Clause 1

Regulatory Enforcement and Sanctions Bill [Lords] – in a Public Bill Committee at 10:30 am on 17 June 2008.

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LBRO

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

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

The clause is a simple one, establishing the Local Better Regulation Office as a corporate body. There are a number of amendments tabled to the accompanying schedule 1, which sets out in detail how LBRO is intended to be established in statute. I shall reserve my main comments for those amendments, which attempt to alter in various ways the establishment of LBRO. The central part of the Bill is to establish the body, to carry out a number of functions to do with better regulation—advice to local authorities and central Government and adjudicating in certain ways between primary and enforcing authorities around the country. The clause is one of the central building blocks of the Bill, establishing LBRO to further the better regulation agenda at local level.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

I am grateful to the Minister for those brief but helpful opening remarks. He said that the clause is short, but equally—in his words—it is essential. It establishes the Local Better Regulation Office, which we will perhaps shorten to LBRO with your permission, Mr Chope. The provision follows from the Hampton review, which looked at the whole way in which risk-based regulation should proceed. It is, in essence, the Government response to the need for raising quality and improving the narrowing wide variance in how local authority regulatory services operate.

We are looking at not just trading standards, but environmental health and matters such as licensing. There are several concerns, not least the fact that we are being asked to believe that a single organisation—a reasonably small organisation—will be able to deliver a significant change in regulatory practice for nearly 500 different local authorities. Effecting the kind of improvements that Ministers seek, especially for the worst regulators, would need, in my view and the view of many of those involved, a considerable change in the internal management, training and culture of those organisations. We are being asked to agree to a small  organisation taking on what is a very significant task. My question to the Minister, therefore, is how will the LBRO deliver that change to so many different organisations?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Does the Minister wish to respond?

Mr. McFaddenindicated dissent.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

It is not compulsory. If the Minister does not rise I presume that he will not be responding and we shall move on.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

I was rather anticipating that as a question was asked from the Opposition Benches, the Minister might provide an answer. I hope that he will be able to do so.

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I am happy to elucidate further upon LBRO and how it will do its job. The hon. Gentleman is absolutely right to root the discussion in the Hampton report, which was carried out three years ago. Hampton identified two basic problems in local better regulation. The first was inconsistency. Different advice was being given to businesses operating around the country; a business might get a green light in one local authority area, but a red light in another. Hampton found that to be costly and cumbersome to business. The second major flaw he identified was inflexibility in how regulation was enforced, particularly in the penalty regime. That applies more to part 3 than to clause 1, but those were the two issues that Hampton identified.

Our response is to establish the Local Better Regulation Office. The hon. Gentleman is right: local authority regulators sit at the centre of a complex system. His question is: how will a small organisation deal with the two quite major issues that Hampton identified? The first thing that I point him to is the board of LBRO. The LBRO has already been established as a company and a board has been appointed, and I hope he agrees that the board represents significant expertise from local authority, trading standards and business backgrounds. That expertise will be of significant help in enabling the LBRO to deliver its aims.

The LBRO will work closely with national regulators, local authorities and businesses, seeking their assistance and co-operation in delivering better regulation. It has a relatively small budget of about £4.5 million a year, but part of that will enable it to provide a level of financial support and assistance to local authorities in carrying out those functions. The hon. Gentleman is right to say that it is a relatively small organisation, but it will occupy a pivotal role at the centre of a complex system of regulation. The expertise of the board and the work it will do with all the different players—regulators, local authorities and businesses—will enable LBRO to carry out the job that we hope it will do.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

I am grateful to the Minister for going into the background. What I am trying to tease out is a practical issue that I have a degree of scepticism about—the practical reality of a single, small organisation being able to effect cultural change in nearly 500 organisations. The Minister is a former special adviser to the former Prime Minister, Mr. Blair. I think the phrase used by  Mr. Blair in those days was that he had the scars on his back from trying to effect change in Whitehall. The Minister will therefore be acutely aware of the difficulty in achieving the kind of change that I suspect he, most of business and I want to see. Does he recognise that it will be a significant challenge, and is he confident that the resources and powers in the Bill are sufficient?

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee 10:45, 17 June 2008

I recognise the challenge. My old boss, the former Prime Minister, was referring to the great Whitehall machine when he talked about having scars on his back. In the Bill, what we are talking about is important but in a different way. It is about how local authorities and organisations enforce regulation. The challenge for LBRO is to ensure that the two weaknesses identified by Mr. Hampton, those of inconsistency and inflexibility which I mentioned a couple of minutes ago, can be dealt with. Not all of that is done through the clause and we will go on to talk about the different powers that the LBRO uses to carry out its functions.

We believe that it should be an organisation with teeth and I welcome the hon. Gentleman’s indication that he agrees with that. Some of the amendments before us might, if passed, reduce the LBRO’s powers to be effective and could leave us with a weaker organisation. I do not want that to happen. The message from business is very important. Business wants to see clarity and consistency in the enforcement of regulation. It is one thing to have a debate about the substance of a regulation and whether it is necessary, but it is another to lack clarity about how that will be enforced in different parts of the country. That issue is an essential part of LBRO’s work.

However, it is not just about how LBRO works at local level. An important part of its job will be to speak to the regulators and to central Government about the regulations. It is not only an “eyes downward” organisation at local level; it has an important upward voice. The Government believe that currently there is a gap there, which LBRO will be able to fill. It has an important role, both in advising central Government and in ensuring consistency in the application of regulation at local level.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

I am grateful to the Minister; it has been a useful exchange. Clearly, the LBRO is one of the principal elements of the Bill, and all the powers and subsequent clauses in part 1 relate to whether it will be able to fulfil its task. I remain sceptical about its ability to fulfil that role, but I hope that it achieves it. I hope that the Minister’s sunny optimism will be proven right and I would be more than happy to—I was going to say buy him a pint of Guinness, which perhaps after Friday’s marvellous result would be even more appropriate. I am happy to be proven wrong, but at the moment I am not entirely convinced. However, the clause is there and I am grateful to the Minister for putting on the record the Government’s confidence in the ability of LBRO to do this with the resources and powers that it has. On that note, I will delay the Committee no further.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.