Bill Esterson
Main Page: Bill Esterson (Labour - Sefton Central)Enterprise Bill [ Lords ] (Fourth sitting)
Bill Esterson Excerpts(8 years, 9 months ago)
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Mary Creagh (Wakefield) (Lab)
Congratulations to the Doorkeepers and engineers on shutting our window; I am sure we will all be peeling off our outer layers in due course.
I want to continue my remarks on the amendments to these regulatory clauses and the benefits of good regulation in creating green jobs and growth. In fact, in case we needed any further examples of that, there is a Waste and Resources Action Programme exhibition outside this very Committee Room, which has the strapline, “Less Waste More Jobs”. That beautifully illustrates what I was saying before lunch.
I want to take a little bit of time to look at the potential impact of the clauses on both the natural environment and the Office of Rail and Road. Let me begin with Natural England. Its statutory purpose is to
“ensure that the natural environment is conserved, enhanced, and managed for the benefit of present and future generations, thereby contributing to sustainable development.”
Its statutory purpose is to protect the natural environment, while the contribution to sustainable development, which includes economic considerations, is an outcome arising from that protection.
The clearest manifestation yet of the potential of the growth duty to have an overriding or undermining influence on the proper exercise of Natural England’s regulatory functions is its recent adoption of a new outcomes approach to the protection and management of our most important wildlife sites and precious places. That new approach was first introduced in a letter from Natural England’s chief executive, James Cross, to a number of key stakeholders in October 2015, with an amended version subsequently published online.
The stated aim is for Natural England to move
“away from being seen as regulators and more towards enablers”
through
“closer working with business to help them achieve their goals while also helping the environment”.
That will apparently involve
“radically reducing the need for regulation”,
and helping businesses to
“achieve their aims in a way that benefits the environment, but takes account of their circumstances”
by seeking
“the best outcomes for everybody, at the right pace”.
While it is right to seek to minimise conflict and to achieve win-win outcomes via the agreement of “common and shared objectives” when possible, there will often be situations where the objectives of businesses will conflict with the proper exercise of Natural England’s regulatory functions and its statutory purpose.
I cite that example in relation to the natural environment, but there are, of course, potential issues around the built environment because local authorities are also listed in clauses 15 and 16. As a former local councillor for seven years, I know that in these straitened times, councils will often err on the side of caution and will be fearful, particularly when making planning decisions. We can see a clear moment when officers will be advising on granting planning permission for something so that the growth duty or reporting requirements that will be placed on them are not subsequently challenged by businesses.
The final area I wish to talk about is the protection of the public interest in its most naked form: the health and safety of workers and the travelling public. Clause 17 applies this reporting duty to the Office of Rail and Road, Ofcom, Ofwat and Ofgem, which is the first time that has happened. In my time as shadow Secretary of State for Transport, I had a great deal to do with the ORR—the Rail Regulator, as it was then. Its statutory duty is to protect the health and safety of workers and the travelling public, to manage demand and supply for rail paths between freight operators and passenger operators and to protect the needs of disabled travellers and ensure they have access to the railway.
With this new duty, I can see clearly that the demands of growth could lead to conflicts of interest. For example, passenger rail travel has doubled over the past 20 years, and there is enormous pressure on those rail slots. It is the difficult duty of the rail regulator to decide which towns and cities get new train services and when the track operators will have access to freight paths to undertake the upkeep and engineering works that keep the railways going. Those decisions are made versus the interests of the commercial operators who run those passenger services. It is in the interests of the rail regulator to ensure that those paths are not too close together and do not run too quickly so as to maintain a safe distance between trains. It must also ensure that there is a requisite number of safety operatives to oversee workers carrying out minor engineering works on the track to avoid tragedies, which sadly occur far too often.
I am concerned that extending the duty to report performance to the Office of Rail and Road, in particular, could end up putting pressure on the regulator to make decisions in the interests of growth that are inimical to the public interest, the protection of public safety, the protection of the health and safety of the workers on the railway, and of course the protection of disabled travellers, whose additional needs in terms of boarding and getting off trains may hold up the smooth operation of the service for a couple of minutes. I have heard anecdotal evidence from my constituents in Wakefield of people being told, “You are holding up the train. We are going to miss our slot. You are going to make us late, and we will lose money as result.” Those pressures already exist, and adding a financial and growth pressure to the regulator could lead to perverse outcomes.
A similar argument could be made about Ofwat, which is responsible for making sure that water companies clean up the beaches, protect the rivers and maintain the reservoirs. The water companies might make more money if they invested less in the asset base but that would not necessarily be good if a reservoir failed and took out a town or village below it. When regulations fail, the consequences in terms of protection of the public are huge. When the Minister replies, I hope that she addresses in particular the issue of road and rail regulation.
Bill Esterson (Sefton Central) (Lab)
Welcome back, Ms Buck. This is the first time that my hon. Friend the Member for Wakefield has spoken in the Committee since her success yesterday and I add my congratulations on her appointment as the new Chair of the Select Committee on Environmental Audit.
As my hon. Friend has said, the Labour party is pro-business, but we are not pro-business as usual and it is important that we challenge unacceptable business practice and exploitative practice. We support good regulation but at the same time we must ensure that unhelpful or damaging regulations are addressed. My hon. Friend cited excellent examples of good regulations that show how such reporting should be done. She also explained that we must take a longer-term view when we consider the environment or other aspects of life. The short-term, balance-sheet effects of regulation are not enough. Whether a regulation, an action or a change in the rules has an effect on a business or an economy in a matter of weeks, months or a year or so is very different from its longer-term impact, whether on the economy or, indeed, the environment. We should be trying to achieve the level playing field that has been a central theme of our deliberations on the Bill so far, and that level playing field should apply to business, consumers and the wider public. The costs of regulation to business can be apparently significant, but savings can be made elsewhere. My hon. Friend the Member for Wakefield has given many examples of exactly that, but I will give a few others as well.
When the minimum wage legislation came in during the early part of the Labour Government, there was criticism that the regulations would produce a big cost to business and to the economy; that they would cost jobs. That turned out to be scaremongering and untrue. There was in fact a benefit, not just to the workers who saw big increases in pay and protection of their terms and conditions, but to the wider economy. People were in a position to spend more money in the economy, which had benefits for business and the wider economy. There was also a benefit in the protections that were given to those businesses that had always been good employers and paid decent wages.
The same, of course, is true today when we debate the challenge of the exploitative use of zero-hours contracts. Sports Direct is an employer that is often cited. There is grave concern at the way zero-hours contracts are used in that business for people whose only or main employment is with that business. That does not just make life very difficult and precarious for the individual; the competitors of Sports Direct or similar businesses where the zero-hours culture is a concern face pressures that are unacceptable, unfair and damaging both to business and to the wider economy.
There are many examples of how regulation can be a force for good. It can be a way of improving the wider environment and economy. It can help business, even though at first glance it may appear not to do so. As we seek to create a fairer society and a fairer and more successful economy, these matters are very important and we rightly have the opportunity to debate them. My hon. Friend was right to table the amendments. They do the job of highlighting the concern and the challenge. She has highlighted the long-term environmental and economic benefits of ensuring that we measure and evaluate regulation—the immediate impact and apparent negative effects, but also the longer-term, beneficial effects. In many cases, what may appear to have a financial cost in the short term has a much greater financial and environmental benefit in the long term. I am therefore pleased that my hon. Friend has tabled the amendments and I am happy to support them.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
We must remember that clause 15 is specifically for this purpose—to require regulators subject to the regulators’ code to report annually on the effect that the code has had and to obtain the views of business on that effect. That is what the clause is all about. Our approach does not preclude consideration of broader public interests when regulators report. As I have said, the key purpose is to address the impact on business, but that does not preclude all the other matters that the hon. Member for Wakefield has raised.
Regarding Ofgem, Ofcom, the rail regulator and Ofwat, clause 17 provides a way forward to include them in the regulators’ code. That clause will remove the exemption, but not of itself bring them into scope; that can be done only following consultation and through secondary legislation. Those are important points to make when looking at the aim of the clause.
Mary Creagh
The Minister said that there was nothing to prevent regulators from consulting with other bodies and people of interest, but that is to misunderstand the behavioural nature of large organisations that are set out in the statutory code, which tend to do what they are prescribed to do in statute. The clauses introduce a statutory requirement to consult with business and to report annually on the impact of businesses. By giving the regulator a duty to consult solely with the private interests of businesses while not consulting with the public interests that they are there to protect—of consumers, citizens, stakeholders and civil society organisations—she is putting the private interests above the public interests that the regulator exists to protect. I have made my point. She said that this would be done through secondary legislation. The House will have a chance to discuss the matter in the future and, no doubt, the debate will continue to rumble along. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Bill Esterson
I beg to move amendment 65, in clause 15, page 13, line 16, at end insert—
“(iii) of the measures adopted by the relevant regulator to make regulations which have an impact on small businesses more comprehensible, and
(ii) of the measures taken to promote awareness of regulations which affect small businesses;”
This amendment would create a new obligation on Regulators to provide an assessment on how they are simplifying their regulations and ensuring that they report on their efforts to extend awareness of regulations.
The Chair
With this it will be convenient to discuss the following:
Amendment 66, in clause 15, page 13, line 16, at end insert—
“(v) an assessment of how the relevant regulator’s regulatory provisions contribute to and improve productivity;”
This amendment would create a new obligation on Regulators to provide an assessment on how their provisions improve productivity.
Amendment 67, in clause 15, page 14, line 6, at end insert—
“(10A) A relevant regulator must give to the Small Business Commissioner any information that the Commissioner may from time to time request which relates to regulatory provisions and their impact on small businesses.”
This amendment would impose a regulatory duty on regulators to provide information on request to the Commissioner, to aid the communication of key issues around productivity to SMEs and regulators.
New clause 19—Report on money laundering regulations—
(1) The Small Business Commissioner shall prepare and publish a report assessing a regulator’s performance and effectiveness at ensuring regulations relating to money laundering are proportionate, user friendly, widely promoted and easily adapted by small businesses.
(2) The report provided for by subsection (1) must include an assessment of the role of the Financial Conduct Authority and its activities to encourage awareness of the impact of money laundering regulations on small businesses.
(3) In this section a regulator is a person with regulatory functions to which section 108 of the Deregulation Act 2015 applies.
This new Clause would require the Small Business Commissioner to publish a report assessing a regulator’s performance and effectiveness at ensuring money laundering regulations are proportionate, user friendly, widely promoted and easily adapted by small businesses. This report must include assessment of the Financial Conduct Authority’s success in its role in encouraging awareness of the impact of money laundering regulations on small businesses.
Bill Esterson
We are all in a hurry to conclude, I am sure. Amendments 65 and 67 deal with the simplicity and accessibility of regulations, specifically placing a duty on regulators to simplify their regulations and ensure that they report on their efforts to extend awareness of them to small businesses. This is a task to be shared by the regulators and the small business commissioner. Regulations get a bad press. The perception of red tape from faceless bureaucrats is pervasive and that is the fault of Governments, of all kinds; they failed to communicate the reasons for regulations, what they did and how they supported businesses.
The Bill is a prime opportunity to take a significant step towards improving the situation, to place a duty on regulators to simplify and explain, and to share this with the small business commissioner so that the commissioner in turn can use their position to raise awareness and understanding among the small business community. The Minister for Policing, Crime and Criminal Justice said on money laundering in response to a written question from my hon. Friend the Member for Bishop Auckland (Helen Goodman):
“The Government is committed to ensuring that the UK has a robust anti-money laundering regime.”
I am not entirely sure that the rhetoric matches the reality of the situation, but new clause 19 seeks to ensure that the anti-money laundering regime is at least comprehensible and transparent to small businesses. It applies the same principles of simplicity and effective communication that we are trying to achieve for small businesses through amendments 65 and 67 to regulations on money laundering. On the publication of its report, “Don’t Look, Won’t Find” in 2015, Transparency International’s senior advocacy manager, Rachel Davies, said that current anti-money laundering rules represented a “shambolic system”. [Interruption.] I am getting some agreement. As well as coming under fire in the report for lobbying on behalf of the same firms that they regulate, the majority of the 22 regulators publish no information about the fines that they issue. The Government’s first national risk assessment of money laundering found that banks and other financial institutions were at “high risk” of exposure to corrupt funds.
Now is not the time to get into a wider debate about money laundering, Ms Buck.
Bill Esterson
I am glad I got that right. However, it is patently clear that the UK must face up to a serious problem, which includes the way in which anti-money laundering rules are regulated. New clause 19 seeks to ensure that small businesses are supported as much as possible in complying with anti-money laundering rules. For the vast majority of small businesses, anti-money laundering rules are another bewildering set of regulations. While the UK is facing up to these problems, the least we can do in this legislation is to make it as straightforward as possible for small businesses to understand and comply with those regulations.
Let me turn to amendment 66. When we discussed amendment 62, we called for a nominal and monetary tally of regulations to be included in the Government’s business impact target. I acknowledged at the time that, although important for the sake of transparency about the impact of regulations, focusing solely on umbrella financial costs to small businesses was something of a blunt instrument. Amendment 66 therefore goes a step further. Our intention is to address the challenge that policy makers face in assessing the broader impact of regulations on the economy and, indeed, society more broadly.
The burden and benefits of regulation are rarely distributed equitably. The point is that simply talking in terms of the overall financial burden on businesses and couching one-in, two-out or other savings targets in those terms overlooks the different circumstances of the more than 5 million small businesses in the UK. What benefits one may burden another. A regulation that plays to a small business in Manchester or London might make life harder for a rural start-up, or it might have a disproportionate impact on a small business that exports to the EU, and so on.
Current assessments disproportionately measure the direct impacts of new policies. Indirect impacts are harder to quantify, but that does not mean that we should pretend they do not exist. Longer-term impacts are even harder to measure, because the impacts spiral out from the business itself to include the knock-on impact on the wider economy, but that is exactly why it is important to factor them in. Amendment 66 adds that magic ingredient, productivity, into the mix for consideration during assessment. Indeed, much recent debate in the Treasury and Department for Business, Innovation and Skills circles has been about how to improve the UK’s productivity. When we consider productivity and not just cost, we radically change the nature of impact assessments. Instead of monitoring what goes in—that is, the immediate financial impact on small companies—we monitor what comes out: the impact of the regulation on how businesses operate, how they grow and whether they can take on more staff, and, ultimately, the impact on GDP.
Adding productivity takes the blunt instrument of the assessments as they stand and adds a far more nuanced approach. It is an approach that more accurately reflects the complexities of the small business landscape and an approach that ends the strange idea that regulations can somehow be considered in isolation—that they can exist in a vacuum outside the wider economy.
Anna Soubry
The regulators code requires regulators to take account of the needs of small businesses and to tailor their regulatory approach accordingly. The Bill’s new reporting requirement requires regulators to be transparent about the effect that these considerations have had on those they regulate, including small businesses. This will be even more explicit when we develop reporting guidance for regulators. The growth duty will require regulators to consider economic growth fully when regulating, and productivity is part of that.
Bill Esterson
I certainly take the Minister’s assurances on money laundering; perhaps this is something that we will revisit on Report in more detail, but certainly over time we will do so. I agree that it is a far from straightforward matter to resolve.
I will just give another example of the effect of a new regulation when it is brought in and requires an assessment. Of course, that is the new schedule to the Bill on Sunday trading. Sunday trading will have an impact on businesses large and small. Some large businesses want it; some are less keen on it. Many, if not most, small independent retailers particularly benefit from having some kind of competitive advantage one day a week, and they are extremely worried about the negative impact of a change in the regulation of Sunday trading, as are workers who will have to work more on Sundays; as are families, who will be affected; and as are faith groups and others, who see the special nature of Sunday being affected.
It is a good example of some of the much wider impacts of a change in regulation, which go way beyond the immediate financial impact on businesses. Clearly, some larger firms plan to gain by cornering yet more of a share of the retail market by trading longer on Sundays, but I cannot see the argument for the idea that there is more to spend just because it is spent on a different day. All that will happen is that less money will be spent at the smaller independent retailers if the larger ones can benefit. That is therefore a good example of the need to consider the wider consequences and shows that the amendments have particular resonance, given the Minister’s proposals for later in our deliberations.
The Minister for Housing and Planning (Brandon Lewis)
The hon. Gentleman is generous in giving way. He has just alluded to the point that I was going to make. He will probably want to discuss that when we reach clause stand part, because we will debate those very points, doubtless at some length, as we have made extra time available for that in Committee. Those items will be tackled, and I will make it clear to the hon. Gentleman that there is more to this than he just outlined.
Bill Esterson
I was hoping for something more from the Minister, but we will not have more time in Committee.
Bill Esterson
We have been given more time on Report, unless the Minister is giving us another day in Committee, and he tables such a proposal when we come back next Monday week. That would be unusual because we have to finish, according to what has been passed in Parliament, two weeks today at five o’clock.
Bill Esterson
Indeed. Honesty from the Minister—I like that.
I would have more sympathy with the Minister for Housing and Planning if the proposals had been made a little earlier than the evening before the Committee started, but there we are.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Despite the attitude of Conservative Members, mumbling, “Get on with it”, my hon. Friend is making an important point. There has not been sufficient time to consider the significant changes and their ramifications, which my hon. Friend is setting out. He rightly says that they have wide-ranging implications that need proper consideration.
Bill Esterson
My hon. Friend is absolutely right and I thank her for reiterating the point.
Amendment 65 seeks to ensure that there is an assessment of whether there is a simplification. Several amendments have emphasised the need to consider properly and report the impact of changes in regulations. The strength of feeling, particularly about Sunday trading and changing the rules in the way in which the Government propose in the new schedule, shows the need to take great care. The change is considerable and it will have a profound effect throughout the country, and between the regions and the nations of the United Kingdom. It is regrettable that the proposal was not introduced in the Lords, as the measure is a Lords Bill, and earlier so that people were aware of it before Second Reading, and that we did not have longer to look at the new schedule than last Monday, on the evening before it was tabled.
Catherine McKinnell
Does my hon. Friend have a proper understanding of why the amendments came so late in the day? Have the Government explained the lateness of their addition to the Bill?
Bill Esterson
I am as much in the dark as my hon. Friend the Member for Newcastle upon Tyne North on this matter, as I am on so much that the Government do. Perhaps the reasons will emerge when we debate—
Bill Esterson
The Minister is in fine form today—when we get to that point, eventually, in two weeks’ time. That question can sit and await answer from the relevant Minister when we deal with the new schedule. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 ordered to stand part of the Bill.
Clauses 16 to 18 ordered to stand part of the Bill.
Clause 19
Extending the primary authority scheme under RESA 2008
Anna Soubry
I beg to move amendment 1, in clause 19, page 17, line 40, leave out “Welsh ministerial” and insert “devolved Welsh”.
This amendment, amendments 3, 4, 6, 7 and 9 and subsections (1) and (2) of the new clause inserted by amendment NC2 replace references in the Regulatory Enforcement and Sanctions Act 2008, and in the amendments made by the Bill to that Act, to a Welsh ministerial matter with references to a devolved Welsh matter. Subsection (4) of the new clause inserted by amendment NC2 defines a “devolved Welsh matter” so that, in addition to Welsh ministerial matters, it also covers matters within the legislative competence of the National Assembly for Wales.
Anna Soubry
Yes. They have been tabled at the request of the Welsh Government and therefore, I am sure that the hon. Gentleman—[Interruption.] He is putting his thumb up, and rightly so. They are technical, but they have been done at the request of the Welsh Government and I am sure that they are absolutely right to make that request, which is why we hope this is uncontentious.
Bill Esterson
The assurance the Minister gave about the Welsh Government’s request was certainly what we needed. It is a shame that Ministers do not accept requests from us in here when we try to amend things, but we live in hope.
Anna Soubry
I do not have anything to say to that. It would be a first if we all agreed on everything—actually, there are times when we agree, and that is wonderful. It would seem that this is such an occasion.
Amendment 1 agreed to.
Bill Esterson
The clause will extend the primary authority scheme, which was introduced by the Labour Government in 2009. It provides greater regulatory consistency and certainty to businesses that operate in local authority areas by creating a statutory partnership between multi-site businesses and a primary authority. The primary authority acts as a co-ordinator of other local authority enforcement activity in relation to that business. The initial roll-out of the primary authority scheme saw a good uptake and support from business, professional bodies and local authorities. It is a splendid example of regulation working well in practice and benefiting business, the wider community and the wider economy, thanks to the previous Labour Government—we can all agree with that.
The primary authority scheme improves levels of compliance with regulations at a local level by providing small business with information about regulations and reducing the financial burden of compliance with them. It is an excellent model; it extends a friendly hand to businesses and regulators. It was created in response to problems caused by inconsistencies in regulatory interpretation between different local authorities, which led to a real challenge for businesses operating across a number of local authorities’ areas. The primary authority scheme overcame that challenge and confusion and gave businesses greater confidence to expand beyond the boundaries of their local authority.
When the primary authority scheme was created, the OECD said that it was a “potentially far-reaching innovation”. It is regulation done well. It finds a balance between business and regulators, works with businesses to ensure compliance is as easy and affordable as possible, and offers councils the flexibility to account for local circumstances where there are discrepancies between their use of regulations and that of neighbouring councils.
We broadly agree with the extension of the primary authority scheme set out in clause 19, but I do not want the Minister to think that she enjoys our unqualified support. A helping hand to small businesses in the spirit of pragmatism and flexibility is good, but let us not take it out of context. In fact, we must bear in mind the context throughout our debates, particularly when we discuss the small business commissioner. The entire Bill is an example of the Government giving with one hand and taking away more with the other. The primary authority scheme will help small businesses to access affordable regulatory compliance, but on every other front they face an onslaught and a whittling away of the Government support they need to get started and contribute to the local economy.
Let me give some examples. The Government axed the Business Growth Service, the Manufacturing Advisory Service and the growth accelerator programme. The growth accelerator programme alone assisted more than 18,000 businesses. A great deal of the £100 million in finance that it helped small and medium-sized enterprises to raise went into helping local businesses in their very earliest stages. The Government converted Innovate UK grants into loans and took up to 58% of the budgets from the very local authorities that the clause tries to help businesses work with—the 58% is from Liverpool, my neighbouring authority.
The Government give a fair impression of wanting to make life easier for businesses with the extension of the primary authorities scheme, but although we support the scheme we are acutely aware that it pales into insignificance in the face of the sheer scale of the withdrawal of support for small businesses in recent years. If the Government wanted to help businesses, they would not have completely shut down the long-term dividends to the economy of many of the discontinued schemes that were already beginning to deliver, including the ability of local authorities to help through economic development, which is disappearing due to the scale of cuts. The change has been made for the sake of scraping together the short-term cuts that the Chancellor wants to achieve his political aims, which has not helped local businesses or local economies.
Anna Soubry
Of course, as has been identified by the hon. Gentleman, the clause extends and improves the hugely successful primary authority scheme. I pay tribute to the last Labour Government for creating the scheme. Some will say that it is one of the few things that they actually did that was of any benefit to anybody, but that would be cheap.