Regulatory Impact Assessments Bill

Kevin Hollinrake Excerpts

2nd reading
Friday 20th October 2023 Commons Chamber

[Philip Davies]

My hon. Friend is absolutely right, and I agree wholeheartedly. That is why, as I say, for the life of me I cannot see why a Minister would not want to do that impact assessment.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

May I suggest an instance where we might not want to do an impact assessment? My hon. Friend makes a good point, and of course the default position is that we should, but in a situation earlier this year the economy faced being ground to a halt because of industrial action—strikes—across the country. Does he think that sometimes the Government have to legislate quickly and may not have time to go through the processes that he and I would normally like to see?

[Philip Davies]

The Minister makes a fair point. Perhaps it is one of the reasons that I am perhaps not quite as persuaded as I would normally be by one of the Bills from my hon. Friend the Member for Christchurch. I want to come back to the point made by my right hon. Friend the Member for Tatton.

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[Philip Davies]

My hon. Friend is highlighting how shrewd a politician he is and what shrewd decision-making skills he has. Ultimately, he was successful in getting the project stopped, but I cannot speculate on whether that was due to the number of tunnels. However, perhaps he helped, and more power to his elbow, because in places like Shipley we support the Prime Minister in wanting better connectivity across the north. The bit that works is north to south; it is across the north that it does not work, and the Prime Minister is absolutely right to focus his money on that. Whether it was down to the cost of the tunnels, I do not know, but it cannot have done much harm.

Finally, the other element of the Bill that I am nervous about, even though it is logical, is how much extra power it gives to what my hon. Friend described in a previous debate today as “the blob”. If we were to be, in effect, governed by cost-benefit analyses in the way that he envisages and in the way that I would like things to be done, I do not think that it is beyond anybody’s imagination that the civil service would, if it was particularly keen on the Government adopting a policy, miraculously produce figures that showed a tremendous benefit and not much of a cost. I am pretty sure that it is not beyond people’s imagination to think that, were the blob, as he described it earlier, particularly determined to block a proposal from the Government, its advice to the Government would be that the cost far exceeded the benefit. I am rather nervous about giving civil servants more power over Government decisions than they already have.

[Kevin Hollinrake]

I think the hon. Member raised that point earlier in his remarks. I am sure that he is aware that whatever figures the Government produce, they are then scrutinised by an independent body, the Regulatory Policy Committee, to make sure that those figures hold water. Is he not reassured by that?

[Philip Davies]

No, I am not. I know the Minister well—he is a very good man—and I know he would not be swayed by what the blob was trying to tell him to do or not do. He is a man of his own mind and a very talented Minister, and I have no doubts about his decision-making skills. However, I am afraid that the idea that I should be reassured at the Government, in effect, handing over more decision making to some unelected body of the great and the good of the elite, and that I should put all my trust in them, does not give me any reassurance. To be perfectly honest, it somewhat horrifies me that the Government are farming out these things to the great and the good of the establishment.

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[Justin Madders]

I would like to wait and see what the inquiry says about the way that that was handled. An awful lot of evidence has been given about Government decision making at the time, which it makes clear was less than ideal. It is probably best for us to wait and see what comes out of the inquiry on how we as a Parliament can best deal with these issues in future. Hopefully that situation will never repeat itself, but the hon. Member for Shipley (Philip Davies) made the point that the solution to many of these challenges lies in Members robustly challenging Government when opportunities arise.

The House of Lords Committee said that an impact statement

“should not just be treated as an item on a ‘to do’ list but be an integral part of the policy formulation process… One of our major concerns is that IAs which are published late, or that appear to have been scrambled together at the last minute to justify a decision already taken, may undermine the quality of the policy choices that underpin the legislation.”

Again, that theme has been picked up in the debate.

[Kevin Hollinrake]

Reflecting on that particular statement, does the hon. Gentleman think his party was wrong to call for longer lockdowns on the basis of no evidence in cost-benefit analysis?

[Justin Madders]

That is a bit rich from a Minister of a Government who did not introduce any impact assessments when they first brought in the lockdowns or various restrictions. I can recall on numerous occasions asking Ministers why people were limited to being in groups of six or why pubs had to close at 10 o’clock. We never got a satisfactory answer to any of those questions, so for the Government to try to put that on us is a little rich.

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[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I congratulate my hon. Friend the Member for Christchurch (Sir Christopher Chope) on his important Bill. I very much agree with his sentiments about ensuring that we have good financial justifications for our policies as soon as they are introduced to this House, although—as I said in an intervention on my hon. Friend the Member for Shipley (Philip Davies)—I think there are occasions on which we must be able to set those things aside.

What my hon. Friend the Member for Christchurch seeks to do through his Bill is to formalise a process that should happen anyway, by making impact assessments a statutory requirement as soon as primary or secondary legislation is introduced. Currently, this is a process that happens through collective agreement.

As I always do when speaking in this House, I will try to put myself in the shoes I was in when I was in business. This place is not always that businesslike; I think it should be more businesslike. When someone in business is about to spend some money or invest in a new policy area, they will look at the costs and benefits of the interventions they are likely to make. However, I do not think that any business will simply bind itself to its own process. This legislation is itself a form of regulation, so I think it is right that we look at outcomes rather than processes. The Government are strongly committed to ensuring proper assessment of our policies, assessing the impacts and seeking to ease the burdens. That is the principle behind my hon. Friend’s Bill.

On my travels around the business community, I talk to many businesses. The principal issue raised by small and medium-sized enterprises is access to finance, but for the large businesses operating in our economy, which are clearly hugely important, the principal concerns are about the impact of regulation and sometimes about the slowness of the regulatory framework; I will come on to that point in a second. Importantly, we are making changes right now that I think my hon. Friend will approve of and that will meet his objectives.

There has been much speculation about the role of Parliament. My hon. Friend asked whether we are simply nodding donkeys. He certainly is not one, and neither is anybody who has spoken in this debate. Parliamentarians across the House can always make changes if they can apply enough pressure to the Government of the day. In my seven and a half years on the Back Benches, I certainly did not feel that I was a nodding donkey.

My hon. Friend wants impact assessments to be carried out prior to legislation even being tabled. He is absolutely right. That point feeds into something even more important, which is that we will ensure we introduce only legislation that is fit for purpose and will have a positive effect on our economy. With the better regulation framework we are introducing, our intention is that consideration of the impact assessment and the cost-benefit analysis will happen even before the legislation has been drafted. That is the principle.

Before a Department decides to legislate, it must first consider other routes that would achieve the same end. If it ultimately decides to legislate in a certain area, a key moment is the write-round, which is where a Minister or Secretary of State writes to other Departments to say that they want to legislate. At that point, the impact assessment should be made available to other Ministers. Hopefully, that will prevent unnecessary legislation resulting from other measures being brought forward that would have the same effect.

I think our recent reform to the better regulation framework meets the intent of my hon. Friend’s Bill. I do not want to put words in his mouth, but I am sure he agrees that the intent is to reduce business burdens. Reducing burdens on business means supply-side reform and more competition, and we know that more competition is the best regulator.

We are focusing on three things within the framework. The first is the existing stock of regulation on our statute book; the second is the flow of new regulation and the need to ensure that anything we introduce has the right purpose and the right effect; and the third, which has not really been discussed in today’s debate, is regulatory practice. What do our regulators actually do in practice when they are carrying out their regulatory duties?

On the existing stock of regulation, for the purposes of the Retained EU Law (Revocation and Reform) Act 2023, we have been hunting out bits of regulation that can be removed or amended now that we have the ability to amend what were previously EU requirements. However, the programme covers a wider area than retained EU law; we are looking for other areas in which we can streamline regulation. My right hon. Friend the Member for Gainsborough (Sir Edward Leigh) was right to say that, as a Conservative Government, we should be in favour of low tax and low regulation, and that is certainly our intention. My right hon. Friend referred extensively to his local RAF base, and we have had many discussions about that because we have had similar experiences over the last couple of years. He may be reassured to know that future impact assessments will look beyond purely economic impacts, and may include some of the measures to which he alluded.

We have already reformed or revoked more than 1,000 pieces of legislation, and 1,000 more reforms and revocations are under way. We have, for instance, either reformed or revoked 500 measures in the Financial Services and Markets Act 2023 and the Procurement Bill. We have also consulted on reforming retained EU employment law, such as the working time directive recording requirements and wine sector reforms, and consultations are currently taking place on the product safety review and the fire safety of domestic upholstered furniture. The latter two consultations will future-proof our approach to product regulation, alongside our proposal to extend recognition of the CE mark indefinitely.

A number of observations have been made about the work of parliamentarians and its effect on regulation. I congratulate my right hon. Friends the Members for Chipping Barnet (Theresa Villiers) and for Chingford and Woodford Green (Sir Iain Duncan Smith) on their work on the taskforce on innovation, growth and regulatory reform, which made 69 recommendations for the easing or simplification of regulations. We have already implemented 10 of those recommendations, and are in the process of implementing a further 49. They involve key issues such as grid connections and reform of our clinical trials process.

We have simplified or scrapped many other regulations. Our reform of the nutrient neutrality rules will potentially release 150,000 previously stalled homes into the marketplace. The reform of the GDPR requirements will save businesses about £1 billion, and the reform of the working time directive recording requirements will have similar benefits. There are also pension and Solvency II reforms and changes, the setting aside of the requirement for small and medium-sized enterprises to provide insurance cover and audited accounts when bidding for public sector contracts in advance of those contracts—that should make it much easier for SMEs to secure such contracts—and changes relating to gene editing, holiday requirements and listing rules for the London Stock Exchange. My hon. Friend the Member for Christchurch mentioned the increase in the number of burdens placed on businesses over the last few years. I cannot comment on the figure that he mentioned—I think it was £14 billion—but regulation does, of course, have its purpose at times. We cannot have clean rivers without regulation. However, I am happy to write to my hon. Friend. I thought he might also mention smart meters, which are included in those figures, because I have heard him mention them in the Chamber before. As we know, the roll-out of smart meters is important to reducing energy use. We have also reformed measures on climate-related reporting in large companies, the energy efficiency of buildings and electric vehicle charging, so that we can have charging stations all around the country. I declare my interest here: as an electric vehicle driver for the past six and a half years, I welcome that, because I know all about range anxiety. The telecoms measures relating to national security—that alone was £2.4 billion—resulted from concerns raised in the House the security threat from foreign actors.

To complement the work that we are doing on the existing stock of regulation, we are working on controlling the flow of new regulation. The better regulation framework, about which I will say more shortly, has been reformed to make it more effective at putting a downward pressure on that flow.

[Philip Davies]

Back in the dim and dark past—when David Cameron was Prime Minister, I think—the Government introduced a “one in, one out” rule for regulations, and then increased that to a “one in, two out” rule. Does that still apply to the Government?

[Kevin Hollinrake]

No, that does not currently apply to the Government. As I say, there are reasons why we regulate, and I have pointed out some of those reasons; I am very happy to write to my hon. Friend regarding some of the reasons we do need to regulate. That is not necessarily the right way to go about it: looking at costs and benefits across the piece is important. In his speech, which I listened to very carefully, he cast some doubts on our ability to properly analyse costs and benefits, so I think it is right that we look at this issue across the piece. Our policymaking should be more nuanced than that.

I have mentioned the landscape of regulators. The third important part of our smarter regulation agenda relates to ensuring we have a well-functioning landscape of independent regulators. These have a significant footprint on the economy, and it is essential that they work well for the United Kingdom. They should operate in an agile and outcome-driven fashion, helping to drive economic growth while protecting consumers and ensuring that markets work as well as they can.

We have launched a series of consultations aimed at improving the outcomes that independent regulation delivers, including a strategic steer for the Competition and Markets Authority and a strategy and policy statement for energy regulation. We have also published findings of an independent review into the Civil Aviation Authority as part of the Cabinet Office’s public bodies review programme. Most recently, we consulted on extending the existing growth duty to Ofgem, Ofcom and Ofwat.

We have launched a call for evidence on the regulatory landscape as a whole, seeking views from businesses, consumers and regulators on what works well and what could be improved on to deliver for the sectors they serve. That call for evidence also seeks views on any further steps we can take to reform the stock of regulation to remove unnecessary burdens, so I can assure my hon. Friend the Member for Shipley that this Government are completely committed to doing everything possible to keep the impacts on business to an absolute minimum. Those impact assessments play a key role when it comes to controlling the flow of new regulation. They set out the conclusions of evidence-based processes and procedures that assess the economic, social and environmental aspects of public policy for businesses and wider society.

My hon. Friend the Member for Christchurch mentioned some of the legislation that has not necessarily been accompanied by an impact assessment. He may want to ask questions of the different Ministers responsible for the policy areas concerned: net zero, HS2, and renters’ reform. For something as strategic as net zero, for example, it is hugely complex to identify both costs and benefits: there are some things that we simply do not know. While listening to my hon. Friend speak about those issues, a famous quote from the former Chinese Premier Zhou Enlai came to mind: in 1972, he was asked about the impact of the French revolution, and he said, “It’s too early to tell.” There are so many things that we just do not know, which I think was a point raised by my hon. Friend the Member for Shipley. As I used to say in our boardroom, “You can make anything look good on a spreadsheet”, so we have to cast a critical eye over any cost-benefit analysis.

The other thing I would say about more parliamentary scrutiny is that we hear from businesses all the time that they are crying out for us to get on and deliver certain key infrastructure projects, so I do not think it would be helpful to extend the time they take to deliver. One example is the East Anglia pylon project, which is 112 miles of electricity cable going through the east of England. I realise that that project is very controversial, but stopping these things from happening has a cost to business, too. There are different dynamics going on in this conversation.

Impact assessments have evolved into an important and valuable component of the UK’s better regulation system. They have added transparent accountability to the work of supporting policy development. As I have said, independent scrutiny by the Regulatory Policy Committee should offer some reassurance to Ministers, parliamentarians and other stakeholders that the impacts have been considered rigorously. The UK’s approach is already highly regarded internationally, and we continue to score highly in impact assessments and post-implementation reviews compared with the other 38 OECD members. We should be justifiably proud of our world-leading reputation in this area.

The reforms to the better regulation framework deliver on the intent set out in May in the “Smarter regulation to grow the economy” document, and will put downward pressure on the flow of new regulation. The reforms require policymakers across Government to think even more carefully about alternative approaches, before concluding that regulation is the best answer. They will also encourage impact assessments, supporting proposals to focus on a wider range of impacts than was the case under the old system that had a narrow focus on impacts on business. The reforms encourage earlier consideration of how to evaluate whether regulations have achieved what was intended, so they can be revised or removed where they are not working as intended.

To support that, our new approach brings independent scrutiny by the independent advisory body, the RPC, to earlier in the policy cycle. That means that the RPC’s opinion can better inform Ministers’ decisions at an earlier stage on whether proceeding with regulation is the right approach, and whether the impacts are proportionate. All that should further improve the quality and value of the impact assessments that will reach Parliament, and help to ensure that the Government are regulating only where necessary, and designing regulation that is both proportionate and future-proof. We want this to drive the best regulatory environment, and ensure that UK businesses can grow and consumers stay safe.

My right hon. Friend the Member for Tatton (Esther McVey) raised the issue of covid and the Public Health Act, and she is right to say that we must learn from our experiences during that time. There is always a price for acting and a price for not acting, and it is right that we look at policy decisions that were taken to ensure that we make better decisions in future—not that we ever want to suffer from the same experiences again.

My hon. Friend the Member for Shipley spoke about the Government frittering money away, and suggested that both parties do that. I am not saying that money is not wasted sometimes. I come from Yorkshire and that is not something we do on an everyday basis—we are keen to avoid it. However, in my eight and a half years in Parliament, and even though we are guilty of it at times, it has always occurred to me that those on the Opposition Benches have an awful lot of money to spend. Time after time, they have voted for tax cuts, or against tax increases, while at the same time calling for increased spending. It simply does not add up.

To conclude, although the Government are not minded to support the Bill, we recognise the vital role that regulatory impact assessments play both in ensuring that Government consider the need for, and likely impact of, new regulations to support legislative change, and in informing decision making and parliamentary scrutiny. The Government do not think the Bill is necessary because there are already proportionate requirements around impact assessments. The framework has always evolved to target regulatory impact assessments where there is the greatest benefit, and we believe our recent reforms move further in that direction.

In the spirit of smarter regulation, which I trust I have shown I very much care about, we should not create new legislation about impact assessment requirements unless it is essential to do so. Our recent changes to the better regulation framework seek to reinforce the processes used in Government, while removing regulation rather than adding to it. We believe that is the correct approach. I again thank my hon. Friend the Member for Christchurch for his contributions to this debate, as well as everyone who has worked hard to raise awareness of the vital role that regulatory impact assessments play when legislative or policy changes are made.