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Regulatory Enforcement and Sanctions Bill [Lords]

Thank you, Mr. Deputy Speaker. I was making a point about the tension between the need to have legislation that protects consumers and the need to ensure that it does not overburden businesses. I recognise that it is always extremely difficult to strike that balance. Businesses constantly ask for less regulation, but it can be difficult to identify a specific measure that we want to remove. That, I argue, is why we need sunset clauses, which are one of the simplest ways of ensuring that regulations on business are appropriate and proportionate. Regulations must also be enforced. Consumers, the public and law-abiding businesses must have confidence in the system and know that competitors that flout the law will be dealt with properly and will not gain a commercial advantage. The key to this is speed. The Macrory review identified the fact that enforcement action that is possible only through a lengthy legal route is a blunt instrument for dealing with many minor offences, and, similarly, that its length and complexity is often a disincentive to regulators using their full powers. I have seen example of that in my own constituency. Neasden goods yard is within a densely populated residential area. A number of companies operate from the site in waste transfer, handling paper and construction materials. Complaints about dust and environmental pollution, and the antisocial behaviour of lorry drivers using the site, go back at least a decade. One operator in particular, Alloyde II, consistently flouted the advice and guidance given to it by inspectors from the council and the Environment Agency and flouted the conditions of its licence. At one stage in 2006, pollution levels from the site far exceeded safety limits on more than 90 days of the year—and that was only part of the way through the year. But the story of enforcement action against the company was a frustrating one for local residents. The council and the Environment Agency for a long time seemed to be incapable of working together to solve the problem, with each offloading the blame on to the other, until eventually a political change in the council administration led to the issue becoming a priority and the council put pressure on the EA to deal with it. Inspectors from both the council and the EA seemed incapable of co-ordinating their action, and the only real route for the EA to follow was a lengthy legal battle to revoke the company's licence. At each stage, the company appealed, allowing it to continue operating and so continue to cause misery to the people of Neasden and Dudden Hill. In retrospect, I wonder whether early co-ordination between the council and the EA and a hefty rapid fine might have resolved this issue for residents. It was certainly worth Alloyde's while to continue to take its chance that regulation would take a long time to come to fruition and close it down, because it was able to make profits in the mean time. It seemed to local residents that money was one of the only things the company understood. I tell this story because although much of the focus of the debate has been on the need for regulators to work together to minimise unnecessary burdens on business, there is another reason why they need to work together: to ensure that enforcement action is effective against irresponsible businesses who consistently flout the law. In Committee, I shall judge this Bill on the extent to which it will deliver both those things and not just one. That is not the only issue I want to explore in Committee. The Minister mentioned the potential for variable penalties and I would like to explore the scale of that in Committee. There is a danger with small fixed notices becoming a levy that large businesses are prepared to pay to go on flouting the law. There is also a danger of catching other businesses that, as the hon. Member for Huntingdon (Mr. Djanogly) said, might innocently break the rules. For small businesses, the impact may be disproportionate: a small shop that makes a mistake storing food is not in the same league as a large laboratory tipping biological waste into a local reservoir. The Minister mentioned the precedents for civil sanctions. The obvious precedent is the Financial Services Authority, which has long since had powers to fine companies that breach market rules. The size of the penalty depends on certain factors, including the track record of the business, its size and the impact on it. We need to explore that further in Committee. It is essential that the focus of the sanctions in the Bill is on changing the behaviour of businesses and not on a tick-box, parking-fine mentality. The Bill must be about protecting consumers, the public and the reputation of business at large, not about meeting targets. Some other recommendations of the Macrory review that might be worth considering are not mentioned in the Bill—for example, recommendations about the use of restorative justice. Macrory believes that restorative justice models have the potential for good long-term outcomes, both for victims and offenders, have the benefit of being flexible and are focused on reducing the harm caused. That principle is very much in keeping with the Hampton review and the claimed focus of the Bill. Will the Government introduce pilots in this area, as Macrory recommended? Will they commit to doing so? If not, why not? Other innovative recommendations in Macrory's review include criminal sanctions such as the use of publicity orders. Macrory cites the case of the Federal Supreme Court, which sentenced the American Caster Corporation for dumping deteriorating drums of solvents by way of a publicity order. The corporation was required to take out an advert in the Los Angeles Times, at a cost to itself, publicising its breach, and the action that it intended to take to remedy the problem. Has the Minister considered using such measures? Does the Bill provide the flexibility to do that? What assessment has he made of that recommendation? Finally, I come to two further issues that we will want to explore in Committee. We will want to seek reassurances from the Government that the Bill will not be unworkable for local authorities, which are chiefly responsible for implementing it. It is essential that those giving guidance to local authorities understand the practice of such bodies and their limitations. That was very much the focus of a number of Labour Back Benchers' interventions on the Minister. It is also important that the need to co-ordinate the activities of companies operating in more than one area does not prevent local authorities from setting their own priorities in respect of democratic choice. I share the concerns of the hon. Member for Huntingdon about the power to turn guidance into direction and about how the primary authority system will work in practice. Such matters need clarifying in Committee. We are also concerned that the detail of stop notices in the Bill will give undue flexibility to regulators to decide whether to pursue action at the expense of business, which, if not guilty, could lose two weeks of business while the regulator decides what action to take. We need to explore further in Committee whether there are more flexible ways of implementing this provision. We recognise that good work has been done on this Bill in the other place to improve it, and we will support the Bill today, but we feel that more can be done to make it a clearer and more effective tool to improve regulatory practice in this country.