Localism Bill

My Lords, I shall speak to Amendments 111 to 114. Part 2 makes it possible for a Minister to require a local authority to make a payment in relation to an EU financial sanction imposed on the UK by the Court of Justice of the European Union if the Minister is satisfied that the authority caused or contributed to the infraction of EU law. The amendments in my name, Amendments 111 to 114, would amend Clause 31, which among other things sets out the requirement for the Secretary of State to publish a statement of policy setting out the general principles on how the power to pass on all or part of the EU financial sanction will be exercised and the amounts determined. Many of the points that I am going to cover were covered also by the previous speaker. For that reason, there is quite a bit that we have in common. Amendment 111 would amend Clause 31(4) to require the policy statement also to contain details of the arrangements for the appointment, constitution and operation of an independent review panel. Amendment 112 would require the Minister to take into account relevant determinations of the independent review panel when exercising his functions under this part of the Bill. Amendment 113 would make an EU financial sanction notice subject to the new clause as introduced by Amendment 117. Amendment 114 would determine the relevance of any determination issued by the independent review panel. Amendment 117 would insert a new clause into the Bill to allow local and public authorities which have received an EU financial sanction notice to refer the notice to an independent review panel, as mentioned by the noble Lord, Lord Tope. The new clause sets out the grounds on which such a referral can be made and provides that the independent review panel may review any finding of fact on which the financial sanction notice was based. These grounds include if a Minister, "““failed to exercise a power conferred by an enactment, and that failure contributed to the infraction of EU law (whether directly or indirectly or by impeding any local or public authority in its attempts to comply with EU law)””," or, "““did not follow the procedures set out in this Part or in the warning notice before giving the financial sanction notice””," or, "““ought to have exercised any discretion under this Part or the warning notice differently””." The new clause requires the independent review panel to determine the validity of the grounds of the referral and to provide a copy of its determination to the Minister who issued the EU financial sanction notice and the local or public body which received it. These amendments stem from the significant amount of concern, already mentioned, that has arisen from the provisions in this part of the Bill since it was first published last December. Throughout the Bill’s passage these concerns have been voiced by Parliamentarians of all parties and shared by the Mayor of London, the London Assembly, London Councils and the Local Government Association. Understandably, the main area of concern has focused on the ability of a Minister to pass on a fine without any form of judicial or independent oversight. The need for independent oversight is particularly vital when one considers the complexity of the factors leading up to any infraction, not least in the area of air quality—I must here declare an interest in that where my home is in London is the most polluted air in the whole of the UK—and the fact that it is more than likely that one of the parties responsible for any breach will be the Government themselves. This concern was voiced eloquently by Jeremy Smith, barrister and former Secretary-General of the Council of European Municipalities and Regions, in the Municipal Journal in February. He said: "““There is, however, a wider point of concern about Part 2 of the Bill. There is no independent decision-maker. The minister takes the decision to make the local authority pay—even though central government may be partly or largely responsible for the infraction in the first place, for example, through delayed action, poor drafting, or for myriad other reasons. This means the minister may be simultaneously prosecutor, judge, jury—and co-defendant. This is surely not a healthy legal precedent … Therefore, Part 2 of the Localism Bill needs fundamental rethinking. If there is to be a claw-back provision at all, it should not be ministers who decide, since central government is almost certainly an interested party. The process should be for the minister to refer the matter to the High Court, or independent arbitrator, to determine any fair apportionment of the Article 260 fine imposed by the ECJ. The independent decision-maker can then take into account every party’s share of responsibility””." The complexity of any infraction process and the need for independent oversight has been reinforced by my noble friend Lord Attlee in this House only recently. In response to an Oral Question from the noble Lord, Lord Berkeley, on air quality during the 2012 Games and who is responsible for this matter, my noble friend Lord Attlee responded: "““Everyone is responsible: the Government, the mayor, TfL, LOCOG, the ODA and, most importantly, individuals who make their own transport decisions””.—[Official Report, 23/5/11; col. 1583.]" While I thank my noble friend Lord Attlee for his frank assessment of a complex situation, his words highlight not only the difficulty any Minister would have in apportioning responsibility, and a subsequent fine, for any infraction but also the fact that the Government will, in almost all instances, be an interested party, as I mentioned previously. It is for this reason that I believe these amendments provide us with a way of building in the safeguards that are so vital to making this part of the Bill acceptable both to your Lordships’ House and the broader community of local government beyond; a community that we must remember has no role in negotiating the very European legislation which could, if these clauses remain unchecked, be presenting them with a very substantial bill. Such a bill would be unpalatable at the best of times, let alone in the current financial landscape. These amendments do not undermine the principle of this part of the Bill—a principle which was first outlined by the Government in Defra’s consultation documents on the natural environment White Paper last summer—but they begin to build in the safeguards that will be necessary for the relevant stakeholders to have confidence in the process outlined in the policy statement. It is vital, therefore, that local or public authorities have the ability to refer any EU financial sanction notice to an independent review panel; a panel to whose written determination the Minister must have regard. I understand that the Government have already been in discussions with the GLA, the LGA and London Councils on the formulation of a draft policy statement and I hope that these amendments will facilitate further discussions on getting that statement right. It is vital that any arrangements for, "““the appointment, constitution and operation of the independent review panel””," as provided for by Amendment 111, are sufficiently transparent and robust to garner the support of those who will be subject to this regime. I hope that the Minister will view these amendments as a helpful way of building consensus, something which your Lordships’ House likes to achieve. They are essential if all parties are to have confidence in this part of the Bill.