Regulatory Enforcement and Sanctions Bill [HL]

My Lords, I support the declared aims of the Bill, which the Minister described earlier in glowing terms. However, I wish to make a few general and specific points on the same theme as that raised by my noble friend Lady Turner of Camden. No one, by definition, wants unnecessary regulation or regulation and enforcement which are out of all proportion to the outcome they are intended to achieve or to the act committed. The difficulty is that interpretations of what is meant by unnecessary and out of all proportion vary greatly, and there are also differences of view about the extent to which regulation should apply only to economic and commercial issues and the extent to which it should also cover social and environmental objectives. To some, measures such as the working time directive and statutory holiday entitlements represent unnecessary regulation, as does much health and safety legislation. Of course, if you are strong and powerful and used to being in charge, regulation can represent a threat to your ability or that of your organisation to do what you want when you want. If you are less strong and powerful—whether an employee, a consumer or a citizen—regulation can represent basic rights, protections and safeguards that could not realistically be secured through other means. I hope that the new bodies, new range of sanctions, new procedures and new duties provided for in the Bill will not lead to the baby being thrown out with the bathwater when it comes to considering so-called unnecessary regulatory burdens. One person’s unnecessary regulatory burden may be another person’s basic rights and safeguards. What is regarded as a cost by one party may well be regarded as a significant benefit by another, whether it be through regulations protecting consumers, through health and safety regulation that leads to a reduction in fatalities to employees or through increased statutory holiday entitlements which benefit a large number of people. Likewise, I hope that a declared aim of consistent and co-ordinated enforcement and a new expanded framework for regulatory sanctions does not, in reality, prove to be code for weaker enforcement and less effective sanctions across the broad range of regulators. I hope that my noble friend can give some reassurance on these points. It is, I know, a question of balance but, on the other hand, it is very easy to lose one’s balance. I should like to make one or two more specific points related mainly to the potential impact of the Bill on health and safety. Concern has been expressed in some quarters about the ability of the Health and Safety Executive to maintain appropriate levels of investigation and enforcement in the light of recent job cuts. The number of fatal injuries at work rose in 2006-07 to 241 from 217 in 2005-06. The good intentions of this Bill will not be achieved if regulators, including the Health and Safety Executive, are not properly resourced. An internal HSE audit indicated that inspectors should be prosecuting in three times as many cases than currently applies. In the light of the increase in fatalities in the past financial year and the findings of the internal HSE audit, do the Government believe that the Health and Safety Executive is properly resourced? What steps do they intend to take to ensure that regulators as a whole are properly resourced to carry out the duties and responsibilities placed upon them under the terms of the Bill? The Bill also makes provision for fixed monetary penalties to be imposed by a regulator, apparently intended in respect of what are described as low-level instances of non-compliance. Can my noble friend say whether it is envisaged that this will apply in relation to health and safety issues where injury has been caused? In this area, one would have thought that financial penalties would need to take account of the circumstances of those injured, the health and safety breach, and the previous health and safety record of the employer. Nor, I suggest, would it be desirable if low monetary penalties were used by a regulator as an easy option to avoid criminal prosecutions, particularly in the field of health and safety where significant injuries have been caused. Was consideration given to making monetary penalties proportionate to either a company’s annual turnover or its assets or both, as well as to the seriousness of the breach? However, the bigger issue is the level of fines for breaches of health and safety law. According to HSE enforcement statistics, in 2005-06 the average penalty per conviction was £29,997. That figure included 13 fines in excess of £100,000, which, when removed, give an average of just £6,219. I believe the average fine levied by the Financial Services Authority, which does not deal with cases where people have been physically injured, was some two and a half times higher than the HSE quoted figure of £29,997. The Macrory report on regulatory justice commented that the lack of an effective deterrent compromised the effectiveness of the regulatory relationship. It certainly does if some companies come to the conclusion that it is more expensive to implement effective health and safety policies than to pay the fines or incur other forms of sanction for any breach. The Bill does not propose to increase penalties for health and safety offences, although a commitment to do so was, I believe, given in 2000. What is the current position on this score as, in its draft response to the Bill, the Health and Safety Executive stated that it was working with the Department for Work and Pensions, "““to explore options to take forward the commitment to raise penalty levels””." I wish the Bill well. I hope that its good intentions are realised and that they are not compromised by inadequate resourcing and by continuing inadequate, albeit broader-based, sanctions.