Regulatory Authorities (Level of Charges) Bill

Greg Knight Excerpts

Friday 13th May 2011 Commons Chamber

[Mr Chope]

That is a rather general example, if I may say so. Perhaps when my hon. Friend comes to respond to the debate he will address a specific profession, such as dentistry. Dentists are already regulated by their professional body. They are also regulated under health and safety legislation and so forth, but the CQC is now insisting that it too should regulate them. It is going to cost dentists a minimum of £800 a year, I think, to register with the CQC. I hope that the Minister will in due course explain what added value will come from that, as there is an enormous amount of scepticism about whether it will lead to any improvement in the quality of dentistry in this country. When one looks at the CQC report, one finds that the income from the regulatory fees for dentists will far exceed the amount that will be spent on regulating dentists. That is a good example of what I am describing as a “stealth tax” or an “additional regulatory burden”.

[Mr Greg Knight (East Yorkshire) (Con)]

May I gently chide my hon. Friend? It is open to someone who has a Bill before this House to provide explanatory notes to assist the House in considering the Bill. I understand from the Vote Office that he has not done so and perhaps he could tell the House why. It would have been helpful had he gone to the extra effort of providing those notes. Because he has not done so and because he has gone on about the Care Quality Commission, may I ask whether he intends the definition of “regulatory authority” in his Bill to encompass local authorities?

[Mr Chope]

The short answer is that I do not intend that definition to cover local authorities. On the lack of explanatory notes, my right hon. Friend is a lawyer of considerable repute and he is capable of reading a two-clause Bill just as well as anybody else. This is not a complicated 100-page, six or 10 schedule Bill. We know that you, Mr Speaker, are saying that we must ensure we get good value for money, and we want to reduce our costs, so I thought it would be an unnecessary burden and an additional cost to have explanatory notes for something that is self-explanatory. I hope, in due course, to take my right hon. Friend through the terms of this short Bill, so that if he has any doubts, he can ask questions in interventions and so on. Perhaps I shall do so now, as I am being prompted.

Clause 1 refers to:

“No regulatory authority carrying out functions in England”,

so the Bill extends only to England. Although we have to say that it applies to England and Wales, it will apply only to England.

[Mr Knight]

Clause 1(1) begins:

“No regulatory authority carrying out functions in England on behalf of a Minister of the Crown”.

My hon. Friend says that that is what the Bill is to cover and that he does not intend it to cover local authorities, yet I understand that the analysis of whether a property which is not connected to the water mains is receiving water of an adequate quality is carried out by the local authority, which is undertaking that duty on behalf of a Minister of the Crown, so surely his definition might include local authorities in some circumstances.

[Mr Chope]

My right hon. Friend may well be right. It may well be that there are certain circumstances in which local authorities are undertaking a responsibility given to them by the Crown and so this Bill would apply to them, but it is not intended to cut across the discretion of local authorities to set their own fees and charges for the services they provide. That would be contrary to the principles of localism, which are supported so widely across the House now.

Clause 1 states:

“No regulatory authority carrying out functions in England on behalf of a Minister of the Crown may increase, over any given period of time, the fees charged in respect of any of its services by more than the rate of inflation, measured by the Consumer Prices Index, over that given period of time.”

Recently, these charges have been increasing very much above the rate of inflation, and I shall give the House some examples.

Anyone who wishes to travel abroad must have a passport, so one can hardly describe this as an optional extra for most citizens. In 1997, a 10-year renewal for an adult passport cost £17.50 but in 2009 the cost had increased to £77.50, which is almost a fourfold increase in real terms in 12 years. Why? Is such an increase not rather unfair, given that everybody needs a passport and especially given that children now have to have their own passports and cannot travel on their parents’ passports? How can such an increase be justified? Clause 1 would make it impossible for the Passport and Records Agency to increase its fees above the rate of inflation over a given period of time without getting specific authority so to do.

--- Later in debate ---

[Mr Chope]

We now know where my hon. Friend the Minister gets all these references from, but that is another story.

Let me give an example of a good regulator. Some of us had the privilege of listening to Colette Bowe from Ofcom earlier in the week. She said that Ofcom had been asked by the Government to reduce its costs by some 25%. It has already reduced its costs by more than 20% and it has not increased the costs of regulation but reduced the size of the organisation so that it acts more proportionately. There is a message there for many other regulators whose minds are not concentrated sufficiently because they have the option of always being able to increase their charges. That is why I have these provisions in the Bill.

The Bill does not say that regulators can never increase their charges, but clause 1(2) states:

“No regulatory authority shall introduce a charge in respect of a service currently provided free of charge in England unless a report has been laid before Parliament setting out the reasons for the introduction of the charge and that report has been approved by a resolution of each House of Parliament.”

Other colleagues will have different examples, but at the moment the Department for Transport is actively considering charging owners of vehicles a registration fee just for having a vehicle in their ownership. The statutory off road notification, which is a means whereby an owner can keep a car off the main road without incurring a fee, will be changed and the owner will have to pay the fee that is being introduced, even if they are keeping the car off the main road and not using it on the highway. That would be an additional new charge. Would it be reasonable? I do not think it would, but if it were introduced under the Bill, it would be necessary for a report to be laid before Parliament setting out the reasons and justification for it. If that were to happen, my right hon. Friend the Member for East Yorkshire would no doubt ask questions about the impact on those who have older cars that they do not use very often.

[Mr Knight]

Does my hon. Friend agree that the introduction of such a charge would be outrageous? In effect, it would be a tax on ownership, which would be unique in this country. Does he share my shock about the reading matter on the Minister’s bedside table? Would the Minister not be better advised to have a copy of the Jensen Interceptor Mark III workshop manual by his bed?

[Mr Chope]

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

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[Mr Hayes]

Later in my contribution I shall describe some of the ways in which the Government have done just that. They have taken a firm grip on these matters. Even in these early days of the long regime to which we can look forward and in which I hope to play a small part, we are making significant progress in the way that my hon. Friend wishes us to do.

It is not a question of the Government not intending to grasp the nettle—to take a grip on the subject, to use his terms—but of doing so in a way that is consistent, coherent and deliverable.

Lest I dwell too much on the first part of the Bill, let me deal with the second part. The Bill would stop a regulator, subject to specific conditions, introducing a charge for a previously free service. A regulator would be able to introduce new charges where previously there had been none on the condition that a report setting out the benefits of the new arrangements was laid before and agreed by the House. Were I a rather more sarcastic person than I am, and if I wished to tease my hon. Friend, which I would not do, as you know, Mr Speaker, I might say to him that he is himself in the Bill establishing a rather elaborate system, to put it mildly, for dealing with the test that he describes: a report to the House, which presumably will be debated, with no real clarity about the length or nature of that debate, and perhaps even referred to a Committee of the House. Who knows how long that process might take? It is absolutely right that these matters should be scrutinised, but the implication of my hon. Friend’s proposals is that we might lengthen, both in terms of time and substance, the mechanisms by which we assess, implement, gauge, and judge necessary regulation.

[Mr Knight]

Will my hon. Friend give way?

[Mr Speaker]

Order. Before the right hon. Member intervenes, may I say two things to the Minister? First, he is second to none in his respect for the courtesies of the House, and I invite him, therefore, to address the House and not continually to turn his back on the Chair. Secondly, although his preamble to his main thesis is of great interest to the House, I remind the House and those listening that there are two clauses in the Bill, which consists of one page and one line. I feel sure that it will not be long before the Minister wishes to address himself to the clauses of the Bill.

--- Later in debate ---

[Mr Knight]

The Minister suggests clause 1 might lengthen the process, but does not subsection (2) increase democratic accountability, and should not that be paramount?

[Mr Hayes]

It is that part of the Bill that I am addressing, Mr Speaker, in very specific terms, and, yes, it could be argued that it makes the system more accountable, in the sense that it brings the matters before the House, but the spirit that lies behind the Bill and the powerful advocacy of my hon. Friend the Member for Christchurch, not just now but for all time, of the need to place fewer burdens on business, is that rather than extending and elaborating the process by which we implement, consider and, indeed, devise regulation, we should simplify it.

That brings me to the final provision of the Bill, which focuses on the duties of responsible Ministers and sets out plans to prevent them from increasing funding for their regulatory bodies. That would mean not only that the charging framework within which regulations operate was restricted, but that regulators should not have any additional funding from central Government as a result. I can understand why my hon. Friend argues that, and why the Bill seeks to put that argument into practice, but a better measure of the quantity and nature of regulation is required to consider these matters as fully as they might be considered.

Let me find common cause with my hon. Friend. It is absolutely right that the House, and indeed the Government, should consider the impact of regulation. The CBI has argued that regulation is one of the key elements inhibiting growth. Its April 2011 survey described a Nigeria-style regulatory regime—its words, not mine, I hasten to add. It said that only that country had a similar regulatory burden to that of Great Britain. Apparently, according to the CBI, we rank 89th out of 139 countries for having the biggest regulatory burden. Its concern was that that regulatory burden had a powerful influence on growth, and unless we deregulated, as my hon. Friend’s Bill would, we would inhibit growth. This is not the first time that the CBI has argued this case, nor is it the only organisation that does so.

My hon. Friend and others will be familiar with the Institute of Directors’ regulation reckoner, which it produces regularly, and I have here the 2011 issue. The IOD estimates that the total administrative costs of regulation for business for 2011 are growing and have a considerable impact on business both large and small. It argues that directors spend 17 hours a month on regulation administration and that the annual cost of regulation administration is £7,664 for each director. It says that work forces spend 106 hours a month on regulation. To put that in crystal clear terms, the IOD argues that the burden on work forces is equivalent to one member of staff working continuously on regulation from 1 January until 26 August, which is 34 weeks, to complete a business’s annual regulation administration. That is the kind of evidence that stimulates my hon. Friend’s concerns and motivates him in his mission to address these matters and to encourage the Government to do so too. This is why it is important that we debate these matters, and it is absolutely why the Government also take them seriously. The CBI argues that in order to avoid a double-dip recession the Government must deal with regulation. My hon. Friend suggests that his Bill, which is essentially about the nature and cost of regulation, would help us to do that.

The arguments of others suggest that regulation does not emanate only from this place. It is the view of the Bruges group, with which my hon. Friend is familiar, that the cost of regulation to businesses that we in this country enjoy—or perhaps I should say endure—is about £100 billion, with EU regulation accounting for about half of the total. I know that you will be as shocked as I am, Madam Deputy Speaker, to hear that, and as determined as I am that we adopt such regulation only where absolutely necessary, and that we certainly do not gold-plate it. Yet the IOD tells us that that is precisely what the previous Government did. That is the risk we face.

Not only must this House be diligent in ensuring that the additional regulatory burden I have described is not piled on to businesses large and small, but we must be even more mindful of the need to ensure that that which comes from other lands does not make the circumstances even worse. To that end, the Bill includes a definition of a regulatory agency in order to try to deal precisely with the matters I have described. However, I am advised by officials that the task of defining a regulatory agency, as the Bill does, is always a very complex one.

It might be helpful to build on that advice and start by reflecting on the range of agencies and organisations already involved in our system of regulation, because for the proposed agency to have effect it would need to sit comfortably with the existing framework of regulators and be consistent with the forms in which that regulation is constituted. The large number of organisations and individuals that play a part in securing compliance form a complex landscape. Businesses have the primary responsibility for meeting their obligations under the law, but a number of agencies in the public and private sectors, as well as civil society organisations, also play a role.

My hon. Friend the Member for Christchurch will know that national regulators secure adherence to the rules in many areas of modern life, including nuclear safety, pensions and health. He spoke earlier about some of the others, and I criticised him for using examples that would perhaps not be covered by the scope of the Bill, but none the less he made a powerful point about the range of areas of life and the range of activities and business on which regulation has an impact, and I understand his point.

Local authorities also have a role in enforcing the law in areas such as food safety, under-age sales and consumer protection. Were the Bill to proceed, the regulatory agency my hon. Friend seeks to establish would need an appropriate legal interface with those authorities.

[Mr Knight]

I wish my hon. Friend would use some of this cold water to wash his car, rather than to pour over the Bill. Why does he not see himself as a reforming Minister and grasp the issues so that he can take this matter forward, rather than using them as an excuse for doing nothing?

[Mr Hayes]

I am disappointed in my right hon. Friend, as a fellow owner of a Jensen Interceptor Mark III and member of the owners club, because what I have said is merely my preliminary remarks on why the Government cannot accept the Bill in its current form. I will move on to why we feel that aspects of the argument put forward by my hon. Friend the Member for Christchurch are worthy and compatible with the Government’s determination to reform these matters in a way that reduces the burden of regulation. My right hon. Friend the Member for East Yorkshire (Mr. Knight) should not be so hasty in assuming that I do not share the reforming zeal that motivates him and others to make life more straightforward for our businesses so that they can add to the prosperity we all seek.

On the specifics of the Bill, my hon. Friend the Member for Christchurch advocates a regulatory agency. However, unless that agency were to interface with the existing mechanisms for dealing with regulation, it would be impossible for the Government to accept its establishment as framed in the Bill, because there are many agencies that play an important role in the regulatory system, in both national and local government, and also agencies that play a role beyond the framework of the law. Trade associations, in particular, provide a service to businesses in the form of regulatory advice and guidance. Lord Young’s review of health and safety law, which has been referred to, highlighted the extent to which other agencies, such as the media and private consultancies, can create their own regulatory burdens. We are therefore dealing with diverse responsibilities.

In some areas regulation is effectively free to business, which is why, as the Bill deals with costs, it is important that we assess which types of regulation impose costs and which do not. The costs of the regulator and regulation are often met by the Government. My hon. Friend, in his speech and in the Bill, makes no detailed assessment of the balance between the costs absorbed by Government and the costs imposed on businesses. The Government’s view is that in many cases it is in the interests of fairness that the costs of regulation are met by those who are regulated. Where such fees are charged, they can take a variety of forms, from licences to levies and charges for specific services.

In those terms, the Bill, as I have said, starts from the commendable idea that businesses should be given as much certainty and transparency as possible on how they are charged by regulators and that appropriate controls should be in place to govern the way in which they are imposed. In that respect, I find common cause with both my hon. Friend the Member for Christchurch and my right hon. Friend the Member for East Yorkshire, who call for a zealous approach to assessing those costs and measuring how Government activity might add to them. It is right that the system, with regard to the imposition of costs, how they are gauged and how they grow, is properly assessed.

Before I address the Bill’s specific points, I think that the House would expect me to put in context the scale and ambition of the Government’s approach to regulatory reform. Just yesterday I was looking at those matters with the Prime Minister and the Deputy Prime Minister in relation to apprenticeships. As you know, Madam Deputy Speaker, it is the Government’s intention to build more apprenticeships than Britain has ever had before, and we were looking at how some of the costs of putting in place the necessary regulation on apprenticeships could be lightened. For example, for large companies that are providing apprenticeships, we have announced that those costs—