---

Regulatory Enforcement and Sanctions Bill [Lords]

The hon. Lady has made her point, but if, as a Front Bencher, I were to comment on a Committee of the House, I am sure that people would jump on me from a great height. We welcome the stated aims of the Bill. It seeks to implement the principles of risk-based and proportionate regulation. Those principles stem from the Hampton and Macrory reviews on regulation, and were generally welcomed by all parties in the House at the time. However, we remain to be convinced that the Bill, as currently drafted, will totally achieve those aspirations. Indeed, we have many serious reservations about significant parts of the Bill, in relation to its practical operation and its legal effect. The Bill requires business to take a leap of faith. It proposes that regulators be awarded additional powers to sanction business, in exchange for a promise of a better regulatory environment. We recognise the concern expressed by the CBI that"““in order to be comfortable with the awarding of these new powers to sanction business, employers need confidence that regulators will deliver their side of the bargain.””" Indeed, we are concerned that much of the Bill could put small businesses—which are already buckling under the increased corporation tax and capital gains tax burdens placed on them by the Government—at a significant disadvantage. The Conservative party is currently working on measures to drive out the ““regulate first”” culture in Whitehall, which has blossomed under this Government. This issue is very important to us. To that end, my hon. Friend the Member for Rutland and Melton (Alan Duncan), the shadow Secretary of State, has launched an independent taskforce, led by Sir David Arculus, to look into an overhaul of the regulation machine. All aspects, including the use of targets, management and training, and the vital need to address the wider cultural issues—including in the civil service—will be examined in order to make regulation the last resort rather than the first option. In the meantime, the Conservatives welcome the mood music coming from the Minister about the need to reduce the burden of regulation. To be credible, however, he must put this into the context of the new regulatory proposals announced by the Prime Minister last week. An example is the regulations dealing with agency workers' rights. They were released to the press yesterday without a ministerial statement being made to the House, and with no indication of their cost to business, which is likely to be huge. Neither we nor the business community has forgotten the record of this Government to date. Despite their manifesto promise to cut red tape, they have presided over a £65 billion rise in the cost of regulation since being elected, or the equivalent of 40 new regulations every working day. The Federation of Small Businesses has calculated that the average small business now spends some seven hours a week simply complying with Government red tape. Some people argue that this is all the fault of the EU, yet the evidence shows that, all too often, the Government gold-plate EU directives. The British Chambers of Commerce estimates that the UK's average elaboration ratio—as it calls it—for 100 directives implemented between 1998 and 2002 was 334 per cent. In other words, the Government provided three times the verbiage and potential regulation in relation to EU directives than it needed to. The result is that the cumulative burden of regulation is now deterring small companies from creating jobs. Over the past few years, we have seen a steady decline in the proportion of small and medium-sized enterprises that are employers. Today, seven out of 10 SMEs employ no one. As the chairman of the Forum of Private Business put it:"““The fact of the matter is that there are no more employers than there were in 1997. This increase in the number of small firms is all about more companies without employees.””" We have heard a lot of talk from Labour before about wanting to cut the regulatory burden on business. In 2001, we saw the introduction of the regulatory reform orders, which, we were told, would transform the process and lead to the scrapping of thousands of regulations. Yet the reality has been somewhat different. In 2005, the Cabinet investigated progress. In four years, Ministers had managed to identify only 63 possible laws that they were willing to tackle. Worse still, of those, they managed to implement only 27. Given that over the same period, there were more than 12,000 new statutory instruments, that was a dreadful indictment of Ministers failing to deliver on their promises.