Regulatory Enforcement and Sanctions Bill [HL]

I am grateful to the noble Baroness, Lady Hamwee, for raising this important issue with her amendments, particularly Amendment No. 68. It takes us to one of the critical issues at the heart of the Bill. I shall do my best to present our reasons for a provision that has caused concern. When the Government took the decision to put the home/lead authority schemes on to a statutory footing, we had two considerations in mind, much the same as those my noble friend Lord Borrie mentioned. First, it is unfair that only some multi-site businesses have access to the existing schemes; and secondly, just as importantly, it is unfair that certain local authorities choose not to host them, meaning that there are clear benefits for the citizens of the authorities that do—at no cost to themselves. We think all local authorities benefit where a particular local authority chooses to work with a business in this way. Hampton himself noted the inequity of the situation where certain local authorities shoulder a disproportionate element of what is essentially a national role. He noted, for example, that Hertfordshire hosts a large number of major schemes while others host none. Businesses have every right to look to a local authority’s regulatory services for a professional service that reflects the importance of better regulation to their competitiveness and to our national prosperity. It is critical that all relevant businesses have access to the scheme. An LBRO’s power of nomination is a vital guarantee that that will be the case. There may be cases where a partnership would just not be appropriate. Perhaps particular businesses have misused the scheme in the past, or doubt has been thrown on their good faith in starting a new one. An LBRO may therefore decline to nominate an authority for a particular business. However, in the interests of our competitiveness as a country and of fairness among local authorities, businesses should have a right to a partnership unless there are good reasons to the contrary. As a backstop, that can be delivered only through a process of compulsory nomination. We have listened carefully to representations made about the potential resource implications of acting as a primary authority. Accordingly, the Bill makes it clear that the relevant local authority will have the right to recover any costs incurred by it when carrying out the primary authority role. As well as the costs involved there are important benefits, given the possibility for a strategic relationship with a major firm. As my noble friend Lord Borrie made clear—and this is an assurance we think we can give—it is intended that in the vast majority of cases the primary authority scheme will be consensual. The LBRO will make nominations only after careful consideration. It will take into account the fact that if a local authority is firmly against taking on such a role, it is unlikely in practice to provide an effective service to the business. In doing so, however, the local authority would have set its face against playing its part in a scheme that we think will be of substantial benefit to the citizens of all local authorities. Amendments Nos. 69 and 70 offer helpful perspectives on the procedural issues that will need to be taken into account. We believe, however, that the issues they raise can be dealt with administratively without the need for explicit statutory provision. The noble Lord, Lord Cope, talked about the need to consult local authorities where the business operates. We would expect the LBRO to take sensible soundings before a nomination, but routine consultation with 400-plus local authorities would be too onerous a requirement. The Bill formally requires the LBRO to consult any local authority that it is contemplating nominating for a primary authority partnership—one of the safeguards my noble friend mentioned. This is designed to protect the authority’s interests, in particular ensuring that the LBRO does not impose a role on an authority where it lacks the resources to carry it out effectively. It would be sensible in practice for the LBRO to consult other local authorities, which is the issue raised by the noble Baroness in Amendment No. 69, including those with an understanding of the business. However, we believe that there is no need for comparable statutory protection of their interests. Amendment No. 70 raises the sensible point that the revocation of a partnership may also have resource implications for a local authority, so the Bill requires the LBRO to take particular account of the resources issues that the primary authority role might present for a local authority before nominating it, as set out in Clause 24(4). Where the LBRO revokes a particular partnership, this too may have resource implications for a local authority. As it may charge for the service, the revocation could involve the loss of a significant source of revenue. We do not believe that there is any need for comparable statutory protections here, however, as there is no question of the LBRO requiring the authority to adopt a role which may not fit the priorities of the local authority itself. But clearly, the LBRO will be under a duty not to revoke a partnership without good reason, and would lay itself open to legal challenge if it did so unreasonably. In response to the question asked by the noble Viscount, Lord Eccles, I am advised that in principle there would be a requirement to consult, but that a range of exemptions might well capture the particular case he referred to. We shall examine those exemptions later today. It depends on a number of factors, and as I say, we shall come to the exemptions to the need to have a primary authority in due course.