Moving centre stage
The Primary Authority scheme is to have a significantly expanded role in regulatory enforcement going forwards. The Local Better Regulation Office sets out how.
The Government has stated its intention to “transform the culture” of regulatory enforcement so that businesses will see a real difference: the Primary Authority scheme, operated by LBRO (Local Better Regulation Office), is firmly at the heart of its plans.
The Coalition Agreement states a commitment to regulatory enforcement that it will “end the culture of tick box regulation, and instead target inspections on high risk organisations through co-regulation and improving professional standards”. It was via the Whitehall Growth Review, that the Government identified Primary Authority as having a key role in delivering this commitment.
A business operating across council boundaries can, regardless of its size, form a primary authority partnership with a single local authority in relation to regulatory compliance. Partnerships can cover all environmental health and trading standards legislation, or specific functions such as food safety or petroleum.
Following the recent Transforming Regulatory Enforcement consultation involving major business organisations, consumer groups, professional bodies and a broad cross-section of regulators, the plans are to expand Primary Authority to enable more, smaller businesses to benefit; and to extend the scheme to cover more areas of regulation.
The proposed changes will deliver commitments made in the Government’s Growth Review as part of a package of measures to free up business from unnecessary regulatory burdens.
Primary Authority was established under Part II of the Regulatory Enforcement and Sanctions Act (RESA) 2008 as a response to the findings of the Hampton review of inspection and enforcement in 2005. The Hampton Review concluded that the enforcement system was uncoordinated, there was duplication of effort, interventions were not planned according to risk and there was a lack of consistency for businesses interacting with the regulatory system.
For businesses, it provides the confidence they need to invest and grow. Through the provision of advice, businesses have access to a reliable source of information that draws on a detailed understanding of their operations, prevents inconsistent interpretation of regulations, and applies regardless of where stores, factories or offices are based or products are sold.
Whether businesses seek to confirm that their existing procedures accord with the rules or simply want to know what to do to comply, tailored advice is available from their primary authority with the assurance that it is respected by all local regulators.
Seeking to spread this good practice further, changes to the Primary Authority scheme are planned in three areas: strengthening inspection plans to deliver earned recognition for business; allowing more organisations to participate, benefiting small business; and including specific policy areas which are currently out of scope.
Inspection plans
A primary authority may draw up an inspection plan for the regulated business (section 30 RESA). Such plans are intended to highlight to other local authorities where inspection resources may be best concentrated, avoiding duplication and waste in the inspection system.
They contain recommendations as to how a local authority with the function of inspection should exercise it in relation to a regulated person (section 30(2)). Where a primary authority has made an inspection plan, it must, if LBRO consents to the plan, bring the plan to the notice of the other local authorities with the function of inspection (section 30(6) RESA). A copy of a typical inspection plan accompanies these instructions.
Section 30(7) RESA provides that a local authority (including the primary authority) exercising the function of inspection in relation to a regulated person must have regard to a plan to which consent has been given under subsection (6). Section 30(8) RESA provides that before a local authority other than the primary authority exercises an inspection (otherwise than in accordance with an agreed plan), it must notify the primary authority.
The proposed changes to the law will mean that local authorities will have to follow inspection plans rather than simply having regard to them. The aim is that the Primary Authority will be able to see how well a business is complying by assessing data from local authorities, and from the business itself.
With this insight, the Primary Authority will be able to judge what recognition, if any, should be offered to a business which in turn can benefit from fewer inspections. These inspections would be better targeted, saving business time and helping local authorities to deploy their enforcement resources better. It will also provide a mechanism by which the frequency of inspections may be increased or reduced, depending on how well the business complies with enforcement.
Inspection plan pilots have been developed with companies such as Tesco, Asda, Sainsbury’s, Iceland, Moto, Wetherspoon, Argos and Homebase. Following recommendations made in the health and safety report, Commonsense, Common Safety, Flintshire, Central Bedfordshire, Eastleigh Wakefield, Watford, Milton Keynes and Reading councils were among the first to test how businesses, which have demonstrated their commitment in complying with regulation, could benefit.
Retailers place a high priority on compliance; from ensuring products are safe to preventing sales of age-restricted products to children: the sector spends £20m per year on the latter case alone. However, at present, the same system or products can be inspected by all 433 local authorities, even if their own procedures have been approved by the primary authority.
Extending eligibility
There are now 74 local authorities involved in 1,381 primary authority partnerships, covering 46,400 premises and 1,190,000 employees. There are clear benefits of Primary Authority for large businesses with premises in different local authority areas around the country, yet smaller organisations can also benefit from its principles. Micro businesses and small businesses cite trade associations as their sole source of information on regulatory compliance.
The purpose of changing the eligibility criteria is to extend the benefits of having a single point of contact with the regulatory system to more businesses. The vision is that any business or regulated entity (or group of same) can gain access to assured advice to support regulatory compliance do from a single point in the system.
It is the intention to extend participation in Primary Authority to trade associations, franchises, company groups, and groups of businesses that share an approach to compliance through a supplier or customer.
Trade associations
Trade associations, whilst varying in size and organisational structure, have huge potential to positively influence market sectors. Many trade associations have a membership of thousands of individual businesses and often these businesses are micro or SME businesses. Trade associations will often issue information to its members about complying with regulatory requirements, particularly focusing on the specific areas of regulation affecting their particular sector.
The British Independent Retailers Association represents around 7,500 non-food retail businesses, the majority of these being micro businesses operating a single store. Members are provided with regulatory guidance by the group and have access to a helpline. Through calls to this helpline, the group has gathered evidence that its members experience inconsistent interpretation of legal requirements by local authorities.
The intention is that a trade association, on behalf of its members, should be able to form a single primary authority partnership with a local authority for the purpose of agreeing assured advice tailored to the relevant sector.
Business groups
The current requirement that each business within a corporate group must individually satisfy the eligibility criteria – that the business itself is regulated by more than one local authority and that the business is regulated by the primary authority – is restrictive for businesses with complex company structures.
Businesses often want all of the companies within their corporate group to benefit from their primary authority partnership. The current requirement that each company within the group satisfy eligibility conditions means that a business may not be able to enter into a single primary authority partnership which covers all of its regulatory activities.
The exclusion of members of a company group sharing a compliance approach, particularly those with strong central control, was not the intention when the legislation was created and this exclusion is expected to become more of a problem as businesses seek more creative and innovative ways of competing in a tough economic climate.
The intention is that a company group should be able to form a single primary authority partnership with a local authority to agree assured advice that applies to all businesses within the group. The company group would nominate part of its business to act as the single point of contact on behalf of the company group.
The co-ordinator would be responsible for working with the primary authority to agree advice and making this advice available to all its businesses within the company group. The primary authority would communicate through the single point of contact for the company group and itself act as a single point of contact for the company group with the local regulatory system.
This approach will address the unintended consequences created through the original legislation and enable businesses to receive assured advice for all businesses within a company group.
Future of LBRO
The Government’s response to the consultation on the future of LBRO and that of Primary Authority gives a solid mandate for the new Better Regulation Delivery Office (BRDO) to be formed within the Department for Business, Innovation and Skills. One of BRDO’s principal roles will be to operate and extend Primary Authority.
In its response to the consultation, and to the Löfstedt Review, the Government has committed to extending Primary Authority so that it is more comprehensive, enables earned recognition of compliant businesses and provides more benefits for smaller business; and to working with HSE and other national regulators to ensure a consistent, cohesive, strategic approach.
As Primary Authority grows, it is increasingly important to ensure those involved in partnerships are able to shape its future. LBRO therefore intends to create a Primary Authority User Group which will work in a similar way to the Local Authority Reference Panel, the World Class Coalition and Business Reference Panel, using the experience and insight of those who are already part of the scheme to aid its development. Membership will include business and local authorities to reflect the profile of existing primary authority partnerships.
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