taken, but they all address the issue of inflexibility and the disproportionate nature of having a one-club policy to enforcement—that of criminal prosecution.
Hampton’s work was built on by Professor Richard Macrory who, if memory serves me, published his report in November 2006. Macrory recommended a number of the different sanctions outlined in part 3, which acknowledges and introduces different powers, including fixed penalties, available monetary penalties, stop notices and so on. We will help ensure that rogue traders—or, as it says in my speaking note, “rouge traders”—will not continue to receive an unfair advantage by failing to adhere to the law, and we will increase confidence further in the regulatory regime.
The proposals have been welcomed by bodies including the Engineering Employers Federation, the Federation of Small Businesses, local authority enforcers and the Institute of Directors. There is widespread support for more flexibility in the system and clause 36 specifically allows a Minister of the Crown or a Welsh Minister to make an order providing for those new civil sanctioning powers as an alternative to criminal prosecution.
As I have said, the sanctions will provide regulators with more proportionate, flexible and effective ways of targeting regulatory non-compliance. Before making an order, the Minister must be satisfied that the regulator will exercise such powers in a manner that is in line with the principles of good regulation—we talked about that this morning—in a way that is transparent, accountable, proportional, consistent and targeted and used only in cases where action is needed. The Minister must seek the approval of the Panel for Regulatory Accountability, whose terms of reference include ensuring that the burden of regulation on business is kept to a minimum. That process is set out on pages 28 and 29 of a guide to the Bill published by my Department.
The Bill also requires the Minister to consult before making an order, and subjects it to affirmative resolution procedure. That means that the relevant parliamentary processes will apply to that order. Part 3 is an important part of the Bill. It addresses the issue of inconsistency, it gives greater flexibility to the regulators and it ensures that we will tackle these rouge traders.