Enterprise Bill [HL]

Earl of Lindsay Excerpts

Monday 12th October 2015 Lords Chamber

[The Earl of Lindsay (Con)]

My Lords, I support the Bill and the measures it proposes for encouraging opportunity, productivity, enterprise, jobs and economic growth, and I particularly welcome Parts 2 and 3, as I have had a long and active interest in better regulation and deregulation and have been a member of the Better Regulation Commission, the Risk and Regulatory Advisory Council and the Better Regulation Strategy Group. All these bodies were established to give independent advice to successive Governments over the past 10 years on how to improve the quality, address the quantity and reduce the unnecessary burdens and unintended consequences of regulation.

I join other noble Lords in welcoming the extension of primary authority powers. Primary authority powers have to date made life easier for all sizes of business, including small businesses. On a broader scale, requiring all national regulators that oversee the business landscape to give greater consideration to reducing the compliance burden that they impose on firms is welcome, as is obliging all regulators to be brought within the scope of the deregulation target. In considering the impact of legislation, it is logical that the manner in which regulation is enforced is given the same level of scrutiny as the regulation itself. As the Minister said in opening, the business community sees the actions of regulators as being at least as important as the content of legislation in determining their experience of regulation.

A further important point is made in the impact assessments associated with this Bill—that,

“the costs imposed on business by regulators’ activity are not routinely measured or reported on. As a result there is a lack of transparency around the size and scale of these costs”.

I therefore welcome the proposal to include the actions of regulators within the business impact target, and that the reporting requirements attaching to that target, which will be subject to independent scrutiny by the Regulatory Policy Committee, will include the activities of regulators. This will encourage regulators to pay greater attention to the way that they operate and the effect they have on the businesses that they are regulating. It has to make sense for there to be greater incentives for regulators to design and deliver their responsibilities in a way that better meets the needs of business.

These measures comprise an important part of the Government’s headline commitment to cutting a further £10 billion of red tape. They lie at the heart of Part 2 of the Bill, and it is on Part 2 that I want to focus. In doing so, I declare an interest as chairman of the United Kingdom Accreditation Service, the national accreditation body. UKAS has a successful record of working with regulators, as its accreditation has proven itself to be one way in which the burden of regulation and its enforcement, or both, can be credibly and intelligently reduced.

In many regulated areas, such as environmental protection or food safety, the robust assurance provided by UKAS accreditation is used to good effect by regulators to target their enforcement activities where they are needed most, and to reduce them where they are needed least. For instance, businesses with accredited certification to ISO 14001 for their environmental management systems are visibly demonstrating, through UKAS-accredited third-party assessments, that they take their environmental obligations seriously. In such instances, the regulator can provide what is known as earned recognition to businesses with accredited certification. This enables reduced inspection requirements for the regulator, which can either make a net saving on inspection resources or redeploy those resources to focus on where the risk is greater. It also benefits the business, which saves on reduced levies charged by the regulator and avoids the business disruption of preparing for and undergoing a regulatory inspection.

I could cite many other areas beyond environmental protection and food safety where UKAS accreditation is enabling regulators to take advantage of earned recognition, or what is known as co-regulation, to improve the way in which they engage with those whom they are responsible for regulating. For instance, UKAS accreditation in the health sector is now recognised by the CQC as a source of information to support its hospital inspections regime. Other examples where UKAS accreditation is assisting regulatory regimes include drinking-water quality, emissions trading, microgeneration, energy efficiency, asbestos testing, gas safety, competent persons schemes under building regulations, farm assurance and animal feed, animal welfare and greyhound tracks.

I therefore hope that the extension of the business impact target will encourage regulators to make even greater use of UKAS accreditation, among other options. It is one tried and tested means by which regulators can sensibly reduce the burden of regulatory enforcement by allowing businesses to earn recognition through robust third-party assessments and manage their own activities in a responsible way.

Regulatory relief can contribute to reduced costs and greater investment, which in turn can drive economic growth. In this context, I note from analysis carried out by the National Audit Office and BIS that small and medium-sized businesses anticipate being among the biggest beneficiaries of regulatory relief. However, as I have already pointed out, businesses will not be the only beneficiaries. Regulators will be able to target their limited resources in a more informed and risk-based manner. This should help them to achieve their statutory objectives in a more efficient manner, which in turn will benefit society as a whole. Given the fundamental benefits that arise for both the regulator and the regulated, I would be interested to learn from the Minister whether a similar approach will be applied to the regulatory burden imposed on voluntary and community bodies, and indeed on those providing public services.

I welcome the new reporting duties that the Bill proposes placing on regulators. The Regulators’ Code sets out a good framework, based on the recognised components of better regulation, within which regulators should work. It is also right that regulators have a duty to consider the need to promote economic growth in the way that they carry out their duties. I therefore strongly support the requirement proposed in the Bill for regulators to publish information and produce an annual report on how they are performing in respect of the code and the growth duty. It will improve the transparency and accountability of the relationship between the regulators and the regulated. It will enable businesses and others to hold regulators to account in a more informed and intelligent manner, and it will enable good practice in the context of the implementation and enforcement of regulation to be understood and shared more easily. I support the Bill and look forward to its later stages.