Mary Creagh
Main Page: Mary Creagh (Labour - Coventry East)Enterprise Bill [ Lords ] (Third sitting)
Mary Creagh Excerpts(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Bill Esterson
The Regulatory Policy Committee seems to be pointing at something slightly different. For some reason, the 10 increases in the overall cost of regulation that the Committee found were not reflected in Government statements on regulatory savings. Why that happened is an interesting question.
It also emerged that many Government regulations—just under half—were considered to be out of scope by the Government. Therefore, when the Minister no doubt gives the figure of £10 billion in a few minutes’ time, one must wonder what the true figure might be. The regulations increased the costs to business, but they are important for Government and I agree that they should be important. However, they were not reflected in the Government’s in-scope or out-of-scope scenarios. Many regulations come from the European Union, the mention of which will cause Government Members to start to—
Bill Esterson
I could not possibly repeat what my hon. Friend just said, but their ears will prick up and they will become interested. One or two of them will no doubt want to jump up and say something about the European Union.
The Government have an interest—[Interruption.] Government Members are being very well behaved today, which is remarkable. The Government have an interest in ensuring that they are seen to be reducing the regulatory burden, but when that is not the case, the Government cannot simply stop reporting it—for just under half the regulations—or shift the goalposts to make the situation look better than it is.
The Lords had a full debate on the matter and when those points were made there really was no response to say that that was not what had happened. When the Government report, they should be up front with businesses about who is responsible for the regulations. The reality is that business is interested in the overall impact of regulations, not where they come from. Ultimately, the issue is about the overall cost, not the cost of some regulations and not others, that really affects the business environment and businesses’ ability to operate as effectively as possible.
Amendment 61 would require the Government’s business impact target to cover the impact of EU regulations or regulatory provisions made by statutory instruments subject to the affirmative procedure. The Regulatory Policy Committee reported that
“nearly half of the approximately 1,000 laws enacted during the previous parliament were outside the scope of the Government’s… One-in, Two-out rules. Nearly 70% of these were of EU origin.”
If regulations have an impact on small businesses, it is important that they are considered within the scope of the business impact target. Otherwise, businesses will not be able to trust what it is being told, which is the point that I was making a moment ago.
It seems a false distinction to rule such regulations out. The origin of the regulations is different and the route when trying to make them work better for the business community or seeking to remove them would be different, but does the perspective of small businesses differ when a regulation comes from the EU? I do not think so. As Lord Stevenson said in Grand Committee,
“I do not honestly think that businessmen and women would care whether the regulations they have to work to come from this place or across the channel. However, they have an impact on their work and therefore I think that we should fess up and try to get a measure into play in the way that we think about all regulation that impacts on business.”—[Official Report, House of Lords, 28 October 2015; Vol. 765, c. GC229.]
I have heard the argument before that the point of the assessment is to focus on what we can control and change. That is important, but it is not a reason not to include such regulations because it gives a false impression of the cost of regulation and entirely misses the point. After all, the same EU regulations are applied differently in different EU member states. Perhaps there is an opportunity to learn from how other EU states apply regulations, if they are able to do so in a way that has a lower cost to business and a smaller impact on business than we currently find.
Mary Creagh
I beg to move amendment 78, in clause 15, page 13, line 8, after “in”, insert
“section 21 (duty to have regard to the regulatory principles) and”
This amendment would make it clear that the reporting requirements include reporting on the duty under section 21 of the Legislative and Regulatory Reform Act 2006 to have regard to a defined set of regulatory principles.
The Chair
With this it will be convenient to discuss the following:
Amendment 79, in clause 15, page 13, line 10, after “which”, insert “section 21 and”
See explanatory statement to amendment 78.
Amendment 80, in clause 15, page 13, line 14, after “businesses”, insert
“and such other persons as the regulator considers appropriate”
In conjunction with amendment 78, this amendment would require each relevant regulator to report not only on the views of businesses (and ‘other regulated persons’), but also on the views of such other persons as the relevant regulator considers appropriate.
Amendment 81, in clause 15, page 13, line 16, at end insert—
“(iii) of the effect of the duties under sections 21 and 22 on the proper exercise of its relevant functions;”
This amendment would require each relevant regulator to report on the effect of the performance of the duties on the proper exercise of the regulatory functions to which they apply.
Amendment 82, in clause 15, page 13, line 18, after “in”, insert “section 21 and”
See explanatory statement to amendment 78.
Amendment 85, in clause 15, page 13, line 41, after “in”, insert “section 21 and”
See explanatory statement to amendment 78.
Amendment 86, in clause 15, page 14, line 28, at end insert—
““businesses” includes businesses and other regulated persons;”
Amendment 87, in clause 15, page 14, line 30, after “by”, insert
“section 21 to have regard to the principles in subsection (2) of that section and”
See explanatory statement to amendment 78.
Amendment 83, in clause 15, page 13, line 31, at end insert—
“(d) the persons from whom information should be obtained for the purposes of a performance report.
This amendment would make provision for guidance to be issued on who should be asked for information for the purposes of preparing a performance report.
Amendment 84, in clause 15, page 13, line 31, at end insert—
“(6A) Before making guidance under subsection (5), the Minister must consult—
(a) persons carrying on businesses; and
(b) such other persons as the Minister considers appropriate.”
This amendment would require the relevant Minister of the Crown to consult businesses and such other persons as the Minister considers appropriate before making guidance relating to the performance reports.
Amendment 88, in clause 16, page 15, line 13, after “businesses”, insert
“and such other persons as the regulator considers appropriate”
See explanatory statement to amendment 80.
Amendment 89, in clause 16, page 15, line 15, at end insert—
“(iii) of the effect of the duties under section 21 and 22 on the proper exercise of its relevant functions;”
See explanatory statement under amendment 81.
Amendment 90, in clause 16, page 15, line 30, at end insert—
“(d) the persons from whom information should be obtained for the purposes of a performance report.”
See explanatory statement to amendment 83.
Amendment 91, in clause 16, page 15, line 30, at end insert—
“(5A) Before making Guidance under subsection (4), the Minister must consult—
(a) persons carrying on businesses; and
(b) such other persons as the Minister considers appropriate.”
See explanatory statement to amendment 84.
Amendment 92, in clause 16, page 15, line 42, after “businesses”, insert
“and such other persons as the Minister considers appropriate”
See explanatory statement to amendment 80.
Amendment 93, in clause 16, page 16, line 9, at end insert—
“(11A) In this section—
“businesses” includes businesses and other regulated persons.”
Mary Creagh
I apologise to the Committee, but I cannot feel my face anymore. It is quite cold in here. I appeal to the Chair that if the coldness carries on after lunch, perhaps we can all have a round of hot coffees from the Terrace cafeteria. I beg to move!
I thank the right hon. Member for Broxtowe for her congratulations, and I thank hon. and right hon. Members from all parts of the House. Whether or not they supported me for Chair, they have got me. I want to begin by talking about the Environmental Audit Committee and its environmental scorecard on the Government. In 2014, the Committee asserted that environmental regulations represent
“the essential underpinning of environmental protection.”
They also, of course, represent the essential underpinning of consumer protection and of health and safety for workers and the general public. Statutory regulators play an important role in the effective implementation and enforcement of environmental regulations.
We have had a drive to reduce the burden of regulation on business. We have seen that with the changes made by the Small Business, Enterprise, and Employment Act 2015, section 108 of the Deregulation Act 2015 and section 22 of the Legislative and Regulatory Reform Act 2006. My party is pro-business; we see it as essential to our society. We want to see industry growing. We are pro-growth. We are also pro-good regulation. In my time as shadow Environment Secretary, I lost count of the number of times when businesses would come in and complain about other businesses that were able to undercut them on price because of their ability to ignore the regulations.
People want to do the right thing in this country. We are lucky enough to have businesses that are so law- abiding and wish to do well on the basis of good business, good growth and green growth. One thing in the clauses is the Government’s failure perhaps to understand the role of regulation in promoting green growth, and I will give some examples of that towards the end of my remarks.
Good regulation protects the citizen from the powerful, whether those interests are of the commercial sector, the state or other large bodies. Good regulation protects patients, the old, those with disabilities, our built environment, our natural environment and many other areas of our lives. I tabled the amendments, which are probing, because I want the Minister to say what protections will be outlined if the measures go through. I have particular concerns about the proposal in clause 17 on Ofwat and the Office of the Rail Regulator. The duty of a regulator is to protect the public interest and there could be some very difficult decisions for those regulators.
I do not believe that there is evidence to suggest that the UK is over-regulated or that there are significant unnecessary costs associated with existing regulations, despite what the Minister said about so-called gold-plating. The costs associated with environmental regulations account for less than 2% of business sector turnover on average. If we focus solely on the costs of regulation to business, we ignore the wider socioeconomic and environmental benefits that regulations are intended to provide. Evidence suggests that the benefits of environmental regulations—only some of which can be quantified—cover the costs three times over.
I would like to give some examples of the costs and benefits. The Minister said earlier that they could be obscure and that we are not sure what they are, but regulators operate in the framework of UK law and European Union law. All the transposition of EU directives is subject to Whitehall cost benefit decisions. I have asked a variety of parliamentary questions on certain EU frameworks and I want to give the Committee some examples.
Back in 1995, it is generally accepted that the UK was seen as the “dirty man of Europe”—a slightly sexist phrase, but one that I am happy to use for the purposes of this discussion. Some 83% of household waste went to landfill and just 7% was recycled or composted. Younger members of the Committee may find it hard to remember those bad old dirty days. Basically, everything went into a bin in the kitchen. By 2014, thanks to a series of EU directives, which were transposed without gold-plating by the previous Labour Government in a very flexible way that allowed local authorities to make the right decisions about what was right in their communities and where they wanted to invest, the UK’s recycling rate had reached 45%. During that time, as our understanding of the finite nature of resources developed—whether they were wood, plastic or paper—and businesses understood that in order to have a sustainable and secure supply chain of raw materials, we could not keep on relying on raw products; we had to develop and grow our recycling industry and base. Hundreds, if not thousands, of new businesses were created in the recycling industry.
That is an example of good regulation creating green growth, green businesses and green jobs. The UK currently recycles 90% of construction materials, well ahead of other countries. We are seen as world leaders, for example, in civil engineering with the Crossrail and Olympics projects, both landmark Labour Government achievements, taking out the spoil and taking it away—by barge in the case of the Olympics, at a nice steady 3 miles an hour —and using it to create new nature reserves in Essex.
I also want to talk about the EU’s water framework directives. Again, younger members of the Committee may find it hard to believe that swimming in Blackpool as a child some 30 or 35 years ago, I emerged covered in oil. When people talk about the good old days, they forget just how good they were. Some 99% of British beaches now comply with EU minimum standards on cleanliness. What does that mean? We cannot really quantify the benefits to our seaside towns, but obviously cleaner beaches mean more tourists and stronger local economies.
In 2014, the Environment Agency, in response to a parliamentary question that I submitted, estimated that the net benefit in England and Wales of implementing the EU water framework directive will be £9 billion by 2027—that is £9 billion of benefit to the UK economy for transposition of that directive.
On air quality, we can similarly see that the UK’s nitrogen oxide—NOx—emissions have fallen by more than two-thirds, reducing the risk of respiratory disease. Over the same period, sulphur dioxide emissions in the UK dropped by 95%. Sulphur dioxide is what gives us acid rain, and when it goes into rivers and particularly into copper piping, it leaches away the copper from the pipes. This was particularly a Scandinavian problem. Perhaps they had more copper pipes or more blond people, but when blond people washed their hair, it turned green because of the acid rain. Again, that is another example of the good old days when industry was able to pollute the atmosphere, and there were unintended costs and consequences not only in terms of environmental degradation, but for blond people suffering green hair. That is probably not something we can quantify, but it must have been quite embarrassing for a child at school. However, those consequences have now been taken out.
We have another five minutes, so I will carry on. My examples illustrate some of the many benefits that regulation brings in terms of green growth and environmental benefits. Clauses 15 and 16 introduce reporting requirements on regulators in respect of their duties under the Legislative and Regulatory Reform Act 2006 to have regard to the code of practice and to the desirability of promoting economic growth. So regulators will have to produce an annual performance report setting out the effect that the duties have had, making explicit reference to the views of any affected businesses. My amendments would require widening that out from businesses so that the whole voice of civil society is heard in that report.
The duties risk unintended consequences. They have an overriding effect on the exercise of regulatory functions, and that could incentivise regulators to give greater emphasis to narrowly defined economic considerations and potentially compromise the protection of the environment —and the citizen, the disabled, the worker and the consumer. It could also compromise the responsibility of regulators to act always in the public interest. In both cases, the exercise of regulatory functions in accordance with their original purpose is not emphasised as a key consideration for regulators. I think that that is problematic.
In their response to the consultation on the growth duty, the Government stated that the duty would not
“compromise the independence of regulators or undermine the importance of the essential protections that they are there to deliver”.
However, the Joint Committee on the draft Deregulation Bill concluded that additional safeguards were required to ensure that the duty would not
“take precedence over regulation and that the overriding and principal objective of regulators remains the protection of the public interest.”
A proposal to amend the relevant clauses to make it clear that the duty would apply only in so far as it was consistent with the proper exercise of the regulatory functions was narrowly defeated in the House of Lords in February 2015. As currently drafted, the proposed reporting requirements are disproportionately focused on the views of businesses as to the effect of the performance of the duties. This is in spite of the risk that they may have an overriding effect on the regulatory functions to which they apply, with unintended consequences for the protection of the environment and the wider public interest.
Secondly, the stated aim of the new reporting requirements is
“to ensure regulators are more transparent about the action they have taken”,
and to
“allow Government, business and other interested stakeholders to hold regulators to account on how they have performed”
in respect of the duties. As I have said, I have concerns about this.
The amendments that I have tabled would make four changes. First, they would require each relevant regulator to report on the effect of performance of the duty under section 21 of the Legislative and Regulatory Reform Act 2006, as well as on the performance of the duties under section 22 of the LRRA and section 108 of the Deregulation Act 2015.
Secondly, in respect of the duties, the amendments would require each relevant regulator to report not only on the views of businesses and other regulated persons, but on the views of such other persons as the relevant regulator considers appropriate. Thirdly, they would require each relevant regulator to report on the effect of the performance of the duties and on the proper exercise of the regulatory functions to which they apply. Finally, they would require the relevant Minister of the Crown to consult businesses and such other persons as the Minister considers appropriate before making guidance relating to the performance reports, and such reports to be made public.
Ordered, That the debate be now adjourned.—(Stephen Barclay.)