Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Government amendments 5 to 7.

Amendment 28, in clause 18, page 13, line 17, leave out “18” and insert “10”.

See explanatory statement to Amendment 30.

Amendment 29, in clause 18, page 13, line 18, leave out from after first “is” to “5%” in line 20.

See explanatory statement to Amendment 30.

Amendment 30, in clause 18, page 13, line 21, at end insert

“up to a maximum amount of £10 million”.

This amendment sets a maximum non-compliance penalty for enhanced duty premises at £10 million.

Government amendment 8.

Clause 18 stand part.

Amendment 27, in clause 19, page 14, line 24, leave out “different” and insert “lower”.

The amendment restricts the Secretary of State to lowering the daily penalties rate for non-compliance by regulation.

Clauses 19 to 23 stand part.

This group of clauses sets out the means by which the SIA will be able to issue civil penalties for non-compliance. Although it is intended that the SIA will rely mainly on advice and guidance in the first instance, a credible sanctions regime with suitable monetary penalties is necessary to ensure that the regulator can secure compliance where it identifies serious or persistent non-compliance.

Where a person fails to fulfil a requirement, it is important that the SIA has the ability to issue financial penalties that can reduce the financial benefit of non-compliance. Where a person fails to comply with a compliance notice, restriction notice or information notice, they may be prosecuted for a criminal offence if it is in the public interest. In most cases, however, penalties will likely be the appropriate way of dealing with non-compliance.

Clause 17 enables the SIA to issue a penalty notice if it is satisfied, on the balance of probabilities, that a person is contravening or has contravened a relevant requirement—for example, if the responsible person for an enhanced duty premises has failed to put in place appropriate public protection measures. A penalty notice will always specify a non-compliance penalty to be paid by the recipient.

The maximum amount of a non-compliance penalty to be imposed by way of a penalty notice is set out in clause 18, which sets the penalty amounts at a level to counter financial gain from non-compliance. The maximum penalty is higher for enhanced duty premises and qualifying events because of the potentially more impactful consequences of non-compliance in the event of an attack.

In most cases, it is anticipated that penalty notices will be used in the event of breach of a compliance or restriction notice, but the Bill allows for a penalty notice to be issued regardless of whether a compliance or restriction notice has been issued. That will provide a powerful deterrent to those who would seek to evade the requirements.

Clause 17 also includes particular provision to ensure that penalty notices are issued fairly. A penalty notice cannot be issued more than once for the same contravention, and payment cannot be required less than 28 days from the issue date.

Government amendments 5 to 8 update the clause in respect of the maximum penalty for failing to attend an interview. Paragraph 3(1)(b) of schedule 3 gives the SIA the power to issue notices to require a person to attend an interview. Notices can be issued to a broad range of individuals, including employees, who the SIA considers may hold relevant information.

The maximum penalty for failing to attend an interview should be tailored to reflect the fact that the penalty will always be imposed on an individual and the broad cohort of individuals who may receive one. Although the individual may sometimes be the responsible person, it is anticipated that the proposed interviewee will likely be working for the responsible person in most cases. These Government amendments therefore provide for a specific maximum amount of non-compliance penalty for failures relating to attending an interview. The maximum will be £5,000 across both the standard and enhanced tiers.

Clause 19 enables the SIA to impose daily penalties in addition to a non-compliance penalty. They may be included in a penalty notice where it is issued for the contravention of a compliance or restriction notice. Daily penalties will start to accrue from the day after the date on which the non-compliance penalty is due. They will cease to be payable when the contravention ends or the penalty notice is withdrawn or varied to such effect.

The maximum daily penalty for standard duty premises is £500, but for enhanced duty premises or qualifying events, the maximum amount is £50,000 per day. The maximum amounts are intended to further disincentivise continuing non-compliance, recognising the breadth of organisations in scope, the differing requirements of each tier, and the potentially more serious consequences at larger premises and events.

Clause 20 sets out how the SIA will determine the appropriate amount of a non-compliance or daily penalty. Importantly, it specifies that the amount must be not only “appropriate” but

“proportionate to the contravention in respect of which it is imposed.”

That means that it must reflect the seriousness of the matter. Specifically, the clause sets out that the SIA must take into account the effects of the contravention, the action taken to fix the contravention or mitigate its impact, and the recipient’s ability to pay. The list is not exhaustive, and the SIA will take into account any other relevant matters when making its determination.

Clause 21 sets out procedural requirements for the issuance of penalty notices. It sets out that prior to issuing a notice, the SIA must notify the potential recipient of its intention to issue a notice and provide them with the opportunity to make representations. It sets out the information that must be included within the notice: the amount of any non-compliance and daily penalty and when they must be paid; the reason the person is receiving the notice; the consequences of non-payment; and how they can appeal. It enables the SIA to vary a notice, but a notice cannot be varied to increase the level of penalty, add daily penalties or shorten the payment period. That will protect the recipient of the notice, and give them the certainty that they will not be subsequently issued with a more onerous penalty.

Clause 22 provides a right to appeal against a penalty notice, or the variation of a notice. An appeal can be brought within 28 days of the notice being given or varied on the grounds that the decision was wholly or partly based on an error of fact, wrong in law, unfair or unreasonable, or for any other reason. Pending the outcome of an appeal, a penalty notice will have no effect unless the tribunal orders otherwise. The clause ensures that decisions to issue penalty notices are subject to review by an independent judicial body. The tribunal may consider evidence that was not before the SIA at the time of its decision, and where it does not dismiss an appeal, the tribunal will vary or cancel a notice.

Finally, clause 23 enables the SIA to take action to recover amounts due under a penalty notice as if the debts were payable by an order of the High Court or, in Scotland, as decreed by a sheriff court. To address non-compliance with penalty notices, there needs to be mechanism for the SIA to recover unpaid penalties. In order to incentivise the timely payment of penalties, interest will accrue on penalties that are not paid by the date specified in a penalty notice, at the rate specified in section 17 of the Judgments Act 1838. The SIA will pay any penalties, including interest, on the consolidated fund.

Mr Tugendhat, do you wish to comment?

Simply to say that, although there needs to be a maximum sum to levy as a penalty, £18 million strikes any reasonable person as extremely high. Although we completely agree with compliance, the fines strike me as a little out of proportion.

Clause 17 accordingly ordered to stand part of the Bill.

Amendments made: 5, in clause 18, page 13, line 10, at end insert—

“(za) in the case of a contravention of a requirement imposed by a notice under paragraph 3(1)(b) of Schedule 3 (requirement to attend and answer questions), £5,000; paragraph 3(1)(b)”

This amendment sets at £5,000 the maximum monetary penalty that an individual may be given for failure to comply with a requirement imposed under paragraph 3(1)(b) of Schedule 3.

Amendment 6, in clause 18, page 13, line 11, after “if” insert

“, in a case to which paragraph (za) does not apply,”

This amendment is consequential on amendment 5.

Amendment 7, in clause 18, page 13, line 13, after “if” insert

“, in a case to which paragraph (za) does not apply,”

This amendment is consequential on amendment 5.

Amendment 8, in clause 18, page 14, line 1, at end insert—

“(za) subsection (1)(za),”—

This amendment is consequential on amendment 5.

Clause 18, as amended, ordered to stand part of the Bill.

Clauses 19 to 23 ordered to stand part of the Bill.