Report received.

Clause 1 [LBRO]:

moved Amendment No. 1:

Clause 1, page 1, line 5, leave out "Local Better" and insert "Better Local"

My Lords, the name proposed for the new quango to be established by the Bill is misleading to the point of falsehood. The name proposed in my Amendment No. 1 is the minimum required in the interests of truth.

This office should not really be called the Local Better Regulation Office; it should be called the National Office for Regulating Local Government Regulators—or something of that sort. That is its purpose and what it is going to do. The body is not local but national. As a test of that, imagine oneself sitting in an office somewhere, picking up the telephone and somebody on the other end saying, "I am from the Local Better Regulation Office". Would you suppose that he or she came from a local or national office? You would assume at once that they came from something local. That proves the point I am trying to make.

The formulation in the amendment was suggested in Committee by the noble Baroness, Lady Hamwee. It is the minimum rather than the ultimately desirable and I put it forward on that basis. I do not consider myself a pedant, although I realise that no pedant ever does. I am a disciple of Lynne Truss and was a disciple of Sir Ernest Gower, who wrote an excellent book on plain words. The Civil Service guide to clear English was written in about 1948 but lasted a long time in Civil Service circles; I do not whether it is still used.

The name should be made clearer. Perhaps the body should be called the "Temporary National Regulator". I am sorry that the noble Lord, Lord Jones, is not with us. He described it as a temporary body and said that it would all be wound up before long. No doubt we shall hear about that on a later amendment. This is not a quango but a tango. The noble Lord, Lord Jones, has looked in occasionally, a bit like the Cheshire Cat. He comes and grins at us from time to time, then fades away again, leaving somebody else to move the amendments in his name.

It is important that we describe things correctly. The Bill does not do so. The noble Lord, Lord Bach, was kind enough to remind me in correspondence that all we are doing here is putting on a statutory basis something that is already done voluntarily to a considerable extent. Yet there is a world of difference between something done voluntarily and something done statutorily, particularly for the local authorities whose powers are in effect being taken away or certainly impinged on. At present, both the primary authority and the local authorities involved must agree. In future, that will all be laid down. Later amendments, notably my Amendment No. 39, attempt to remedy this. The difference is that, when a dispute arises, ultimately the matter, if it is statutory, can come to the courts to decide in a way that it could not if it was voluntary. There could be appeals all the way up to what we should call the Middlesex Guildhall by the time this gets going. Putting this on a statutory basis is one thing; we can discuss that in later amendments. Yet the body is really a national office and we should recognise that at a minimum by accepting Amendment No. 1. I beg to move.

My Lords, this was indeed an idea that came to me during the debate in Committee. What can I say? I am a pedant.

My Lords, the noble Lord, Lord Cope of Berkeley, has made a good case for his amendment. It is certainly a much better case than that made by the noble Baroness, Lady Wilcox, on behalf of the Opposition, when she wanted to change the word "Regulation" to "Deregulation". That seemed to me nonsense. We all know that regulation is necessary, whether we are talking about food safety, health and safety of workers, consumer protection or whatever. What is needed is better regulation—or better administered regulation—which is fairly and adequately enforced.

The noble Lord, Lord Cope of Berkeley, makes a good case for altering the name. What are we about? We are about better regulation and he wants to say "Better Local Regulation Office" instead of "Local Better Regulation Office". Of course, he is quite right that it is a national body and the existing name could confuse people in the way that he described.

The only qualification that I have is that we are where we are. The name "Local Better Regulation Office" has been with us for some time; the noble Lord admitted that it was there as a corporate body before it was suggested that it become a statutory body. The name is familiar—the LBRO has advertised posts under that name—so what is the case for changing it now? I very much doubt that that case has been made, as distinct from the case that could have been made if we were starting from scratch.

My Lords, I support my noble friend Lord Cope on both amendments. As he has extensively argued, the appellation "Local Better Regulation Office" is an obvious misnomer, as the office is an attempt at central, national co-ordination. What is currently regulated by local authorities will come under the jurisdiction of this new national body. Names of bodies should indicate the functions of those bodies and, while the Minister might pick at our argument for being pedantic or irrelevant, I would argue that it is important to have clarity of intention from the start. Misinterpretation can lead to mistakes and the regulatory system cannot afford to suffer mistakes—nor should it.

We are rather spoilt on this Bill and in the Department for Business, Enterprise and Regulatory Reform by having the noble Lord, Lord Jones, as our Minister of State as well as the noble Baroness, Lady Vadera, as our Parliamentary Under-Secretary of State, with the whole thing backed up by the noble Lord, Lord Bach, who is one of the most experienced members of the Government's Front-Bench team. We are being spoilt rotten—and I am only too delighted to welcome the noble Baroness, Lady Vadera, to the Bill, which she has now taken over and on which, I presume, she will be with us to the end.

My Lords, I thank the noble Lord, Lord Cope, for tabling Amendments Nos. 1 and 2. I take this opportunity also to thank noble Lords for the time and attention that they have accorded to this important Bill. We have listened and we have considered carefully all the amendments proposed. We have made numerous concessions which we believe will improve the Bill, please noble Lords and enable us to complete our consideration of the Bill today. However, the first amendment is not one that we can accept.

I shall explain to the House why we chose the name "Local Better Regulation Office". We completely accept that the office is not a local one but a national body. However, the phrase "Better Regulation", which appears in the middle of the LBRO's name, refers to a well recognised concept in policy making. The Better Regulation Executive, which leads across government on regulatory reform, is a part of my own department; indeed, I am the Minister for Better Regulation. The LBRO is about better regulation at a local level, which is local better regulation. I would not dream of suggesting that anyone is being pedantic, but we could have quite a long debate on semantics. The key issue is that the LBRO will promote better regulation locally. That could be phrased as local better regulation or better local regulation, but the former name maintains the better regulation brand and is therefore, I believe, the correct sequence of words in this case.

As my noble friend Lord Borrie suggests, the LBRO has been in existence since last year. It already has brand recognition. It has written to every local authority in England and Wales. It has a draft strategy that has been consulted on in its name. Changing its name now without good reason would lose the value of that brand recognition and require the office to spend time rebuilding its reputation. In addition, there would be administrative and legal costs associated with any change of name, which we estimate would be about £35,000. These would include the cost of rebranding stationery, user guides and websites, as well as legal fees on, for example, company documentation, pensions, payrolls et cetera. I understand that £35,000 may not seem much but, coming from the Treasury, I should point out that it is the annual salary of an average teacher or policeman. I understand the point that the noble Lord makes but I hope that in the light of what I have said he will feel able to withdraw the amendment.

My Lords, that was an interesting short debate. I am grateful for the support for my proposal not only from the noble Baroness, Lady Hamwee, from whom I got the idea in the first place and whose support was therefore to be expected, but also from the noble Lord, Lord Borrie. However, the noble Lord, Lord Borrie, also argued, as did the Minister for Better Regulation, that it would be a mistake to alter the name now. I am mildly shocked by that suggestion. What is being said is that, because the Executive decided something a few months ago off their own bat, Parliament is going to be ignored and whatever we say should not be taken seriously. What is being said is, "We have already decided that. It was all settled. We cleared that up in government". If we accept that sort of argument in Parliament, we will, if we are not careful, waste our time discussing legislation at all. There is a considerable danger in that. I am not sure what the Government are doing in presuming to lay all these things down and then saying, "Sorry, we have decided that already. Forget it. Do not bother even discussing it".

The Minister herself accepted that this body is not a local body, which is what its title suggests. She also advanced the idea that the cost of changing the name was too great. Frankly, coming from this Government, that is rather amusing. This Government have changed the names of departments of state more frequently than any Government I have known. They have mucked about with the titles of Ministers, sometimes very frequently, reshuffled departments, rewritten everything and moved departments about, sometimes in large ways and at enormous expense. Yet they say that they cannot possibly afford a little money to change this name, which they decided—wrongly in my opinion—a few months ago.

I am not happy with the answers that have been given to me and I urge the Government to think again. This Bill started in your Lordships' House. It has not yet been to another place, so there is plenty of time for the Government to think again when it is passed down the Corridor. As a matter of fact, they have taken a lot of time between Committee and Report. The Bill has not been overpressed through this House. I make no complaint about that, but the Government have time to rethink this matter, as I think they should, for the reasons that I have advanced. I have made the case and I have been supported around the House, at least on the basis of the case. I now beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

moved Amendment No. 3:

Clause 1, page 1, line 7, at end insert—

"(4) LBRO shall cease to exist on 1st January 2014 unless the Secretary of State provides an order under section 73(3) of this Act."

My Lords, I once again bring for us to debate a sunset clause to ensure that the provisions of the Bill cannot continue past 1 January 2014 without parliamentary scrutiny. The Minister may have been a little too quick to dismiss my initial—

My Lords, I thank the noble Baroness, Lady Wilcox, for giving way so early in her remarks. I intervene with a view to assisting the House on this matter. It may help the House to know that, when I respond, I will propose making a statutory provision for a review of the LBRO's effectiveness in three years—two years before the proposed date in the sunset clause. This provision would be similar to that in Part 3 of the Bill. We believe that it would be a more tailored approach, which would achieve the aims intended by the noble Baroness and noble Lords but without the uncertainties and unintended consequences that the sunset clause would bring.

Well, my Lords, I have a wonderful speech here. It took my researcher Violet and me ages to write. Where did I stop? I said that once again I bring for us to debate a sunset clause to ensure that the provisions of the Bill cannot continue past 1 January 2014 without parliamentary scrutiny. If I heard the Minister correctly, she will propose an undertaking to review the Local Better Regulation Office in three years. If that is what I heard—I would like to think that that was what I heard, and she is not interrupting me again to tell me that I am wrong—I do not need to continue with this speech.

Noble Lords:

Hear, hear!

My Lords, I would prefer to say that that would be a welcome and reassuring measure. I look forward to what she will say. It is not for us to prevent the Government from getting their business through; it is our job to improve the Bill where we can. If that is what we are about to do, that would be very helpful. I beg to move.

My Lords, the amendment should refer to Section 74(3), not Section 73(3).

My Lords, I entirely endorse the remarks of the noble Baroness welcoming the noble Baroness, Lady Vadera, to the Front Bench. I am slightly disappointed, because I was about to place a bet of £10 for every time a Tory Peer stood up and made a slightly childish comment about the actions of the noble Lord, Lord Jones. At the rate they were going, I would probably have had £1,000 by Easter. However, I endorse the noble Baroness's remarks and welcome the Government's concession. As the Minister will be aware, sunset clauses are a topic dear to the heart of our party and this is a satisfactory compromise, which I welcome on behalf of these Benches.

My Lords, I just make the point that Clause 17 already provides for the possibility of a government order to be made to dissolve the Local Better Regulation Office when its purpose has been achieved. That is surely much better than an arbitrary date as chosen by this amendment. We also have my noble friend's point about the review, so that, well before the date chosen by the Opposition for a complete but arbitrary cut-off point, there will be a review. No doubt there would have been one anyway because of the power in Clause 17 to dissolve the office at some future date.

My Lords, the House already knows what the Government intend to do and I do not believe that I should detain noble Lords any longer on this issue. I hope that the noble Baroness will feel able to withdraw her amendment.

My Lords, I thank the Minister. I am grateful for what she said and for the gracious way in which the noble Lord, Lord Razzall, came forward and spoke. He always says nasty things about us. I do not know why he goes on like that. I will give him £10 if he wants £10: he does not have to gamble on how many times we mention the noble Lord, Lord Jones. I say to the noble Lord, Lord Borrie, that politics is a messy old business. "Perhaps" is not good enough for us, so I am much happier to have the Minister's reassurance today. I am now happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [LBRO: supplementary]:

moved Amendment No. 4:

Schedule 1, page 36, line 32, at beginning insert "half"

My Lords, the noble Lord, Lord Hodgson, raised an important point in Committee about the provisions in the Bill for board membership. As he said, the Bill allows the chair to appoint ex officio members—in other words, employees of the LBRO—to the board. Currently, the number of ex officio members may not exceed the number of ordinary members. This may allow the chairman to form an effective majority over the ordinary members of the board simply by appointing the maximum number of employees as ex officio members. While we think this is unlikely in practice, it is clearly unacceptable if we wish to make the right provision for the good governance of the new body.

We agreed in Committee to consider restricting further the number of ex officio members. Having considered the matter, we believe that the approach suggested by the noble Lord in Committee—in other words, that the number of ex officio members should be limited to half the number of full board members—is the right one and we are grateful to him for raising the issue. The effect is that employees may only ever form one-third of the committee, removing the risk that they might make up an effective majority.

I know that there is an amendment in the name of the noble Lord. I have had the good fortune to discuss this matter with him prior to today. I hope that he will not move his amendment. I beg to move.

My Lords, I briefly thank the Minister for his kind comments and, indeed, for his amendment. When we discussed this in Grand Committee, the noble Baroness, Lady Hamwee, suggested the idea of half less one. I tabled an amendment to this effect but when I played around with the practical implications for the structure of the board, it was clear that the original idea was better. Therefore, I shall not move my amendment and I am grateful to the Minister for adopting the proposal.

On Question, amendment agreed to.

[Amendment No. 5 not moved.]

moved Amendment No. 6:

Schedule 1, page 37, line 6, leave out "five" and insert "three"

My Lords, this takes us back over some territory we discussed in Grand Committee. This pair of amendments has the simple objective of changing the terms of office for board members from two five-year terms to three three-year terms. My arguments in Grand Committee can be summarised as follows. First, the LBRO will deal with private sector companies, and modern corporate governance allows for three three-year terms, not two five-year terms. Since it interfaces with the LBRO, the LBRO should be on the same basis. Secondly, five-year terms are inherently undesirable. A chairman or board member can do a great deal of damage in five years. Thirdly, my noble friend Lord Cope made the helpful suggestion that three-year terms made the board succession question—which he described as the balance between continuity and turnover—easier.

The argument against, which the noble Lord, Lord Borrie, was prominent in advancing, was that this is a public sector and part-time body, and it takes five years to get to know the ropes. It is a public sector body, but a very specialised one. It is established as a body corporate. It is registered with the Registrar of Companies for England and Wales. Paragraph 1 of Schedule 1 suggests that it is not to be regarded as a servant or agent of the Crown. However, it is wrong to say that it takes five years to get to know the ropes. All non-executive directors are part-time. In large private sector companies, three years is considered the right length of time and as striking the right balance between continuity and becoming complacent. The suggestion, also made in Grand Committee, that three-year reappointments unduly increase Ministers' influence was unworthy, because if the members of the LBRO are so weak as to fall prey to this, a five-year term of office will make no difference.

The Minister suggested that he wished to use the precedent of the Serious Organised Crime Agency. I really do not think that SOCA, as a law enforcement agency, is comparable to this issue. He finally pointed out that five years was, in any case, the maximum period and that it was possible to remove a chairman or board member in less than five years. But we all know that the reality is that, once people are appointed, it involves very great agony and effort to turf someone out before the end of their maximum turn. The LBRO interfaces with private sector companies, which are set up on a "three-by-three", not a "five-by-two", basis. The LBRO should be the same. That would be better for it and will make it more effective and responsive to changes in the marketplace. I hope that the Minister will think again. I beg to move.

My Lords, I hope that I have never said, either in Committee or elsewhere, that it is necessary to be on a body for five years to get to know the ropes. I expressed my view that five years should be the maximum period, because it takes a year or two—especially for a part-timer—to be useful and to get to know the ropes. Then one needs a reasonable time to be useful, rather than thinking, "In a few months' time, I have to leave". That was all I was saying. I hope that I did not go as far as the extreme statement attributed to me by the noble Lord.

My Lords, paragraph 6 of Schedule 1 makes provision for the tenure of board membership, and paragraph 6(2) limits board members to terms of no more than five years; paragraph 6(5) limits board members to a total period of appointment of no more than 10 years. The noble Lord, Lord Hodgson, returns to a theme discussed in Committee, and I am sorry that, on this occasion, I will not be able to agree with him.

As my noble friend has just said, these are maximum periods for a term and for the total period of appointment respectively. It should be noted that within the Bill it is quite possible to appoint a board member for a term of only three years. The noble Lord, Lord Hodgson, has already mentioned what my noble friend Lord Borrie said in Committee—that, unlike board members in the world of business and commerce, the LBRO's board will be taking on part-time posts and it will take them some time to learn the ropes. We take the same view.

While of course there are arguments for and against limiting the terms of the LBRO's board members to three years, on balance we believe that it is preferable to include flexibility in the Bill and to allow for the possibility of a five-year term for a board member. That addresses the point made by my noble friend on the previous occasion, and now on Report. That is the Government's view and I hope that the noble Lord—although I am sure he is not persuaded—will not press his amendments.

My Lords, I am grateful, as ever, to the Minister for his courteous response to my amendments. I am not persuaded that his case is right for achieving the best governance in this organisation. All non-executive directors are part-time, and if you are to be a non-executive director of a major international company, you have to get to know and become familiar with the company in three years, and you can be reappointed. I understand the Minister's viewpoint; it is not an open-and-shut case. I accept that there are arguments on the other side that he and the noble Lord, Lord Borrie, have advanced. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

Clause 4 ["Relevant function"]:

moved Amendment No. 8:

Clause 4, page 3, line 18, leave out subsection (7) and insert—

"(7) The Secretary of State may by order determine whether, for the purposes of subsection (3), an enactment made under section 2(2) of the European Communities Act 1972 (c.68) is made with respect to any of the matters specified in that subsection.

(7A) An order under subsection (7) requires the consent of the Welsh Ministers where—

(a) the determination affects the application of this Part in relation to local authorities in Wales, and(b) the enactment made under section 2(2) of the European Communities Act 1972 relates to a Welsh ministerial matter."

My Lords, I also speak to government Amendments Nos. 12 and 37. Amendments Nos. 8 and 37 are linked. Amendment No. 8 will require that any direction issued by the Secretary of State under Clause 4(7) is made by way of an order subject to the negative resolution procedure. Amendment No. 37 is consequential to this. These amendments respond to the comments of the Delegated Powers and Regulatory Reform Committee regarding Clauses 4(3) and 4(7) and our treatment of the relevant statutory instruments made under Section 2(2) of the European Communities Act 1972. The committee has stated that it is content with the approach we have taken in Amendment No. 37. There was a good debate in Committee and I would like to explain our approach.

The scope of Parts 1 and 2 is determined by reference to the "regulatory functions" of local authorities arising, first, under any of the Acts listed in Schedule 3 and statutory instruments made under those Acts; and secondly, under secondary legislation made under Section 2(2) of the European Communities Act. The use of category headings to capture the secondary legislation made under Section 2(2) of the ECA is intended to facilitate the interpretation of the scope of Parts 1 and 2 of the Bill. In most cases, it will be clear whether a set of regulations falls within one of the category headings. Such regulations themselves generally include a heading such as "Animal Health" or "Consumer Protection". Where there is doubt, a power has been included to allow the Secretary of State to determine whether an instrument made under Section 2(2) falls within the scope of one of the category headings at Clause 4(7). Amendment No. 37 will make this determination subject to the negative resolution procedure. I hope that noble Lords will feel able to support these amendments and hope that we have met the concerns of the Delegated Powers Committee and the Committee on the Bill.

On Amendment No. 12, it was noted in Committee by the noble Baroness, Lady Hamwee, that while the LBRO is required to consult persons who are subject to regulation—usually businesses or their representatives—before issuing guidance, it is not explicitly required to consult local authorities. It has always been our intention that the LBRO should do so under the broader requirement to consult such persons as it considers appropriate, set out at Clause 6(4)(b). We were therefore very happy to consider the noble Baroness's amendment, which would have added a specific requirement to consult local authorities. Amendment No. 12 has this effect. It requires the LBRO to consult such local authorities—or their representatives—as it considers appropriate. This reflects the fact that guidance may only affect a subset of local authorities. For instance, guidance on trading standards would only be relevant for unitary and county councils. The LBRO needs the flexibility to conduct a more tailored consultation than an unqualified requirement to consult all local authorities would require. I beg to move.

My Lords, I welcome these amendments. The letter on Amendment No. 8, sent to noble Lords following Committee by the noble Lord, Lord Bach, was particularly helpful. It certainly prepared me for this amendment and persuaded me. I also welcome Amendment No. 12 and am grateful to the Government for taking up the point.

On Question, amendment agreed to.

Clause 5 [Objective relating to general functions]:

moved Amendment No. 9:

Clause 5, page 3, line 32, at end insert "and efficiently"

My Lords, we now come to the general functions of the LBRO and are ploughing some familiar ground, but it is ground where the nature of the argument has moved on since we debated this in Grand Committee. The purpose of the amendment is to add "and efficiently" to the word "effectively" as the objective relating to the general functions of the LBRO with regard to local authorities in England and Wales in Clause 5.

Once again, I take the Minister back to the Regulators' Compliance Code, which states:

"This Code supports the Government's better regulation agenda and is based on the recommendations in the Hampton Report. Its purpose is to promote efficient and effective approaches to regulatory inspection and enforcement".

It does not say only "effective"; it says "efficient and effective". When we discussed this in Committee, the Minister was quite sympathetic, saying that the amendment had,

"given me food for thought".—[Official Report, 21/1/08; col. GC 35.]

I therefore left the Committee stage with a spring in my step but, sadly, since then, his sympathy appears to have drained away, so I am returning to the charge this afternoon.

The Minister may say that the quotation I have given concerns only the Regulators' Compliance Code and not the Bill. I do not entirely accept that because regulation should be all of a piece. Indeed, the purpose behind the Bill is to achieve an even, level playing field with regard to better regulation, and that is the reason behind the creation of the LBRO. Even if I were inclined to accept it, the guide to the Bill, at the top of page 11, refers to the general duties created by the Bill and lays down three duties. It goes on to say:

"These duties closely relate to the Regulators' Compliance Code and the Legislative and Regulatory Reform ... Order ... which are currently before Parliament ... The duties created under the RES Bill"— the Bill we are considering this afternoon—

"will work alongside the Regulators' Compliance Code and the five principles to ensure that the principles of better regulation are embedded in the delivery of local authority regulatory services".

It therefore seems to me that we are absolutely ad idem on the compliance code and the legislation that we are debating today.

The Minister was kind enough to offer us a meeting to discuss this matter in more detail, and I am extremely grateful to him and the noble Baroness. We spent an hour going through some of the trickier issues that we are discussing here this afternoon, and we had a chance to discuss more closely his loss of sympathy—the fact that his intention to give me a fair hearing had somehow disappeared—which appeared to be due to a potential clash with the duties of the Audit Commission. Adding the word "efficiently" in Clause 5(1)(a) would cause difficulties with the Audit Commission, given the wording in that subsection, which reads:

"In exercising its functions under sections 6 to 10 LBRO has the objective of securing that local authorities in England and Wales exercise their relevant functions".

It was the duty of the Audit Commission to judge efficiency and therefore, according to the Minister and the Bill team, it was all right for the LBRO to require local authorities to be effective—there would be no clash. However, requiring it to be efficient causes a clash.

I thought that that was slightly counterintuitive, so this morning, while preparing for this afternoon, I went to the Printed Paper Office and got out the Audit Commission's two most recent reports. The first is called Fire and Rescue Performance Assessment, and the summary at paragraph 8 on page 3 says:

"However, all services are achieving some efficiency savings, and 31 fire services ... are meeting their efficiency targets".

I thought that I now understood this—I could see what the Government were driving at. Clearly there would be a clash if we had efficiency. However, I then went on to paragraph 9, which states:

"This has been achieved through better arrangements for consulting local people and more effective work at the neighbourhood level".

So, clearly the Audit Commission is measuring effectiveness and efficiency. However, if we turn to page 3 of the second report, which is called Positively Charged: Maximising the Benefits of Local Public Service Charges, there is no mention at all of efficiency. The only reference in the summary reads:

"Councils do not always make the most effective use of their charging powers".

Therefore, I have some difficulty seeing why the Government now argue that "efficient" will give rise to a clash when, in the two Audit Commission reports I picked out at random, effectiveness is clearly an important part of their role.

The reality is that the LBRO should ensure that local authorities are both effective and efficient. The Minister knows that because that was his reaction when he heard the arguments put to him in Committee. The prospect of a clash with the Audit Commission is, to be candid, a smokescreen. The Minister should trust his instincts and accept the amendment. I beg to move.

My Lords, I have a lot of sympathy with what has been said by the mover of the amendment, the noble Lord, Lord Hodgson. I recalled that in Committee my noble friend Lord Desai indicated that it was rather difficult to think of saying that a local authority has been effective in its job without also considering whether it had been efficient. The two seem to go together like twins and that led me to think that the proposal in the amendment of the noble Lord, Lord Hodgson, is redundant because "effective" covers the same area. However, to be on the safe side and make it clearer to local authorities, businesspeople, consumers and whoever is concerned with the provision in the Bill, it may well be a good idea to have "efficient" added to "effective".

The noble Lord has done his homework in studying a selection of Audit Commission reports and has made some important points. I was not terribly convinced of the explanation given in Committee by my noble friend Lord Bach when in rejecting "efficient" he said that that was a matter for the Audit Commission. I fully accept that detailed assessment of local government management and its efficiency is indeed a matter for the Audit Commission, but I do not see a clash between that assessment that the Audit Commission pursues and the idea in the amendment that the LBRO should consider the effectiveness and efficiency of local authorities. Therefore, I still have sympathy with the amendment proposed by the noble Lord.

My Lords, I spoke in Grand Committee and I continue to be astonished that, in a Bill designed to reduce red tape, all that we have been doing is adding words, phrases, requirements and tasks. Therefore, whenever we cut red tape, we make sure that another nice bouquet of it is handed on to whoever has to abolish it. Why have two words when one will do? The whole principle of business is "save money, save costs and save time" and I do not think anything is gained by having two words where one will do.

My Lords, the point that the noble Lord, Lord Desai, has just made about reducing or adding to the burden provoked a smile from the Government Front Bench. It is a view that I share, but the Minister may be about to tell us why we are both wrong.

I tabled an amendment in Committee that referred to what I think the noble Lord, Lord Bach, called the mantra of "efficiency, effectiveness and economy"—with which the Audit Commission is concerned. I tabled that amendment because I wanted to understand how the work of the LBRO interfaced with that of the Audit Commission. I was then persuaded to withdraw it. It seems to me that to add one extra limb in this clause would be inappropriate. I can see that the LBRO's business is to support and to encourage effectiveness among local authorities, which is entirely within its remit. Efficiency on the part of local authorities is not its business. I would be unhappy if the provision were extended in this way.

My Lords, I support my noble friend Lord Hodgson of Astley Abbotts in his Amendment No. 9. It seems to me to be a sensible idea to ensure that the LBRO is tied to good practice through the Government's own regulator's compliance code. It makes a qualitative requirement that the LBRO fulfils its duties with adequate success. In these debates on regulation, we need to ensure that the LBRO is a body fulfilling a purpose. When the regulatory system is so hideously complex, the last thing we need is another body that will further complicate the system, let alone an extra word. We need to find solutions and clarity and unless we stipulate that, I believe we are in danger of missing an opportunity here.

My Lords, I thank the noble Lord, Lord Hodgson, for raising this issue. In our view, the noble Baroness, Lady Hamwee, had it absolutely right. She speaks with a lot of experience of local government—some of us have some experience of local government but not to the extent that she has. The point she makes is right. Efficiency is very much about the internal workings of a local authority. I will not say that it has a specific meaning, but it has a pretty clear meaning in local authority terms. Efficiency is about the internal workings of local authority regulatory services. The LBRO is looking at the external manifestation of regulation: the effects or effectiveness of regulation.

The efficiency of local government is a matter that is looked at by the Audit Commission. We are not afraid of clashes with the Audit Commission—the noble Lord is wrong about that—but he is aware of our belief that the Audit Commission already performs the role of seeing that a local authority is performing efficiently and it has performed that role perfectly well. It would be ironic to have two public bodies performing the same function in the name of efficiency and, in the process, to put local authorities under a duty to account to both at the same time. To have to account to the Audit Commission is a responsibility on each and every local authority. We are just confusing issues if we say that there should also be an obligation under this Bill to the LBRO.

The word "effective" in the LBRO's objective seeks to capture maintaining what can only be described as regulatory outcomes, which sounds rather clichéd; for example, consumer protection, which is key to the policy behind the LBRO. We do not think that the use of the word "effective" in the context of the Audit Commission has the same meaning. For that reason, we see no clash with regard to the term "effective" from the quotes given to us by the noble Lord when moving his amendment. It is not because it adds an extra word to the Bill—although in general terms my noble friend Lord Desai is right that we will add the words "in writing" later this afternoon—but because there is a confusing of roles. Efficiency is a matter for the Audit Commission and effectiveness is very much a matter for the LBRO. I am sorry that I cannot accept the amendment.

My Lords, I am very disappointed with the Minister's response, as he will understand. I am grateful to the noble Lord, Lord Borrie, for his qualified support for what we are trying to achieve. I understand what the Minister is driving at, but I do not think that that meets the point, which is that the Audit Commission reports comment on effectiveness as well as efficiency. So if you wish to avoid having the same ground climbed twice, you should strike out "effective" as well as "efficient".

Secondly, if this is the case, the regulator's code also needs amending because that refers to both categories as being part of a regulatory function. It is all to do with the internal workings of the regulator. That is not the purpose behind the Regulators'Compliance Code. That code was about the enforcement of regulation. It does not refer to whether a regulator is internally efficient, which is the construction that the Minister is trying to put on my amendment. From my perspective, "effective" means fulfilling its functions and "efficient" means that it is doing it in a way that is the minimum burden to the person who is being regulated. That is to say, is it sending four or five individuals to check where one would do; and are various other aspects of the operation not being fulfilled in an efficient way and a way that is likely in the longer term to place a burden on the regulated business, bearing in mind that what we have here can be charged to the regulated company or the regulated entity? I am unsatisfied and I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 9) shall be agreed to?

Their Lordships divided: Contents, 34; Not-Contents, 172.

Resolved in the negative, and amendment disagreed to accordingly.

moved Amendment No. 10:

Clause 5, page 3, line 34, at end insert", and

(d) in a way which allows or encourages economic progress."

My Lords, spurred on by that enormous success, I return to Clause 5 and the objective relating to general functions. I can be briefer on this occasion than I was on the previous amendment. I again wish to add an additional objective. The amendment requires the LBRO to have regard to the work of local authorities,

"in a way which allows or encourages economic progress".

According to page 6 of the guidance, the Bill implements the Hampton agenda, which includes a principle that regulation should recognise that a key element of activity will be to allow, or even encourage, economic progress and to intervene only where there is a clear case for protection. Somewhere in this better regulation Bill we need to recognise the importance of entrepreneurial and economic activity to the future of this country. It is too easily overlooked.

In Grand Committee, the Minister chided me:

"I am afraid we do not believe that it is necessary or desirable to include provision in the Bill requiring the LBRO to ensure that local authorities carry out their functions in a way that allows or encourages economic progress ... it is hard to believe that a local authority would do the opposite".—[Official Report, 21/1/08; col. GC 42.]

I wish I always had his confidence. In deference to him, I shall leave aside the wilder shores that his party reached in the 1970s, which brought this country to its knees, but there is a much more prevalent, softer and insidious possibility because local authorities can be very risk-averse. The benefits from economic success, entrepreneurial activity and dynamism accrue to those involved, but when there is a failure, the fallout can rebound on the local authority. The local press can ask, "Who allowed it? How was it permitted? Should someone not have stopped it? What was the local authority doing?". We need to make sure that we have a better way of dealing with this, and I think that if we fail to mention in the Bill the fact that economic progress is the wellspring or activity that will enable us to do many of the things that we, whatever our political persuasion, think are desirable for this country, we are failing the better regulation agenda, and we are failing what Hampton set out as his principles. I beg to move.

My Lords, I have a problem with this amendment too. Local authorities have powers in regard to the three limbs of sustainable development—economic, environmental and social—and to extract one and put it in the Bill would distort the picture. I have written a note to myself that this goes too far. The remit of the LBRO is quite specific and clear, and this is outside the way in which the Government have designed it. It also goes too far for local authorities.

That is not to say that economic progress should not be encouraged but it would distort the responsibilities of local authorities to have this provision in the Bill, both by specifically separating it from the other roles and duties which are spelt out, and from the constraints and criteria on how they exercise their regulatory functions. I am sorry to disappoint the noble Lord again.

My Lords, I am also sorry that I am going to disappoint the noble Lord again. As was said in Committee, the phrase the noble Lord seeks to get into the Bill is echoed in the regulator's compliance code, which comes into force in April this year. The code states:

"Good regulation and its enforcement act as an enabler to economic activity", and should,

"allow or encourage economic progress".

However, the code also includes a number of other obligations based on the Hampton principles to which local authorities must have regard. These are: carrying out comprehensive and effective risk assessments; improving compliance through support and advice; not inspecting without a reason; balancing the need for information with the burdens presented by information requests; targeting those who deliberately or persistently breach the law; and establishing structures to ensure accountability and transparency. It is essential for local authorities to have regard to all these obligations and it would be odd and invidious to include only one in the LBRO's objective, thereby giving that one undue weight over the others.

I know that the noble Lord, Lord Hodgson, is keen to ensure that we acknowledge in the Bill the importance of economic activity to the prosperity of this country. The Bill recognises the importance of economic activity and it is designed to ensure that the UK regulatory environment is world class. Where a local authority exercises its relevant functions effectively and in a way that does not give rise to unnecessary burdens, is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, economic progress will follow.

I accept that we may not have made it as clear as possible how the work of the LBRO will relate to the code and that this will have to be addressed. If the noble Lord has done nothing else, he has made that point. The most appropriate place to do this is in the guide that accompanies the Bill. I do not agree with him that this should be included in the Bill and I invite him to withdraw the amendment.

My Lords, the importance of economic activity and success is hard to overestimate. I accept entirely the Minister's point about other matters referred to in the Hampton report. The economic prosperity of this country is so critical that its position vis-à-vis our regulatory framework is central, in a way that some of the other headings that he referred to, while important, are not. Having said that, if the Government are clearly not minded to accept that point of view, I do not propose to ask the House to troop through the Lobbies, as I did a few minutes ago. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 11:

Clause 5, page 3, line 38, leave out "only"

My Lords, the amendment seeks to take out the word "only" from the provision that,

"regulatory activities should be targeted only at cases in which action is needed".

We debated the clause in Committee, where I was concerned to understand the difference between acting proportionately, which is required in the same clause, and targeting. During that debate the noble Lord, Lord Whitty, said that he thought that "only" was incorrect, and that it,

"seems not to provide the kind of protection for consumers and others that",—[Official Report, 21/1/08; col. GC 39.]

had been spelt out previously. I think that he was right. Rereading the clause, it seemed that targeting "only", if it is not tautologous, is very close to being tautologous and it is too tight. The noble Lord, Lord Whitty, asked the Minister to have another look at the risk-based approach to regulation and suggested that the matter could be expressed "slightly more subtly". This is not a very subtle amendment but, nevertheless, I hope that it may give the Government an opportunity to argue the case again. I beg to move.

My Lords, we spent some time in Committee discussing the principles of good regulation, which feature prominently in the LBRO's objective. Local authorities are already required to have regard to the principles of good regulation, under the provisions in the legislative and regulatory reform order. That order applies the principles as listed in Section 21 of the Legislative and Regulatory Reform Act 2006. The fifth of the principles, which we are talking about here, states that,

"regulatory activity should be targeted only at cases in which action is needed".

Clause 5(2)(a) follows that wording precisely. The word "only" is what the noble Baroness complains of.

A change in wording here would send somewhat contradictory messages to the LBRO and to local authorities, and would clearly be undesirable. However, I acknowledge that concerns were raised in Committee that "only", which here is attached to the fifth principle of targeting, could cast a cloud over some important work performed by local authorities.

The clause specifies that regulatory activities should be targeted only at cases where "action is needed". That does not mean that local authorities may only act where there is a specific problem. It means that they should target their activities where they are needed more generally. There is no doubt that local authorities will need to do some investigative work to determine if there is a specific problem in the first place. I give an example: a fire authority may want to do random inspections of high-risk premises in its area or a food authority may need to take random samples of food to test for contamination. Clearly those are both cases where action is needed. Local authorities could not do their work in protecting the public adequately without that action. It would not, therefore, be excluded by the principle. However, the principle of targeting suggests that purely routine inspections, with no such meaningful rationale, should not go ahead, and that is obviously right.

Consistency with the existing legislation is critical, but I acknowledge the concerns expressed on this point. Reluctantly, we disagree with the noble Baroness. "Only" should remain in the clause.

My Lords, the Government seem to be hung up on the fact that they have used this phrase in previous legislation. The Minister's argument seemed apart from that to support not only everything that I said—I said it quite quickly—but everything that I thought. I have not looked at the 2006 Act in this context, but if the phrase is wrong here, it would not be right to compound what is perhaps not quite right in that Act. I shall withdraw the amendment, but urge the Government to take another look at the matter. I understand the need to be consistent with previous legislation, because there can be confusion if exactly the same point is dealt with in different ways in different Acts of Parliament. I have made that point on a number of occasions over the years. However, the phrase is not right here. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Guidance to local authorities]:

moved Amendment No. 12:

Clause 6, page 4, line 11, at end insert—

"(aa) such local authorities in England and Wales, or such persons representative of local authorities in England and Wales, as LBRO considers appropriate, and"

On Question, amendment agreed to.

Clause 7 [Guidance to local authorities: enforcement]:

moved Amendment No. 13:

Clause 7, page 4, line 18, leave out "LBRO" and insert "The Secretary of State"

My Lords, before moving the amendments, I acknowledge the great assistance that I have had, both in letters from the Minister and from the Bill team, which directed me to one of the longest links that I have ever tried to tap into my laptop. In the end, I obtained the information for which I was looking. I am truly grateful for that and the other comments that have been transmitted to me in the dialogue on who should have the power to direct.

Amendments Nos. 13 to 18 and 20 to 23 would simply move the power to direct local authorities from the LBRO to the Secretary of State. In Committee, the Minister said:

"The power to direct is intended as a backstop power that might be used where, for example, one or more local authorities persistently acts with disregard for a particular piece of guidance and that disregard is, frankly, detrimental to business or the public or, as could often happen, both".—[Official Report, 23/1/08; col. GC 111.]

That is a pretty stern test. This important statement was and remains welcome as a description of the need for the backstop power. In what follows, I am using—I hope, without plagiarism—persistent disregard as the way of looking at the situation.

The Minister also said on a more personal note that I was a sturdy champion of local government, a charge which I fully accept. However, my concern on this occasion is centred on the relationship between Ministers and Parliament. As the Delegated Powers Committee reported, directions can have a legislative effect. It is one thing when they are used for administrative matters, but another when, as in this case, they change the legal position of the person directed. I believe that the Constitution Committee of your Lordships' House would agree.

Therefore, Parliament needs to be very careful as to whom it gives the power of direction. In this case, when the Minister's test of persistent disregard comes to be considered, it will most probably be when a local authority has either failed to follow Clause 6(3), under which it must have regard to guidance, or, as is much more likely, when it has regard but remains convinced that the guidance is faulty and so should not apply. It is after all human to err. The LBRO will be no exception. It is also likely that if and when a local authority persists in disagreement, there will have been a long and diligent dialogue. The Secretary of State is the best person to resolve the matter. He should retain the backstop power of direction and Parliament should expect him to do so.

There are several other good reasons for this conclusion. Non-departmental public bodies do not now have powers of direction, nor should they. An analogy with the Food Standards Agency has been suggested and I am grateful for a full briefing from it. There is one power of direction which enables the agency to bring a food authority into line, subject to an order in the High Court. This power has never been used. It is certainly not a precedent for the interrelated purposes of Clauses 6 and 7.

Further, the giving of the power to the LBRO would make it in all essentials judge and jury, not only in its own approach to persistent disregard but also on behalf of regulators, thus widening the power in a completely unprecedented way. Then there is the obvious point that an unelected public body can enforce compliance on an elected local authority. Finally, the LBRO will face a steep learning curve. It is to be a temporary body. To whom might its powers of direction be transferred when it is dissolved? For all these reasons, the LBRO is the wrong choice.

In Committee, there was an extensive discussion of consultation on the powers to be given to the LBRO, summed up by the Minister with a carefully phrased sentence:

"Consultation produced an overwhelming view from business that the LBRO would need significant powers of compulsion beyond those of merely issuing guidance".—[Official Report, 23/1/08; col. GC 112.]

I hope the Minister will forgive me emphasising "from business". It is possible to see the picture quite differently. There was no consultation on the power to make directions because there was no Clause 7 in the draft Bill. The parliamentary procedure of direction was not mentioned; instead, questions were asked.

Proposal 5 of the Government's response to the consultation was that:

"Local authorities be placed under a statutory duty 'to have regard to' guidance issued by LBRO".

The questions asked were:

"Do you agree with this approach?"; and,

"Should a stronger requirement be placed on local authorities to comply with LBRO guidance? If so, what is your argument?".

Some 79 per cent of the respondents answered that there was no need for a stronger requirement, while 21 per cent answered yes. Among the yeses was the National Consumer Council, which answered to the second question:

"However if outcomes suffer because guidance is being consistently ignored then LBRO should have appropriate reserve powers to deal with this".

The Trading Standards Institute—incidentally, these two bodies were discussed in Committee—answered the same question by saying:

"If LBRO determines that there is a limited take up of guidance and yet clear benefits from adherence then LBRO should be able to be instructive to authorities on implementation of any such guidance".

It is clear that Ministers have allowed the 21 per cent—mainly business respondents—to prevail. By including Clause 7 they have gone further than anyone consulted could have expected. One can question the purpose of consultation if its results are not then accepted but, being where we are, we need to make the best of it. It is also now said that, having seen the clause, both the National Consumer Council and the Trading Standards Institute are content with it. Yet do they fully understand the constitutional issue involved? What about the 79 per cent?

Defending the late entrance of Clause 7, it is argued that the Secretary of State is an adequate safeguard because he has to be consulted before a direction can be made. Why have a safeguard when you do not need it? It is much better to put the responsibility where it truly lies, with the Secretary of State. This is not only normal practice but also improves accountability to Parliament, particularly if the Secretary of State was to lay an order rather than proceeding straight to a direction. All the detriments associated with the LBRO having the power are removed. Its relationships in pursuit of its core aim—

"to support local authorities to regulate more effectively"— would be that much easier to manage productively.

In summary, Clause 7 would remain in place if my amendments were accepted. The Secretary of State would have the power to direct when he was satisfied that there was persistent disregard of sound guidance. The Government thus retain all the substance they want. There is only a change in the form. We can all hope with some confidence that the power would never in fact turn out to be necessary. I beg to move.

My Lords, I wholeheartedly support what the noble Viscount has said, his reasons for saying it and the way that he put it. When I first read the Bill, Clause 7 was perhaps the clause that startled me most. It is headed "Guidance to local authorities: enforcement", which seems relatively innocent. Yet in the first line one comes to the power of direction. This is an important constitutional point. I do not want to take up the time of the House by repeating what the noble Viscount has said. By not repeating it, I hope it is not thought that I do not entirely go along with him. We support him fully from these Benches.

My Lords, I oppose the amendment proposed by the noble Viscount, Lord Eccles. We know—he showed us—that Clause 6 gives the LBRO power to issue guidance to local authorities on their so-called relevant functions. In the main, no doubt, that guidance will be accepted and followed by local authorities. As the noble Viscount pointed out, Clause 6(3) says that local authorities "must have regard" to the guidance.

From time to time there is bound to be a recalcitrant local authority and the question is how the guidance can be enforced. Should it be by the LBRO itself or by a relevant Minister? The Government's answer in the Bill as it stands is the right one. The LBRO needs some sort of backup power for the recalcitrant local authority which, let us say, persistently ignores or declines to follow the guidance that the LBRO has given. Without that, there is a risk of the LBRO being impotent. The amendment asks for ministerial involvement but, as the noble Viscount fairly pointed out, Clause 7(2) requires the LBRO to have the consent of the Secretary of State. So there is a ministerial dimension and the potential for parliamentary accountability connected in that way in the Bill already. The Minister can always be asked, in this House or in the other place, why consent was given—and the Minister will have to respond.

We have here the independence of the LBRO and its power to issue guidance and enforce it directly, but we also have ministerial accountability, which is the key constitutional point with which the noble Viscount has been concerned. The Bill as it stands achieves the right amount of LBRO independence and ministerial accountability for what is done.

My Lords, bearing in mind what the noble Lord, Lord Borrie, said about not having something that is impotent, I wonder what effective enforcement the LBRO can achieve. Is it financial against a local authority? In what other way can the LBRO ensure that the recalcitrant local authority actually complies? Clearly, a Secretary of State has a financial ability. Does the LBRO have that financial ability?

My Lords, along with the noble Baroness, Lady Hamwee, I am in full support of the raft of amendments proposed by my noble friend Lord Eccles. The amendments would move the powers of direction from the LBRO to the Secretary of State. Crucially, the amendments do not diminish the power that stands behind the instruction for compliance. I follow my noble friend Lord Eccles in his concern that the Bill gives the non-departmental body, the LBRO, an unprecedented power to turn guidance to local authorities subject to the "must have regard to" instruction into enforcement—and thus the instruction "must comply".

I would also very much like to hear the Minister's justification for conferring such a great and significant power, given that the LBRO is a new body and an untested novice in its regulatory role. A regulatory body should never have the power to be both judge and jury over the regulated. I do not need to point out to your Lordships that such a situation risks losing the trust of British businesses in the regulatory system. I find it hard to believe that the Minister will not agree that optimum regulation occurs when the system is seen to work for business and the consumer, and not isolated in a separate superiority. Therefore, I would be very much more reassured if the Minister could put the reserve power of direction into the properly accountable hand of the Secretary of State.

My Lords, I am grateful for the opportunity that the amendments give to discuss our reason for the inclusion of the measures in Clause 7. I am doubly grateful to the noble Viscount for his thanks particularly to the Bill team for the help that he says that it has given him. It is very good of him to say so because Bill teams do not often receive that kind of plaudit, although they do extraordinarily hard work—one hopes for all Members of the House.

I acknowledge, too, that the noble Viscount has moved his position to some extent from the one he held in Committee. The amendment would no longer remove the power that the LBRO has to direct compliance with guidance; it would retain the approach adopted in Clause 7 but would put the power to give directions into the hands of the Secretary of State. I understand why the noble Viscount is testing the provisions in the clause further, but I shall try to explain to the House why we do not feel that this particular change would be helpful.

We have already set out the thinking behind the inclusion of the LBRO's power to direct. It has its origins in the Hampton report, which recommended the creation of a public body with significant powers, along the lines of those which are already held by the Food Standards Agency, to which the noble Viscount referred. It is important that the LBRO should have a backstop power to be used when, for example, as my noble friend Lord Borrie argued, one or more local authorities persistently act with disregard for a particular piece of guidance, and this disregard is detrimental to business or the public.

The use of the power will be subject to important controls. The most important of these is that any use of the powers of direction is subject to the consent of the Secretary of State. One question that has been raised has been the one of precedents for the Clause 7 power. As we discussed in Committee, the Hampton report recommended the creation of a body with powers broadly comparable to the Food Standards Agency. We believe that it is relevant, despite what the noble Viscount has said, that the closest precedent is the power exercised by the Food Standards Agency under the Food Safety Act 1990 in Section 40, where the agency may give directions to a local authority to take steps to comply with a code of practice, much as the LBRO may require that a local authority complies with guidance. The FSA only has to consult the Secretary of State, however—that Act does not contain the stricter requirement of consent from the Secretary of State that Clause 7 sets out.

Not only does this power have a clear precedent therefore, but the measures before the House have rather more stringent controls than does the precedent. The noble Viscount is concerned to ensure that appropriate democratic accountability is brought to the way in which the LBRO gives directions to a local authority. We believe that the ministerial consent requirement will have a similar effect in practice as the approach set out in the amendment. The LBRO will propose directions, but Ministers will be accountable for consenting to their use. The provisions in Clause 7 are vital in enabling the LBRO to achieve its objective; sufficient safeguards are in place to ensure that the LBRO uses its power to direct compliance with guidance in a responsible manner.

The noble and learned Baroness, Lady Butler-Sloss, asked how the LBRO could enforce its directions. Of course, local authorities, as she will know probably better than anyone else in the House this evening, are required to comply with directions. Failure to do so would be a breach of their statutory duty. The LBRO can seek to enforce the breach and third parties can sue if they are harmed by that breach of statutory duty. So it puts the local authority at risk of being sued by third parties.

We mentioned in Committee—and the noble Viscount dealt to some extent with this argument in moving his amendment—that the inclusion of this power has the support of business, notably the British Retail Consortium. It certainly does. The CBI has written this week to the Government, saying that it would welcome moves to maintain the powers of the Local Better Regulation Office. It said:

"Business has been promised a better regulatory environment if regulators are awarded new powers. But this requires regulators to deliver on this, and we think it important that the LBRO is given the appropriate powers to ensure that local authorities do just this. Maintaining Clause 7 as currently drafted, which gives the LBRO powers of direction, would help achieve this".

Noble Lords may have seen the briefing notes from the major stakeholders, but I remind them of the position of other bodies that by no stretch of the imagination could be described as businesses. The Trading Standards Institute said that it believes that,

"it is necessary that LBRO has the power to direct local authorities that are at odds with central guidance in order to ensure a consistent regulatory environment".

The National Consumer Council said:

"The LBRO cannot secure consistency of practice if local authority regulatory services are free to choose to ignore its guidance. Indeed, we are concerned that the requirements on LBRO to consult and obtain the consent of the Secretary of State before issuing a direction are too onerous and might work to dissuade LBRO from legitimately exercising this power".

They go further than the Government do. Clearly, it would be unhappy with this specific amendment which would put the use of the power even further from LBRO's hands.

I will just sum up our case on this. We believe LBRO's powers in Clause 7 are precedented; based squarely on Hampton; have the support of business, and not just business but also consumers and the professions, particularly the Trading Standards Institute; are subject to controls recommended by the Delegated Powers and Regulatory Reform Committee which we have accepted in full; and are designed in such a way as to ensure the appropriate accountability to Parliament. For those reasons, I am afraid that we stick with our view that Clause 7, as drafted, is appropriate in this case. These are intended as backup powers and it is in that context that we suggest that they are appropriate for this Bill.

My Lords, before I try to reply as best I can, may I refer to the Food Safety Act which the Minister mentioned? There are two things. Under Section 40 the Secretary of State can issue a code of practice, giving food authorities guidance on how they should enforce food law, and under Section 41A the Food Standards Agency can direct a food authority. Even if a food authority is also a local authority, that power is much narrower than anything proposed in this Bill because it is specifically about the single subject of food. I wonder if the Minister would agree that we are looking at a precedent. It is not right to use the Food Standards Agency as a sufficient precedent for what is in this Bill.

My Lords, I accept the enormous amount of work that the noble Viscount has put into researching this, no doubt more work than I have put in. The advice that I have received is that the Food Standards Agency is a good precedent for what we are intending here. It may not be absolutely on all fours, precedents rarely are, but it gives that agency the power to direct local authorities. That is precisely what we are seeking for the LBRO here. It is a backup power with all that that is intended to mean. One difference the other way is that the Food Standards Agency only needs to consult the Secretary of State. Here if the LBRO is to direct any local authority, it has to have the prior consent of the Secretary of State himself or herself.

My Lords, I thank the Minister for that reply. I think that in substance we are in very close agreement. I am not in any way contesting the need to be able to bring a recalcitrant local authority into line. Nothing in my amendment takes away the power to do just that. My argument is: why have a dog when you can bark yourself? Also, no non-departmental government body has, even if it has the power of direction, ever exercised it. Why is it sensible to set a precedent on this occasion? It seems to me that what I have proposed meets everything in substance that the Minister wishes to see. I have effectively two choices—three really. I could hope that down the other end the argument will be read with sufficient care, the Government will come to see the force of it and an amendment will be introduced. I am not entirely optimistic that that will be the case. So, in thanking all those who have taken part in this relatively short debate and noting particularly what the noble Baroness, Lady Hamwee, said, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 13) shall be agreed to?

Their Lordships divided: Contents, 52; Not-Contents, 109.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 14 to 18 not moved.]

moved Amendment No. 19:

Clause 7, page 4, line 31, at end insert—

"( ) such local authorities in England and Wales, or such persons representative of local authorities in England and Wales, as LBRO considers appropriate,"

My Lords, in Committee, we sought to delete the whole of Clause 7. I did not at that point argue a matter that I argued elsewhere in relation to the Bill, which is the special position of local authorities with regard to consultation—in this case, consultation by LBRO for giving a direction. Under Clause 7(5),

"LBRO must consult ... any relevant regulator, and such other persons as", it considers appropriate. My amendment would make it entirely clear, as I am sure must be the case, that local authorities have a particular position. I have used wording that the Government have used in similar amendments to the Bill and, although I never expect that my drafting will be accepted in terms by the Government, I hope that the point will be taken. I beg to move.

My Lords, I thank the noble Baroness, Lady Hamwee, for her amendment, which we suspect is designed to complete the job that she began in Grand Committee by tabling an amendment that required LBRO to consult local authorities prior to issuing guidance under Clause 6. We considered that amendment and made an amendment of our own to include that requirement in the Bill. We are delighted to say that we will consider this new amendment as well. I hope to return with our form of words at Third Reading.

My Lords, I happily beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 20 to 23 not moved.]

Clause 9 [Advice to Ministers of the Crown]:

moved Amendment No. 24:

Clause 9, page 5, line 10, after "of" insert "existing or proposed"

My Lords, this is a simple amendment, which I hope the Government will accept, because they were in favour of the principle of the thing when we discussed it in Committee.

My Lords, the noble Lord hopes that we will accept it. We certainly intend to consider it, if that will help him.

My Lords, in that case, I need not go on for very long. The point is whether the LBRO will consider prospective as well as existing legislation. The noble Lord said in Grand Committee that that might be included under the words "any other matter" in subsection (1)(d). As legislation is specifically referred to in subsection (1)(b), we should include the words that I suggest. I beg to move.

My Lords, I have Amendments Nos. 25, 26 and 27 in this group. I pause hopefully, but no one is leaping to intervene.

Clause 11 provides for LBRO to publish,

"a list specifying matters to which a local authority should give priority when allocating resources to its relevant functions".

My concern is that LBRO's powers should not extend to allocating to the regulatory functions from the whole of a local authority's budget. Rather, they should be limited to the priorities within what a local authority itself allocates to the functions. I hope that the Government can reassure me that that is what is intended. If the Government take the view that LBRO should have the greater power of saying to a local authority, "Thou shalt devote X million out of your Y hundreds of millions to the relevant functions", that is too much power on the part of LBRO. I therefore hope that the Government can assure me that this is intended to be a more limited intervention.

My Lords, I have tabled Amendment No. 28 in this group. This is an issue that we covered in Committee. It concerns publishing the details of representations made to LBRO and the identity of those making the representations. The background to this was that I felt it important that, if you wish to influence public policy by lobbying LBRO, you should at least be prepared to be identified as having done so. The compulsive litigant or compulsive complainant should at least be identified as such.

The Minister suggested on 28 January at col. GC 132 that this would fall foul of the Data Protection Act as he understood it. Between Committee stage and tonight, I have taken the trouble to ask, at a fairly unofficial level, a data protection lawyer about this. I am advised—I am sure that the serried tanks of the Bill team and its huge legal battery will have much better advice than I have—that where people put themselves forward and make direct representations, they would not be afforded the protection of the Data Protection Act, but that they would be if their support was implied. That is to say that, if the chamber of commerce had done something, you could mention the chamber of commerce but not the firms that were part of it. If you said that a company had made a representation, you could name the company but not individual directors.

I hope that the Minister will take the opportunity to think about this. Transparency is important in these areas. If you wish to influence public policy, you should have the courage of your convictions and be prepared to stand up and say what you are standing for. The dangers of allowing this to be done without disclosure are considerable.

My Lords, these amendments in the names of the noble Baroness, Lady Hamwee, and the noble Lord, Lord Hodgson, give me an opportunity to remind the House briefly of the intentions behind Clause 11. Before that, I should refer to Amendment No. 24 in the name of the noble Lord, Lord Cope. His amendment gives me an opportunity to give further assurances about how the Government expect the advisory role of LBRO to operate in practice. The noble Lord raised an important point in Committee in relation to its ability to offer advice to the Government, not only on the existing legislation enforced by local authorities but on proposals in the pipeline. Clearly, LBRO will have considerable expertise to offer and the Government could get just as much benefit, if not more, from advice on legislation in development. We share the noble Lord's view that LBRO should be able to advise on this. We consider the provision in Clause 9(1)(d), that LBRO may give advice on,

"any other matter relating to the exercise by local authorities in England and Wales of their relevant functions", would be sufficient legal basis for LBRO to offer advice on legislative proposals. To put the matter beyond doubt, let me say that the amendment of the noble Lord is helpful and that, if he will withdraw it tonight, we will come back on Third Reading with words that I suspect will be very similar to what he has proposed—they might be a little different. We are grateful to him and will certainly consider his amendment.

Turning to the amendments in the name of the noble Baroness, Lady Hamwee, I can give her the agreement that she wanted. That is not to accept the amendments but to agree that, in her phrase, "more limited intervention" is what we are trying to achieve here, rather than what she fears. I want to make it clear that the provisions in Clause 11 will not prevent councils from giving due regard to their own priorities. These can be given equal—or even greater—weight than the national priorities when it comes to planning their operations and how resources are allocated. The clause is intended purely to give some order and discipline to the way in which the centre sets priorities for local authorities. I would have quoted the Rogers report in more detail to answer the noble Baroness, but I can give her what I hope she wanted to hear from me, which is that she is right in thinking that we are in favour of more limited intervention and that this would not somehow undermine local authorities' rights.

The noble Lord, Lord Hodgson, wants us to agree that LBRO should publish the names of anyone who makes representations, pursuant to its preparation of a list of regulatory priorities. I am going to argue again that LBRO should have the flexibility to, where appropriate, withhold the details of those who made representations, not least because the publication of personal data may—and I use that word advisedly—in some circumstances fall foul of the Data Protection Act principles. This duty would require disclosure of the names of anybody making representation in all cases and could give rise, if it fell foul of that Act, to actionable breaches where there is a duty of confidentiality in any particular case.

Representations may not simply be formal lobbying activities. LBRO is likely, in practice, to follow the example of Peter Rogers when he conducted the first review of regulatory priorities last year and to hold a number of workshops and focus groups with the public, regulators and businesses. Under this amendment, the names of all those involved would need to be published. That would not be appropriate. In practice, LBRO is likely to want to publish the names in many cases. This is good practice, as when the Government published most of the names and responses of those who responded to the consultation on the Bill, but we do not believe that it should be a requirement. The same rules should apply as to any other consultation that might impact on government policy.

We understand the noble Lord's concern that undue influence might be brought to bear on LBRO's activity and that the light of publicity might help to eradicate this. Let me give what further reassurance I can. LBRO alone cannot and will not take the final decision that will put the priorities into effect. Under Clause 11(7), the consent of the Secretary of State is needed before the priorities become statutory priorities. The Secretary of State will expect to see a logically argued case based on clear evidence before LBRO's recommendations are accepted. This is what the representation requirement is meant to capture. The hidden influence of individual bodies alone would not be sufficient to sway the final decision. Therefore, I am afraid that we cannot accept the noble Lord's amendment.

My Lords, I am delighted with the response from the Minister on my Amendment No. 24, because he has accepted the point, and I am happy with the drafting. As a matter of fact, I support the other amendments in the group, in the names of my noble friend Lord Hodgson and the noble Baroness, Lady Hamwee. I am glad that the points behind the amendments of the noble Baroness will also be considered further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 [Enforcement priorities]:

[Amendments Nos. 25 to 28 not moved.]

moved Amendment No. 29:

After Clause 12, insert the following new Clause—

"Memorandum of understanding

LBRO must enter into a memorandum of understanding with the devolved authorities in Scotland and Northern Ireland as to how they will work together in the exercise of their respective functions."

My Lords, we return to an issue that has concerned me regarding the different treatment emerging in the United Kingdom as a result of the devolved nature of Scotland and Northern Ireland. That is a serious weakness in the planned approach of the Bill, about which the Government are only now starting to be clear and honest. The noble Lord, Lord Bach, was uncharacteristically ratty with me in Grand Committee when I pointed that out in our debate on Clause 73, which is on extent.

I shall briefly readdress my arguments. Paragraph 4 of the Explanatory Notes states:

"The Hampton Review set out a vision for a risk-based approach to regulation and included a set of principles for regulatory inspection and enforcement, based around risk and proportionality".

Nowhere does that paragraph mention the episodic nature of this approach, whereby it may or may not apply to Scotland or Northern Ireland. Furthermore, in the debate on Second Reading, the noble Lord, Lord Jones of Birmingham, said:

"The UK's better regulation agenda is widely regarded across the world as being the most ambitious anywhere".—[Hansard, 28/11/07; col. 1238.]

He then prayed in aid this legislation as part of that work. That is all very well, but the Bill is not about the UK; for the most part, it is about England and Wales, with some references to Scotland and Northern Ireland coming along behind. When the Minister talked about the UK, that showed how far he is adrift from what the Bill seeks to achieve. Paragraph 6 of the Explanatory Notes states:

"The Hampton Review found that the diffuse structure of local authority regulatory enforcement increases uncertainty and administrative burdens for business".

We are not tackling this issue as regards Scotland and Northern Ireland. The Bill is flawed in respect of firms that operate on a UK-wide basis. Only when one reaches paragraph 17 of the Explanatory Notes does it become clear what the Bill's remit is in different parts of the UK.

I tried to think about how we could move this game forward. My thought was that Clause 12 might be relevant, as it requires the establishment of memorandums of understanding with certain key regulators—those with which LBRO and local authorities are expected to have the greatest amount of day-to-day contact. I hope that the noble Lord, Lord Borrie, will forgive me if I quote what he said in Grand Committee. He said:

"There is of course a problem of local authorities receiving mixed messages from central government ... Having some memoranda of understanding is vitally important: it helps to improve the consistency of messages coming through to local authorities from central government".—[Official Report, 23/1/08; col. GC 136.]

What I am trying to achieve in the amendment is a memorandum of understanding between LBRO within England and Wales and the appropriate authorities in Scotland and Northern Ireland, with a view to avoiding mixed messages. That is what my new clause is all about.

My proposal would not infringe anyone's sovereignty. I am sure that the Minister will say—the Bill team pointed this out at our meeting on Monday—that we cannot require the devolved Administration in Scotland or Northern Ireland to enter into memoranda of understanding. I am not clear how we will require one of their regulators to enter into any meaningful MoU. I can understand that there is a requirement to force them to do something, but a worthwhile MoU between LBRO and the regulators listed in Clause 12 will come about after negotiations—because of give-and-take in discussions—on how best to approach this matter. Under my amendment, that would be the case for the devolved Administrations. There would be an opportunity for discussions to take place and for a process with a level playing field to emerge. I hope that the Minister will consider this matter carefully, with a view to making the Bill a better piece of legislation, because it would provide the certainty of a level playing field across the United Kingdom as a whole.

In Grand Committee, we discussed an amendment similar to my second amendment in the group, Amendment No. 106 to Clause 73. I am extremely grateful to the Minister for the long and detailed letter that he sent me by hand today, no less. I had the benefit of it ahead of this debate. He states that the clause,

"is not designed to specify what provision we are making about the law in each jurisdiction. That is done in the main body of the Bill itself".

I accept that, but if you are going to have to work through this legislation, you will find it quite difficult, when you reach subsections (1), (3) and (4) of Clause 23, to work out that this is the part of the Bill that tells you that Part 2 does not apply to Scotland and Northern Ireland. If, as I suspect, his speaking notes state that this amendment is not acceptable and will break every constitutional precept, I hope that he will find ways to make it absolutely clear in this legislation where and what it applies to. This Bill is meant to ensure better regulation. Better regulation is clear regulation and we have failed to achieve proper clarity in this significant area.

I understand that this is a difficult and tricky issue, but we must find a way, if we are trying to help UK plc to have a level playing field. Finding some way of tackling the issues implicit for the devolved Administrations is critical. I beg to move.

My Lords, we sympathise with the spirit of the amendment, which certainly captures how the Government expect LBRO to behave in practice. However, as the noble Lord anticipated, the amendment brings us into territory which risks falling foul of the devolution settlements. Of course it will be crucial for LBRO to work with relevant parties in Scotland and Northern Ireland if we are to secure the greatest possible benefits for businesses operating across the United Kingdom. That has always been behind the noble Lord's thoughts on the Bill and on other legislation.

We are grateful to Welsh Ministers for their interest in the Bill and for their commitment to its full application in Wales. Ministers in Scotland and Northern Ireland have made it clear that they do not want the Bill and LBRO to apply to devolved matters. The noble Lord is welcome to take up the issue with them, but responsibility for devolved matters lies ultimately with the devolved Administrations and their electorates. As one would expect from the noble Lord, the amendment has been carefully phrased in terms of the requirement on LBRO. Nevertheless, I am afraid that the amendment would by implication place a requirement on the devolved Administrations to enter into a memorandum of understanding with LBRO. The requirement on LBRO to enter into the memorandum would be meaningless without that corollary. That is just not possible without the consent of the Northern Ireland Assembly and the Scottish Parliament.

Of course, businesses will want to see as much joint working as possible between LBRO and the devolved Administrations. The guide accompanying the Bill makes it clear that we expect LBRO to work with the devolved Administrations in so far as it is authorised to do so. I am glad to say that LBRO, in its present company form, has already begun to establish productive relationships with Scotland and Northern Ireland, both at the governing level and with professional bodies such as the Convention of Scottish Local Authorities and representative organisations. It is on track to form strong working relationships. Here, as elsewhere, we believe that LBRO can be trusted to get on with the job using common sense; certainly businesses will look to it to do so.

I am afraid that we cannot accept the noble Lord's amendment, because it could not be put into operation. I am grateful for what he said about the letter that I gave him today on Amendment No. 106. In order to make sure that this is as clear as possible to those interested in the Bill, the guide that will be published on the Bill will set out clearly what parts apply where. That information can, of course, be found in the Bill, as the noble Lord has acknowledged, but we will make sure, as best we can, that one part of the guide will set that out, so that anyone using the Bill will be able to find out whether it applies in various parts of the United Kingdom. I invite the noble Lord to withdraw his amendment.

My Lords, I am grateful for the Minister's reassurance that he will ensure that clarity on this issue is prevalent and pre-eminent when we publish the guide to the Bill. This issue could have significant implications for UK-wide businesses. I hope that we can continue to think about ways to develop it, because, as the Minister and I have discussed, this is not the only area where there is a mismatch. We have to find a way of making sure that the pieces of legislation join up as far as possible if we are not to impose considerable and unnecessary burdens on businesses operating UK-wide. I am grateful for the Minister's reassurance and correspondence and for the efforts of the Bill team to address this point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 [Ancillary powers]:

moved Amendment No. 30:

Clause 14, page 7, line 4, at end insert ", with the consent of the Treasury"

My Lords, Amendment No. 30 inserts the ominous words,

"with the consent of the Treasury".

As your Lordships know, I was a Treasury Minister and am, in a sense, reverting to that part of my history. The subsection in question allows the LBRO, for instance, to acquire and dispose of property and to borrow and invest money, although it is not said what the LBRO would invest it in. There appears to be no control over what it does. If it borrows money, I am not sure whether that will have either an express or an implied government guarantee. Let us suppose that the LBRO acquired some office property, perhaps for its own use, with the aid of a mortgage or loan of some sort, and the value of the office block went down, so that it was unable to cover the loan and found itself in negative equity. I am sure that before long some people will find themselves in negative equity. We hope that they will not, but if they did, would the Government stand behind it? That is the question. If they do not, they will have to pay more to borrow the money, which is the way these things work. It is an important and relevant question. The sums of money will be small in terms of the Government's accounts, but where will they appear in the Government's accounts, if at all? Is it a completely freestanding body? These are the thoughts that lie behind my amendment to insert the requirement for the consent of the Treasury to significant financial transactions that are potentially permitted by this clause.

I am interested that the Government have grouped my Amendment No. 30 with their Amendments Nos. 31 to 36, which all deal, in Clauses 15 and 16, with the giving of guidance by the Secretary of State and by Welsh Ministers respectively. It may be that the reason for grouping those amendments with my amendment on finance is that some of the guidance will be financial. I would not think that in the least improper. On the contrary, I would think it wise, particularly if there were going to be express or implied guarantees behind any money borrowed by the body in question. Amendments Nos. 33 and 36 take up points that I made in Committee about guidance. I am grateful to the Minister and his colleagues for agreeing to those amendments. I think there are some potentially important financial considerations with regard to Amendment No. 30. I beg to move.

My Lords, this gives me an opportunity to clarify that the LBRO will be subject to all the usual rules for the management of public money. The noble Lord, Lord Cope, raised the question of the LBRO's money. Provided the LBRO is acting within its remit and objectives, Her Majesty's Government would have to stand behind it financially, as they do with every other non-departmental public body. It has been created as an NDPB with operational independence and freedom from day-to-day interference by Ministers. I am sure that the House will think that a good thing. The government amendments in this group seek to limit the scope for inappropriate micromanagement by Ministers.

This clause is essential to provide sufficient legal certainty that the LBRO will be able to engage in activities that are helpful or necessary to the discharge of its functions and the achievements of its objectives. The clause provides specific examples of what will be covered by the ancillary powers provision—some financial, many not. There are many precedents for such provisions. Natural England was established by the Natural Environment and Rural Communities Act 2006. Section 13 of that Act specifies that Natural England may,

"do anything that appears to it to be conducive or incidental to the discharge of its functions".

The section then sets out a list of examples, which includes all the actions included in the LBRO list, as well as some additional ones.

There are good reasons why detailed ministerial control, which would be accorded if Treasury approval was needed, is unnecessary. The first is that reliance on ancillary powers is circumscribed by the requirement that anything done must be,

"necessary or expedient for the purpose of, or in connection with, the exercise of ... its functions".

Secondly, the LBRO will be subject to all the normal rules of public spending. Thirdly, it will be financially accountable to Parliament in the normal way through the Comptroller and Auditor-General. Fourthly, it must provide the Secretary of State and the Comptroller and Auditor-General with a copy of its accounts on an annual basis.

We argue that this is a routine provision for independent public bodies, with a good recent precedent. The clause is essential in ensuring that the LBRO can function effectively in day-to-day business matters. We do not think that adding a new level of control would do anything other than significantly hamper the organisation in its routine work.

That takes me to government Amendments Nos. 31 to 36. They place a number of important controls on the right of Ministers to give directions to the LBRO. At Second Reading and in Committee, noble Lords were concerned about the precise uses to which Ministers' powers of direction would be put. I repeat that it is the Government's intention that these powers of direction should be used as nothing more than a backstop. The LBRO will be operating as an independent body, and it is intended that Ministers will use the power only in cases where the organisation acts against the public interest. Naturally, we hope that that situation will not arise, but Ministers will be accountable to Parliament for the performance and conduct of the LBRO and there has to be a power of direction to ensure that accountability is assured. We accept that the powers in Clauses 15 and 16 were too broadly drawn for this purpose, and we have already accepted the recommendation of the Delegated Powers and Regulatory Reform Committee in relation to directions over the LBRO's own direction-giving power.

In Committee, noble Lords suggested a number of additional changes, which we agreed in principle to consider. First, the noble Viscount, Lord Eccles, argued that the reference to "general or specific" directions was too broad; secondly, the noble Baroness, Lady Hamwee, suggested that a formal consultation process should be required before directions are issued; and, thirdly, the noble Lord, Lord Cope, suggested that there should be a requirement that any directions should be laid before Parliament or the Welsh Assembly where appropriate. We have decided to make the appropriate changes and we are grateful to the various noble Lords for their suggestions. Our amendments, which I hope to move in due course, will implement them.

My Lords, perhaps I may ask the Minister to clarify one point in relation to my noble friend's amendment. He referred to the support that the Treasury would give to the LBRO. Was that de facto or de jure? Will it actually happen or is it bound to happen by law? Reading the "Status" paragraph in Schedule 1, I was struck that it was as close to saying that the LBRO is flying on its own as it could be without those words being used. The paragraph states:

"LBRO is not to be regarded as a servant or agent of the Crown ... The property of LBRO is not to be regarded as the property of, or property held on behalf of, the Crown".

I understand that the Government may be forced to stand behind the LBRO but I should like to know whether they are bound to do so by law.

My Lords, I am advised that the organisation will be treated like any other NDPB in this instance. However, I think that the points raised in this debate are worthy of a letter setting out how we intend the finances to work here; that is, setting out the relationship between the Treasury and this body. I hope that noble Lords will allow me to write to them about that.

My Lords, that would be most helpful. I am somewhat reassured by what the Minister said on the financial provisions and I am grateful to him for accepting the suggestions that I and others made in Committee on Clauses 15 and 16. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 [Guidance or directions by the Secretary of State]:

moved Amendments Nos. 31 to 33:

Clause 15, page 7, line 13, leave out "general or specific"

Clause 15, page 7, line 14, at end insert—

"( ) Before giving any guidance or directions under this section the Secretary of State must consult—

(a) LBRO, and(b) such other persons as the Secretary of State considers likely to be affected by the guidance or directions, or persons representative of such persons."

Clause 15, page 7, line 16, at end insert "and lay a copy of any such guidance or directions before Parliament"

On Question, amendments agreed to.

Clause 16 [Guidance or directions by Welsh Ministers]:

moved Amendments Nos. 34 to 36:

Clause 16, page 7, line 30, leave out "general or specific"

Clause 16, page 7, line 32, at end insert—

"( ) Before giving any guidance or directions under this section the Welsh Ministers must consult—

(a) LBRO, and(b) such other persons as the Welsh Ministers consider likely to be affected by the guidance or directions, or persons representative of such persons."

Clause 16, page 7, line 34, at end insert "and lay a copy of any such guidance or directions before the National Assembly for Wales"

On Question, amendments agreed to.

Clause 19 [Orders under Part 1]:

moved Amendment No. 37:

Clause 19, page 9, line 38, after "section" insert "4(7),"

On Question, amendment agreed to.

Clause 25 [Nomination of primary authorities]:

moved Amendment No. 38:

Clause 25, page 11, line 30, after "agreed" insert "in writing"

My Lords, this group includes Amendment No. 39, to which I shall also speak. On reflection, I will not, as it is in the name of the noble Lord, Lord Cope, but perhaps I may respond to it in due course.

Amendment No. 38 concerns a small matter but it was one on which the noble Lord, Lord Cope, moved an amendment in Committee and we thought that he was right about it. Where a local authority agrees with a business that it will act as the business's primary authority, the agreement should be made in writing, and that should be stated in the Bill. Of course, it is likely that the LBRO would register a primary authority partnership only where it received notification in writing of an agreement between a business and a local authority, but we believe that there is some benefit in making that a requirement and that is what we do in Amendment No. 38. I beg to move.

My Lords, I am most grateful for the noble Lord's agreement to the amendment by putting it in writing in the form of an amendment. He has taken on board not only the point that I made but also the drafting, simple as it was.

In Amendment No. 39, I am concerned about a quite separate point. At present, when a primary authority lays down how a series of local authorities are to carry out their responsibilities in respect of, say, a chain of shops, the local authorities in which the shops are situated all over the country have no certainty of being told whether their authority will be controlled by the agreement made between the primary authority and the headquarters of the business concerned.

When I moved a similar amendment in Committee, I was told, "It's all right because it will all be on a website, so they can look it up quite easily if they are thinking of going to have a look at a shop". However, in a high street, some shops will be owned by national chains—we all know that any high street has a lot of shops owned by national chains. Others will be independent—I hope that as many as possible of them will be because I like to see independent shops in high streets—and some will be franchises. As we know from Committee, it will be extremely difficult to know whether franchises will be controlled through a primary authority or whether they will be treated as independents. Therefore, the local authority regulator will have to go through the website looking at all the shops in the high street before he sets out to see whether they are complying with the regulations. That is why I am saying that the LBRO should let the junior authorities know whether an agreement is in place. I have also provided in the amendment that they should be told when it is proposed that a primary authority will be appointed so that, if they want to, they can object to it.

It is not particularly easy to tell who owns the shops in a high street. Some will be trading under names which are not the names of the companies that own them but trade names, and that will add to the complication for the local authority regulators. I do not want the regulators to be placed in the position where they go into a shop—for example, with a view to enforcing some food regulations—only to be told, "Push off. There's an agreement with our headquarters that you are not supposed to do this. You're supposed to do it another way". That would be bad for the local authority regulators. Therefore, it is important that the junior authorities, as I call them, know when such agreements are either proposed or enforced. That is the intention behind Amendment No. 39. However, I am grateful for Amendment No. 38.

My Lords, I shall support—very briefly, your Lordships will be pleased to hear—my noble friend Lord Cope in his Amendment No. 39, which will make sure that the regulated party and, crucially, the regulators will be completely clear who is responsible for enforcement.

My Lords, Amendment No. 39 gives me an opportunity to discuss how we envisage primary authority partnerships will be publicised in practice. We understand the concerns of the noble Lord about how the existence of primary authority partnerships will be brought to the attention of local authorities. I like to think that we can put his mind to rest.

The critical issue is the register of partnerships that the LBRO will be required to maintain under Clause 25(6). The primary authority provisions are, deliberately, closely built on the basis of tried and tested voluntary arrangements which local authorities have maintained. There are a large number of such partnerships and they are listed on databases maintained by LACORS and the Health and Safety Executive. When a serious regulatory issue arises relating to a multi-site business, all that local authority enforcers have to do is simply look the company up on LACORS's or the HSE's database and consult the authority which has taken on that role. In practice, there is no difficulty in finding out whether a partnership exists and which areas of regulatory activity are relevant. As with the existing voluntary schemes, the LBRO database will make this very clear. The process we are proposing is no more complicated than what authorities already require of themselves under voluntary arrangements at present, but it will be more rigorous and give businesses the certainty that they need.

We feel that the amendment may rest on the assumption that local authorities will need to keep tabs on each partnership just in case something untoward emerges. That is not the case. Local authorities will only need to refer to it if there is a specific problem to be dealt with where an enforcement action is necessary. Local authorities that already participate in the voluntary guidance on home lead schemes will find that it is simply an extension of existing practice—but, of course, the database will be the responsibility of the LBRO rather than other bodies.

It may be helpful to go through a hypothetical series of events. Say an enforcing officer in local authority A establishes that there is a trading standards problem with a business that needs attention. It is not an emergency, so the exemptions created by Clause 28 do not apply, and the requirement to contact the primary authority takes effect. All the officer needs to do is look up the company's name on the database. If there is a partnership—there may not be, but if there is one—three pieces of information will be listed against it: the name of the primary authority, the field of regulation within which it has effect, and the contact details for notification of the issues. It will be very clear if there is a trading standards partnership in existence and about the appropriate steps for getting in touch with it.

It is important to think through the practicalities of the scheme. We think that the scheme that we are intending to set up, which relies a lot on what has existed before, is practical and can work. For that reason we are not persuaded that the amendment is necessary.

My Lords, I had not intended to intervene here but, as the Minister will realise when we come to the groups of amendments with which I am involved, the question of numbers of prosecutions, and therefore numbers of regulated bodies or individuals that might be prosecuted, will become important. Can he give the House any idea of what proportion there is now, and what proportion is anticipated, of enforcement actions likely to be covered by instructions from primary authorities or the requirement to consult them?

My Lords, I am grateful to the noble and learned Lord, but it is extremely hard to answer his question because it will need the development of the primary authority principle to know from experience how widespread the effect will be. Perhaps he will let me consider what he has said and maybe on a later amendment we can come back with a better answer.

On Question, amendment agreed to.

had given notice of his intention to move Amendment No. 39:

Clause 25, page 12, line 13, at end insert—

"( ) LBRO must inform the local authorities in whose area the regulated person carries on the activity being regulated—

(a) when it is proposed to nominate a primary authority, and(b) when such an authority has been nominated."

My Lords, I was not particularly happy with what the Minister said but I do not wish to move the amendment.

[Amendment No. 39 not moved.]

Clause 27 [Enforcement action]:

moved Amendment No. 40:

Clause 27, page 12, line 27, at end insert "pursuant to the relevant function"

My Lords, we come to an important series of amendments which deal with various matters, many raised in Committee, relating to the primary authority's provisions in Part 2. I will speak to my Amendments Nos. 41, 42 and 44 in due course.

The first amendment is technical, aiming to tackle an unintended omission in Clause 27. Primary authority partnerships will be established between businesses and local authorities, and will cover particular areas of regulation. That situation reflects practice under the existing voluntary schemes. Firms will commonly have trading standards partnerships with, for example, a county council and environmental health partnerships with a district council. To use the language of Clause 24, they will be nominated to play the part of primary authority for the "relevant function".

Clause 27 needs to be limited to reflect that specialisation. An enforcing authority should only be under an obligation to consult the primary authority before taking enforcement actions that follow from the regulatory function in question. For example, an enforcing authority should be under an obligation to contact a business's primary authority with responsibility for environmental health if, and only if, the issue at hand is an environmental health issue. It should not be required to contact the primary authority responsible, for instance, for trading standards. That reflects practice under the existing home lead schemes, where local authorities will in many cases contact different lead authorities for different areas of regulation. Enforcing authorities should not be required to consult on enforcement actions of every sort. Amendment No. 40 would make this restriction clear.

Amendment No. 41 will remove the LBRO's power to delegate to another body its arbitration functions under Schedule 4. The noble Baroness, Lady Hamwee, and the noble Lords, Lord Cope and Lord Berkeley, expressed concern in the Committee that the LBRO's power to delegate its arbitration function could result in another body directing a local authority under paragraph 7 of Schedule 4. It has never been our intention that the delegation power should be used in this way.

The LBRO will be a relatively small body with a wide-ranging scope. The types of cases that can be referred to the LBRO for arbitration could range from agricultural produce to zoo licensing, dog breeding to explosives. We do not expect the LBRO to have the necessary in-house expertise to effectively arbitrate on all the issues that could be referred to it. Instead, we expect it to consult with, and take the advice of, expert bodies such as national regulators when arbitrating. We think that sufficient provision is made for this purpose without the LBRO delegating its arbitration function to another body. In particular, under Clause 14:

"LBRO may do anything which it thinks necessary and expedient for the purpose of, or in connection with, the exercise of its functions".

That could include seeking advice from a national regulator when arbitrating. In addition, under paragraph 5 of Schedule 4, the LBRO must consult with the relevant national regulator, and may consult other persons it considers appropriate, when arbitrating. Therefore, we are removing the power for the LBRO to delegate its arbitration function.

Amendments Nos. 42 and 44 will specify those matters which must be exempt from the requirement to notify a primary authority before enforcement action is taken. For reasons that were discussed in Committee, we considered it important to retain as much flexibility as possible for exemptions to the primary authority provisions to be dealt with by order. Noble Lords may wish to refer to the guide accompanying the Bill, which lists the categories of exemptions that we now intend to make here. The detail of these exemptions needs to be worked up in consultation with those on the ground. We shall consult on the details later this year. We were persuaded by the strength of the argument presented in Committee that where it is possible to do so, such exemptions should be put in the Bill.

The noble Viscount, Lord Colville, who I am delighted to see in his place—almost every other hour he is elsewhere in the building chairing the Crossrail committee—tabled an amendment in Committee which would have retained the ability to specify exemptions by order, but set out those circumstances that the orders must address on the face of the Bill. We thought that was a sensible approach, and we have therefore brought forward an amendment which will have that effect. The amendment will set out four exemptions which must be specified in the order. I do not need to set out what the exemptions say as they are in our amendment.

I have spoken to the government amendments but there is another one in the group. I beg to move.

My Lords, Amendment No. 43 stands in my name. I pause to see whether the Government will accept it. I see the Minister shakes his head. It is similar to points that the Government have accepted, acknowledging the position of local authorities and providing for consultation with them. That explains the amendment. I hope that the explanation carries some force. I do not want to spend a long time on it.

I welcome the matters that the Government are putting into the Bill regarding exemptions. An acknowledgement of consultation would be an appropriate step. I welcome the government amendments in the group. On delegation, the Government are absolutely right. I raise a concern which has been expressed to me and I believe to the noble Baroness, Lady Wilcox, by the Chartered Institute of Environmental Health, which is worried that,

"the effect of this amendment could be considerable for the resources of the LBRO and may bring into doubt their ability to meet the demand for adjudications and/or dealing with the (potentially large) number of references it might get under this process".

I would welcome comment from the Minister on the resources point.

On Amendment No. 42, I cannot restrain myself from noting that we now have a provision that the Secretary of State "shall" do something. Amendments to change "may" to "shall" normally come from the Opposition Benches. The Government may find it is quoted back at them on other occasions.

Paragraph (b) in Amendment No. 44 states that the application of a section would be "wholly disproportionate". I stumbled slightly over "wholly"; it is not something I would have expected to see in legislation. That seems to be more the language of conversation or rhetoric. Given that there is reference to proportionality elsewhere in the Bill, I wonder whether there is a particular significance in this.

My Lords, I speak against government Amendment No. 41. That amendment removes the ability of the Local Better Regulation Office to delegate its functions under Schedule 4 to another person as it considers appropriate. Perhaps I may jog your Lordships' memories back to day three of Committee. Noble Lords will remember that that aspect of the Bill was debated by the noble Lord, Lord Cope, and by the noble Baroness, Lady Hamwee. The noble Lord, Lord Jones, answered the debate at col. GC 249 and, in his usual sympathetic style, agreed to review this part further and to look at "delegation", "responsibility" and "function".

The Government's proposed solution is to remove that paragraph from Schedule 4. It is an unsatisfactory solution as, while it addresses the point made that the Local Better Regulation Office should not be able to delegate or discharge its responsibility to another, at the same time it now makes the reverse possible, as the Local Better Regulation Office could now not delegate at all. The noble Lord, Lord Jones, said that this provision is,

"critical to the success of the scheme".—[Official Report, 28/1/08; col. GC 248.]

The Local Better Regulation Office is a small body and the arbitration role that it undertakes under Schedule 4 has the potential to become burdensome, to skew the resources away from other tasks and not take advantage of expertise in other organisations capable of ably assisting.

The Trading Standards Institute and the Chartered Institute of Environmental Health, as mentioned by the noble Baroness, Lady Hamwee, have expressed their concerns about this amendment and the impact it could have on the Local Better Regulation Office to engage with organisations such as themselves and the Local Authorities Co-ordinating Office on Regulatory Services to fulfil its obligations and responsibilities under the Bill. No one is suggesting here that the Local Better Regulation Office should be able to discharge its responsibilities to another, as could be interpreted from the original text, but the pendulum seems to have swung the other way to force this new body to be much more insular and not to take advantage of the expertise that exists within these other organisations.

My question to the Minister is: are the Government able to reconsider and to provide an amendment that addresses the concerns that were communicated in Committee without removing this paragraph completely and frustrating the clear intention that the Government had here?

My Lords, I do not want to make any criticisms. On Amendment No. 44, I just want to say a word of gratitude to the Minister. There are two lessons to be learnt from this amendment, which the Government, at my suggestion, have been good enough to accept. If one knows the criteria in advance, whereby some particular function will be used, one does not need delegated legislation. We have far too much of it. Just look how easy it is to put it in the Bill. I am very grateful to the noble Lord for ensuring that this will be in the Bill and that we do not have to endure even more subordinate legislation.

My other point relates to what the noble Baroness, Lady Hamwee, said. Paragraph (b) in the amendment is quite important. I do not mind whether it is "wholly disproportionate" or just plain "disproportionate". If it does not matter, there is no point in involving massive bureaucracy. There is a great advantage in the noble Lord bringing forward an amendment that ensures that there will not be an imposition of bureaucracy on local authorities for quite minor matters, so I want to say thank you.

My Lords, I am very grateful to the noble Viscount, although I am not sure that I am quite so grateful to the noble Baroness opposite or to the noble Baroness, Lady Hamwee.

Amendment No. 43 in the name of the noble Baroness, Lady Hamwee, would require the Secretary of State to consult local authorities before laying an order that would set out the exemptions to the primary authority requirements in Clause 27. We are sympathetic to the intentions behind the amendment. As the House will know, the Government's code of practice sets a high standard for consultation relating to any new area of policy development. This is important not least in the interests of better regulation, which is the subject of this Bill.

Noble Lords will be aware that, as was said in Committee, the Government have recently reviewed their processes of consultation and will revise their code of practice shortly. I assure noble Lords that any use of the order-making powers in Clause 28 will be subject to consultation and will clearly need the input of the experts working with practitioners from local authorities as well as from businesses to get the details right. However, an explicit statutory requirement to that effect is unnecessary. The spirit of the noble Baroness's amendment is agreed to, but it does not need to be in the Bill in this instance.

The noble Baroness invited me to refer to the phrase "wholly disproportionate". That relates to orders that the Secretary of State is required to make. Proportionality is a fine balancing test and often it is not crystal clear whether contact will be proportionate. Where contacting the primary authority is wholly disproportionate—a stronger test than merely disproportionate—there must be an exemption. That is what the provision does.

The noble Baroness also asked about resources. Under Clause 12 and the memorandums of understanding, we expect LBRO to make arrangements for sharing resource and expertise on arbitration issues. The answer to the noble Baroness, Lady Wilcox, is that, although we have taken out that part from the schedule, there is under Clause 14 the right for LBRO to do anything that,

"it thinks necessary or expedient for the purpose of, or in connection with, the exercise of its functions".

That can include seeking advice from a national regulator when arbitrating. I also point out that, under paragraph 5 of Schedule 4, LBRO must consult the relevant national regulator and may consult other persons it considers to be appropriate when arbitrating. By removing part of the schedule, we have not made it impossible—in fact, it is still very possible—for LBRO to consult.

On Question, amendment agreed to.

Schedule 4 [Enforcement action: references to LBRO]:

moved Amendment No. 41:

Schedule 4, page 48, leave out lines 37 to 39

On Question, amendment agreed to.

Clause 28 [Enforcement action: exclusions]:

moved Amendment No. 42:

Clause 28, page 13, line 31, leave out "may" and insert "shall"

On Question, amendment agreed to.

[Amendment No. 43 not moved.]

moved Amendment No. 44:

Clause 28, page 13, line 36, at end insert—

"( ) The Secretary of State shall in particular under subsection (1) prescribe circumstances for the purpose of securing that section 27(1) to (4) shall not apply—

(a) where the enforcement action is required urgently to avoid a significant risk of serious harm to human health or the environment (including the health of animals or plants) or the financial interests of consumers;(b) where the application of section 27(1) to (4) would be wholly disproportionate."

On Question, Amendment agreed to.

My Lords, I beg to move that consideration on Report be now adjourned. In moving the Motion, I suggest that Report begin again not before 8.44 pm.

Moved accordingly, and, on Question, Motion agreed to.