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Regulatory Enforcement and Sanctions Bill [HL]

I start by welcoming the noble Lord, Lord Razzall, to his place in this Committee. His colleague the noble Baroness, Lady Hamwee, has played an important role until now, and I sure he will play such a role from now on. Amendment No. 108, to which the noble Lord, Lord De Mauley, has just spoken, is similar to government Amendment No. 164, which I shall turn to shortly. Amendment No. 107, tabled by the noble Lord, Lord Razzall, takes a slightly different approach to the same issue. Again, we sympathise with the intentions, and we would expect regulators to use their compliance with the code as part of the evidence of their suitability to take on the sanctioning powers we propose. However, requiring the Minister to be satisfied that a regulator is compliant with the code would be a step too far. Section 22 of the Legislative and Regulatory Reform Act 2006 requires a regulator to have regard to the code. Amendment No. 107 would instead require regulators to be fully compliant with the code before these powers could be conferred upon them. There may be only a small difference between us, but we think that would be a little too onerous. I shall move government Amendment No. 164 in due course—whether that is today or on another day is a matter of question. In its report on the Bill, the Delegated Powers and Regulatory Reform Committee accepted the general procedure for awarding the powers to a regulator by secondary legalisation, but recommended that the circumstances in which the new powers are awarded should be set out in the Bill. It has always been our intention that only those regulators who are capable of acting in a way that is compliant with the principles of better regulation should have access to the new sanctions, and our amendment gives effect to that. The drafting of the government amendment is a little different from that of Amendment No. 108, proposed by the noble Lord, Lord De Mauley. Amendment No. 164 requires the Minister making the order to be satisfied that the regulator will act in accordance with the principles of better regulation, as set out in Clause 5(2), when exercising the new sanctioning powers. This makes the approval of regulators more directly related to the exercise of the new Part 3 powers; it also captures new regulators who may not be able to demonstrate that they are currently acting in a way that is compliant with the principles. Instead, the Minister will have to be satisfied that such regulators will act in this way. The issue of risk assessments was mentioned in Amendment No. 108. We agree that the assessment of risk should be at the heart of regulatory activity. We believe, however, in spite of the noble Lord’s valiant efforts, that this is captured by the words ““targeted”” and ““proportionate””, as a targeted and proportionate approach should be one that is based on an assessment of risk. Members of the Committee may also be wondering why the amendment creates a new clause rather than making an amendment to Clause 34. This is in order to ensure that the amendment also applies to Clause 60, which extends any power that a Minister has to create criminal offences in secondary legislation to include the power to create alternative civil sanctions. As for the principles of good regulation, regulations should be focused on the problems of minimised side effects and avoid a scattergun approach and enforcers should focus primarily on those whose activities give rise to the most serious risks. I hope that I have done enough to persuade the noble Lord to withdraw his amendment.