Mr.
Prisk: I understand the toxicology issues, and the
Minister has made important statements today that have not been made
before. Clearly, there will be certain circumstances in which those
toxicology studies will not be available for some time beyond 14 days.
Can the Minister tell us, and those who might be affected by the
legislation, what will happen in those
circumstances?
Mr.
McFadden: As I said, the process cannot be limitless as
that would place the business in an unfair situation. A judgment must
be made and we feel that 14 days strikes the right balance
between allowing the regulator to do whatever tests are necessary, and
not putting the business under a cloud of uncertainty or even a
continuing state of closure. This is a judgment about how one strikes
that balance. The hon. Gentleman feels that seven days is right, but we
feel that 14 would cover more situations and that is our
judgment.
Mr.
Prisk: This is a helpful debate. Presumably—to
continue with the example we have been using—there would be no
prohibition on the subsequent issuing by the regulatory authority in
question of a stop notice, in the event of a subsequent leakage. Would
there be an opportunity, therefore, if for example a delayed toxicology
study were to be presented at 21 days, for the authority to issue a
stop notice at that
point?
Mr.
McFadden: A stop notice could be issued twice, but as I
have said it is an onerous sanction and not something that either the
regulator or the business would want to go through repeatedly. The
purpose of including an onerous option of that kind in the
regulator’s toolkit is precisely to deal with those urgent and
serious situations that we have discussed under clause 46, so the hon.
Gentleman makes a fair point in saying that the process could be
repeated, but we are trying to frame the stop notice procedure in such
a way that problems will be dealt with by issuing one notice, dealing
with the problem and moving on. That is the right way to tackle such a
problem.
Mr.
Prisk: It is an extremely helpful debate. I am not quite
sure why, but when the issue came up in the other place Ministers
seemed either unable or unwilling to utter the words that the Minister
has just said: that he
sees the period as a maximum and that there is an expectation that the
completion certificate will be issued well within that period. There is
a dilemma, in the sense that I suspect that, if a need was seen for a
late toxicology study to force a second stop notice, most businesses
affected would regard it as much more onerous, because of the need to
stop and restart a process that had been begun. I think therefore that
there is a problem with
that. I
am partly comforted by the Minister’s assurance—which I
know will partly be coloured by later guidance to be issued by
Ministers. We have clarified something that was not clear from the
deliberations in the other place and made some welcome progress for
businesses that have been concerned about the provision, several of
which have contacted me directly. I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn.
Lorely
Burt: There is also my
amendment.
The
Chairman: I do not know whether the hon. Lady wanted to
press her amendment, but she did not indicate that she did, and we take
only the lead amendment in any grouping. All the others must be moved
separately; otherwise they fall
automatically.
Lorely
Burt: No; I was inquiring only about seeking leave to
withdraw it, so that is
fine.
The
Chairman: There is no need to withdraw an amendment that
has not been proposed.
Clause 47
ordered to stand part of the
Bill.
Clause
48Stop
notices:
compensation
Mr.
Prisk: I beg to move amendment No. 56, in
clause 48, page 24, line 15, at
end insert ‘and any subsequent
appeal.’. The
amendment would improve the current wording of subsection (1) of the
clause, which is about compensation in relation to stop notices.
Subsection (1)
states: “Provision
under section 46 conferring power on a regulator to serve a stop notice
on a person must include provision for the regulator to compensate the
person for loss suffered as the result of the service of the
notice.” We
want to insert at the end of that subsection the phrase, “and
any subsequent
appeal”. The
provision is designed principally to enable small businesses in
particular to appeal without fear that they will not be able to recover
costs simply because they wanted to challenge the notice in the first
place. The Minister agreed in previous debates that no one in the
relevant circumstances should be deterred from making representations
or appealing—knowing that they would then be out of pocket. It
is an important principle, and the Minister agreed to it in a previous
debate. I do not want to make this a long debate, so I simply ask the
Minister whether he now accepts that principle, and if so, whether he
will accept the amendment. It is fair that there should be no
circumstances in which someone who wishes to make an appeal is deterred
by the fact that they will be out of pocket as a
result.
Mr.
McFadden: I am happy to confirm our earlier exchange about
accepting the principle that the hon. Gentleman outlined. I can also
give him the good news that the amendment is unnecessary because the
situation that he is talking about is covered. As he rightly said, the
clause includes provision for the regulator to compensate a person for
losses suffered as a result of the service of the notice. That would
include any period during an appeal when the notice was still in force.
I understand the sentiments behind what the hon. Gentleman is trying to
do in the amendment, but the clause requires the regulator to put in
place a scheme to compensate a person for a loss suffered as a result
of the service of the notice. I am happy to confirm that that would
include ongoing losses suffered during an appeal when the notice was
still in force. The amendment would therefore add nothing to the
arrangements covered in the
Bill.
Mr.
Prisk: I am fascinated. At least two lawyers from
different organisations told me that there was a significant omission
in the Bill and that it was important to have a provision to deal with
that. In response to their comments, I felt that it was important to
table the amendment. However, if the Minister is happy to confirm
firmly on the record that there is a provision in the law, we have
scored a goal without even starting the game. I am very happy if that
is the case, not least because the Minister’s words are now
firmly on the record. Although I suspect that we would all like the
opportunity to divide the Committee to ensure that the issue is dealt
with, there is no need. Therefore, I beg to ask leave to withdraw the
amendment.
Amendment,
by leave, withdrawn.
Clause 48
ordered to stand part of the Bill.
Clause 49
ordered to stand part of the Bill.
Clause
50Enforcement
undertakings Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: Clause 50 takes us on to a slightly different
issue from that of stop notices, which we have been discussing so far
this morning. It comes at the issue of regulatory compliance from a
slightly different angle. The clauses and amendments that we have
discussed so far have dealt with the options available to a regulator
to ensure compliance, and stop notices are part of that. Clause 50,
however, offers an option to the regulated, rather than just the
regulator.
The clause
enables a Minister to make an order allowing a regulator to accept
enforcement undertakings offered by a person or business subject to
regulation. An enforcement undertaking is an undertaking or promise by
a person or business to take certain actions. It is not something that
can be imposed by the regulator, but an option that is available to a
business that is found to be in contravention of the regulations. The
clause takes forward a key recommendation of the review by Professor
Richard Macrory and allows businesses to volunteer action to put right
any harm that has been done.
Under
subsection (1), the regulator may accept enforcement undertakings only
when it has reasonable grounds for suspecting that an act or omission
by a
person constitutes a relevant offence. In practice, that is likely to
mean that the business is offering undertakings during an investigation
for an offence. Subsection (3) outlines the type of action that an
undertaking must cover,
which “must
be...action to secure that the offence does not continue or
recur...action to secure that the position is, so far as possible,
restored to what it would have been if the offence had not been
committed...action (including the payment of a sum of money) to
benefit any person affected by the offence, or...action of a
prescribed
description.” 9.30
am
Mr.
Prisk: Can the Minister confirm that, while the test of
reasonableness is clearly set out in subsection (1), the principle of
reasonableness would also be incorporated in the case of an action of
securing a position that is to restore what would have been, had the
offence not been
committed?
Mr.
McFadden: The regulator will have to judge, after an
enforcement undertaking has been offered and if it has been accepted,
that it has been complied with. The regulator must make a judgment. As
I said, subsection (3) sets out the types of things that we are talking
about. Subsection (4) provides that if an enforcement undertaking is
accepted, the person may not be prosecuted for the offence, or have a
fixed monetary penalty or discretionary requirement imposed on them,
unless they fail or are deemed to have failed to comply with the
undertakings. We
are saying that if a business, in the course of such an investigation,
says, “These are the actions that we wish to take in order to
put this matter right”, and it has come forward in such a way,
it should benefit from doing so. There should be an incentive to do so,
rather than its being placed in a situation where the option is
available but if the business exercises it, it gets no benefit, because
it is equally liable to all the other penalties that we have been
talking
about. That
is in a situation where there is compliance, but—a significant
but—where a person fails to comply with their undertaking, the
regulator will be able to prosecute the person for the original offence
or impose a fixed monetary penalty or discretionary requirement.
Subsection (5) enables the Minister to include further provision in the
order, such as the procedure for entering into the enforcement
undertaking, publication of the details, certification by the regulator
that that has been complied with, and so
on. There
is not a right of appeal against the enforcement undertaking itself,
given that that is something volunteered by the person and not imposed
on them by the regulator. We believe in allowing enforcement
undertakings. We can envisage a reputable, well-intentioned business
coming forward to exercise that option. The lack of compliance may be
completely inadvertent. It may be that it did not know that it was not
compliant, but it is something that it is more than happy to put right.
That could be an important option available. It is something that was
encouraged by Professor Macrory and is another important addition to
the
Bill. Question
put and agreed
to. Clause
50 ordered to stand part of the
Bill. Clause
51 ordered to stand part of the
Bill.
Clause
52Monetary
penalties Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: I rise because clause 52 relates to a debate
that we had earlier. The hon. Member for Hertford and Stortford asked
about discounts, to which the clause relates. It might be helpful to
the Committee if I outline what is covered
here. Clause
52 deals with the enforcement of monetary penalties. The clause allows
the order made by the Minister under this part of the Bill to make
provision for discounts for early payment of a monetary penalty and for
the payment of interest as a financial penalty for late payment of the
original penalty. However, the total amount of any late payment must
not exceed the total amount of the penalty imposed—there is a
limit on that.
I hesitate to
use the parking fine analogy because the situations that these clauses
deal with are significantly more important and on a greater scale, but
the principle of early payment in such situations is one that we are
all familiar with from that context. The Government believe that early
payment discounts can be a helpful incentive to encourage businesses to
comply promptly with fixed monetary penalties. Late payment penalties
could provide a useful enforcement tool for regulators. We had a
discussion the other day about the Companies House precedent and the
potential for penalties for late filing. The Government also believe
that if financial penalties are to be effective, there needs to be an
enforcement process. Subsection (2) provides for the enforcement of
unpaid penalties and any interest or late payment charges through the
civil courts. It allows the order to create a more streamlined process
accompanied by treating the penalty as if it were payable under a court
order. In practice, that would mean that the regulator could skip the
initial stages of registering a claim for the unpaid sum in the courts
and then proceed more swiftly to enforcement action. The principle is
one that we are familiar with: incentives to pay early and penalties
for paying late.
Mr.
Prisk: I do not have a huge objection to the idea of early
payment discounts, but the discount should not be so deep that it skews
the system, such that many small businesses feel they should just pay
up and move on. The danger is that the system would start to become
imbalanced. The Minister has indicated previously, however, that
businesses would not be at any disadvantage financially should they
seek to challenge or make objections. My principal concern is to ensure
that if someone wishes to challenge and question what has happened,
they are able to do so and are not at any financial
disadvantage.
Mr.
McFadden: I absolutely understand the point that the hon.
Gentleman is making and I agree with him about not being at a
disadvantage if one pursues the processes that are outlined in the
Bill. We had an exchange on this subject a few moments ago. He was keen
to say to me that I had clarified what had not been clear in the Lords.
I should make it clear that this is not a new change in the Bill; it is
how the tribunal system
will work under section 29 of the Tribunals, Courts and Enforcement Act
2007, which created first-tier tribunals. The tribunal has the power to
award
“The
costs of and incidental
to” any
proceedings before it. That covers the point that the hon. Gentleman is
making but it is not an addition to the Bill; it is actually already in
place in that Act, which created the tribunals to which the appeals
will be made.
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