Enterprise and Regulatory Reform Bill

Debate between Chuka Umunna and David Ruffley

Monday 11th June 2012 Commons Chamber

[Mr David Ruffley (Bury St Edmunds) (Con)]

It is always a pleasure to listen to the hon. Member for Streatham (Mr Umunna), who invariably makes his case with courtesy and rationality, but on this occasion I do not agree with the thrust of his speech.

Making the United Kingdom economy much more competitive is vital if we are to weather the storms following the fallout from the eurozone catastrophe while also facing the inexorable rise of far-eastern economies. Deregulation is a key part of that.

All Governments launch initiatives to create bonfires of regulation and to slash red tape. But is it not remarkable that the intended beneficiaries of such anti-regulation drives so rarely tell Members of Parliament that they believe that the regulatory burden has been reduced? After 15 years in the House, I have yet to meet a business constituent who has said that. In each year of the last Parliament—this will be the only instance of my straying into the realm of party-political knockabout—the Labour Government created six new regulations every working day, and as a result the coalition Government have a massive burden of over-regulation to identify and, in my view, eliminate.

The changes relating to employment in part 2 of the Bill are certainly needed. The number of unfair dismissal claims doubled from 100,000 in 2002-03 to 218,100 in 2010-11. That is a staggering increase, and, according to the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), it costs businesses an average of £4,000 to defend each claim. It is hardly surprising that employers say that they are discouraged from taking on new employees at the margin, especially at a time when business confidence is so low.

Let me give a parochial example. Two self-made businessmen, one working in food retail and the other in furniture retail—both started with nothing, and both are very good employers—told me that the chief factor in the decision whether to take on new employees this year was the problem of unfair dismissal claims and vexatious claims. Both had had unfortunate experiences in the last year. I visited their companies, and I do not think that they were telling porkies.

We should not accept the caricature presented by some Opposition Members who have suggested that liberalising the labour market even further is an exclusively right-wing idea. Those who follow these matters carefully rather than jeering in the cheaper seats in the back will know that, according to the distinguished left-of-centre employment law professor Pietro Ichino—he is very much on the left of Italian politics—there is an equality issue between the very well-protected employed and the unemployed who stay unemployed because of over-regulation in the market.

Unfortunately, although the Secretary of State has already raised the qualification threshold for unfair dismissal from one to two years, he has ruled out exempting small businesses—micro-businesses—from various employment laws. Perhaps the Minister will explain why the Government have turned their face against exempting businesses that employ fewer than 10 people from the full panoply of unfair dismissal law when it comes to young workers. The high cost of youth unemployment surely suggests that we should try that, if only for a limited period, to see what the results are. I should have thought that those who are worried about youth unemployment could not disagree with such a proposition for a minute, but if they are not satisfied with my argument, what about the evidence?

In 2004, businesses in Germany with fewer than 10 employees were exempted from the requirement to provide cause when letting an employee go. Before that, the threshold was only five employees. Did unemployment rise as a result? No, it did not. In 2005, overall unemployment in Germany was more than 11.5%; now it is 7.5%. Among those under 25, it has fallen from 12.5% to 6.3%. That is due not only to the slightly more relaxed regime for small businesses in Germany, but to the fact that mini and midi-businesses were subject to much more generous and simpler social security contribution regimes. The hon. Member for Streatham suggested national insurance breaks for small businesses employers, and I am sympathetic to that idea, but the evidence shows that the exemption system worked in Germany.

[Mr Umunna]

Will the hon. Gentleman give way?

[Mr Ruffley]

No, I want to make some progress.

Part 5 deals with legislative burdens more generally. Clause 49 proposes an increase in Ministers’ power to introduce sunset provisions, and I welcome that. We may be one of the first countries to use sunset clauses as a matter of course in all regulatory policy. Some states, such as Germany, use them sporadically, but no EU states use them systematically, and not even the United States uses them across the board. Our Government are leading the way in reducing regulatory levels by providing for their use in all legislation, as far as possible, throughout Whitehall.

Finally, let me say something about one in, one out. There has been some early modest success in that regard, but I should be grateful if Ministers would consider a proposal which the last Government toyed with, but did not proceed with, in 2008. I refer to regulatory budgets, which would set a figure for the value and cost of regulations in any particular Department. That proposal was not included in the 2008 Labour consultation, but many of us have been considering ways in which, if a budget went bust because too many regulations were being imposed on business, the Department would be subject to the sanction of reductions in its public expenditure settlement with the Treasury. That would certainly hold Ministers’ and senior civil servants’ feet to the fire. Perhaps the Minister will tell us whether the Government will consider it.

Banking (Responsibility and Reform)

Debate between Chuka Umunna and David Ruffley

Tuesday 7th February 2012 Commons Chamber

[Mr Umunna]

I will move on.

Given that market mechanisms since the crash have not operated to rein in excessive pay in the banking sector, the bank bonus tax, we have argued, should be repeated, on top of the bank levy, in recognition of the fact that the banking sector owes a responsibility to society in general. If the claim that we are all in it together is to mean anything, the reintroduction of that tax is a must. It would create 100,000 youth jobs and 25,000 affordable homes. It would do immeasurable good to the reputation of the sector and support jobs, growth and business in the UK economy.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I agree with some of the things that the hon. Gentleman has said, but the last Labour Chancellor said that

“it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things”.

Those were the words of the right hon. Member for Edinburgh South West (Mr Darling) in autumn 2010. What has changed since?

[Mr Umunna]

I would say to the hon. Gentleman that they were not that good at getting out of it, because the bank bonus tax was expected to raise about £500 million, but in the end it raised £3.5 billion, which is a sizeable sum.