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Legislative and Regulatory Reform Bill

My Lords, I come down from the lofty heights. In 1993, I was the deregulation adviser to the President of the Board of Trade and, as such, co-ordinated the deregulation initiative at that time. That was a very long time ago and there are a vastly greater number of regulations—I would hate to think how many—now than there were in 1993. However, despite the fact that my deregulation experience was in another era, I believe that there are lessons to be learnt from the exercise that we undertook at that time which are relevant to the importance of this Bill and are to do a little bit with what the former speaker was saying concerning the nitty-gritty of making deregulation work. I say that presuming that the Bill, suitably amended, will enable simplification, amendment, reduction and removal of regulations to be effected more easily and with less delay than has been possible up to now. There is no question in my mind but that establishing how the huge burden of excessive regulation on business, public services and charities can be lightened without any adverse effects on consumers, and the public interest generally, is a most difficult and huge task. I suggest that it needs the input of industry, commerce, small firms and large companies. They are better placed to assess the priorities of deregulation than are government departments. We tackled that in 1993 by establishing seven task forces covering all sectors of commerce and industry, plus two other committees to study the particular concerns of small business and the voluntary sector. The task forces were required to report within six months. One of the important benefits of setting such a time limit was that we were able to attract as members of the task forces some very senior executives who knew that there was a strict time limit to their commitment. There were 71 members of the different task forces including chairmen and managing directors of large and small companies, and directors and members of trade associations. The other benefit of a tight timetable was that it forced the task forces to use their judgment to establish what they believed were the priority areas for reform, for in six months there could not be sufficient time to review the whole huge regulatory system. We reported in January 1994, identifying 605 proposals for regulatory change. At that time we reported that 250 of our proposals had been taken up and 280 were under detailed consideration by Government. Having highly experienced participants in each of the seven sectorial task forces brought considerable expertise to the review of existing regulations and lent great authority to their proposed priorities. I suggest that there are lessons to learn from that form of intensive consultation to provide Government with good advice in reducing the regulatory burden. The small business special committee that ranged across all sectors provided a particularly valuable insight into the regulations that hurt the small firm most. Of course, the other lesson to learn from our experience at that time relates to how many of our proposals actually got fulfilled. That I do not know, having retired in early 1994 from my year-long assignment as deregulation adviser. The Deregulation and Contracting Out Act 1994 did not have the success for which we had hoped of speeding the removal or modification of regulations. I suspect that only a very small proportion of the proposals that the Government of the day judged to be in the national interest were carried through. I very much hope that history will not be repeated with this Bill if the Government really intend to act rather than just to discuss the need to simplify, improve or remove regulation. As well as making specific recommendations, the task forces put forward three principles that should guide departments when reviewing existing regulations for the future. I suggest that those principles are as relevant today as they were in 1994. The first is to think small; make sure that small firms can cope with the regulation. The second is to avoid regulations that are out of proportion to the benefit to be obtained. The third is to make regulations goal-based rather than over-prescriptive. All three are obvious common sense, but I fear that there is little evidence these days that those principles have much influence on those in Whitehall or in Brussels who draft the endless stream of regulations imposed not only on business but on every part of our national life. The first of the principles—think small—is especially important because it is always the small companies, businesses and charities that are hardest hit by the cost and difficulties imposed by excessive regulation. In respect of assessing the need for new regulations, we highlighted in our 1994 report two essential prerequisites that I believe are even more important now than they were in the past. The first is having a robust, authoritative and professional assessment of compliance costs in every new regulation proposed. That compliance cost should also take account of the impact of the regulation on small companies and charities. Government departments may assess the cost impact of their policies, but that is not the same as producing a detailed compliance cost of particular new regulations, which is what is needed. The second prerequisite is often equally important—a full assessment of risk, which, wherever possible, should be a careful statistical exercise establishing the level of risk that the proposed regulation is intended to address. One of the five principles of good regulation enshrined in the Bill is transparency. I suggest that if in future the Government insist on proper compliance costs and risk assessment and make those transparent to Parliament and all interested parties, we may well be better able to judge the need and value of new regulatory proposals. How that can be applied to the vast number of regulations stemming from Brussels, I do not know. It requires a stronger voice than just the UK’s to persuade the EU bureaucrat that the citizens of Europe would benefit from similar transparency of compliance cost and, where appropriate, risk assessment. What I believe is needed above all else and is wanted throughout the country by us all, not just by businessmen, is the political will to stem the tide of ever more regulation and bureaucracy and to change the regulatory culture that dominates Whitehall and Brussels.