Regulatory Enforcement and Sanctions Bill [HL]

I wish that I were comforted by the persuasive arguments of the noble Lord, Lord Borrie, but I am not. It is bold to assert that if one makes provisions in legislation of the kind in Clause 7, nobody will use them in an untoward way in the future. My noble friend Lord Hodgson spoke of the difference between talking and going to war. I remind the Committee that if one goes to war, one has to have a pretty good reason to believe that one would win. I cannot think that any single local authority would rate its chances very highly. It seems that all the leverage is on the side of central government. The Minister said that the amendments give Parliament the right to pass a negative resolution to stop directions being given to more than one authority. Nevertheless, another sentence in the report of the Delegated Powers and Regulatory Reform Committee states: "““We consider that the Minister should provide a list of the guidance to which Clause 7(1)(b) refers””." As the noble Baroness said, there is something called ““advice”” and there is something called ““guidance””, which is written. Some of my questions on the previous amendment sought more information on the level of certainty of the guidance at which somebody, either in the Secretary of State’s office, because of Clause 15, in a regulator’s office, because of some of the provisions in Clause 7, or in the LBRO’s office, began to think that it was getting time to have a direction. It is not as though it is a normal situation where a Secretary of State is giving directions to a public body; many more players are involved who can initiate the process. I apologise for going on at length. It has been claimed that support exists. I do not know whether Members of the Committee have read a famous old book by a chap called Dr Eric Berne, called, Games People Play. There is a famous game in it called, ““So you made me do it””. When government pray in aid stakeholders and supporters, and list trading standards, institutes and all the rest, it is moving very close to a game of ““So you made me do it””. The power for the LBRO to make directions in Clause 7(1) as amended today by Amendment No. 33, which will introduce subsection (3A), still raises two major issues. Before I go into them, I point out that the clause has a contradictory title: Guidance to local authorities: enforcement. I have always been brought up to believe that when Daddy or Grandaddy gave me guidance, they were not intending to enforce it, and I was hoping to find that they had no power to do so. Further, I can find nothing in the Rogers report, which was cited by the Minister on Monday. It is 187 pages long and, on first reading, looks like a most diligent and excellent report. I think that a huge amount of work has gone into it. I find nothing in its recommendations which goes beyond a request that the Government agree the proposed six priorities, which are set out—the Government had asked for five; Rogers came up with six—and that local authorities, having been given the approval, which will assist them at all times but particularly in times of straitened resources, to get on with the job, and that the LBRO be the guardian and monitor of best practice. It is clear that Rogers is fully in support of the LBRO being the guardian and monitor of best practice; he says nothing about enforcement by the LBRO upon local authorities. Nor is there good evidence that enforcement upon local authorities was part of Hampton, still less of Macrory. They were all looking for enlightened, continuous improvement in the process of regulation by consent. The first big issue in Clause 7 is that it gives the LBRO, a non-departmental public body, the power to make guidance mandatory by direction, and a direction compels compliance. I have had some correspondence with the department, as the Minister will know, and I believe that this is an unprecedented use of the power to direct. If there is a precedent, will the Minister provide the Committee with it? The main reason I believe it to be unprecedented is its indirect nature and the number of parties involved. I cannot find an instance as complex as this one. The second issue is that the width of the duty upon the LBRO to give guidance and to support the giving of guidance by regulators under their respective Acts, means that a direction made by the LBRO will still have legislative character. This raises the question as to whether the powers contained in the Bill can be justified. Before attempting to give my answer, it is necessary for me to go back to something the Minister reminded the Committee about—the interaction between Clauses 15 and 7. Although Clause 7 has the safeguard of the Secretary of State needing to give consent to an LBRO proposal to direct, nevertheless, under Clause 15, the Secretary of State could give the LBRO a direction to direct a local authority, thus overriding Clause 7. That is not altered by the amendments put forward today. This combination of powers to direct places the control of the scheme laid out in the Bill unequivocally in the hands of the Secretary of State. Amendments Nos. 33 and 52 do not change the fundamental position; they reduce the powers so that they can only be exercised without parliamentary scrutiny if they are applied to one local authority. Thus, if it were judged that the regulatory behaviour of Camden in response to guidance was inconsistent with that of Cornwall, and that both were in error, a direction could be given first to one and then to the other to get into line. It seems extremely unlikely that one ever could achieve consistency between Northumberland and Hackney, for example. The process could either start under Clause 7 with the LBRO or under Clause 15 with the Secretary of State. At this stage—again I apologise for speaking at some length—I will say more about how directions have come to be used to seek powers as wide as those in Clause 7, which need compelling justification. There are two reasons. As directions never have been, and are not, subject to parliamentary scrutiny and approval—and usually must be complied with—successive Governments have introduced them into Acts for limited purposes. The two accepted purposes are, first, for administrative reasons—matters such as how to prepare accounts or keep asset registers in line with Treasury practice—and, secondly, as a power of last resort. That is why one was pursuing backstop, compulsory and reserve powers. A power of last resort is to be used if and when a public body moves too far away from the purposes set for it by Parliament—so far, so good—and is well recorded in accepted commentaries such as Bennion and Craies. Later in the Bill, we will come to amendments which follow the Constitution Committee’s similar views on the subject of directions and the need to be cautious because of the lack of parliamentary scrutiny. I turn to my second main issue. In recent years, the use and potential use of directions have been widened to include things such as general and policy directions and, in this instance, to include two ways—one direct and one indirect—in which guidance can be turned into an instruction on behalf of the Secretary of State, either on the LBRO’s own initiative or as a result of an initiative by a regulator. I believe that this puts local authorities in an impossible position. If so little confidence is shown in their ability to follow and resolve regulatory issues and if the determination of how they should be resolved is to move them into the hands of a centralised public body doing the bidding of the Secretary of State, why should local authorities be diligent? They could tell themselves and their constituents that, once again, they must do what they are told. It is no fun barking when a bigger dog is about to tell you how and when to do so. These unprecedented powers are constitutionally undesirable in their own right and will damage the performance of local authorities. The clause should be dropped from the Bill.