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Legislative and Regulatory Reform Bill

While the tabling of this new clause indicates that the Opposition are as eager as we are to help small businesses, the amendment is not required therefore the Government cannot support it. One of the main policy objectives at the heart of this Bill is that orders made under the power in Clause 1 will help to reduce regulatory burdens, including burdens on small businesses. The proposed new clause is therefore unnecessary. All regulatory proposals must be accompanied by a RIA, and major proposals are scrutinised and require approval by the Panel for Regulatory Accountability (PRA). The purpose of RIAs and PRA scrutiny is to ensure that the costs and consequences of regulatory proposals are reasonable and proportionate to the benefits. Exemptions for any group or sector are considered on a case-by-case basis, with Ministers making transparent their decision through the RIA/PRA process, as we have just discussed. One of the key principles of better regulation is light-touch implementation of policy proposals. This amendment runs counter to that principle, as did the previous one. RIAs already consider the impact of any regulation on small and medium enterprises and are subject to scrutiny by officials within the Better Regulation Executive. The chair of the Small Business Council, Julie Kenny, is invited to attend meetings of the PRA. That seeks to ensure that small businesses have a voice on the committee and that the regulatory proposals scrutinised take full account of the impact on small businesses. The Government are already reducing regulatory burdens on small businesses. For example, we are exempting nearly 900,000 companies from audit requirements on their accounts as a result of raising the annual turnover threshold from £1 million to£5.6 million, saving companies at least £94 million a year. We have introduced regulation updates: a one-page ““see at a glance”” look at new regulations which enable an SME to decide whether a new regulation will affect it, without having to wade through a lengthy document, saving time and money. We have introduced a 12-week minimum implementation period for new regulation, giving implementation guidelines to SMEs, to enable them to prepare for new regulation at least three months before it is due to come into effect. The DTI simplification plan alone identifies how it will reduce the burdens on businesses by more than £1 billion over the lifetime of its five-year programme. The Company Law Reform Bill, the heart of which is deregulation, will deliver savings to businesses of some £250 million a year. That includes an estimated annual saving of £100 million for small businesses. The requirement in the Bill for consultation on any proposed order will also allow those affected by any proposals to have an opportunity to put their case to the Government. The Government will take these views into account before a draft order and explanatory document are laid before Parliament. The explanatory document must give details of the consultation, representations received and any changes made as a result of those representations. Those representations from small and medium enterprises, as with other representations, will of course be reflected in this explanatory document. There is a clear overlap between what this amendment would require and what is already required by the Bill in the explanatory document. This Bill is about reducing and removing unnecessary burdens, not increasing them, and will make the procedure more onerous, diverting valuable resources away from actually delivering the necessary reductions in red tape that businesses, the public and the voluntary sector are crying out for. Small businesses are the backbone of the UK economy—we share a view on that. There are a record number of small businesses, nearly twice as many as there were a generation ago. This Government champion small businesses. We recognise their huge importance to the UK economy. My statistics state that 58 per cent of the UK’s private sector workforce is made up of small enterprises; and small business, as has been recognised, accounts for over half of the UK’s turnover—some £1,200 billion. The Bill has widespread support, including from the Federation of Small Businesses and the Small Business Council. It is difficult to see how the proposed new clause would add anything to the mechanisms this Government have already put in place to support small businesses. Small business, as defined, is in danger of putting a straitjacket on the approach which the Government would take on this, because the definition of ““small or medium-sized enterprise”” may differ according to the requirement of the particular regulation. A Companies Act definition may be appropriate if one is considering exemption from audit or from some other more detailed requirement of financial reporting. It is not necessarily always the key test for other requirements. To put such a straitjacket in the Bill is unhelpful. On the basis of the evidence provided, I therefore urge the noble Baroness opposite to withdraw this amendment.