Clause 20 - Code of practice

Legislative and Regulatory Reform Bill – in a Public Bill Committee at 12:00 pm on 9 March 2006.

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Question proposed, That the clause stand part of the Bill.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

May I ask the Minister to expand on the effectiveness of the sanctions described in the clause for breaches of the code of practice? It seems that breaches of the code of practice that result in additional costs on business will not enable businesses to claim for the consequential damages arising from breaches of the code. The most that they can hope for is that any breaches of the code could be used as mitigation of penalties imposed. I understand that quite often the Office of Fair Trading will put forward proposals and if they are not accepted by the parties involved, it will say, “If you do not accept these, we will insist on higher penalties.” So it will effectively exercise a process of extortion on the people whom it is investigating.

If we are to have regulators who will operate outwith this code of practice, surely there should be an effective sanction. When I studied jurisprudence, one of the principles that we looked at was that there is no point having a command without a sanction. If the Minister accepts that principle, can he point out where the effective sanctions are for breaches of the code of practice under the clause?

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office)

Very briefly, under the clause, regulators who fail to comply with the statutory duty to have regard to the code of practice in circumstances where they are required to do so could be challenged through judicial review in the usual way. Subsection (4) states that

“a court or tribunal finds that a person has failed to comply with any requirement, restriction or condition”.

That subsection derives from the 2001 Act. It seems to have operated pretty effectively in that Act. If the hon. Gentleman has evidence to the contrary, he is entirely free to bring it to the attention of the Committee or of the House on Report. Failure to act in the proper way by regulators is judicially reviewable and it is within the 2001 Act.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Will the Minister accept that the process of going to judicial review is incredible expensive? Does he expect a corner shop or a small manufacturing business that is subject to oppressive behaviour by a regulator in breach of the code of practice to employ expensive lawyers and to go through the process of judicial review to get an effective sanction for the breaches of the code?

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office)

I do not think that I am advocating that, but this provision is lifted directly from the 2001 Act. I am willing to be corrected, but I understand that it was not identified during the consultation and the deliberations on the Bill as an inherent weakness in the 2001 Act. If he has evidence that it is and that it has prevented the better regulation agenda, he is entirely free to bring it to the attention of the Committee and the House.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

I have been listening to the point that the Minister was making. I wonder whether subsection (4) does not provide some sort of remedy. It seems to be saying that the court or tribunal dealing with a breach of duty by a company would be able to take account of the way in which the regulatory function had been exercised in deciding how to deal with the case. Does that not mean that it would be possible for the court to make a quite penal decision on costs against the regulator? If so—if the regulator had to pay not just his own costs but those of the person victimised or treated in the wrong way—that would be at least some movement in the right direction. Is that what the Minister had in mind?

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office) 10:00, 9 March 2006

That is entirely the case. I should also like to reassure the hon. Member for Christchurch that non-legal sanctions exist on regulators, including National Audit Office and Audit Commission reports. Those are additional pressures and areas of accountability and respect for regulators. If the hon. Gentleman has evidence that that aspect of the 2001 Act has not worked and has been a deterrent, he is entirely at liberty to bring that evidence to the House’s attention before Report.

Question put and agreed to.

Clause 20 ordered to stand part of the Bill.