Report stage in the Lords
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Lord BachLabour- Quote
- moved Amendment No. 45:
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Lord De MauleyConservative- Quote
- moved Amendment No. 46:
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- Lord BachLabour
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- My Lords, I believe that the noble Lord, Lord De Mauley, and I have largely the same intentions in our amendments. We are both trying to facilitate discussions between enforcing authorities and primary authorities before an inspection takes place; to give primary authorities the opportunity to share with enforcing authorities their knowledge and expertise; to give primary authorities the opportunity to inform the approach taken by an enforcing authority to an inspection; and to allow primary authorities to demonstrate, where appropriate, that an inspection is just unnecessary. We do not think that primary authorities should be required to consent to inspections proposed by an enforcing authority, because inspections can be triggered by a wide range of factors, including a complaint that must be followed up and recurring management failings within an outlet that must be addressed. We do not think that an inspection plan can take into account all these factors. If an enforcing authority has to seek the consent of the relevant primary authority before undertaking an inspection, the result will be a deluge of notifications to the primary authority, bogging down the primary authority’s system as a whole and preventing quick inspections when these are needed. To avoid this outcome, primary authorities would naturally be likely never, or very rarely, to contest proposed inspections. Primary authorities would also draw up high-level inspection plans hedged with so many caveats as to render them meaningless. We do not think that disengagement between a primary authority and an enforcing authority would benefit anyone, particularly not businesses. The noble Lord asked why there are different provisions for inspection and enforcement. Inspection is a different animal from enforcement. It imposes far fewer burdens on the business than an enforcement action does and we think that it would be disproportionate to require anything more than informing the primary authority. We do not think that consent is necessary. We fear that, although these are well intentioned amendments, their tendency would be to undermine the expected benefits of inspection plans. For that reason, I urge the noble Lord to withdraw them.
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- Lord De MauleyConservative
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- My Lords, I think that my case stands and I am not entirely convinced by the Minister’s response, as he will not be surprised to hear. But in view of the hour, I will not press the matter. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 47 not moved.]
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Lord Cope of BerkeleyConservative- Quote
- moved Amendment No. 48:
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- Lord De MauleyConservative
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- My Lords, I support my noble friend’s important amendment, which stipulates the need for fair jurisdiction in light of the primary authority partnership principle proposed by the Bill. I will not repeat the debates voicing the many concerns over the primary authority partnership that dominated so much of our time in Grand Committee, but I reiterate the nervousness on these Benches that the primary authority principle may lead to unfair or prejudiced treatment against smaller, especially single-site, businesses. The Minister will, I am sure, assure us that we need not worry about that, but the insertion of this clause would provide an even better assurance.
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Lord Lyell of MarkyateConservative- Quote
- My Lords, I support the insertion of this new clause. There are five requirements for better regulation, which include proportionality and targeting. Proportionality is obviously enormously important. Targeting is more worrying. The Minister will be aware that targeting over the past 10 years has in some areas got a bad name for the unintended consequences that it has produced. As my noble friends Lord De Mauley and Lord Cope said, pressures can sometimes be brought to bear. There can be political pressures to try to achieve one thing over another. This is a salutary reminder that, if the Bill goes through as drafted, immense powers will be given to probably tens of thousands of officials in local authorities and regulatory authorities up and down the country. The importance of even-handedness can hardly be overemphasised.
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- Lord BachLabour
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- My Lords, the noble Lord, Lord Cope, has made clear since Second Reading his concern to ensure that the Bill does not work against the interests of independent businesses and, sometimes, smaller businesses. I am confident that, far from doing so, the Bill will bring better and more consistent standards of enforcement for all businesses. We know that local authorities are under a duty to have regard to the principles of good regulation, under the Legislative and Regulatory Reform Act. Clause 5 of this Bill would require that the LBRO works to ensure that local authorities carry out their regulatory activities in the same way. Part 2 will work to bring greater consistency to the treatment of businesses operating across more than one local authority. Consistency in other respects is also important, not least consistency between businesses. Promoting consistency between businesses, in this sense, will be just as much a part of the LBRO’s work. Its power of giving guidance to which local authorities must have regard will be its most effective tool in this instance. The primary authority scheme will not interfere with those areas where local discretion is necessary. It will promote consistency in areas where there is simply no good reason why standards should not be the same across the country. Businesses have spoken to us about the very substantial costs they face where standards differ. In such cases as the brand name on a line of clothing, a method of preparing rice for cooking, or the kind of footwear necessary for staff working in a specific type of warehouse, an approach that was unproblematic from the home authority’s point of view was challenged elsewhere. There is no good reason why, in cases like these, standards that are acceptable in one part of the country should not be equally acceptable in another. That is why businesses, including the Federation of Small Businesses, so overwhelmingly support the aims of the Bill. The main issue put to us by smaller businesses during the consultation was not that they disliked the primary authority scheme in principle. In fact, many smaller businesses operating over a handful of local authorities face problems of consistency themselves, and will benefit from it directly. Their concern was that local authority resources would be diverted away from them. We included a cost-recovery clause in the Bill, which we believe has removed that risk completely. The Bill foresees, and deals in paragraph 7 of Schedule 4, with the risk that enforcement practice may diverge between businesses as primary authorities give subtly different advice on compliance by conferring on the LBRO the right to give guidance and, if need be, directions relating to specific actions which have been subject to arbitration. That is, lessons learnt from particular arbitration cases can be disseminated more widely to all businesses and local authorities if necessary. The noble Lord and others who have spoken are concerned that local authorities must be even-handed. I ask the House to remember that local authorities are under a duty to be proportionate under the Legislative and Regulatory Reform (Regulatory Functions) Order 2007. We referred to levels of inspection for independent and multi-site businesses. The accusation is that inspection plans will somehow give multi-site businesses an unfair advantage. The inspection plans will not mean that multi-site businesses will somehow get less inspection; they mean that their inspection will be focused on known strategic problems for that business. We believe that they will improve the level of service that local authority enforcers will be able to give their communities just by improving the information available to inspectors. Finally, on the “patchwork” issue that the noble Lord, Lord Cope, is concerned about, there will be different standards in some areas, but we do not think that that will affect matters which really count for local people. In fact, the residents of local authorities everywhere will benefit from much better intelligence-sharing between councils, which will focus the energies of their local authority enforcement officers on the important issues associated with multi-site firms. If need be, the powers of direction in Schedule 4 will allow the LBRO to bring more consistency between and within businesses. We do not believe that the extremely well meaning amendment of the noble Lord is necessary because of the way in which this system will work.
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- Lord Cope of BerkeleyConservative
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- My Lords, the noble Lord has confirmed what I said at the start of our debates this afternoon—that this office is the national office for regulating local government regulators. I shall not pursue that. This new clause is intended to be a safety net for smaller businesses, as was recognised in the debate, because I am conscious from my experience in Parliament and in government that, due to the law of unintended consequences, the way in which things work out in practice is not always what was intended by the legislators at the time. But the Minister conceded earlier that, as there is to be a review before long so that we can see how this is all working, the unintended consequences can be considered at that time, if they exist and if my fears are realised. In the light of that, I will not press this safety-net clause at this time and I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 35 [Power to make orders providing for civil sanctions]:
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- Lord Lyell of MarkyateConservative
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- moved Amendment No. 49:
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Lord Neill of BladenCrossbench- Quote
- My Lords, I yield to nobody in my admiration of this House; I think that it is a wonderful House. What I find completely astonishing is the attendance here tonight. Reports from two of our Select Committees have drawn to our attention the fact that unprecedented powers are being conferred on a host of local authorities and regulators; so they are. I have not yet seen any answer to what the noble and learned Lord, Lord Lyell of Markyate, said in Committee. On the Labour Benches, if I exclude the Ministers, I see one Member; on the Lib-Dem Benches, there is one, and the number has sometimes risen to two; and on the Conservative Benches, there are eight. What we are being told by the noble and learned Lord is that we are faced with an extraordinary innovation that is not required at all. It is not required because we have a system of magistrates’ courts and Crown Courts that can handle genuine cases where a breach of regulation is alleged. I shall be brief because it is now late in the evening and the noble and learned Lord has said everything that needs to be said, but there are three keys points here. First, we are going to have the same body in a series of cases—many cases—acting in the roles of investigator, prosecutor, judge, jury and sentencer. Secondly, we are going to have a reversal of the burden of proof because the citizen, the company or whoever is at the receiving end of one of these decrees coming out of the regulator or local authority will find that he is said to be guilty of something, and the fine or penalty has already been imposed. It will be as it is with a parking ticket where, in effect, you start one down trying to prove that it was not your car. Thirdly, there is the human rights aspect. What has happened to due process in all this? It seems to have been completely ignored. Article 6 of the convention has been totally overlooked. In effect, we are being driven by a Bill based on the views of Professor Macrory, who starts with his concept of a compliance deficit. The noble and learned Lord, Lord Lyell, will recall the usual Irish joke: when somebody asked the question, “What is a compliance deficit?”, counsel would reply—I cannot do the accent—“My Lords, on the hills of Connemara they talk of little else”. Nobody has the faintest idea what this concept is and what the evidence is that can establish it. Therefore, I add my voice to that of the noble and learned Lord and say that it is time to ask the Government to supply answers to the questions that he put in Committee and has put again today, and to rethink their whole policy in this area before Third Reading.
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- 21:30
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Lord Mayhew of TwysdenConservative- Quote
- My Lords, my noble and learned friend has rendered the House and, more widely, those outside a signal service. Every minute of his speech was properly taken up in revealing a matter of great constitutional importance that is of great importance to all of us who are concerned with due process and the machinery of justice. I remind the House that in the Committee on the Criminal Justice and Immigration Bill, which has just been completed, Ministers were at pains, time after time, to assert their confidence in and admiration for the magistrates’ courts. In these days of joined-up government, I hope the Minister who will reply will tell us why the Government are attaching such importance to bypassing the magistrates’ courts in this important jurisdiction.
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Lord BorrieLabour- Quote
- My Lords, we have this evening, as we did in Grand Committee, listened to an extremely eloquent and persuasive speech by the noble and learned Lord, Lord Lyell of Markyate. His main thrust—indeed, his main amendment—is to remove from the Bill the ministerial power to give a regulator power to issue civil sanctions. Perhaps I may be critical of the noble and learned Lord and of the noble Lord, Lord Neill of Bladen. Both of them used, more than once, the language of the criminal law, saying that the same person was to be prosecutor, judge and jury in the same case, when they were talking about civil sanctions. There are benefits to the consumer and business in following the general principles of the Macrory report, to whose worth the noble and learned Lord gave due obeisance. The main thrust of the report is to give greater flexibility to the regulator and to provide for civil sanctions as a suitable alternative in some cases—in the less “egregious” cases, to use the Minister’s word, which I would not have chosen myself—where, because the matter is less serious, the full panoply of the criminal law and prosecution in the magistrates’ court or the Crown Court may not be warranted. Macrory suggests that there should be procedures for civil penalties instead. I am glad that on this occasion, but not in Grand Committee, the noble and learned Lord, Lord Lyell, has not attacked the provisions for stop orders or restitution orders. As far as I can see, he has confined his criticism to fixed and discretionary civil penalties. I would not differ from the noble and learned Lord in his claim that the magistrates’ courts and the Crown Courts have, over the years, been extremely helpful in dealing with the criminal law in legislation such as the Trade Descriptions Act—I think that we both referred in Grand Committee to the fact that it is having its 40th anniversary this year. That Act has done a great deal of good in consumer protection and just as much good, if not more, in its deterrent effect. The fact that it is there and that there is the potential of criminal prosecution has been just as important as the actual cases that have taken place and that have, no doubt, registered with businesses up and down the country. As the noble and learned Lord admitted, conviction before a criminal court has a severe meaning for a respectable business. Certainly businesses regard the full force of the criminal law as most undesirable and to be avoided. That is the great benefit of the deterrent effect of the criminal law. But the criminal law is not always needed in every case of a business contravening a particular statutory requirement; it is not needed in every case to ensure compliance and to correct the deficiencies and the faults of business. The noble and learned Lord was teasing the Minister about his letter of 20 February and the use of the phrase “egregious offences”. The letter said: “Like Professor Macrory, we believe that regulatory offences do not always merit a criminal prosecution and that the court should be reserved for the more egregious offences”. That is surely sensible and right irrespective of the adjective. The greater flexibility introduced in Part 3 of the Bill is most useful. Of course, for civil sanctions as for criminal sanctions, there must be procedural safeguards, despite the fact that civil sanctions do not have the same dramatic effect and do not register as criminal convictions.
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- 21:45
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- Lord Lyell of MarkyateConservative
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- My Lords, the Minister said that egregious or more serious cases should go to the courts. Those were 40 per cent of all the cases that he produced. I have provided the figures on how many went to the magistrates’ courts and the Crown Court: 15,385 went to the magistrates’ courts and 76 went to the Crown Court. Now we are finding that 40 per cent are to go off to the courts and 60 per cent are to go into the new civil system. Did that not surprise the noble Lord, Lord Borrie?
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- Lord BorrieLabour
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- Not really, my Lords. I imagine that there are more cases that are less deserving of criminal prosecution than those that are deserving of criminal prosecution. That is all that one needs to say on those figures. The greater flexibility that Part 3 provides is beneficial, so long as there are procedural safeguards—that was the point that I was making when the noble and learned Lord intervened. I do not think that the noble and learned Lord referred to them, but they require a notice with reasons of what the breach of the law has been, an opportunity for reply and a review. The regulator may then confirm his original view or not. If he confirms his original view, there is a right of appeal, albeit to an administrative tribunal. I do not bow to the noble and learned Lord in my regard for the magistrates’ courts and the Crown Court, but tribunals are not novel in 2008. There is another anniversary: it is the half-century of the Tribunals and Inquiries Act 1958, which was established following the famous Franks committee, under Sir Oliver Franks, as he was then, to ensure the impartiality, fairness, merit, speed and efficiency of tribunals, which had been questioned. In other words, tribunals have a high reputation, too, and they seem very suitable to be entrusted with the task of dealing with the kind of cases that we are talking about under Part 3 of this Bill.
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- Lord Neill of BladenCrossbench
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- My Lords, before the noble Lord sits down, will he address the point that the language of Clause 38 speaks of a “relevant offence”? The whole of this is founded on the basis that there is an offence and that you get out of it—for example, under Clause 39(5)—only by having a defence that would completely answer a criminal conviction. In other words, the two systems are inextricably confused and the man in the street cannot possibly be looking at this in the way that the noble Lord is, which is that it is all civil penalties and nothing to do with the criminal law. It is all about offences.
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- Lord BorrieLabour
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- My Lords, I do not wish to take up the time of the House, but my answer to that is that of course the starting point is a criminal offence, for which there could be a criminal prosecution. The purpose of Part 3 is to provide an alternative to a prosecution and to get at the problem in a somewhat different way.
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Viscount EcclesConservative- Quote
- My Lords, we are in great danger of underestimating the impact of the introduction of this wide system on the individual. We are in danger of being shanghaied by the business community. This is not going to be easy. For example, if you privately abstract water, regulations and forms have to be filled in, with penalties attached to the abstraction licence if you do not stick to its conditions. There are lots of people in similar situations, living under regulations as individuals, and those people are used to the idea that, if they infringe, they go in front of the magistrates. There are social consequences of these courts being replaced by officials—in whom there is not the slightest degree of trust at the moment—who can be both judge and jury. This is going to take years for people to accept. Civil penalties for traffic offences, for example, do not do the relationship between the individual citizen and the police any good at all. On the whole, we do not like cameras or their consequences. This debate is about a compliance deficit which none of us can quite find and whose size and diversity we do not understand. We have been given no detailed evidence about the compliance deficit. We are completely underestimating the social consequences of what is proposed.
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Baroness WilcoxConservative- Quote
- My Lords, I sympathise with the amendments of the noble and learned Lord, Lord Lyell. This part of the Bill that has not been properly addressed and, like my noble friend, I would like further assurances concerning the Bill empowering all regulators, and not only investigators and prosecutors, to become judge, jury and sentencers in their own cause. This is subject only to a right of appeal by the business or citizen concerned to a tribunal, probably the first-tier tribunal. It certainly appears to be a constitutional flaw within the Bill. I know that the Minister has no intention to affect negatively small businesses, small farmers, homeowners, drivers, small shopkeepers and others. I would thus be keen for the Minister to clarify the impact of the Bill on small businesses. I hope that conversations may now be set up between the Minister and my noble and learned friend Lord Lyell of Markyate. I would have said “before Third Reading”, but we have run over time. The Minister has kindly said that there will be second day for this Report stage, which is likely to be 31 March at 7 o’clock in the evening. That will provide time for us to look seriously at this matter, for civil servants to give their views to the Minister, and for the noble and learned Lord, Lord Lyell, long though he may have waited, to have his say. He must feel that the House has listened sympathetically to him and is interested in the outcome. We thank the Minister.
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The Parliamentary Under-Secretary of State, Department for Business, Enterprise and Regulatory Reform (Baroness Vadera)Non-affiliated- Quote
- My Lords, I thank the noble and learned Lord, Lord Lyell, for his eloquent contribution to the debate. He will not be surprised to hear me say that I regret that we cannot accept the amendments, which are profound and would render Part 3 of the Bill pointless. A large number of questions have been raised. On points of fact, I will be happy to write and have further discussion. I have received many notes from my staff with detailed answers, but given the time, I shall confine my remarks to restating the benefits and the purpose of the Bill. The new sanctions will enable regulators to enforce offences much more effectively. They provide a clear, more flexible and proportionate approach to enforcement, and should help reduce the level of non-compliance and enable a more co-operative and consensual approach to regulation. The noble and learned Lord has implied that criminal courts provide an adequate system and that there is no such thing as a compliance deficit. We should not forget that the powers in Part 3 are an alternative to criminal prosecution, and that the courts will have a continuing role to play in enforcing such offences. Professor Macrory said that the more serious and egregious cases should be dealt with by criminal courts to preserve the stigma of criminal conviction. Companies should not disregard criminal fines and sanctions as part of the normal cost of doing business.
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- Lord Neill of BladenCrossbench
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- My Lords, have we not set up a Supreme Court to keep the judiciary away from the political process? In that case, why does the Minister cite the opinions that judges have expressed on this Bill as an argument to persuade the noble and learned Lord to withdraw his amendment?
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- 22:00
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- Baroness VaderaNon-affiliated
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- My Lords, because they were consulted, as noble Lords would have expected us to consult them. If we had not done so, noble Lords would have asked why we had not.
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- Lord Lyell of MarkyateConservative
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- My Lords, I am a little in doubt as to our procedural position at the moment. Are we just going on through the evening—
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- Lord BachLabour
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- My Lords, the usual channels have agreed that we will adjourn at 10 o’clock, or around 10 o’clock, at the end of the debate on this group of amendments. The noble and learned Lord will have to decide whether to have a vote or withdraw his amendment. After that has finished, it is my intention to adjourn Report and then to adjourn the House.
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- Lord Lyell of MarkyateConservative
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- My Lords, that is extremely helpful. I had hoped that we were going to come to an end by fluxion of time at 10 pm and that the Minister would have time to prepare the answers which he understandably found it difficult to give tonight to my questions. That not being the case, I can tell the House that it has always been my intention to withdraw the amendment at this stage and to return to it, in so far as the rules of the House allow, at Third Reading. I am extremely grateful to all the noble Lords who have taken part and I include the noble Lord, Lord Borrie, who has immense knowledge of these matters. I would like to make quite a number of points in reply both to him and to the Minister, but if I start doing that now I will be another 10 or 15 minutes and that is not sensible. So at this stage, I beg leave to withdraw the amendment and we will return to the substantive issues later. Amendment, by leave, withdrawn. [Amendments Nos. 50 to 52 not moved.]
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- Lord BachLabour
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- My Lords, I beg to move that consideration on Report be now adjourned. Moved accordingly, and, on Question, Motion agreed to. House adjourned at 10.11 pm.
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