Regulatory Authorities (Level of Charges) Bill

David Nuttall Excerpts

Friday 13th May 2011 Commons Chamber

[Mr Chope]

My hon. Friend makes a very important point. Why should the users of passports be paying for this manifest failure of Siemens Business Services? That really does make the cost a stealth tax. Who knows, when applying for a passport renewal, that a significant part of the cost is actually to pay Siemens Business Services for an inadequate IT system? Having said all that, in 1997 the cost was £17.50, by 2002 it had increased to £33—by then the Siemens issue should probably have been sorted out—and it then increased to £77.50 in 2009, so I am not sure that my hon. Friend has the complete answer. However, what he says is interesting because it shows how these bodies are tempted to pass costs on to the users of their services, no matter how unreasonably those costs may have been incurred.

Another example involves the Driver and Vehicle Licensing Agency and the Driving Standards Agency. In 2006, the application fee for the UK driving test was £21, but by 2011 it had risen to £31. The fee for a UK driving test practical on a week day increased from £48.50 in 2008 to £62 in 2011. My right hon. Friend the Member for East Yorkshire (Mr Knight) has a great interest in this subject, but I wonder whether he knows the answer to the following quiz question: who was the first person to pass his driving test? If he does not know, I can tell him and the House. The first person to do so was Mr J Beene in 1935, and he had to pay 7/6d in old money, which is the equivalent of 37.5p now. These examples just show how these regulatory costs have risen over the years and how they continue to rise.

Other examples include the significant costs imposed for immigration settlement fees. A lot of cross-subsidy takes place within those and so in the current year the cost faced by a parent or grandparent of someone who has already settled in this country is £1,814, which is a significant fee for that application. You may recall, Mr Speaker, that there was a lively exchange of views a couple of years ago when the issue of fishing licences from the Environment Agency came before the House. Those licences produce a yield of £23 million for the Environment Agency, and my hon. Friend the Member for North Herefordshire (Bill Wiggin) raised his concern, and that of others, that the EA had arbitrarily increased by 37% the cost of concessionary rod licences for pensioners and disabled anglers. Why was that done? It was done to help the Environment Agency make a larger profit at the expense of the users of those licences. That is another example of a case that would be covered by the Bill, because if the Environment Agency wanted to increase its charges above the rate of inflation, it would have to get specific authority so to do.

At the moment, there is a proposal from the Police Federation that the cost of a shotgun licence should be increased by some 400%. Again, what could be the justification for that? Surely it is an abuse of the system.

[Mr David Nuttall (Bury North) (Con)]

Does my hon. Friend agree that such extortionate increases are in fact likely to lead many people to give up licensing their shotguns altogether, which will mean that the police will have to deal with many people holding unlicensed shotguns?

[Mr Chope]

I think that that would be a danger were the increase in fees to go ahead. A similar danger arises in the case of 17-year-olds seeking their first provisional driving licence. Is it reasonable that they should have to pay a very large fee for that? That fee might be a deterrent to their getting a licence and they might choose—unlawfully, obviously—to drive without a licence. That was a challenge I faced when I was the Minister for Roads and Traffic because in order to keep down the cost of entry into driving for someone obtaining a provisional licence and in order to make ends meet, it was necessary to introduce a modest charge for people who wanted to renew their licence at the age of 70.

There was a big debate in the Government at the time, egged on by a false leader in The Sunday Telegraph, and the proposal to charge a modest fee for 70-year-olds when they renewed their licences was regarded as a tax on pensioners. Nobody really understood the point that my hon. Friend the Member for Bury North (Mr Nuttall) is making, which is that to increase the costs for the person seeking to get his first provisional licence would be a potential deterrent for that person. I have raised a similar issue in the context of the very high rates of insurance costs and the Government’s policy of having increases in insurance premium tax that bear directly and disproportionately on the costs for young drivers who want insurance. My hon. Friend therefore makes some very good points.

A constant problem is: if we have regulators, who will regulate them? That is essentially what the Bill is about. It challenges the Government in a time when money is tight and when we are told that family incomes will fall over the next two or three years. The Government are imposing quite tight targets on many Government Departments, but would it be fair if those Departments responded by increasing the fees and charges they impose on the tax-paying public by more than the rate of inflation? I do not think it would.

--- Later in debate ---

[Mr Chope]

I am sure the Minister will respond to that in his wind-up.

[Mr Nuttall]

And if not, why not?

[Mr Chope]

Indeed.

One of the problems we face is moths—I can even see them flying around the Chamber—so I have a very heavy volume by my bedside to deal with them, particularly when I go home after a long sitting in the Chamber. They are eating every woollen thing in my house, so it is a real problem. The way to deal with them is to have a big tome on the bedside table.

[Mr Nuttall]

“Erskine May”?

[Mr Chope]

Definitely not.

I could give many examples of charges, but the significance of the Bill is that it imposes no additional charge on the taxpayer. There is no money resolution because there is no need for one. Clause 1(3) states:

“No Minister of the Crown may increase the level of any grant payable to a regulatory authority as a consequence of the provisions in this Act.”

Without that provision, it would be possible to argue that if we did not allow regulatory authorities to increase their charges, the Government, through the taxpayer, would have to give additional grant aid. That is specifically excluded under clause 1.

Subsection (4) gives a definition of “regulatory authority” that is inclusive rather than exclusive. It includes

“any authority or body which regulates the carrying on of any business or activity, or the practice of any profession.”

There is flexibility for the Government, as subsection (5) gives the Secretary of State power to make

“consequential, saving, transitional or transitory provision”

as he or she deems fit. Clause 2 sets out the title and commencement date and states that the Bill applies only to England and Wales.

I hope the Minister will commend the Bill for being short and to the point, and that he will use the opportunity presented by this debate to give some assurances to members of the public that we shall not see increases in the burden of regulatory fees and charges similar to those that took place under the previous Government. Will he assure us that the Government really are committed to ensuring that those stealth taxes are kept under control?

It is in the nature of Ministers not to like the idea that a Bill could not be improved by the Government. There may be problems with my Bill, but even if the Minister cannot accept it in its current form, I hope that the Government will suggest ways it could be improved or modified and that they will not block its Second Reading.

I commend the Bill to the House.

[Mr David Nuttall (Bury North) (Con)]

I am grateful for the opportunity to speak briefly in support of a most laudable Bill. I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on bringing the measure before the House this morning. The Regulatory Authorities (Level of Charges) Bill might be referred to more colloquially as the control of stealth taxes Bill, and when it reaches the statute book, as I hope it will, perhaps that is what it will be called.

Most people would see the Bill as right for the times in which we live—often described as an age of austerity. I am grateful to my hon. Friend for raising some of the problems that regulatory authorities cause. Whenever I have conversations with a professional, be it an accountant, a solicitor or an architect, it is not long before we reach the subject of the imposition of fees by regulatory authorities. From my time in practice, I know that a common source of concern was that bodies such as the Law Society or the Solicitors Regulation Authority seemed able to charge what they liked, without any real control over how they arrived at their fees.

For an organisation that is not in the competitive world, it is all too easy to increase the charges they make on those they have under their control, instead of cutting costs. In many cases, people have no choice about where they have to apply for the licence or certificate they need to conduct their business. That is why some measure of control over regulatory bodies is appropriate.

Many people see those bodies as above the law; they seem to operate in a parallel universe, immune from the pressures of the real world where there is a need to control costs and ensure that the prices charged to customers and clients are kept as low as possible. Those pressures do not exist when there is a captive market and people have nowhere else to go.

The problem with regulatory authorities is that in many ways they are a law unto themselves. Their activities rarely attract much attention. People may have to return to professional bodies every year, but in the case of many other bodies it is only every few years. My hon. Friend mentioned passports. Over 10 years, the cost of a passport increased from £17.50 to £77.50, which far exceeded the rate of inflation over that period, but nobody sat down with a calculator to work out whether the fee went up in line with inflation, or massively more than that. Businesses have to cope not only with the regulatory burden imposed by such bodies, but with the financial burden.

I fully accept that the Bill is not the ideal solution. I would prefer the abolition of the regulatory burden in the first place, and although I accept that in many cases regulation is essential, I am pleased that the coalition Government have been making excellent progress in culling the numerous public bodies and quangos. No doubt the Minister will refer to that later. However, despite the Government’s activities in culling quangos, hundreds will still exist, so the Bill is relevant and essential to protect both the public and businesses from excessive fee increases.

We might think that the onset of new technology, and the possibility for individuals and companies to file things online—in some cases, they have no alternative—would have the effect of driving down prices. Of course, we know from the licence fee freeze that has been imposed on the BBC that, when an organisation is told to cut costs rather than increase its licence fee, it can be done. A few years ago, when Companies House was given freedom from the Government, its filing fees actually decreased. I remember how pleased companies were that the filing fee for an annual return, for example, stopped increasing and started decreasing, so it can be done.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

My hon. Friend mentions that Companies House almost went into private mode and was able to drive down its costs. Will he consider the fact that some licence fees have increased because they are no longer heavily subsidised by general taxation and because Governments have tried to ensure that licences should be paid for by the people to whom they are issued? That is why prices have gone up.

[Mr Nuttall]

My hon. Friend makes a good point, and I agree with the general thrust of his comments: service users should contribute to the cost of the service that they use. It is right that, for example, solicitors and accountants pay for the costs of their regulatory bodies. People have no difficulty with that, but the problem comes when regulatory bodies, which are answerable to no one other than their own membership, feel that they can impose excessive increases way beyond the inflation rate, rather than considering ways to control their costs. That is particularly important when organisations across the public sector are being asked to live within their means, and that is the Bill’s thrust.

I certainly hope that the Bill receives the overwhelming support of the House this morning. I wish it well in its progress through the House and in another place. I look forward to hearing the Minister’s comments and to seeing the Bill on the statute book in the months to come. I am sure that it will be widely welcomed, not just in the House, but across the country.