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Regulatory Enforcement and Sanctions Bill [Lords]

Or sooner, as my hon. Friend says. I am supportive of the stated aims of this Bill. Proportionate regulation is to be welcomed. I remain to be convinced that the Bill, as drafted, will meet its own aims. The Bill's aims have their genesis in the Hampton and Macrory reviews. Hampton, for example, found that the diffuse structure of local authority regulatory enforcement increases uncertainty and administrative burdens for business. Few could argue with that. I should like to take a few minutes to look in detail at the Bill and its flaws. The Hampton review found that unco-ordinated action means that businesses receive unnecessary inspections and conflicting advice, while a lack of communication between local authorities results in a duplication of effort. Part 1 intends to address those problems by establishing a local better regulation office with the objective, to paraphrase the explanatory notes, of ensuring that local authorities exercise their relevant functions in a manner that is effective and efficient and complies with the Better Regulation Commission's principles of good regulation. Those principles are that regulatory activities should be exercised in a way that is transparent, accountable, proportionate and consistent, and that they should be targeted only at cases in which action is needed. In short, the LBRO is to be a ““regulator's regulator””. All too often regulations are enforced in a way that shows no regard for the risk. Not unfairly, trading standards, environmental health and licensing inspectors are regarded as inconsistent and over-zealous. Anything that we can do to change that should be welcomed. I shall not bore hon. Members with the tedium of the fine detail of the workings of the LBRO. My colleagues in the Lords have done sterling work in securing amendments that will help its operation, but neither they nor I—nor indeed the Minister—can ignore the fact that the establishment and operation of the LBRO seems a hideously complex way of improving the way local authorities regulate. If local inspectors are the problem, is not the answer to reform the rules that they are enforcing and then retrain and manage them to achieve improved outcomes? As the Minister said, the LBRO will be a small organisation taking on the clout of over 500 big regulators spread across the country. However laudable its aims, we must question its ability to take on the might of those who like to overuse the few powers in life that they enjoy. Part 2 attempts to introduce a degree of competition between local authorities in the enforcement of regulations. Any regulated person who carries out an activity in the area of two or more local authorities will be able to nominate which body regulates him, and that body will then be that person's primary authority. That will mean, for example, that such a person need not be subject to enforcement from more than one trading standards authority. One might think that that is fair enough. I recognise that differing interpretations of the same regulations create a major additional burden for businesses. Indeed, I should like to know whether the Minister's Department has measured the cost of that burden. If this Bill is passed, Labour-controlled councils might find themselves doing a lot less regulatory work. Just as voters did at the start of the month, the chief executives of big firms will vote with their feet and opt to be governed by Conservative councils that have an understanding of business. That is all very well for big businesses that will be in a position to do that. Indeed, it is to be welcomed. Consistently enforced regulations mean less uncertainty and a reduced regulatory burden, but what about the small shops—““Hutton's Haberdashery””, or ““John's Jewellers””? They will be stuck with the same old regulators and, in Labour areas, all too often the same old over-regulation. Equally, there is considerable potential for consumer confusion. As my hon. Friend the Member for Huntingdon (Mr. Djanogly) noted, if a complaint is made against a store in, say, Barrow and Furness that has chosen to be regulated by a different local authority, to whom do consumers complain, and how can they be sure their complaint will be pursued? I shall be interested to hear about that from the Minister who sums up the debate. My fear is that part 2 will help bigger businesses while making no difference to small shops and punishing consumers, but I also have another concern about it. The decision to allow primary authorities to charge for their services will not play well with businesses that already pay for enforcement services through their local rates. Businesses using the primary authority system will be subjected to what is essentially a regime of double taxation. The Macrory review made recommendations aimed at ensuring that regulators have access to a flexible set of sanctioning tools that are consistent with the risk-based approach to enforcement outlined in the Hampton review. Many regulators are heavily reliant on criminal prosecution as the main sanction, but the Bill provides for civil monetary penalties. Let us be clear: we are talking about a system of fines that can be imposed without recourse to the courts. I do not oppose civil penalties, but I feel that we need to review the extent to which they should be restricted. As drafted, this Bill contains no such restriction, and a total of 27 designated regulators will have the relevant powers. The Minister who opened the debate unfairly compared the subjective assessments made by Companies House of how a business is run with the instant fines introduced by the previous Conservative Government for people who do not achieve the clearly objective and easily measurable task of submitting their accounts on time. I hope that the Minister who winds up the debate will say how much leeway the Public Bill Committee will have to restrict those powers and give businesses, especially small ones, some reassurance. As Lord Lyell of Markyate stated on Third Reading in the other place, the provision in effect gives the regulators the power to be"““investigator, prosecutor, judge, jury and sentencer””—[Official Report, House of Lords, 28 April 2008; Vol. 700, c. 26.]" He has much more legal standing and experience than either I or the Minister, and we should take his words seriously. Earlier, we considered the fact that the right of appeal does not negate the basic accusation made against the new system. The British Retail Consortium says:"““We opposed the introduction of administrative penalties for the very reason that we believe these...could result in a parking fine style system of enforcement.””" That point was made earlier. Wide powers relating to a long list of offences are being granted to a large number of unaccountable regulators; that combination could be disproportionate and unnecessary. I support the stated aims of the Bill, but it does not come close to meeting those aims. The LBRO—the regulator's regulator—is small and weak. All the signs are that it will be ineffectual. The provision for primary authorities may help bigger businesses that trade across the country, but it will not help small shops or, crucially, the consumer. Instead, it will lead to consumer confusion. The Bill attempts to force regulators to enforce regulations in a more measured way, but the civil sanctions section of the Bill will help to foster a traffic warden culture across 27 regulators. Inspectors are elevated to the status of judge and jury. The Government continue to heap regulatory burdens on business. The regulatory impact assessment for the Pensions Bill estimates that the cost of regulation stemming from that Bill alone will exceed £230 million. What estimate has the Minister made of the total cost of regulations associated with the Bills set out by the Prime Minister in the draft Queen's Speech? Just six months before he became a GOAT, or member of the Government of all the talents, the Minister for Trade Promotion and Investment, Digby Jones, told The Daily Telegraph:"““Red tape is what governments do…I am on businesses' side: I'm trying to pull it off without regulation…Otherwise they WILL get the clunking fist.””" The Bill does nothing to change the proliferation of regulations that stifle business. How many more botched regulation-related Bills can we expect from the Government before we get real change?