Clause 26

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

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Nomination of primary authorities

Amendment proposed [this day]: No. 16, in clause 26, page 13, line 3, at end insert—

‘(c) the regulated person gives 3 months notice that it wishes to terminate the nomination’.—[Mr. Prisk.]

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 4:00, 17 June 2008

I was coming to the conclusion of my remarks on amendment No. 16 at the end of the previous sitting. Essentially, as the hon. Member for Solihull said, those remarks deal with whether the relationship can be forced. That is at the heart of the question.

There are a number of safeguards in clause 26 regarding the primary authority relationship. It mentions, for example, that the Local Better Regulation Office may only nominate a local authority if

“the authority and the regulated person have agreed in writing” or when

“the regulated person has requested LBRO to make a nomination under section 25(1)...and LBRO considers the authority suitable for nomination”.

We want to give LBRO powers on such matters, partly because we think that there could be unfairness if many authorities simply opt out of the responsibilities that go with primary authority status, and if that work is being done by only one or two authorities. In the vast majority of cases, the relationship will be voluntary—after all, arranging such a relationship will be preferable to forcing it—but we want to give LBRO the power.

Under the amendment, if a business can simply opt out unilaterally, the danger, from a regulatory point of view, is that it could shop around, perhaps looking for its version of the right answer to a particular regulatory question. We do not think that a situation in which the relationship is forced should be the norm, but we do think that, as a backstop, it is important that LBRO can bring two parties together, rather than allowing a continual opting out of the primary authority relationship for a business in a multi-site—

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

Will the Minister say, from a practical point of view, what steps a business should follow if it decides or feels that it needs to terminate or revoke the nomination of the primary authority?

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

We spoke in this morning’s sitting about a situation in which one supermarket chain takes over another. The business could go to LBRO and say, for example, “We have been taken over by another group in another part of the country, so we think that the primary authority should no longer be local authority A, but local authority B.” That would be a perfectly rational thing to do. One would hope that LBRO would look kindly on such a situation. There are mechanisms whereby, for completely rational reasons, a business can say that it wants the primary authority to be changed. A similar circumstance could arise if a business moved its headquarters or principal centre of operations from north to south, for example. It would make sense for such a business to have a different primary authority relationship.

I am not saying that the arrangements should be frozen for ever once they are established, but there should be circumstances in which LBRO can say, “This is the relationship that we want to put together.” Under the amendment that the hon. Gentleman has proposed, the business could continually withdraw from primary authority relationships simply by giving notice, without the kind of reason that I have described. The danger is that we could have regulatory shopping around for the best deal, as it were, which I do not think would serve the Bill’s purpose.

Photo of Ann McKechin Ann McKechin Labour, Glasgow North

Will the Minister confirm how the LBRO will determine the suitability of Scottish local authorities as primary local authorities, given that there is no specific requirement for the membership of the LBRO to contain anyone with a Scottish background, be that a member of the Scottish Government or a person from the Scottish local authority?

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

By the same criteria as anywhere else. It would depend on whether the company, which operates in multiple areas, has headquarters in a particular Scottish local authority, or has its main operations in a Scottish area. It may also have operations in different parts of Scotland or across Scotland and England. The same principle would apply in all those cases. There is a clause in the Bill that sets out the territorial application on which we touched. Assuming that territorial application applies and that we are talking about functions that are reserved, then LBRO’s primary authority principle will operate in the same way in Scotland as elsewhere.

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

The debate has been useful because it has helped to clarify an issue that is not very clear in the Bill. Clause 26(5)(b) refers to when LBRO “considers it appropriate”. The Minister has now made it clear that a number of avenues are available to businesses to enable them to terminate any particular relationship with a primary authority. That has been helpful. In some ways, it would have been better for it to have been explicit, but with that clarification, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.