Better Regulation

Lord Stoneham of Droxford Excerpts

Thursday 7th December 2017 Lords Chamber

[Lord Stoneham of Droxford (LD)]

I, too, thank the noble Baroness, Lady Neville-Rolfe, for leading this debate. She has huge experience in this field, starting as a government official, then working at Tesco, particularly in retailing and consumer protection law. I suspect that she spent a lot of her life in Europe dealing with regulatory matters, and she has now gained the skill of leading legislation in this House.

Those of us who have spent a lifetime in industry should and do understand the importance of regulation to ensure that fair and free competition exists and that staff and consumers are protected. I have worked in three industries—the coal industry, construction and newspapers. The one Act in my generation that stands out is the Health and Safety at Work etc. Act. I worked for the Coal Board in the 1970s and had the task of drafting the letters for the chairman of the Coal Board to send to the families of miners who were killed in accidents. I reckon that they averaged about 40 a year. Looking back, it was an unacceptable figure, but it shows that we required in this country a substantial movement in health and safety practice. In the coal industry, we probably used to assume that accidents were inevitable, but in my working career I have never assumed that any accident should happen.

Construction has already been mentioned in this debate. Compared with 40 years ago, construction has undergone a transformation. Grenfell is obviously a failure, and we will find out much more from the investigation currently taking place. However, it is not a question of less regulation but of getting better regulation to deal with some of the problems that will clearly be unearthed when the inquiry is conducted and completed. Every incident that we have in health and safety has to be tested and examined so that we can develop regulation and improve what we are doing. Just as important as regulation is the culture, which is one of the things that the Health and Safety at Work etc. Act changed. I particularly admire the culture of the aviation sector with its drive to examine every incident and encourage a culture of no scope for improvement in its safety audits—because it knows the consequences of having a margin of error.

My principal industry of newspapers was not unsafe. But I particularly appreciated the area of competition regulation in a sector that was consolidating through mergers at the time. There were considerable opportunities for price fixing, collusion and muzzling competitive forces. They were endemic—but for the fact that there were regulations and competitive authorities to keep an eye on what was being done.

As someone who has worked in industry through most of my career, I certainly believe in keeping regulation simple, up-to-date and easily understood. But it needs to be said, as was stated in the briefing material, that the OECD regards this country as having relatively low levels of regulation compared with other member states. One of the principal sources of comparative advantage for this nation in attracting foreign investment is the system of fairly low-level regulation compared with other countries. That is what has attracted foreign investment into this country, from companies needing to sell their goods in the European market.

It is particularly important for small businesses that we keep regulation simple and effective, because they have the most difficulty in keeping up with regulation. We need their powers of innovation, growth and transformation to contribute to our economy. I certainly am not one of those who propose—indeed, we should strongly oppose—any concept that this country should develop down a Singapore route, with less regulation and unrestricted free enterprise, as a way of developing comparative advantage once and if we come out of the EU.

The coalition made some progress in trying to simplify our regulation policies. There are times when you need slightly more PR-type initiatives such as “one in, two out” or “one in, three out”, because that is a quite effective way of bringing about change in organisations that are not facing up to the need for it. But actually you need more effective long-term measures rather than simply changing the name of the campaign from “Cutting Red Tape” to the “Red Tape Challenge”. Having business impact targets and trying to improve government departments from within are important initiatives.

However, there are a number of problems, one of which is that in order to set realistic targets, you need to include in them the things that matter. I know that the Government have resisted this for a long time, but tax administration being outside the initial impact assessments is ludicrous because most small businesses certainly see the burdens of tax administration as being probably the largest impact that they have to face. They are not going to take much notice of campaigns that try to sideline the things that add most to their costs. Although I support them, we also have to include the national living wage and the national minimum wage so as to indicate where burdens are being put on business in order to get a true impact analysis of what regulation is doing—even when there are downsides to measures that most of us strongly support.

Finally, I want to say a little about the global dimension. The future for this country is very much about international trade and data. This week, I took myself off to look at the impact studies that the Government have produced. It was an amazing experience. You must make an appointment and be met at the Treasury. You have to give up your phone and sign your life away and promise that you will behave yourself, and then you get to see these studies. There is absolutely nothing new in those studies apart from emphasising the huge complexity of what the Government are leading us into with Brexit.

One phrase did catch my imagination. I started at A and looked at agriculture. It stated: “A key consideration is that the cross-border trade between Northern Ireland and Ireland is particularly complex and sensitive. The food and drink industry between the UK and Ireland is fully integrated and treated as a single trading unit by business”. Some 10 European systems apply across the agricultural sector, along with 15 relevant agencies. Good regulation will be vital to the flow of goods in the future. Regulation is particularly essential in this industry because when there is a problem, it helps to have good regulation so that businesses can recover quickly and continue to have free movement.

The Government are facing a huge task of converting all the European regulations which apparently are now going to come under our own auspices; it will be a huge enterprise. When moving house, most people clear out the loft first—but we will have a system where the withdrawal Bill will come in, then we will amend it so that we have a transition Bill, and presumably then we will then have to work through all the regulations to ensure that we are in control. What we also have to decide is which European regulatory agencies will apply and which we will participate in. We are half way to Brexit, with 18 months to go. Do the Government have a plan as to which of these agencies they are going to participate in and which they will duplicate? In my experience, it can take two or three years to set up a new department or regulatory agency, and I think that the country deserves to know.

The country could do with increasing scrutiny of regulation, but in a debate with the noble Baroness, Lady Neville-Rolfe, when she was in the Government and defending against various amendments that we had proposed, I said that she was Stonewall Jackson in her defence of the Government. However, I warned her at the time that Stonewall Jackson was killed by his own troops. For all her aspirations on regulation, the difficulty is that, with the huge mountain of work that the Brexit operation will involve, simplifying regulation will be put very much on the back burner.