Deregulation Bill

Richard Fuller Excerpts

Monday 3rd February 2014 Commons Chamber

[David Rutley (Macclesfield) (Con)]

I rise to give my full support to the Bill, which represents another important clear-out of unnecessary barriers to economic growth and will help to clear a path to the creation of more jobs. It also tackles the worrying “something must be done” culture of believing in legislation as the cure to all problems. Too often, legislation and heavy-handed regulation makes things worse, not better.

We need more first-time entrepreneurs to step forward without being put off by the fog of regulation, and we need more such people to take another step by becoming first-time employers. I therefore welcome provisions in the Bill to simplify apprenticeships, just as I welcomed measures in the Finance Act 2013 to reduce the burden of employer’s national insurance contributions— the jobs tax—which the Labour party has sought to increase.

We need not only first-time entrepreneurs and first-time employers, but first-time exporters. We must continue to help more first-time home owners within our property-holding democracy, so I welcome clause 21, which will reduce barriers to the right to buy—[Interruption.] The receipts will be used to build more social housing, as my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) has indicated from a sedentary position.

By pulling down barriers to action, we are sending the clear message that Britain is open to people giving it a try, realising dreams and achieving ambitions, regardless of whether they are the first in their family ever to do so. We are saying that there is hope and opportunity. As the Prime Minister said to the Federation of Small Businesses at its conference last week, there are areas where the Government need to

“get out of the way of small business success.”

That means introducing a programme of ongoing tax reductions, continuing to drive down the barriers of regulation and letting businesses steer their own course to success. The new employment allowance is a rebate of £2,000 on the national insurance contributions of every business in the country.

[Richard Fuller (Bedford) (Con)]

We cut Labour’s jobs tax.

[David Rutley]

Absolutely.

The duty to pay employer’s national insurance contributions for people under 21 will be abolished completely. Last year’s autumn statement included a cap on the increase in business rates and a rolling programme of small business rate relief that will enable a £1,000 reduction in business rates for shops and retail premises, which will help to safeguard our high streets.

The Bill is an integral part of the Government’s long-term approach on deregulation. As the Minister said, the red tape challenge has highlighted just how much regulation there is and demonstrated the Government’s willingness—their desire even—to drain the swamp of existing regulation. The Minister kindly referred to that as a lake, but I think that it is more of a swamp.

--- Later in debate ---

[Caroline Lucas]

I am not a spokesperson for the Labour party, but if the hon. Gentleman wants to ask that question of those on the Labour Front Bench, he is very welcome to do so. What I am talking about is my knowledge of small businesses, with which I spend a lot of time in my constituency. What they would love to see is a reduction in VAT or an extension of the threshold, so that more small businesses are caught by the business rate relief. There are all kinds of things that they would like to see, but they are not necessarily telling me about a huge burden of regulation of the kind that the Government think they are trying to solve.

An example of the positive role of regulation is the 2016 zero-carbon target. This set a destination in advance and precipitated a huge amount of innovation from businesses figuring out how to get there—new jobs, new industries and new export markets for UK businesses. Customers are increasingly interested in energy efficiency, and a new home will probably save them £800 on their annual energy bills. Builders have responded to a clear stepwise trajectory towards zero-carbon homes, with uplifts in regulations in 2006 and 2010, and again this year, en route to 2016, from when all new homes are meant to be zero-carbon. The costs of building low-carbon, efficient homes have tumbled—by half in the last two years alone, according to forthcoming research. That example highlights the fact that Government regulation, not deregulation, can be incredibly successful in driving innovation, keeping energy bills down, creating jobs and cutting carbon emissions.

Environmental regulation to manage building in flood-prone areas will protect people from the nightmares that we have witnessed on our TV screens, if not in our own living rooms, over recent weeks. There are plenty of examples of disastrous deregulation, too. The US car industry lobbied and funded both Democrats and Republicans to reduce regulation. The result was that it drove itself to bankruptcy, because it was out-competed by overseas manufacturers that developed more efficient cars to meet tougher regulations elsewhere.

The Government seem to be ignoring business representatives speaking out in favour of strong regulation. I have mentioned the Aldersgate Group a couple of times. In 2011, it warned that the drive to cut regulations on business could threaten the economic recovery. In a report launched here in the House of Commons, it stated that Government initiatives such as the red tape challenge that threaten “to rip up” vital green legislation would lock in polluting industrial processes for decades to come, jeopardise future competitiveness, and damage the UK’s attractiveness to green investors. It questioned whether measures such as one in, one out rule made sense, and would address pressing environmental challenges such as climate change. That is just one example of a market failure that requires more, not less, regulation to safeguard the environment and drive development in new industries.

The Aldersgate Group also highlighted the negative impact of putting sensible environmental regulations at risk with a consequent loss of business confidence. Peter Young, the group’s chairman, said:

“It is a myth that all businesses want less regulation. Effective green laws create a level playing field which drives efficiency, early action and the innovation in UK companies that will be the engine for future growth and jobs.

A crude deregulation drive risks damaging competitiveness and severely threatens the Prime Minister’s commitment to a green industrial revolution. The regulatory framework should encourage a rapid shift to a sustainable economy rather than being held back by vested interests or the lowest common denominator.

The Government’s ‘war on red tape' must not become a crusade that threatens regulatory outcomes such as protecting the environment. Even the threat of deregulation on the Climate Change Act and renewable energy support is massively eroding investment and making growth more difficult.”

There you have it, Madam Deputy Speaker. That is not just the Green party speaking; some of the captains of some of the biggest industries in the country are saying, very clearly, that the idea that all businesses hate all regulation is a myth and a travesty.

[Richard Fuller]

What does the hon. Lady think is the impact of deregulation on the interests of small business, as opposed to large business? She has talked about large businesses, but does she not think that deregulation particularly helps small businesses?

[Caroline Lucas]

I certainly think that some deregulation can help small businesses, and I also think that small businesses find it harder to deal with. What I object to is the fact that we are talking in vast generalisations. Let us instead talk about specific regulations. By and large—apart from, for instance, the clause about knitting yarn—the Bill contains none of the measures that small businesses in my constituency are crying out for. As I have said, what they would love to see are changes in the whole economic environment, such as the introduction of a higher threshold before business rate relief comes in. That would make a huge difference to them.

Let me now say something about the growth duty. I fear that it will interfere with, and impinge on, the ability of organisations to play crucial roles. The idea that growth must come before everything is a mantra and an ideological obsession, and it seems to me that an obsession with short-term GDP growth at any cost is simply not in the public interest. The Government’s justification for the growth duty has been inconsistent and incoherent. Regulators are already subject to a statutory duty to regulate proportionately, to be transparent and accountable, and to target activities only when that is necessary. That legislation is already there.

Ministers give assurances that the independence and effectiveness of organisations in carrying out their duties will not be undermined. A Government consultation paper states:

“Supporting growth and stripping back burdens are not sufficiently prioritised.”

However, it also states that

“the regulators would need to be able to demonstrate that they have considered the economic impact of their actions when making decisions”,

and that

“the duty is intended to be complementary to, and not override… existing duties.”

I do not understand why the new growth duty is necessary. As the consultation paper makes clear, regulations already exist, and we already know that the bodies concerned must take into account the impact of their proposals on the wider economy.

It seems to me that what we have here is yet another knee-jerk reaction. Growth must come before everything else—protecting workers’ rights, public health, equality, fair treatment, and the environment—and that, in my view, is a very negative approach.

--- Later in debate ---

[Priti Patel]

My hon. Friend is absolutely right. As he has so succinctly put it, creating jobs and giving people employment are central to our long-term economic plan, and to a sustainable strengthening of our future economy. The Bill will not only help those who are employed, but will help people to secure employment, which is why deregulation is so essential.

[Richard Fuller]

I know that my hon. Friend is keen to move on to specific aspects of the Bill, but may I ask her a question before she does so? Those of us who believe in free markets and the power of entrepreneurs to achieve great change want the Government to do as much as they possibly can to get unnecessary regulation out of the way. Given her experience on the Committee that considered the draft legislation, can she assure the House that the Government have gone as far as they possibly could in this Bill to get rid of such regulation?

[Priti Patel]

My hon. Friend is right to ask that question. The Government have, of course, gone incredibly far. They inherited an appalling number of regulations from the last Government, and they are now doing exactly the right thing. They are making good progress, and setting the right direction of travel. We need to support them in that, because British business in particular depends on the changes that we are making in order to create the even playing field that will enhance our competitiveness in the world.

--- Later in debate ---

[Priti Patel]

My hon. Friend is absolutely right. This is about how we can transform the way public bodies, including Whitehall, function. Our new growth duty is an important step in changing that mindset. This is a real message going out saying, “The status quo is not enough any more.” For us to be competitive as a country, we have to change our mindset across Government and Whitehall and also across all aspects of decision making, to help our businesses thrive.

[Richard Fuller]

I would like to bring my hon. Friend back to the general principles and look at the bodies that regulate. The last Government were so keen on establishing regulatory authorities, increasing the burden on business, and that did nothing to stop the increase in youth unemployment and nothing to stop this country racking up massive amounts of debt and the stagnation in wages. Is she sure that under this Government we can really get deregulating? Have we done enough to get rid of some of the bodies the last Government put in place, that stopped us growing as an economy and did not do anything to tackle some of the problems we inherited?

[Priti Patel]

I thank my hon. Friend for his point on public bodies in particular. In the public bodies legislation we went a long way to reshaping that landscape. I am sure there is more to do, however, and this Deregulation Bill is a highly positive and a very welcome start. I commend our colleagues on the Front Bench on everything they have done to champion this. As and when the Bill passes through the Bill Committee, we can do more to strengthen and enhance the ability to deregulate across Whitehall, too.

I mentioned that a vast number of my constituents are employed by SMEs. Interestingly, there is a diverse range of businesses in my constituency. Many of them come under the category of self-employment, but they too come across aspects of health and safety regulation in particular. Many of the businesses in my constituency are hugely supportive of scrapping the rules for self-employed workers, whose activities pose no harm, and of changing the landscape in that regard. They are being liberated now, so they are no longer saddled with this burden and are able to grow and move their businesses on.

--- Later in debate ---

[Mr Wright]

I will come to the precise benefits for business in a moment, but I want first to refer to the hon. Member for Witham (Priti Patel), whom I cannot see in her place at the moment. She used her knowledge from the Joint Committee and her experience in business. I have to disagree with a lot of what she said. I respect her experience in business, but she says that Government just have to get out of the way of business. I do not think that is necessarily the case in a modern, innovative economy. What we need is a Government who will work with business on a long-term vision and an industrial strategy that will enable us to pay our way in the world.

I agree with everything that the hon. Lady said about business start-ups and the need to enhance our competitiveness, but there is nothing in the Bill—no single clause or schedule—that would facilitate start-ups: if only there were such provisions. One of the things that worry us most is the fact that the United Kingdom is slipping down in the world rankings for start-ups. According to figures from the OECD, it has fallen from 18th in the world last year to 28th this year. When it comes to obtaining electricity for a business, our ranking has slipped from 64th to 74th. Surely we should be doing something about that. The Bill could have helped us to do so, but unfortunately it does not.

Several Members mentioned the Bill’s impact on business. One could be forgiven for thinking that it would facilitate an enormous start-up of entrepreneurial activity, but its provisions are so insubstantial and so insignificant to British business that they are almost meaningless. As was pointed out by my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) in her excellent opening speech, the statement of impact for the draft Bill estimated that it would save businesses £10 million over 10 years: £1 million a year.

[Richard Fuller]

rose—

[Mr Wright]

I will give way to the hon. Gentleman, who I know is very knowledgeable about business. Those savings to business would equate to a full 20p a year for each and every business in the country. Does he not think that our ambitions should be greater?

--- Later in debate ---

[Richard Fuller]

Amen to the hon. Gentleman’s apparent call for the Government to take further action to deregulate and to reduce the burdens on business. He has told us several times how small the changes are. Will he, on behalf of the Opposition, table further deregulatory measures in Committee that will reduce the burden of regulation on business?

[Mr Wright]

When I speak to businesses, which I do every day, they tell me that the main factor affecting their long-term growth perspective is access to finance. Nothing in the Bill enables us to take a long-term view when it comes to where businesses can obtain the finance they need to grow.

It takes four fifths of a second for the British economy—for the hard work and effort of millions of people and enterprises—to generate that potential saving of £1 million a year. I say this to Ministers, and to other Members who have spoken today: do not insult the intelligence of Britain by describing the Bill as a substantial piece of reforming legislation. It will not really help businesses; it will certainly not give them as much help as they need. For the purposes of businesses that want extra orders or secure access to finance, or want the Government to be on their side, this Bill is sadly lacking.

Families are experiencing a cost of living crisis, and have lost £1,600 a year since the general election. Just a few days ago, the Office for National Statistics confirmed that since the Government took office in 2010, Britain has faced the largest continuous fall in real wages since records began half a century ago. However, there is absolutely nothing in the Bill to deal with that situation. The hon. Member for Carmarthen East and Dinefwr mentioned a 4% drop in wages in his community in Wales. One would think that the Government would want to do something about that in a deregulation Bill whose aim was to free up the inspiring innovation of businesses and individuals, but not a bit of it. The net benefits to individuals as a result of the Bill will amount to 0.18p for every single man, woman or child in this country. I really do think that the Government should do better than that.

The hon. Member for Brighton, Pavilion (Caroline Lucas) made a characteristically intelligent speech. She observed that some regulation could be good. She also mentioned clause 21, about which I am particularly concerned. The clause reduces the eligibility criteria relating to the purchase of social housing, which will have an adverse impact on the supply of such housing. Any local authority that wants to plan for the long term will need to spend capital, and will need to borrow as a result. The reduction of the qualifying period from five years to three will make it much more difficult for authorities to borrow on the back of a sustained rental stream. We need only look at the evidence that we have already seen: in the last year 10,600 council houses have been sold, but only 1,600 starts have been made.

Let me return to the hon. Member for Macclesfield and his Churchillian “action this day” rhetoric. What Macmillan did as Churchill’s housing Minister, and what Churchill did in the Housing Repairs and Rents Act 1954, was truly inspiring. It is what the present Government should be doing, but unfortunately they are not.

My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) conveyed the powerful message that regulation is an essential part of a functioning market economy, ensuring that we are sufficiently competitive. She also said that the Bill paid insufficient regard to the Government’s supposed goal to be the greenest Government ever. There is no environmental concern and no environmental impact, and in fact there is an attack on sustainable development here. This is where the Government have got it wrong. It is not mutually exclusive to think about green and growth, although Ministers often think it is. Actually, if we think about how we are going to pay our way in the world in the 21st century, we realise that the real emphasis should be on the industries of the future—those of the green economy. As the CBI and others have said, this is what the modern face of British industry should look like.

Unfortunately I cannot see the hon. Member for Stroud (Neil Carmichael) in the Chamber. I consider him to be part of the sensible wing of the Tory party, but his speech tonight disabused me of that idea. He served on the Enterprise and Regulatory Reform Bill Committee with me. I do not want to rehash the arguments we had in that Committee, but there was no evidence whatever for some of the stuff that was coming through in respect of Beecroft. What was said was, “I’ve met a bloke down the pub and he said ‘wouldn’t this be a good idea?’” That was the empirical evidence the Government brought forward on that Bill.

The hon. Gentleman will recall that in that legislation the Government abolished the Agricultural Wages Board without a single discussion of it on the Floor of the House or in Committee. It was brought in at such a late stage. What businesses want is certainty. Having uncertainty in terms of feed-in tariffs and other things is anti-business.

My hon. Friend the Member for Hayes and Harlington (John McDonnell) mentioned a lack of clarity with regard to clause 23. He also mentioned individual term time dates for schools in respect of clause 37 and here I declare an interest. My youngest son attends a primary school in Hartlepool and my daughter attends a secondary school in Hartlepool. If those schools do not co-ordinate and instead have different term times, it will cause enormous hassle and pressure for our family and millions like us.

My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) gave a knowledgeable speech and my hon. Friend the Member for Wansbeck made a key point: the Bill is very wide-ranging—the mishmash that he mentioned—and that variety will potentially create problems. I agree.

There is nothing really troubling about this Bill, although there are individual clauses, such as clauses 1 and 2 on the tribunal powers to make recommendations, that are concerning and we would certainly like to see clause 2 deleted in Committee. The actions in this Bill do not match the rhetoric, however. We do not want to obstruct the Bill’s progress tonight, but we do have concerns on specific issues and we will need to look closely at them in Committee. When businesses are crying out for certainty and greater access to finance in order for us to be more competitive in the world, the Government’s ambitions could have been better with regard to the Deregulation Bill.