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Lord McIntosh of Haringey moved Amendments Nos. 158 to 160:



    Page 73, line 28, after ("described") insert ("in the licence"").


    Page 73, line 29, at end insert--


("( ) After subsection (10) there is inserted--
"(11) In this section "prescribed" means prescribed in regulations made by the Authority."").

On Question, amendments agreed to.

Clause 73, as amended, agreed to.

Clause 32 [Standard conditions of electricity licences]:

Lord McIntosh of Haringey moved Amendments Nos. 161 and 162:


    Page 29, line 30, after ("shall") insert (", subject to such modifications of the conditions made under Part I of the 1989 Act after the determination under this subsection,").


    Page 30, line 47, at end insert ("being modified)").

On Question, amendments agreed to.

Clause 32, as amended, agreed to.

Clause 33 agreed to.

Clause 34 [Modification of standard conditions of licences]:

Lord McIntosh of Haringey moved Amendment No. 163:


    Page 33, line 29, leave out ("standard conditions") and insert ("anything done").

On Question, amendment agreed to.

Clause 34, as amended, agreed to.

Clause 35 [Electricity licence modification references]:

Lord McIntosh of Haringey moved Amendment No. 164:


    Page 34, line 26, leave out ("and 14") and insert (", 14 and 14A").

On Question, amendment agreed to.

Clause 35, as amended, agreed to.

21 Jun 2000 : Column 293

Clauses 36 and 37 agreed to.

Clause 38 [Competition Commission's power to veto modifications following report]:

Lord McIntosh of Haringey moved Amendments Nos. 165 to 168:


    Page 36, line 34, after ("be") insert ("the modifications which are").


    Page 36, line 43, after ("modifications") insert ("of the relevant conditions").


    Page 37, line 30, at end insert ("or, as the case may be, the relevant licence holders").


    Page 37, line 34, at end insert--


("(8A) Where, in consequence of a reference under section 12(1A), the Commission modifies under subsection (4)(b) the standard conditions of licences of any type, the Authority may make such incidental and consequential modifications as it considers necessary or expedient of any conditions of licences of that type granted before that time.
(8B) Where the Commission modifies the standard conditions of licences of any type as mentioned in subsection (8A) the Authority--
(a) shall make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and
(b) shall publish the modifications made for those purposes in such manner as it considers appropriate.
(8C) The modification under this section of part of a standard condition of a particular licence in consequence of a reference under section 12(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part.").

On Question, amendments agreed to.

Clause 38, as amended, agreed to.

Clause 39 agreed to.

Clause 80 [Standard conditions of gas licences]:

Lord McIntosh of Haringey moved Amendments Nos. 169 and 170:


    Page 77, line 1, after ("shall") insert (", subject to such modifications of the conditions made under Part I of the 1986 Act after the determination under this subsection,").


    Page 77, line 6, after ("licences)") insert ("--


(a) the words "and sections 23(2), 26(1A) and 27(2) below" shall be omitted; and
(b)")

On Question, amendments agreed to.

Clause 80, as amended, agreed to.

Clause 81 [Modification of standard conditions of gas licences]:

Lord McIntosh of Haringey moved Amendments Nos. 171 to 173:


    Page 77, line 13, at end insert ("; and


(b) after "the holder of the licence" there is inserted "being modified".").


    Page 77, line 45, leave out ("or") and insert ("and").


    Page 78, line 2, at end insert ("or").

On Question, amendments agreed to.

Clause 81, as amended, agreed to.

21 Jun 2000 : Column 294

Clause 82 [Modification of licence conditions following Competition Commission report]:

Lord McIntosh of Haringey moved Amendments Nos. 174 to 179:


    Page 78, line 46, at end insert--


("( ) After subsection (5) of that section there is inserted--
"(6) The modification under subsection (1) of part of a standard condition of a particular licence in consequence of a reference under section 24(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part."").


    Page 79, line 20, after ("be") insert ("the modifications which are").


    Page 79, line 29, after ("modifications") insert ("of the relevant conditions").


    Page 80, line 15, at end insert ("or, as the case may be, the relevant licence holders.").


    Page 80, line 19, at end insert--


("(8A) Where, in consequence of a reference under section 24(1A), the Commission modifies under subsection (4)(b) the standard conditions of licences of any type (that is to say, licences under section 7 or section 7A(1) or 7A(2)) the Authority may make such incidental and consequential modifications as it considers necessary or expedient of any conditions of licences of that type granted before that time.
(8B) Where the Commission modifies the standard conditions of licences of any type as mentioned in subsection (8A) the Authority--
(a) shall make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and
(b) shall publish the modifications made for those purposes in such manner as it considers appropriate.
(8C) The modification under this section of part of a standard condition of a particular licence in consequence of a reference under section 24(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part."").


    Page 80, line 45, at end insert--


("( ) In section 27 of that Act (modification of licences by order under enactments other than the 1986 Act), after subsection (1) there is inserted--
"(1A) The modification under subsection (1)(a) of part of a standard condition of a particular licence in consequence of a reference under section 24(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part."").

On Question, amendments agreed to.

Clause 82, as amended, agreed to.

Clause 84 agreed to.

5.15 p.m.

The Deputy Chairman of Committees: There has been a wrong placing of Amendment No. 180. It will come after Amendment No. 181.

Clause 40 agreed to.

Clause 41 [Reasons for decisions under the 1989 Act]:

Lord McIntosh of Haringey moved Amendment No. 181:


    Page 40, leave out line 31.

On Question, amendment agreed to.

21 Jun 2000 : Column 295

Lord Kingsland moved Amendment No. 180:


    Page 41, line 6, at end insert--


("( ) A notice under subsection (2) shall, in particular, contain details of--
(a) how the decision is proportionate; and
(b) how it complies with the Human Rights Act 1998.").

The noble Lord said: In moving the amendment I speak also to Amendments Nos. 183, 184, 186, 188 and 189.

Amendment No. 180 has a twin amendment, Amendment No. 186. The issue is straightforward. Clause 41 of the Bill sets out the circumstances in which reasons for the decisions under the 1989 Act are given. The clause applies to seven decisions. Clause 41(2) states:


    "As soon as reasonably practicable after making such a decision the Authority or the Secretary of State shall publish a notice stating the reasons for the decision in such manner as it or he considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be interested".

Amendments Nos. 180 and 186 simply wish to add an obligation to be contained in the notice requiring the authority or the Secretary of State to say how the decision is proportionate and how it complies with the Human Rights Act 1998.

I do not see how the amendment could be objectionable to the Government. The Government introduced the Human Rights Bill into this Chamber in 1997. It became an Act the following year and is due to come into force in October 2000. I am in no doubt that those who are the subject of any decision taken under Clause 41 will scrutinise carefully the notice to see whether it conforms with the provisions of the European convention. In my submission it can only be in the interest of the Secretary of State or the authority to explain in exactly what way he or it believes that the decision has conformed with the terms of the convention.

Clause 58, concerning electricity, and Clause 94, concerning gas, insert new provisions into Sections 27A to F of the Electricity Act and Sections 30A to F of the Gas Act. They give the authority power to impose penalties for contravention of relevant conditions or requirements or failure of performance standards. As I am sure the Committee is aware, relevant conditions or requirements are defined under the Acts and amplified by the Bill.

The penalty has to be reasonable in all the circumstances but is otherwise wholly unconstrained. If the licence holder is aggrieved by inter alia the imposition or amount of the penalty, it may make an application to the court. If the court is satisfied that the imposition of the penalty was not within the power of the authority, it can quash or reduce it.

The Opposition take the view that procedures introduced by the new provisions constitute the determination of a civil right or obligation under Article 6 of the European Convention on Human Rights and, therefore, should provide a fair and public hearing before an independent and impartial tribunal. The provisions before the Committee do not do so

21 Jun 2000 : Column 296

because the authority is not independent of the executive. It is involved in the imposition of licence conditions, relevant requirements and setting performance standards; and there is no provision for an oral hearing.

It is true that the Government have furnished us with a procedure that they describe as a right of appeal. However, that right of appeal is no more than a narrowly confined right of review--a sort of judicial review "minus". In our submission it cannot cure the deficiencies of these procedures.

The amendments offer two alternative forms of appeal: the first based on the telecoms analogue contained in Statutory Instrument 1999 No. 3180; and the other based on the Competition Act model. Amendment No. 183, which refers to electricity, and Amendment No. 188, which refers to gas, insert new sections into Section 49B of the Electricity Act and Section 38B of the Gas Act, giving broader grounds of appeal from all relevant decisions of the authority including a decision to impose a penalty under the new Section 27A or 30A: that is, an appeal to the court on grounds of material error of fact, material procedural error, error of law or other forms of illegality including unreasonableness or lack of proportionality.

Amendment No. 184, dealing with electricity legislation, and Amendment No. 189 dealing with gas legislation, insert, as an alternative, new sections into the Electricity and Gas Acts giving even broader grounds of appeal, again from all relevant decisions of the authority including a decision to impose a penalty under the new Section 27A or 30A. Thus, the Opposition have helpfully provided the Minister with two alternative approaches from which he has the luxury of choice.

I want to comment, now, in more detail on the Government's so-called right of appeal. Under the new Section 27E, a licence holder can make an application to the court if it is aggrieved over the amount of the penalty. But there is no provision which would enable the court to find that the amount was unreasonable. In other words, the right of appeal is in reality a narrowly confined right of review rather than a proper right of appeal and does not even appear to offer similar grounds of review to those available on an application for judicial review.

As a court would not normally substitute its own findings of fact, it is not clear how a court would exercise the power to substitute another penalty from that originally imposed by the authority, or the power to substitute a different payment date from that originally prescribed.

Moreover, it is not clear whether the provisions in new Section 27E(3) are intended to take the place of any right on the part of a licence holder to bring an action for judicial review on the lawfulness of the actions and the authority in imposing the penalty. Are the provisions intended to provide the only right of redress for a licence holder?

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That view appears to be supported by new Section 27E(8), which provides that:


    "Except as provided by this section, the validity of a penalty shall not be questioned by any legal proceedings whatever".

Here we have a fine example of a classic ouster clause. It would preclude a licence holder from taking any further form of action, or even to seek an appellate review of a decision of the court. On that basis, it would not appear to be open to an aggrieved licence holder to apply to the court for a determination as to whether the authority has acted lawfully, reasonably and fairly in imposing a penalty, or has made a material error of fact in imposing a penalty.

In the Standing Committee debate in another place, the Opposition argued that the appeal procedure was extremely limited and contended that the first ground of appeal in Section 27E(4) was similar, though more restricted, to a provision for a judicial review and as such precluded an appeal on the fine itself or the actual facts, limiting it to a view on the basis of whether the authority acted in a quasi-judicial and fair manner, regardless of the decision made. The fine could therefore be unreasonable under an objective assessment but provided the authority regarded it as reasonable, and the authority had taken all steps to enable it to take that view, there could be no appeal.

We also argued that the second ground of appeal in Section 27E(4) was confined to procedural matters and that the third ground of appeal in Section 27E(4) was restricted to the timing of payment of the fine but that there were no grounds for appeal on the quantum or reasonableness of the fine.

We believe that as the authority will be the body responsible for establishing and enforcing obligations--for example, under the Electricity Act 1989--and for setting standards of performance, and for determining whether there has been a contravention of the Act or failure to achieve a standard of performance, and for imposing financial penalties, there should be a full right of appeal against the decisions of the authority. In this respect, the arrangements under the Bill are wholly inadequate. It should be possible to challenge a substantive decision of the authority in respect of any particular matter or to challenge that it has made a material error of fact or law.

I have already said that the remedy provided is less than that provided by judicial review and does not provide a full and proper appeal to an independent tribunal. As such, there must be considerable doubt whether the arrangements will be consistent with the Human Rights Act.

In the debate in Standing Committee in the other place (cols. 565 and 566), the Government maintained that no amendments were necessary and they referred to the explicit provision in new Section 27E(3) which allows the court, on an application from the licence holder concerned, to quash the penalty or substitute such lesser penalty as it considers appropriate in all the circumstances.

21 Jun 2000 : Column 298

The Government maintained that it would be odd to insert these provisions if they did not intend licence holders to have the right to challenge the authority's decisions. The Government also argued that there was an inherent power of the judiciary to ensure that the executive complied with the will of Parliament as expressed in statute; and that the Bill was explicit that the reasonableness criteria should apply and that this was a term recognised in the United Kingdom courts. However, they suggested that ministerial references to reliance on reasonableness could be invoked in support in court.

It is likely that the provisions in Clause 58, in their present form, will be the subject of an application in due course to the court under the Human Rights Act 1998 on the ground that an aggrieved licence holder does not have unfettered access to an independent appeal tribunal which has power to examine all aspects of the contested decision involving a financial penalty.

We have suggested two alternative approaches to resolve the problem. The Minister is aware that an appeals procedure can be found in the Telecommunications (Appeals) Regulations 1999, which came into effect on 20th December 1999. The regulations provide an appeals procedure for a range of decisions of national regulatory authorities in respect of telecommunications in accordance with Article 1(6) of Directive 97/51/EC and Articles 5(3), 9(4), 9(6) and 19 of Directive 97/13/EC, which require member states to ensure that suitable mechanisms exist at national level under which a party affected by a decision of the national regulatory authority has a right of appeal independent of the parties involved.

Under the regulations, a new Section 46B is inserted into the Telecommunications Act 1984 which provides for an appeal against certain decisions of the Secretary of State and the Director-General of Telecommunications. An appeal can be made on one or more of the following grounds: namely, that a material error as to the facts had been made; that there was a material procedural error; that an error of law had been made; that there was some other material illegality, including unreasonableness or lack of proportionality. An appeal lies to the High Court or, for Scotland, to the Court of Session.

We recognise that the regulations apply only to appeals against the decisions specified in the regulation and that the regulations were introduced to meet the requirements of EC directives and as such they have no direct effect on the issues being raised by the electricity and gas companies. However, the provisions for appeals under the regulations address the concerns of these industries and it is difficult to see why the Government are not prepared to consider an equivalent arrangement for appeals against decisions under Clause 58. Indeed, the arrangements in the regulations provide a model which could be of general application in providing a basis for appeal by an agreed body from the decision of a regulatory body. I beg to move.


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