Regulatory Enforcement and Sanctions Bill [HL]

My Lords, this gives me an opportunity to clarify that the LBRO will be subject to all the usual rules for the management of public money. The noble Lord, Lord Cope, raised the question of the LBRO’s money. Provided the LBRO is acting within its remit and objectives, Her Majesty’s Government would have to stand behind it financially, as they do with every other non-departmental public body. It has been created as an NDPB with operational independence and freedom from day-to-day interference by Ministers. I am sure that the House will think that a good thing. The government amendments in this group seek to limit the scope for inappropriate micromanagement by Ministers. This clause is essential to provide sufficient legal certainty that the LBRO will be able to engage in activities that are helpful or necessary to the discharge of its functions and the achievements of its objectives. The clause provides specific examples of what will be covered by the ancillary powers provision—some financial, many not. There are many precedents for such provisions. Natural England was established by the Natural Environment and Rural Communities Act 2006. Section 13 of that Act specifies that Natural England may, "““do anything that appears to it to be conducive or incidental to the discharge of its functions””." The section then sets out a list of examples, which includes all the actions included in the LBRO list, as well as some additional ones. There are good reasons why detailed ministerial control, which would be accorded if Treasury approval was needed, is unnecessary. The first is that reliance on ancillary powers is circumscribed by the requirement that anything done must be, "““necessary or expedient for the purpose of, or in connection with, the exercise of … its functions””." Secondly, the LBRO will be subject to all the normal rules of public spending. Thirdly, it will be financially accountable to Parliament in the normal way through the Comptroller and Auditor-General. Fourthly, it must provide the Secretary of State and the Comptroller and Auditor-General with a copy of its accounts on an annual basis. We argue that this is a routine provision for independent public bodies, with a good recent precedent. The clause is essential in ensuring that the LBRO can function effectively in day-to-day business matters. We do not think that adding a new level of control would do anything other than significantly hamper the organisation in its routine work. That takes me to government Amendments Nos. 31 to 36. They place a number of important controls on the right of Ministers to give directions to the LBRO. At Second Reading and in Committee, noble Lords were concerned about the precise uses to which Ministers’ powers of direction would be put. I repeat that it is the Government’s intention that these powers of direction should be used as nothing more than a backstop. The LBRO will be operating as an independent body, and it is intended that Ministers will use the power only in cases where the organisation acts against the public interest. Naturally, we hope that that situation will not arise, but Ministers will be accountable to Parliament for the performance and conduct of the LBRO and there has to be a power of direction to ensure that accountability is assured. We accept that the powers in Clauses 15 and 16 were too broadly drawn for this purpose, and we have already accepted the recommendation of the Delegated Powers and Regulatory Reform Committee in relation to directions over the LBRO’s own direction-giving power. In Committee, noble Lords suggested a number of additional changes, which we agreed in principle to consider. First, the noble Viscount, Lord Eccles, argued that the reference to ““general or specific”” directions was too broad; secondly, the noble Baroness, Lady Hamwee, suggested that a formal consultation process should be required before directions are issued; and, thirdly, the noble Lord, Lord Cope, suggested that there should be a requirement that any directions should be laid before Parliament or the Welsh Assembly where appropriate. We have decided to make the appropriate changes and we are grateful to the various noble Lords for their suggestions. Our amendments, which I hope to move in due course, will implement them.