I thank the hon. Member for South Cambridgeshire (Mr. Lansley) for his earlier welcoming remarks.
The regulatory impact unit helps the Government to find the right balance between proper standards of protection and unnecessary impact on business. It scrutinises proposed regulation to ensure that it has been properly assessed and identifies spheres in which existing regulation is unnecessary or needs simplification.
That response will be welcomed by small businesses in my community for which regulation is a very important issue. Does my hon. Friend accept that small firms in particular are often at a competitive disadvantage because of the disproportionate cost and time involved in their complying with regulations? Does he accept that that fact reinforces the need for the Government to regulate only when absolutely necessary?
I certainly accept my hon. Friend's point, which is why we are setting up the Small Business Service to provide user friendly advice and support. The regulatory impact unit will work alongside the service to tackle the pressures facing small businesses. We are concerned that they should not suffer disproportionately from red tape. That is why regulatory impact assessment requires Departments to think about the particular problems facing small businesses, using a small firms litmus test
Last Friday, I was at a meeting of the North and Mid-Cheshire chamber of commerce, where about 100 small and medium-sized businesses were represented. We discussed the 1998–99 annual report of the Better Regulation Task Force, which was distributed by the Minister's predecessor the day before he left office. Consternation was expressed at the costs that such businesses are having to bear. The representatives asked whether it might be sensible to rechristen the organisation the deregulation task force, not the Better Regulation Task Force, to show a commitment to removing the regulations and costs on their businesses.
The most important thing about regulation is getting it right. The previous Administration were obsessed with numbers and did not get the balance right with better regulation and benefits outweighing the disbenefits. What is also important is that the Government are committed to minimising the extra costs to employers and creating a climate in which enterprise can thrive. That is why we have lowered the tax rate for small companies twice since May 1997 and abolished advance corporation tax, creating a£1 billion cash flow advantage to companies in general. The hon. Gentleman has to judge regulation and improvements to it according to the overall context of the business environment.
To develop the point made by my hon. Friend the Member for Preseli Pembrokeshire (Ms Lawrence), will my hon. Friend the Minister focus on the needs of micro-enterprises? There are hundreds of thousands of such sole traders, who are grappling with the burden of bumph and the other overheads that are the bequest of the past 18 years. Will he consider their interests as a matter of urgency?
I thank my hon. Friend for that question and remind him that during the previous Administration a small business went to the wall every three minutes. That is why we are going to ensure that the regulatory impact unit looks into all regulation and that the benefits outweigh the disbenefits.