Clause 28

Regulatory Enforcement and Sanctions Bill [Lords] – in a Public Bill Committee at 4:00 pm on 17 June 2008.

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Enforcement action

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

I beg to move amendment No. 12, in clause 28, page 13, line 24, leave out from ‘is’ to ‘it’ in line 25 and insert

‘inappropriate and that compliance could be secured by an alternative enforcement action’.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

With this it will be convenient to discuss the following amendments: No. 13, in clause 28, page 13, line 26, after second ‘the’, insert ‘originally proposed’.

No. 14, in clause 28, page 13, line 27, at end insert

‘and to take the alternative enforcement action mentioned above’.

No. 31, in clause 28, page 14, line 13, leave out paragraph (b).

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

I will discuss amendment No. 31 in a moment, as it is distinct. The first three amendments seek to return greater flexibility of power to primary authorities—something that was in the Government’s first draft of the Bill. There are three amendments to subsection (2) on page 13, and rather than deal with them individually, to aid members of the Committee I will read how the new subsection would read once amended, so that the picture can be seen in its entirety:

“If a primary authority determines within the relevant period that the proposed enforcement action is inappropriate and that compliance could be secured by alternative enforcement action, it may within that period direct the enforcing authority not to take the originally proposed action and to take the alternative enforcement action mentioned above.”

That would be the net effect of the three amendments, although I stress that they are probing amendments and seek to understand the subsection.

As currently drafted, the clause is much narrower than in the original Bill as presented to the other place. As such, it limits the primary authority to intervening by preventing one form of action by an enforcing authority. The amendments, which have the support of the British Retail Consortium, seek to re-establish a wider remit so that where better alternative actions exist, the primary authority can direct the enforcing authority to implement them. That would enable the primary authority to act more positively, and not be negative in its activities.

I fully accept that the wording that I used is not perfect—that is my error and not that of the Clerks. However, I wish to consider the practical issues and perhaps the Minister could focus particularly on why the Government decided to change the original wording. Secondly, does the Minister recognise that more flexible powers would better enable primary authorities to fulfil their role? That is the heart of the amendments.

Amendment No. 31 relates to subsection (9) on page 14. It defines the relevant period within which a primary authority must decide whether enforcement actions can or cannot proceed. Subsection (9)(a) specifies that that might be

“the period of five working days”,

which for most companies is a normal working week. It means that during that time the business is in limbo about whether it will face a sanction, fine or whatever. In business, time is money and that is particularly the case for small businesses who may be affected by such legislation. The matter should be hanging over them for as short a period as is reasonably possible.

Subsection (9)(a) is good, because five working days is perfectly reasonable and sensible. My problem is that paragraph (b) then states that “relevant period” can mean

“such longer period beginning with that day as LBRO may direct.”

Why does the Minister believe that the LBRO should need any longer than five working days? That would cause difficulties for smaller businesses. Rather than the major organisations with large legal departments, this concerns the smallest family businesses that have only two or three people who are just trying to get on with their job. They have a personal sanction and are waiting to know what will happen. Is not five days enough? I look forward to the Minister’s response.

Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Chair of the Liberal Democrat Parliamentary Party 4:15, 17 June 2008

The area of greatest discomfort for me is that the clause will bestow on one local authority the power of veto over another authority’s enforcement decisions. That not only is undemocratic, but gives the primary authority de facto powers of legal interpretation that are the proper function of the courts. The amendments and the new clause that I have tabled would remove that veto and leave it to a court rather than a primary authority to decide whether enforcement action was unjustified in the light of advice given to a company by the primary authority. I should be grateful if the Minister would try to give some reassurance and a little more information on that matter.

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 hon. Member for Hertford and Stortford posed two questions in moving his amendment. One was why the Government had changed their position somewhat on the issue since the draft Bill was published and the other related to the relevant time, so I shall try to cover both points. He is right that there was something of a change in the position and that the amendment he proposed would take us back closer to where the process started in the original consultation. I will explain why the Government changed their view on that during the consultation. Subsection (2) is clear about what the grounds are. It states:

“If the primary authority determines within the relevant period that the proposed enforcement action is inconsistent with advice or guidance previously may within that period direct the enforcing authority not to take the enforcement action.”

The test, therefore, is inconsistency with advice or guidance previously given, and that test is narrower than the one we originally proposed and the one outlined in the hon. Gentleman’s amendment, which would be whether it was inappropriate.

When we consulted on that issue before the final version of the Bill was published, a number of stakeholders and local authorities told us that they were concerned about that because it would give the primary authority a role that was more akin to a free-ranging right of review, rather than asking it to answer what is a clearer and more narrowly defined question on whether the enforcing authority had acted in a manner consistent with the advice that was given. We took those representations on board and narrowed them down somewhat. In doing so, I believe that we have, to some extent, eased the burden on primary authorities with regard to what they are required to look at in those circumstances. Some primary authorities—even very experienced ones—have a number of headquarters in their areas. We are concerned that a wide test, such as the test of inappropriateness, would leave them having to play a much more interventionist role, rather than judging enforcement action on the basis of consistency of advice.

Photo of Judy Mallaber Judy Mallaber PPS (Rt Hon Baroness Ashton of Upholland, President of the Council (Leader of the House of Lords)), Privy Council Office

I can see that my hon. Friend is saying that it gives a narrower power of discretion and judgment to the primary authority. However, there could still be circumstances in which the enforcing authority felt that it had a good, specific, local reason to take different action from that in the original guidance. Will my hon. Friend tell me what the situation will be? Will there be a right of appeal to the LBRO and whose view would ultimately prevail in that circumstance?

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

That is where LBRO’s arbitration role comes in. My hon. Friend is right to say that. If the test was the original, wider appropriateness test, rather than the consistency test that we have now written into the Bill, there would probably be many more appeals to LBRO.

I hope that helps the hon. Member for Hertford and Stortford in relation to his amendment. I understand what he is driving at, as it is pretty close to the position where the Government began on this. However, we have listened to the representations about the burden that would be put on primary authorities. As I said, significant concerns were raised by people charged with enforcement. They said that giving primary authorities such a general right to block enforcement action would be wide-ranging—much more so than the consistency test—and that it would put a substantial burden of liability on the primary authority, which would find itself required to make a thorough investigation of every aspect of a particular enforcement action.

This morning, we discussed the concerns of the hon. Gentleman’s local authority about the burdens that will potentially be imposed on it by the Bill. My fear is that, compared with the consistency test, the amendment would increase those burdens. That is why we have made the change.

Before I turn to a further point made by the hon. Gentleman, I will mention a couple of the stakeholders who have commented on this. Representatives of the professions involved, such as the Trading Standards Institute and the Chartered Institute of Environmental Health, have welcomed the change we will make in this regard. The consistency test gives the primary authority more of an objective role, which is founded on judging the action against the advice that it has given. That is why we have narrowed the power in that respect.

On the point about the extension to the normal deadline of five working days, the hon. Gentleman is right that the normal deadline would be five working days. However, subsection (9)(b) states,

“such longer period beginning with that day as LBRO may direct.”

In the conversations that we have had with local authorities, including Hertfordshire council, five working days is thought to be sufficient in the vast majority of cases and is normally enough to give the enforcing authority time to judge the consistency test, about which we are talking in relation to the clause.

The ability to extend the deadline has been included to provide some flexibility in situations where, for one reason or another, it might not be possible for the primary authority to respond in five days. For example, a particular event in the primary authority area might mean that staff are diverted on a short-term basis and that the primary authority is unable to commit resources to considering such a referral. A case might be particularly complicated and occasionally might take longer than five days. The Local Authorities Coordinators of Regulatory Services—the local authority regulation body—has commented on the Bill and has recommended that we extend the term from 28 days as a matter of course. We do not want to do that because we agree with the hon. Gentleman: time is money and we do not want unnecessary extensions. Five days should be the norm in most cases. However, we do think that the provision for some flexibility makes sense. I hope that on that basis, the hon. Gentleman will not choose to press the amendment.

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

The debate has been helpful. I understand that it was slightly ironic to propose what the Government were originally proposing and then to watch the Minister explain why they have changed their mind. It is very good to see—

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

The listening Government. I am sure that that is all part of the process and we just hope that it is more successful than it has been elsewhere in Government business. It is entirely right that the Minister should reflect that consultation and that is welcome.

With regard to amendment No. 31, I confess that the moment the phrase “28 days” loomed I suddenly thought that we were in another place, discussing other matters. Thankfully, I do not feel so passionately about it that I feel the need to leave the room, but the debate is important.

It was particularly helpful that the Minister made it clear that the Government’s wish and the LBRO’s wish is that five days is the norm and that there has to be a jolly good reason for going beyond that. That is an assurance that I know small businesses will want. The idea that 28 days should be the norm is nonsense; it might be convenient for the local authorities, but in the end the paying customer is the small business. Small businesses are the ones who all of us in the public sector rely on to generate the wealth to pay for our incomes and we should not forget that. Although I understand that there will be exceptional cases, as long as that is the case and as long as we recognise that five days is the  normality, it would seem that we have made a gain today. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 28 ordered to stand part of the Bill.

Schedule 4 agreed to.