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Regulatory Enforcement and Sanctions Bill [HL]

My Lords, I was going to come on to that point, although I should say that we are discussing this Bill and its structure, which has been consulted on. It applies to a wide set of regulators, as the noble and learned Lord has said on many occasions; it is not a narrow Bill that applies only to a certain set of regulators. I will come on to address the point of the alternatives between civil and criminal penalties, if I may first finish the point that I was making. The point that I was attempting to make was about knowledgeable regulators being able to lead to a better compliance outcome. In that context, the noble and learned Lord expressed the fear that regulators will hand out fines disproportionately. There is no evidence to suggest that that will be the case and all the evidence to suggest that it will not. In addition to being expert, they are bound by the regulators’ compliance code and have to act in a way that is proportionate, accountable, transparent, consistent and targeted. They will not be granted the new powers unless the Minister is satisfied when a Hampton review is undertaken on each regulator that they are capable of acting in such a way. Their detailed powers will be subject to an affirmative order requiring a debate in both Houses and they could have their powers taken away if they misuse them. The noble and learned Lord suggested that we are seeking to pursue the Bill in preference to improving the performance of magistrates’ courts by instead taking cases away from them. We are not. We are implementing all the recommendations of the Macrory review, including those outside the scope of the legislation, which give courts the necessary tools to tackle regulatory offences more effectively than currently. I have already provided details of that in writing to the noble and learned Lord. The noble and learned Lord and the noble Lord, Lord Neill, have questioned whether the Bill is compliant with the European Convention on Human Rights, especially Article 6. It is. As we discussed on Friday, the Government firmly believe that the safeguards in the Bill satisfy our obligations under the ECHR. Indeed, I should point out that the European Court of Human Rights has itself recognised the benefits of removing certain forms of conduct from the category of criminal offences under domestic law. In the case of Ozturk v Germany, the European Court of Human Rights said that such measures could serve the interests of the individuals as well as the needs of the proper administration of justice. The noble and learned Lord implied that regulators will be acting as judge, jury and sentencer, in a phrase expanded by the noble Baroness, Lady Wilcox, and has in the past drawn an analogy with traffic wardens. Traffic wardens do not have to give notice of intent, hear representations and be satisfied to the criminal standard of proof before issuing a parking fine. I have enumerated several times the checks and balances in the Bill, so I will not repeat them now. I say in response to the query from the noble Lord, Lord Neill, that he will know that, where serious assertions are made in civil proceedings, the burden of proof will follow the gravity of the assertion. Therefore it is not at all unusual for the balance of proof to be determined with little difference if the assertion is serious. I stress again that there is a right of appeal against the new sanctions to an independent, impartial and expert tribunal. The details of this were discussed in particular by the noble and learned Baroness, Lady Butler-Sloss. There was some confusion on Report about the membership of the tribunal. I clarify that we envisage that the tribunal will be chaired by a tribunal judge and not by a civil servant. We have clarified the drafting, which we will come to later. I shall clarify comments made by my noble friend Lord Bach on the last day of Report. The tribunal will have powers to confirm, to overturn or to substitute a regulator’s sanctioning decision. Its role will be similar to, but not the same as, that of the Court of Appeal Criminal Division. It will examine not whether the sanctioning decision is safe or unsafe but whether there are grounds for overturning the decision. Wide grounds of appeal have been provided for each sanction, which in some ways will allow for a fuller examination of the decision than the Court of Appeal, as it specifically allows for the examination of matters of fact. The Court of Appeal is generally reluctant to overturn the jury’s findings of fact. The noble and learned Lord, Lord Lyell, talked about current Bills and mentioned the wheelie bin case, which I believe involve the same question of whether business should have a choice whether to accept the civil sanction or whether to opt for a criminal prosecution. It cannot be for business to choose how it will be treated. Allowing a business to do that would leave the system open to abuse. The business could, for example, attempt to delay the enforcement process by going down one route and then opting for another. For the new system of civil sanctions to have the confidence of the public, it must be swift and effective. Furthermore, in a proportionate sanctioning regime, criminal prosecution should be reserved, as we have said, for the most serious cases. This can be assessed by the regulator only in view of all the cases before it. Therefore the choice between civil and criminal sanctions must remain at the discretion of the regulator and not the offender. What might be appropriate in certain limited cases might not be appropriate for the Bill and its structure, which we have discussed and consulted on at length. We have already set out that the route that the regulator chooses will be determined by a number of factors such as the nature of the offence, the characteristics of the case and what is set out in the regulator’s own enforcement policy, which will be public. The noble and learned Lord questioned the blanket nature of the powers under the Bill and, on occasion, the lack of detail of things such as the level of fixed monetary penalties. He also detailed procedures of the new tribunal. This is an enabling Bill and, given the complexity of businesses and the differences in various regimes of regulation, we can hardly have one size fits all in this primary legislation. Details will be in the orders that grant powers when the Minister is satisfied that they are warranted and to the level needed, and they will be available and the subject of debate and affirmative order by both Houses. I am grateful for the confirmation by the noble Lord, Lord Razzall, that we have satisfied the Constitution Committee and the Delegated Powers and Regulatory Reform Committee. They indeed raised concerns, which we have made amendments to address. We have, for example, introduced a notice of intent for fixed monetary penalties and have capped the level of them. I understand that the Constitution Committee is now content with what it calls the balance in Part 3 between effective sanctions and due process. Finally, the noble and learned Lord said that only big business will be able to operate this sanctions regime. I am the Minister for small businesses and for regulatory reform. That joint responsibility is not a coincidence, because the impact of regulation may be felt disproportionately by small businesses. I strongly refute the view that the noble and learned Lord has expressed. Small businesses have supported this Bill fully. The only concern that they have expressed is that during the passage of the Bill we will it water down. They want something less daunting than criminal prosecution for minor and unintended offences for their mainstream businesses and they want a level playing field where rogue traders are punished proportionately so that they do not gain a competitive advantage. The Federation of Small Businesses says that it, "““supports the use of alternative sanctions rather than the use of criminal prosecutions, which should only be reserved for the most egregious offenders and offences””." We are not in the business of maintaining the status quo if it can be improved. The Government’s job, which should be supported by all parties, is to modernise regulatory enforcement, to make it fit for the 21st century and to create the most competitive environment for business without affecting the outcomes for society as a whole. I am therefore pleased that we have managed to satisfy the noble and learned Baroness, Lady Butler-Sloss, the noble Lord, Lord Razzall, and the committees. I am saddened not to have satisfied the noble and learned Lord, but I hope that he will feel able to withdraw his amendment.