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Regulatory Enforcement and Sanctions Bill [Lords]

This has been a significant but relatively brief debate on an important piece of the Government's legislative agenda. Indeed, the legislation is perhaps the most important Bill for business this Session. However, I think that business representatives watching the debate will be disappointed when they see how few Members of Parliament have turned out to participate in it. They recognise that regulation is one of the most important issues affecting the success of their companies and of UK plc, and they will simply not understand why hon. Members have chosen not to be here to speak up in the interests of businesses in their constituencies. It is important to send the message that the debate deserved better attention. As many hon. Members have said, it sounds as though the Bill is a step in the right direction, but as we have heard, the Government's track record on regulation is so bad that we have to be sceptical about their intentions. The fundamental issue when it comes to regulation is that the Government simply cannot stop meddling. They believe that they know how to run every business better than the business man, every school better than the head teacher, every doctor's practice better than the doctor, and every voluntary organisation better than the people who have run it for years. They simply cannot keep their hands off. They feel that they need to get involved because they alone have the unique skills necessary to make things run efficiently. The Government always talk about better regulation when they should be talking about less regulation or deregulation. The belief that regulation and interfering are important runs right the way through the Government, but that is not the right way to go. It was notable that when the Department for Education and Skills, as it then was, issued guidance to schools on how to tackle bureaucracy, the document ran to two volumes, because the Department could not make it clear in one volume. As we have heard from the British Chambers of Commerce, we get 14 new regulations a day from the Government—that is £66 billion in extra costs to business. We heard that HSBC, one of the biggest banks in the world, has to face 370 regulatory bodies around the world. We live in an incredibly regulatory environment. It is right to ask:"““How can an enterprise economy break through when the government presides over systematic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk averse by the day?””" Those are not my words, but those of Sir Digby Jones, spoken when he was director general of the CBI. He is now better known to us as Digby the Baron Jones of Birmingham. We always thought that that was the correct form of address for a dowager duchess, but that is how he wishes to be known. He highlighted the issue of regulation before he came to Parliament to sit in the other place. It is of little surprise, therefore, that he is not the Minister taking the Bill through its stages in the other place. I think that he would have found it hard to resist saying that we are over-regulated and need to do more about it. The Minister talked in enthusiastic terms about the work that the Government have been doing on deregulation, but why are all the representations that we receive from business and other organisations about the pressures that they face as a result of regulation, and the fact that they are regulated too much? Why are we told that the average cost to UK business of implementing new legislation is £133,340 a year? Why does the Federation of Small Businesses tell us that the average small business spends seven hours a week complying with red tape and on paperwork? Why does British Chambers of Commerce estimate that by the time Ministers have taken directives through the system to make them apply to UK law, the cost is increased threefold? There is too much regulation. The approach identified in the Bill begins to scratch the surface, but it does not address the underlying problem. As we heard from my hon. Friend the Member for Huntingdon (Mr. Djanogly), in four years, only 63 measures were identified under the regulatory reform orders, although the orders were to be the Government's vehicle for addressing the problem. Only 27 of those 63 have actually been dealt with. Business in this country faces competition as never before. There was a nice, convenient thought that China would pose a threat to us only on the cheap, dirty side of manufacturing—that was never the way in which we saw manufacturing, but that was the perception. Nobody truly realised China's ambition to do high-value, high-end work, too. Business was initially attracted overseas by low labour costs. Now, it will go overseas to pursue cheap energy. A key factor in determining whether businesses decide to stay in this country or move overseas is the regulatory environment. It is a matter of profound concern that companies such as Shire—one of the biggest pharmaceutical companies—are looking to move offshore. WWP is, I think, the biggest advertising and marketing agency in the world; it, too, is moving offshore, and others are talking about doing so. They think that what was special about Britain is being lost, and that other countries offer a more attractive environment in which to do business. What they need from the Government is work done to tackle skills issues, so that the graduates and school leavers who come through the system have the skills that the companies need. Businesses need tax rates to be addressed, too. In Prime Minister's Question Time, it was disturbing to hear the Prime Minister criticise us for saying that corporation tax needs to be dealt with. He said that that was the wrong sort of problem to raise. Above all, there is the issue of regulation to be addressed. Every single business that we visit in our constituencies tells us that it is over-regulated, and that it is wrong. We have heard some expert and well-qualified speeches. It is notable that we five Conservative Members who have spoken have all run our own businesses. We have gone through the pain; we know what it is like when a person sets up a business and feels that the world is against them, even though their motivation for going into business was that they had an idea and wanted to provide a service to the community or a business audience. They end up feeling like some sort of criminal if they do not get their VAT form in bang on time. The approach towards business does so much to stifle it. Many people would never have started their own business if they had known how difficult it would be. My hon. Friend the Member for The Wrekin (Mark Pritchard) is right to tell us that regulation is not bad per se. Many regulations are good for business and for Britain. The problem is identifying and removing the ones that are not good and are counter-productive. He was right to say that we need to know the answer to the question of how many businesses have closed as a result of bad regulation. My hon. Friend the Member for Wellingborough (Mr. Bone) said that he was rejected by the electorate on a number of occasions. That rejection meant that by the time he entered the House, he was a more expert, well-qualified MP than he would otherwise have been. We are lucky that he is here to bring that expertise to the House and to our considerations today. He talked about the sense of frustration that business has about bad regulation, and he did so with immense feeling and understanding, because he has been there himself, and has run businesses for 20 years. My hon. Friend the Member for Beverley and Holderness (Mr. Stuart) rightly sounded sceptical about parts of the Bill; again, he has experienced the consequences of over-regulation first hand. He asked a whole range of sensible, practical questions—so much so that they almost amounted to a request to go on the Committee for the Bill. We will need such detailed analysis as the Bill goes through its stages. My hon. Friend the Member for Stone (Mr. Cash), whom I am glad to see in his place, talked about the relationship with the European Communities Act 1972. Ministers talk about leading the way in cutting down administrative burdens, but one of the greatest frustrations for business is that a small directive from Brussels ends up as a long regulation that comes out of a Department. If we want to tackle the culture of over-regulation, we need to start with Ministers. They need to say what European regulations and directives say and that they will not add anything to them. If that does not stand up, it will be the failing of the directive. We should not use directives as an opportunity to gold-plate and add on bits and pieces to allow officials, who I know are well meaning, to tag on a little bit that they have been tucking away in a drawer, hoping for a suitable directive that they can latch it on to. Ministers have to be robust in rejecting that approach and saying that the directives that come from Brussels should be exactly that, and not become a vehicle into which more bits are added. On the elements of the Bill itself, we owe a great debt of gratitude to Philip Hampton and Richard Macrory for their work, which has identified practical and important considerations. However, as we have heard, questions need to be answered today, or certainly in Committee. The talk about the local better regulation office sounds alarm bells. It may be well intentioned, but we have seen too often that what starts as a well-intentioned initiative grows out of control. We can imagine that in a little while the Minister will say, ““Well, the local better regulation office is working so well that we will have regional better regulation offices as well. Then, to make sure that it all comes together, we will have a national better regulation office.”” An entire new arm of bureaucracy and administration would be set up. That is not the way in which we should be going. We also want to know how the new body will prevent over-zealous implementation. The businesses in our constituencies often tell us that the problem is not regulation, but how it is interpreted by people from health and safety and Government Departments. A company in my constituency told me of its experience. Every year, it took on people from the local community college for work experience. A couple of years ago, health and safety representatives told it that it could not do that any more because it was a dangerous environment in which to work. I am talking about a retail establishment. First, its management were told that the young people could trip up and down the step in the shop as they were carrying things around. Secondly, there was—even more dangerously—a till in the establishment. I did not think that unusual in a shop. However, if a young person was bending over when the till opened, he could be hit on the head. The health and safety representatives refused to allow the shop to offer work placements to people at school. That was not down to regulation; no regulation anywhere in this country says that children should not work near tills. It was a case of an over-zealous inspector, who damaged both that business and the aspirations of young people. My hon. Friend the Member for Wellingborough talked about inspection for the sake of inspection. The underlying problem is that as a society we are becoming too risk-averse—we are trying to eliminate the downside and risk. Risk, however, is part of an entrepreneurial, successful society, and if we do not encourage people to take sensible, calculated risks, we will damage our opportunities to deliver the growth and economic success that we want. Part 2 of the Bill relates to the primary authority. We need to know from the Minister how it will ensure fairness for small businesses and a level playing field with big businesses, which can choose where they are regulated. Take the example of two neighbouring shops—one is large and regulated remotely, perhaps hundreds of miles away, and the other is regulated locally. How can they both be on a level playing field, given that they are accountable to different primary authorities? We need greater clarity on that. We also want clarity on part 3, which is about civil sanctions. We welcome measures that track all rogue traders. We know the problems, headaches and pain that such traders cause our constituents and we want tougher action against them. However, as a result of the Bill, 27 different regulators—an awful lot—will be given the powers to impose civil sanctions. How will we stop the tendency for them to go for easy pickings and focus on smaller businesses that will not appeal? The regulators may use the full force of their powers against such smaller businesses, but not against the more serious offenders. The comments of the noble Lord Lyell of Markyate have been cited. He said that the regulators would be the investigator, prosecutor, judge, jury and sentencer. In British law, we are not familiar with that concept, which represents a completely different approach from that of the legal system that we have had in the past. Perhaps the Minister can tell us whether there has been a precedent. The issue causes understandable concern.