Deregulation

Mark Prisk Excerpts

Tuesday 10th January 2012 Westminster Hall

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I certainly need a haircut. I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing this debate and on her excellent contribution. In particular, I accept the argument, “Good progress, could do better,” not because I am unambitious, but because it is important to be realistic. Businesses have heard a lot of rhetoric from politicians of all parties on this issue, but the reality on the ground has often been of a lesser degree, so wanting to ensure a consistent approach has been crucial to our stance.

This issue has vexed Governments for many years—throughout my lifetime, in fact. The previous Administration had a strong rhetoric on the issue, but in the end were delivering the equivalent of six new regulations every working day, which is a daunting inheritance. As my hon. Friend rightly pointed out, the problem lies partly in that natural tension between the wider social and political agenda of any Government and how we deregulate. It is true that when a tragedy occurs—my hon. Friend alluded to this when she talked about something needing to be done—the public pressure on parliamentarians and Government can often be overwhelming, even when, looked at objectively, evidence for new laws is thin. This debate is constantly held in Government.

We as a Government have taken a different approach. Rather than find 200 or 300 regulations that we should get rid of and leave it at that, we are trying to be systematic. Our approach recognises the tension between the wider goals of any Government and the purpose of deregulation and seeks to change the very culture of Whitehall, so that regulation becomes the last resort and not the first option. To do that, we first sought to establish a system to cap the cost of new domestic regulation—the one-in, one-out system, which I will discuss in a moment. We then matched it with a systematic review of all existing regulations, through the red tape challenge, which I will update Members on in a moment.

Those policies are supplemented by an intention to sunset new regulations, to establish a regulatory moratorium on micro-enterprises—that addresses the point made by my hon. Friend the Member for Witham (Priti Patel)—and by our recently announced review of regulators and local enforcement. I will come on to that as well, because very often it is not the legislation but how it is enforced that drives the small business crazy. Alongside that domestic agenda, we have sought to reduce the burden of regulation coming from Brussels, first by ending the routine habit of gold-plating everything that comes from there and, secondly, by actively seeking an exemption from EU legislation for small businesses, and I would like to update Members on that point.

I shall look at each element, to bring the core points together and to answer some of the points raised by my hon. Friend the Member for Suffolk Coastal. Turning to new regulations, last January we introduced the one-in, one-out system to cap their cost, so Ministers have to balance the cost of new regulations by making a commensurate reduction in the existing regulatory burden. We think, as businesses have to, about the picture in the round, not just about the single measure that we have been charged with getting through Westminster. That is important, because when running a business it is not the single measure that breaks one’s back but the cumulative burden of regulations.

When we began the process in January of last year, 157 regulations were in preparation, 119 of which would have imposed a cost on business, and many more have come through the system in the past 12 months. The one-in, one-out system has had the effect of rejecting many of those measures and forcing Whitehall to change its habits, and by the end of last year, we had got to the point of only 89 new measures being agreed, only 19 of which would impose any cost on business.

In the first year—I say this with caution—one-in, one-out has started to have an impact on the flow of new regulations, although it is far from perfect. I want to ensure that the message from the Better Regulation Executive and me, as the Minister with responsibility, is clear. We have made an encouraging start, but, as my hon. Friend the Member for Suffolk Coastal rightly said, we could do better. We need to strengthen and enhance that.

There have been substantial changes in some areas. One-in, one-out has helped to get Departments to think about the picture in the round. For example, the Department for Business, Innovation and Skills has launched its own employment law review. There has been a package of changes on employment tribunals, on commissioning an independent review of managing sickness absence, which is a critical issue for business, and on launching an employers’ charter to rebalance the agenda.

We have agreed to create a universally portable Criminal Records Bureau check that employers can view online instantly, thus reducing the duplication in the process and making it easier to access. Naturally, it will maintain the minimum check that we want to ensure that children are safe, but it will reduce the ridiculous paperwork embroiled in the process.

Similarly, on health and safety, we intend to implement all Professor Löfstedt’s recommendations, which include exempting up to 1 million self-employed people from many health and safety rules designed for multi-nationals. My hon. Friend the Member for South West Norfolk (Elizabeth Truss) made an excellent point about rules being set, possibly conveniently for large businesses, that are disproportionate for the self-employed and for smaller firms.

The red tape challenge and the question of Europe are related. The red tape challenge matches the wish of the one-in, one-out policy to examine systematically what is already on the statute book. It is not easy to be exact, but we think that the statute book incorporates approximately 21,000 measures, 11,000 or so of which have a direct bearing on business. It is a mammoth task, as Members will appreciate. We intend systematically to review and cull unnecessary, burdensome or ineffective regulations.

We have grouped regulations into themes to make it easier to see the picture in the round. The website has featured 13 themes, and the Star Chamber, which goes through regulations item by item with civil servants from all the relevant Departments, has examined five themes completely. The environmental themes, to which my hon. Friend the Member for Suffolk Coastal referred, are before us at the moment. The points that she made have been mirrored in many of our discussions. I welcome her contribution. If she wants to add to it after the debate, I shall be happy to ensure that her comments are incorporated into the process.

Of the 1,200 measures that we have considered so far, more than half will be either scrapped or substantially improved. On 15 December last year, 84 defunct regulations were removed from the statute book by the House. The process in law has begun in Westminster, not just in Whitehall. To reverse the situation, we must ensure that the sausage machine is put into reverse and that we regularly remove measures from the statute book. Key measures include overhauling employment tribunals, replacing 12 sets of consumer rules and laws with a single consumer Bill of Rights, implementing a wholesale deregulation of entertainment licensing and simplifying poisons licensing. Some of the most serious poisons are on the same list as fly spray. My hon. Friend rightly described the rather crude way in which significant and minor risks are lumped together, sometimes for all the wrong historical reasons. That must be addressed, and poisons are a classic example.

We are cutting the number of different sets of food labelling regulations from a rather dazzling 31 to 17, and maybe we need to do a little more. We are removing needless energy rules that currently tie up the process of short-term holiday letting, which is important in East Anglia. We are also scrapping 80 of the 107 regulations considered in the hospitality, food and drinks sector. Those are important changes.

We have incorporated the habitat and wildlife directive into our consideration of environmental law under the red tape challenge. How could we not? However, the red tape challenge cannot rewrite set European legislation. What we can do is ask ourselves, “Are we implementing this in a minimal way and a way that is reasonable for those whom we seek to regulate? Is the information that we seek from those organisations in a form and of a scale that it is reasonable to expect them to fulfil?” It is easy for a large department of 2,000 people not to realise that a three-person business finds it a heck of a challenge to fill in endless survey forms and still earn a living.

On Europe, we recognise that we need to deal with the issue fundamentally. That is why we started last year with a new set of guiding principles. The first was to end the routine gold-plating of EU laws. My hon. Friend the Member for South West Norfolk is absolutely right that large, well-established lobbying voices can argue that it would be really good for Britain to have enhanced rules—just slightly more than the minimum standard, as they might describe it, in Europe. “It would be good, Minister,” they say, “to make things crystal clear by setting out all 74 possible circumstances in legislation. That would be really helpful. Clarity would be brought.” That is the natural argument presented.

To prevent that, we have put in place a principle saying that the default position is that we will simply copy what is in the agreed directive into UK law unless that would clearly affect UK interests adversely. That is a fundamental shift from the default position. It does not mean that no measure will ever be gold-plated, but it does mean that the Minister in question will have to bring it before their Cabinet colleagues to justify why. That is an important deterrent.

We also need to go back further in the policy-making process in Europe. That is why, last March, the Prime Minister wrote to President Barroso and Herman Van Rompuy, the President of the European Council, calling for new burdens on business to be offset by savings elsewhere. Members can see that the principle of the cumulative burden has been introduced. Since then, we have secured a commitment from the European Commission to reverse the burden of proof when including micro-businesses in the scope of EU legislation. The EU must justify why a micro-business should be included, rather than assuming that it should. That is an important first principle. To illustrate, we have agreed with EU Ministers to exempt micro-businesses from certain EU accounting rules. We think that that will save UK small businesses approximately £150 million to £300 million in annual costs. That is an important shift, and it sets a precedent. Once it is seen that that can be done in that field, there is no reason why it cannot be explored elsewhere.

It is not just the Commission or the Council with which we must concern ourselves; often, it is also the European Parliament, where there are also strong voices similarly in favour of saying “Something must be done.” That is why, working with Members of the European Parliament across the coalition, we have secured the European Parliament’s agreement that it will conduct independent impact assessments on its substantive amendments. It has also set up a specific unit to consider that work. In other words, when a measure is introduced, the European Parliament can now say, “Hang on a moment. What will that cost?” The cost can be judged independently. That is an important start, although we need to go a lot further. Now that we have those matrices, the next step is to ensure that they are implemented.

In conclusion, rather than just finding 50 popular measures to get rid of and leaving it at that, we have tried to address the root problem. During the next week or so, I will set out for the House the details of what we did in 2011, so that people can see measure for measure, item for item and cost for cost exactly what has gone, what is going and what will stay. Over the past 12 months, we have sought to turn the oil tanker around, change direction and ensure that we not only cap the cost of new regulation and reduce the burden of existing regulations, but tackle the burden of EU regulations and how the UK implements them. Together, those things will make a good start, but as my hon. Friend the Member for Suffolk Coastal rightly said, we recognise that there is much more to be done.

Question put and agreed to.