Deregulation Bill

Lord Rosser Excerpts

Thursday 20th November 2014 Grand Committee

The FSA is a free-standing government department concerned only with safe food and customers first. That comes under Section 1 of the legislation that set it up. From that point of view, it is important to put it on the record. Whatever we might argue about the growth duty, the nuances, the way it has changed as the legislation has gone through following the scrutiny of the Joint Committee and whatever aspirations Ministers might have, the fact of the matter is that there is no threat whatever to food safety from these clauses.

[Lord Rosser (Lab)]

I support the amendment that has been so ably moved by my noble friend Lord Tunnicliffe. In particular, I will raise some questions about how the Government see the terms of Clauses 83 to 86 impacting on bodies exercising regulatory functions, including those coming under the auspices of the Home Office. At the moment, subject to what the Minister says in response, one rather gets the impression, as my noble friend Lord Tunnicliffe suggested, that Clause 83 may be a bit of a lawyers’ paradise and a basis for legal proceedings against regulatory functions, whether or not they have taken that factor into consideration and thus the creation of considerable uncertainty.

As I understand it, the Home office bodies it is intended should fall within the scope of these clauses include the animals and science regulation unit, the Disclosure and Barring Service, the Gangmasters Licensing Authority, the National Counter Terrorism Security Office and the Security Industry Authority. It will be a requirement under this Bill for these bodies in exercising their regulatory functions to have regard to the desirability of promoting economic growth and, in particular, for the regulator to consider the importance of the promotion of economic growth of exercising the regulatory function in a way that ensures that regulatory action is taken only when it is needed and that any action is proportionate.

The Explanatory Notes quote as background to these provisions a report by the noble Lord, Lord Heseltine, which the notes say,

“recommended that the government should impose an obligation on regulators to take proper account of the economic consequences of their actions”.

That is not actually the same as promoting economic growth. Unlike Clause 83, taking proper account of the economic consequences of actions would, for example, include at least some if not all of the issues referred to in my noble friend Lord Tunnicliffe’s amendment, including exercising the regulatory function in a way that does not cause significant detriment to consumers, employees, the environment, health and safety and equality rights.

One of the regulatory bodies under the Home Office is the Disclosure and Barring Service, which is a regulator only as it relates to the conditions of registration under the Police Act 1997 that apply to bodies registered or wishing to register with the DBS to be able to submit applications for individuals for criminal record certificates. If I am correct in saying that, presumably the provisions in Clauses 83 to 86 would relate only to this element of the DBS functions. But I would be grateful if the Minister could say in his response exactly what part of the functions of the Disclosure and Barring Service is intended should be covered by Clauses 83 to 86.

Will the Minister also say in his response how it is considered the Disclosure and Barring Service has operated up to now in a way that has not complied with the provisions of Clause 83 and thus what change he considers that Clause 83 will make to the way in which the DBS will in future carry out its regulatory role compared with the way in which it has carried out its role to date?

The Gangmasters Licensing Authority also comes under the umbrella of the Home Office. The GLA describes itself as a regulator with licensing, enforcement and compliance functions, all of which combine to create a prevention framework for the protection of workers from exploitation. It has two regulatory sanctions—revocation of a licence and prosecution of unlicensed organisations and those who use unlicensed companies. The GLA has told us that it operates within a regulatory framework, with independent and objective accountability, taking decisions that have a regulatory impact on businesses that are appropriate and proportionate where such impacts benefit the economic growth of compliant businesses.

Bearing in mind the fact that the regulatory function of the GLA is to protect workers from exploitation by unscrupulous companies and in so doing level the playing field for organisations that wish to trade and operate ethically, will the Minister explain in what way Clauses 83 to 86 will result in a change in the way that the Gangmasters Licensing Authority will be expected to carry out its regulatory role in future under the Bill compared with the way in which it has carried out its regulatory role to date? If the Government deem it necessary for the GLA to be required under the law to have regard to promoting economic growth, do they not think it equally important that it should be in the Bill, as provided for in my noble friend’s amendment, that a body whose reason for existence is to prevent exploitation of workers should, in meeting its new statutory duty to have regard to the promotion of growth, also have a statutory duty under the Bill not to take regulatory action that would cause significant detriment to employees?

The Explanatory Notes state that the post-implementation review of the regulators compliance code found that regulators had a tendency to regard economic growth as subsidiary to their statutory duties. How many regulators fell into that category? Was it all of them and, if not, which are the ones that operate in the regulatory bodies that it is intended will be covered by Clauses 83 to 86?

The Government clearly believe that Clauses 83 to 86 will change the way in which regulatory bodies and regulators will carry out their role, including the decisions they make; otherwise, why is this clause being included? If the Government are not going to accept my noble friend’s amendment, that will also indicate that the Government are seeking to change the balance of regulators’ decisions to the detriment of the groups and factors mentioned in my noble friend’s amendment; otherwise, they would accept the amendment.

The question is: what will Clauses 83 to 86 mean in reality? Can the Minister please provide a list of the regulatory bodies expected to be covered by these clauses, showing the extent to which the Government consider that each one does or does not already meet the terms of Clause 83 in carrying out its role? If the Government do not consider that they already operate in accordance with the terms of Clause 83, can the Minister please provide information on decisions that those regulatory bodies have previously made which the Government consider would have been different had Clause 83 been on the statute book? It is only with that information available that we will be able to form a view on whether the clause is basically verbiage for show or whether it will change decisions being made by regulators. If so, in what way, and to whose benefit and to whose disadvantage would that be?

[Lord Grantchester (Lab)]

I support my noble friend Lord Tunnicliffe on these amendments. While the Minister may contend that these words are unnecessary due to the phrase,

“the desirability of promoting economic growth”,

being in the clause, my noble friend’s wording provides a better balance by referring to the need not to cause harm. I have always believed that, were there to be an 11th commandment, it would be, “Thou shalt not commit pain”.

I declare my interest as a farmer. In agriculture and the environment there is often a conflict between economic development and the environment. I remember that when my noble friend Lord Whitty, who unfortunately cannot be in his place today, took the Natural Environment and Rural Communities Bill through your Lordships’ House in 2005, there was much debate concerning a conflict clause and how regulators were to balance the competing claims of economic well-being and the environment. My noble friend Lord Knight was the Minister in the Commons at the time. At the moment, he is taking part in a debate in the Chamber.

In the NERC Act we got the balance right. In that context, the regulatory functions were carried out by the Environment Agency and Natural England. While the NERC Act set up Natural England, it was correct not to include a conflict resolution clause applying to its work outside certain designated areas such as national parks, areas of outstanding natural beauty and conservation sites. In these areas, the level of importance of biodiversity and landscape had already been determined. To have included a conflict resolution clause would have seriously constrained Natural England’s independent decision-making ability, and here I echo the remarks of my noble friend Lord Rooker on his experience with the Food Standards Agency.

However, it is imperative to include the amendment in order to underline the necessity to have regard to economic development. After all, Natural England also operates in urban green spaces. It is easy to slip into automatic rejection of renewable energy—for example, solar development—as it will necessarily result in the loss of agricultural land. Each case must be taken on its merits.

I contend that the rural economy by and large already operates to the standards outlined by these clauses. However, if we are to have Clause 83 in the Bill—and here I do not wish to preclude the remarks of the noble Lord, Lord Greaves, in his stand part debate, which is to follow—we need this amendment. In the rural economy, there is already a need to balance economic, environmental and social obligations. All these factors are usually combined into the word “sustainability”.

If the intention in Clause 83 is further to alter the balance in favour of the economic dimension of sustainability and that regulators can be held accountable for the degree to which they have had this due regard, then, without this amendment, the regulating organisations could find themselves in difficulty and their environmental focus blunted. The Gangmasters Licensing Authority could find its labour exploitation focus blurred. The Food Standards Agency could find its public health focus diminished. The Veterinary Medicines Directorate could find its animal health objective confused.

--- Later in debate ---

I hesitate to go through the range of issues covered by other noble Lords in particular detail. On the Disclosure and Barring Service, the Gangmasters Licensing Authority and the Legal Services Board, how far regulators will have regard to growth will depend on the circumstances in question. We all understand that different regulatory bodies have different responsibilities because of their particular concerns. Again, I stress that our aim here is to keep the burden of regulation on business productivity to a minimum and to make sure that regulation is proportionate, ensuring that interactions with businesses are necessary and proportionate, and understanding the business environment and tailoring regulatory activities accordingly. If the guidance on this is considered not clear enough, clearly we need to discuss whether the guidance itself needs a certain amount of redrafting.

[Lord Rosser]

The Minister has accepted that Clause 83 may lead to additional legal action. I appreciate that he attempted to dismiss it by saying that it would not happen very often but, if we are talking about businesses, the pockets of some of them that might think about taking legal proceedings in relation to Clause 83 may be somewhat deeper than those of the regulatory bodies. First, how would the Government intend to address that situation to ensure that a regulatory body did not feel that it could not contest proceedings for fear that it might lose them and find itself paying quite considerable bills? Secondly, as I understood it, the Minister said that the provisions of Clause 83 should not carry any greater weight than any other requirements on a regulatory authority or any other issues that it should take into account. Is it the Government’s intention to write that into the Bill?

[Lord Wallace of Saltaire]

The Government’s position is that the guidance plus the statutory instruments, which Clauses 84 and 85 deal with—I recognise that we are in effect discussing all four of these clauses on the basis of this amendment—will be sufficient. However, that is also a matter which we are prepared to discuss between Committee and Report to make sure that we can agree a satisfactory level of what needs to be in the Bill, in guidance and in further regulations or statutory instruments as we go through.

[Lord Rosser]

What about the question of financing any legal action taken against a regulator or authority, bearing in mind that it could involve some quite large businesses whose pockets would certainly be deeper than those of the regulator?

[Lord Wallace of Saltaire]

I shall take that back, too, and we will discuss it between Committee and Report. I hope that I have managed to answer a number of questions. I recognise the concerns that have been expressed. We have a well operating system of regulation in the United Kingdom. The question of balance between good regulation, better regulation, sufficient regulation and efficient regulation is something around which a great deal of hard politics revolves. All of us who read the Daily Mail as loyally as the noble Lord, Lord McKenzie, and I do know that its constant campaign against all health and safety regulations is one end of the spectrum, but the other end of the spectrum is the overregulation that we all also have to be concerned about. That is going to be a continuing basis of politics, and this clause aims to strike the right balance.