Enterprise Bill [HL]

Earl of Lindsay Excerpts

Wednesday 25th November 2015 Lords Chamber

[Lord Mendelsohn]

My Lords, in moving Amendment 17 in this group, I will also speak to Amendments 18 and 38. At this stage I will just say how wonderful it has been to have my noble friend Lord Stevenson in for the first part of Report. He is looking in rather fine form and I hope we will continue to see him here in such fine fettle over a long period.

In Committee, my noble friend immaculately moved a similar amendment to provide an opportunity to discuss a broader question about regulation and its important role in promoting enterprise, helping to balance risk in society and providing a framework for a stronger and more productive economy. Regulations protect the vulnerable from harm and uphold the rights of consumers and new businesses, as well as more generally promoting a level playing field for businesses. Done well, the process of regulation can be a spur to competition and growth; done badly, of course, it can become a stifling burden.

No Government contemplate introducing new regulation believing it will make life worse for their citizens, yet the public perception of regulation is of a relentless, negative story, with faceless bureaucrats imposing rules in an inflexible and often absurd manner. However, policymakers face challenges, including the fact that the costs and benefits of regulation are not shared equally across all parts of society. It is often only the direct impacts that are measured by Governments when they design new policies. Indirect impacts, particularly compliance and transaction costs, are often important but extremely difficult to pin down, and are rarely measured.

The ultimate impacts on GDP growth—or well-being, as it is more fashionable to talk about now—are rarely discussed at all. The imbalance between the costs and benefits of regulation is often felt most keenly by businesses, which in turn seek to pass on a proportion of any higher costs to consumers, leading to a sort of stealth taxation. My noble friend Lord Stevenson argued in Committee, in a very forthright and forensic way, that we on this side of your Lordships’ House are fans of intelligent regulation. We think it would be sensible for the Government to begin the argument for intelligent legislation by taking a long hard look at the composition of our current stock of regulation and how best to improve it.

I now turn to Amendment 17. I was astonished to find out recently that the Regulatory Policy Committee reported that,

“nearly half of the approximately 1,000 laws enacted during the previous parliament”—

under the coalition Government—

“were outside the scope of the Government’s One-in, One-out and One-in, Two-out rules”,

and:

“Nearly 70% of these were of EU origin”.

That is nearly half of the approximately 1,000 laws that were introduced. The truism that what you measure gets reported applies here. Our amendment would require the Government, when they are assessing regulatory burdens, to count all regulations applying to businesses and not to exclude EU regulations en bloc as they do at present. What matters to businesses, in particular to small and medium-sized businesses, is which regulations they have to follow, not where they come from. Part of the traditional argument as to why we do not do these ones is that we have little influence over them. Again, that is a particularly unambitious way to look at it: we have a degree of influence and we should exercise it as much as possible. What is most important is the impact on businesses and we should make sure that we measure and look at that.

Our other amendments follow up the suggestion in Amendment 17. Amendment 18 would require Ministers to carry out a review and publish guidance every five years on what constitutes our stock of regulation. Without considering the whole stock, we have no way of assessing, for example, the claims made by the previous Government that something like £10.6 billion of savings were made during that Parliament because of reductions in red tape and regulation. The independent Regulatory Policy Committee suggests that not only is this a great overstatement but that more costs were incurred than were saved. If we are to get this right, we need to start with a proper definition of our regulatory stock. As someone who has a small business, I have made the point previously that I am still looking for the couple of thousand quid that I should be better off by if we had saved that amount of money.

Amendment 38 calls on the independent Regulatory Policy Committee to carry out an annual review of whether the duties placed on regulators under the Bill will affect their capabilities and capacity to conduct their regulatory role. In responding in Committee, the Minister spoke a lot about what was happening in Europe on regulatory reform—much of which is welcome—but she did not accept our argument that we need to consider the whole stock of regulation and not just overimplementation or gold-plating. Our amendment would require the target to include all EU-derived legislation. She felt that was too prescriptive, but we disagree. I beg to move.

[The Earl of Lindsay (Con)]

My Lords, I have some sympathy for some of the issues these amendments explore, although I am not necessarily convinced that the exact proposals as captured in the amendments would be the right answer. None the less, with reference to Amendment 17, I fully accept that the regulatory target as measured by the Regulatory Policy Committee captures only part of the story. From a business’s point of view, the movement in the net burden of regulation goes beyond the quantum of regulation that the RPC is itself measuring. I fully respect the Government’s commitment to transparency in this area and believe that accessible information is available out there in terms of the additional regulations that are outside the scope of the RPC, but the fact that there is a regulatory burden sitting outside scope could be brought to people’s attention more energetically and more regularly than is currently the case.

The sentiment behind Amendment 18 is interesting. I would probably have approached this in a slightly different way and said that rather than there having to be a report every five years that sets out the methodology and the extent to which some regulations were or were not in scope, perhaps this would be better as an annual exercise. Given that the Regulatory Policy Committee reports annually on its work and the scope it presides over, that cycle might be the right one to link in some sort of wider dissemination or reminder of what exactly the methodology is and to report on the issues that are set out in Amendment 18.