Regulatory Enforcement and Sanctions Bill [HL]

This group of amendments covers two separate issues relating to LBRO arbitration. Perhaps I may leave the noble Baroness’s comments on Amendment No. 81 to one side for a moment. The first set of amendments restates the way in which the Bill allows the LBRO to filter applications for arbitration. These can be made by all three parties to an enforcement action under the primary authority scheme—by businesses, by the primary authority or by the enforcing authority. There is a serious risk that the LBRO could be overloaded with arbitration cases—some of which could well be vexatious—if the right to arbitration was unconditional. The Bill has therefore specified that all three parties may refer the matter to LBRO only ““with its consent””. I can confirm that the amendments would merely restate what is in the Bill and, with respect, they are therefore deemed to be unnecessary. All three parties would have the right to apply to the LBRO stating the grounds for their case for arbitration. The LBRO would then screen those applications and, where appropriate, give consent. Those applications would then proceed to a formal referral process. That would amount to the same process set out in the amendments. I think that we are probably talking about two routes to exactly the same result. Amendment No. 81 makes a point of logic. I understand that the noble Baroness’s concern is to ensure that the approach taken in the Bill here is correct. The primary authority provisions revolve around checking whether enforcement actions proposed by local authorities are consistent with the advice that a business has been given. Where the primary authority thinks that it is inconsistent under Clause 26, then it may effectively block the action going ahead. Schedule 4 sets out the LBRO’s ability to arbitrate where the primary authority, the enforcing authority or the relevant business refers the matter to the LBRO. The essential question before the LBRO in that case is whether the enforcement action should then be stopped. It has three issues to consider, which are set out in paragraph 1(3)(b). First, LBRO needs to verify whether the enforcement action is inconsistent with any advice given by the primary authority. Secondly, the LBRO needs to verify whether the advice was correct to start with—that is, to make sure that the primary authority has not got the law wrong, making inconsistency irrelevant. Thirdly, the LBRO needs to verify whether the primary authority has given advice properly. It has to make sure that it has not been unreasonable in the advice it has given—for example, that it has not disregarded cases where there might be a need for a different local approach. If the answer to all three questions is yes—the action is inconsistent with advice and the advice was given both correctly and properly—the enforcement action should be stopped. I can confirm that inconsistency is the appropriate concept here. Consistency would reverse the outcome of LBRO arbitration with the effect that it would block actions where they are consistent and let them go ahead when they are inconsistent. Clearly that is not what we are after. I apologise for the need to take the debate back to the first principle. I am grateful for the noble Baroness’s vigilance in raising this matter. I hope that I have clarified the issue.