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Regulatory Enforcement and Sanctions Bill [HL]

My Lords, the House is grateful to the noble Viscount, Lord Eccles, for the concerns that he has expressed throughout our proceedings—at Second Reading and at various stages since then—about the power of direction in Clause 7. His amendments today would curtail significantly and in a new way the scope of the direction-giving provision. There are some technical difficulties with the amendments. Although I will talk mainly about the substance of what the noble Viscount has argued, as that is what we have difficulty with, I will set out briefly what those technical difficulties are. We suspect, having heard the noble Viscount, that the amendments are intended to ensure that directions to comply with guidance may not be used until the guidance in question has been published for a year. However, the amendments would simply freeze the LBRO’s ability to give directions until the first anniversary of its very first set of guidance, whatever that might be and whatever it might affect. Amendment No. 2 specifies that one year after guidance—any guidance—has been issued under Clause 6, specifically, to quote the amendment, "““since the publication of guidance under section 6(5)””," the LBRO may start using its direction-giving power under Clause 7. We do not believe that that is what the noble Viscount intends, but we are afraid that it might be the effect of his amendment. We have looked at Clause 7(1) many times in this House. The subsection makes it clear that the LBRO may give directions to local authorities to comply either with its own guidelines issued under Clause 6 or with other relevant statutory guidance issued by another body. The noble Viscount said a few minutes ago that he deliberately omitted Clause 7(1)(b) from the effect of his amendment—he is nodding. If he meant to refer to Clause 6 guidance—and of course he did—the amendment makes sense only if read as meaning the first guidance that the LBRO publishes under Clause 6. In effect, therefore, the countdown to the LBRO’s power of direction in Clause 7 would start on the day on which the LBRO publishes its first guidance under Clause 6. Once a year has elapsed after that event, the amendment would in practice have no further effect. There are therefore technical difficulties with the amendment. Let me move on to the points of substance that the noble Viscount has raised. In Committee and on Report, I quoted—I do not intend to do so again today—many of our major stakeholders who fully support the clause and the necessity that the LBRO should have a power of direction. Those stakeholders include the CBI and, on the non-business side, the National Consumer Council and the Trading Standards Institute, which believe that this is an important backstop—I use that word advisedly—to ensure that the guidance has impact. If there is no backstop, what is the remedy if a local authority does not follow the guidance that is set? We have also discussed the closest precedent for this provision: the powers conferred on the Food Standards Agency to give directions to a local authority requiring it to comply with its code of practice. The primary restriction on the Food Standards Agency’s power is that it should consult Ministers before exercising it. That is not the position in the Bill. When we introduced the Bill, the key restriction was that the LBRO’s exercise of the direction-making power—the Clause 7 power—required the consent of the Secretary of State. That goes further than our precedent, but we added two further safeguards in Committee and on Report. First, we accepted in full the recommendations of the Delegated Powers and Regulatory Reform Committee of this House that, where directions apply to more than one local authority, parliamentary consent is needed by way of an order subject under Clause 7(4) to the negative procedure. Secondly, we have been persuaded by the case made by the noble Baroness, Lady Hamwee, that local authorities should be consulted before the LBRO uses this power. Noble Lords who have read the list of amendments will know that, shortly, a government amendment on this will be moved and, I hope, carried. I argue that those are significant concessions, which mean that the LBRO’s ability to issue directions will be subject to three important safeguards. The LBRO will need to pass a number of hurdles before it can issue directions under Clause 7. Let us suppose that guidance has been issued but that it becomes clear, alas, that some local authorities have decided to ignore the guidance, which places the public at risk or places a significant burden on the regulated community. Under government Amendment No. 3, the LBRO will be required to consult the local authorities involved regarding its proposal that the authorities be directed to comply with the guidance. To meet its statutory duties, the LBRO will have to do so in a meaningful way and give the local authority the time and opportunity to respond. The next step will be that the LBRO must prepare a case for intervention to the Secretary of State. The LBRO must wait for the consent of the Secretary of State—consent that will certainly not be given lightly. Finally, if the directions apply to more than one local authority, orders will have to be drafted and approved by Parliament. The point of going through that rigmarole is to show that the existing safeguards in the Bill simply will not allow the LBRO to issue a direction with undue haste unless there is a good reason for it to do so. We believe that the amendment is unnecessary, but we go on to argue—this is the kernel, the heart, of our case—that the amendment is unhelpful, for two main reasons. First, the power in Clause 7 is included to ensure that local authorities do not ignore the LBRO’s guidance in practice. Adding a year’s delay could simply give a year’s grace to those authorities that might seek wilfully to ignore guidance. To put it another way, it would preclude the LBRO from issuing directions even where a local authority was flagrantly disregarding guidance from the day of publication; the LBRO would be powerless to act for one year. In our view, that cannot be sensible. Secondly, directions will not be used in trivial cases. If it makes sense for the directions to be applied, it will almost certainly make sense for them to be applied quickly. As we have seen, delay is inherent in any effective system of safeguards, but there is no justification for building delay into the system for its own sake. We have dwelt in some depth throughout our deliberations on a directions clause, which we believe is unusually well safeguarded. We have focused closely on the Food Standards Agency example, but noble Lords may be surprised to hear that the LBRO’s powers over local authorities fall well short of those exercised by comparable bodies in other respects. I shall end by saying that we are grateful for the care with which the noble Viscount has scrutinised the Bill, but we believe that we need to get this very limited power—this backstop power with its many safeguards—into perspective. We do not want to see the LBRO directing local authorities as a matter of routine, but these are backstop powers and we have amply provided against misuse. I have been asked a number of questions and I shall do my best to answer some of them. The noble Viscount asked about the LBRO. He said that is untested and that we are giving it draconian powers. However, if the government amendment in the next group succeeds, there will be a review of the LBRO after three years. Noble Lords will recall that there were discussions about that on Report. The noble Viscount said that the FSA powers have never been used. The FSA has made it clear to, I think, the noble Viscount that, although the powers have not been used, they nevertheless provide, "““an important safeguard to ensure that consumers are protected through enforcement of food law””." We hope that the LBRO’s powers will not need to be used, but that does not mean that the clause is unnecessary. The noble Viscount suggested that other guidance could include anything. Our answer to that is, no, it could include only statutory guidance relevant to the scope of the LBRO’s objectives. He also raised other issues, which I shall be happy to answer in writing in due course. Perhaps I may summarise why we disagree with the noble Viscount on this issue. First, let us forget for the moment the technical aspect of his amendment, although we think that that is important. If his amendment were passed, it could give local authorities the impression that it is acceptable not to take any account of the guidance in the first year after publication. Secondly, the LBRO will use its power of direction only in serious cases. The levels of safeguard in place are testimony to that. If a case is serious, the LBRO may need to act urgently and, frankly, a year is too long. Thirdly, the power is surrounded with significant safeguards and already includes the requirement to have the consent of the Secretary of State. Lastly, the existing safeguards, including the one that we hope will be carried in the next group, mean that there will be a significant period between local authorities’ first exposure to the guidance and the LBRO’s ability to apply directions. I have done my best to respond to the amendment tabled by the noble Viscount and I hope that, after he has considered what I have said, he will consider withdrawing it.