Limitations on Order-Making Power

Regulatory Reform Bill [Lords] – in the House of Commons at 5:45 pm on 5 April 2001.

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Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss amendment No. 2, in page 3, leave out lines 12 to 15 and insert— 'is also of the opinion—

  1. (a) that the burdens created or imposed as a result of the provisions of the order are less onerous than those reduced or removed; or
  2. (b) that other beneficial effects for persons affected by the provisions of the order, not including those effects which only relate to Ministers of the Crown, government departments or statutory bodies, make it desirable for the order to be made.'.

Photo of Andrew Lansley Andrew Lansley Shadow Minister for the Cabinet Office and Policy Renewal

After the hors d'oeuvres, we come to the main course, although we will have to eat very fast.

I think that I can state the amendment's purpose pretty straightforwardly. On Second Reading, we tabled a reasoned amendment to the Bill as a whole on the grounds that it sought to use an exceptional power not for the original purpose for which it was created, which was a deregulatory one. We lost the Division on that amendment.

In Committee, we tried to ensure that, in imposing limitations on the order-making power, the Bill would not only have the deregulatory purpose for which amendments in another place provided, but that the burdens that were removed exceeded those that were created or imposed That was resisted.

There may be a technical, drafting problem with the amendment, but I hope not. I emphasise that we are searching for a compromise. We understand that the Government intend to establish a power not only to reimpose burdens in existing legislation when reforming a regulatory system, but to create new burdens. The Government should be required under the Bill to consider additional or recreated burdens and determine whether they are more or less onerous than the provisions that are to be reduced or removed.

Such a requirement is similar to the provisions of the Deregulation and Contracting Out Act 1994, which was tighter than the Bill, but provided that Ministers could create burdens that related to the subject matter of, but were less onerous than that imposed by, the existing provision. Existing legislation therefore already provides for weighing up burdens.

If Ministers want to proceed down the path of imposing burdens that are more onerous than those that are reduced or removed, they should he required to express that in the Bill. If the burdens are more onerous, they should balance that against the benefits that will accrue. However, they should not be public sector benefits.

We want to reach a compromise. If Ministers intend to have the power to impose new burdens, let them do that, but not through reference to benefits that would accrue to the public sector, Ministers, Departments and statutory bodies. If Ministers can demonstrate that benefits to the private sector will outweigh the additional burdens that they want to impose, they should quantify them.

I will stop speaking simply to give the Minister an opportunity to reply. However, the amendment constitutes a genuine effort to move from our earlier position to one that might be acceptable to the Government.

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office)

I shall to be brief. There was an attempt in Committee to turn the Bill into another deregulation measure. I hoped that I had convinced Conservative Members that the purpose of the Bill was to re-balance regulatory regimes and that even if the powers in the 1994 Act had been brought up to date, they would not have enabled a Minister to take action to improve a regulatory regime. I gave an example in Committee that is worth reiterating. If a Minister wants to re move many small burdens from shops and place larger burdens on supermarkets, it is difficult to ascertain the way in which to weigh that up and calculate the benefits and disbenefits. Yet common sense shows that there is a reason for that.

In trying to reintroduce paragraph (a), the hon. Member for South Cambridgeshire (Mr. Lansley) has reopened the debate. There is a conflict between the hon. Gentleman's remarks and the amendment. That is confusing. Proposed new paragraph (a) would turn the Bill into a deregulatory measure. Yet proposed new paragraph (b) states: that other beneficial effects for persons affected by the provisions of the order, not including those effects which only relate to Ministers of the Crown, government departments or statutory bodies, make it desirable for the order to be made. That replaces tighter tests for which clauses 1 and 3 provide. We spent a great deal of time discussing those proportionate tests—

It being Six o'clock, MR. DEPUTY SPEAKER, pursuant to Orders [19 March], put forthwith the Question necessary to dispose of proceedings to be concluded at that hour.

Amendment negatived.

Order for Third Reading read.

6 pm

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office)

I beg to move, That the Bill be now read the Third time.

I am pleased that the Bill is proceeding through its final parliamentary stages. It is more than two years since we first consulted on it and almost exactly a year since it was published in draft. As a result of prolonged gestation, the Bill received a thorough, almost unprecedented amount of parliamentary scrutiny. The Government listened to anxieties and accepted several amendments in another place. Those amendments ensure that all orders must be based on a deregulatory measure.

The Bill has undergone further scrutiny in this House. I am pleased that Committee stage was marked by a consensual and constructive approach by all parties. Although no further amendments were made to the Bill, I hope that hon. Members on both sides of the Chamber will agree that our debates in Committee made the Government's position clear on a number of issues where some hon. Members still had doubts. Indeed, a draft form was produced for the consultation that the Department should go through when it is consulting on a regulatory reform order. Some of the structure of that is thanks to Conservative Members. We had a constructive debate in Committee.

Photo of Bill Cash Bill Cash Conservative, Stone

I shall pursue a point that I made at an earlier stage about the compatibility of obligations resulting from membership of the European Union, and the directives and regulations that derive from that and section 2 of the European Communities Act 1972. I have been reading again the explanatory notes to the Bill, and I bear in mind the Minister's reply. I think I saw movement upwards and downwards—nodding—from the Front Bench when the Minister replied. There is an important question that needs to be resolved.

On the issue of parliamentary scrutiny, on page 56 the explanatory notes clearly state: Subject to the terms of any Standing Order under which they were appointed, any such Committee might well consider in each case whether proposals … appeared to be incompatible with any obligation resulting from membership of the European Union. I want clarification in writing of whether any order made under the Bill could be made if it were incompatible with an obligation derived from a directive, a regulation or other legislative enactment of the European Union.

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office)

I think that the courts are considering that very point. It is not quite the question that the hon. Gentleman asked before. However, I am happy to write to him on that issue.

Having had such a serious and detailed consensual debate in Committee, I was disappointed—perhaps I should not have been—by the debate on Report. We did not discuss areas of consultation or the amount of deregulatory action that should be within the Bill, if indeed there is a difference between the Front Benches on that issue. We did not discuss whether the wording should be simpler or clarified within regulatory reform orders. These matters were not discussed. In many instances we had what were, in effect, Second Reading speeches. That is disappointing. As many hon. Members have said, there is an interest on the part of business, as well as of Members of this House and the other place, in getting regulation right, and in making it as unburdensome on business as we can. That requires a detailed and thoughtful understanding of the regulatory process. It does not require simple, ideological statements that are grounded not in objective evidence but in prejudice.

I can only think that a lack of political confidence, and a lack of confidence in their own intellectual analysis of how regulations impact on business, led to the Opposition's being unprepared to debate the details, despite all the time available this afternoon. If they had debated them, they might not have had to repeat clichés such as the one about this country being the most heavily regulated and becoming even more so. Almost every independent study, including the Organisation for Economic Co-operation and Development study published in December 1999, showed that that was not so. That study showed that, in terms of product market regulation and the barriers of trade, ours was the least regulated of the OECD countries.

A number of Conservative Members made the standard prejudiced point that we were the only member of the European Union that played by the rules. In fact, if we compare this country's performance on the speed with which legislation is transposed with that of other countries, we are mid-table. We are also mid-table in terms of the number of infraction proceedings against this country; we are neither the best nor the worst. The better regulation taskforce's study comparing the hotel industries in France and the United Kingdom concluded that the hotel industry in France was slightly more heavily regulated than ours.

The right hon. Member for Henley (Mr. Heseltine) has been mentioned a number of times—fondly, I think, by Conservative Members—for the work that he did on deregulation and better regulation. In 1994, he set up a taskforce to consider how we, compared with other European countries, had transposed some European legislation. His report was very long, but it found very little evidence to support the contention advanced by Conservative Members. I am confident that the Bill will become a valuable tool for implementing important reforms. It will also help Ministers to act in those situations in which regulation is being applied in too heavy-handed a fashion. Again, that is not a party political point, but something that all sides welcome.

Photo of Owen Paterson Owen Paterson Opposition Whip (Commons)

The Minister sounds immensely complacent to me. The British Chambers of Commerce estimates, in its burdens barometer, that £9.62 billion has been imposed on business in the form of burdens, yet the Minister has just dismissed that. That is a very significant sum of money, and it bears down disproportionately on small businesses.

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office)

The hon. Gentleman must not mistake my nearly being sent to sleep by some Conservative Members' speeches—which were rather off the point—for complacency. If we were complacent, we would not be introducing this Regulatory Reform Bill. We have introduced it because we know that there is a problem, and that the Government can improve their performance on regulations. Indeed, any Government can do so.

We are aware that all regulations that apply to small, medium and large businesses impact disproportionately on the small businesses. It is an arithmetical fact that they do so. That is why we have taken measures either to exempt small businesses or, as the Chancellor announced in his Budget statement, to give special support to them. I remind the hon. Member for North Shropshire (Mr. Paterson) that since this Government came to office, there has been a net increase in small businesses of 150,000 or thereabouts. Those businesses are being created faster and are lasting longer than under the previous Government. Those 150,000 small businesses have contributed to the 1 million jobs that have been created over the past four years.

Photo of John Bercow John Bercow Shadow Spokesperson (Home Affairs)

The Minister seeks to assure us that he is not complacent. I do not doubt for a moment that he will acknowledge the superiority of the record of the United States relative not only to Britain but to all the member states of the European Union in job creation and retention these past 30 years. In that context, and in preparation for the Regulatory Reform Bill, can the hon. Gentleman tell us what assessment he has made of the Regulatory Flexibility Act 1980 and the Small Business Regulatory Enforcement Fairness Act 1996 in the United States?

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office)

I can tell the hon. Gentleman that in comparative studies between the regulatory burden in this country and in the United States, when state and federal regulations are added together, this country comes out very favourably. I refer the hon. Gentleman to the OECD study that I mentioned earlier.

The Bill is an excellent tool in itself and an exemplar of scrutiny both before it reached Parliament and when it was before this House and another place. I look forward to its wide and frequent use in improving this country's regulatory regime and achieving a legislative framework to suit the modern world.

Photo of Andrew Lansley Andrew Lansley Shadow Minister for the Cabinet Office and Policy Renewal 6:11, 5 April 2001

I am grateful for the opportunity to respond to the Minister on Third Reading. Even though he chided Conservative Members for making what he described as Second Reading speeches on new clause 1, I felt that the Minister wanted to revisit the Second Reading debate himself. However, we have had that debate. I am pleased to echo the Minister's view that there was a constructive attitude to the Committee proceedings throughout, although we secured no changes to the Bill in Committee, nor was it ever likely that we would secure any changes on Report. It was right for my colleagues to use their time to express their sense of concern about the pace and increases in regulation. It was perhaps their best opportunity to express their concern rather than to play the Government's game that it is now simply a matter of debating the legislation's technicalities and procedures.

The Government will no doubt have their Bill. We objected to it on the ground that it did not have a solely deregulatory purpose. None the less, I hope that it will be only a short time before we have the responsibility of using it. We have agreed that the legislation is not without merit. It is true that the Deregulation and Contracting Out Act 1994 did not necessarily give sufficient scope for reforming a scheme of regulation rather than regulations that related to one subject alone. It was certainly a limitation, even on a deregulatory purpose, for the 1994 Act to confine deregulation and contracting out orders to legislation passed prior to the point at which the Act came into force. So there is merit in the Bill for that reason.

We will be able to use this legislation for a positive deregulatory purpose. I freely admit that I do not exclude the possibility of occasionally changing a scheme of regulation in ways that impose burdens at the same time as reducing them elsewhere, thus rebalancing them. It is not inconceivable that from time to time one has to restructure legislation to impose burdens.

I remind the House that our objection to the Bill was that it did not seem to us right to use the exceptional, supra-affirmative procedure. That procedure was created by the previous Conservative Government, and opposed by the then Labour Opposition. It was designed for the very specific purpose of reducing the extent to which the Executive place burdens on private citizens. However, the Bill applies the supra-affirmative procedure to many purposes other than deregulation. Whatever the Minister may say, and regardless of the nature of amendments to be tabled in another place, the deregulatory purpose may be no more than a fig leaf to cover the Government's regulatory intent.

I do not want to intrude a harsh partisan point, but we believe—from our experience and from the experience of those dealing with business—that regulation has increased under this Government. A number of business organisations' representatives consider that increase to be excessive and believe it should it be rolled back.

I turn once more to Sir Martin Jacomb, who wrote in The Daily Telegraph earlier this week: Early last month, the Prime Minister invited a group of business people to breakfast at Chequers; they told him how regulation and tax bureaucracy were stifling enterprise, which apparently came as news to him. It surprised no one else. That is the essence we know what the Government and the Minister clearly do not—that the business sector is finding that the increasing burden of regulation inevitably stifles enterprise. The Government have not established an underlying system to try to reduce that burden.

It will be a Conservative responsibility to reduce the burden of regulation. The Bill is not enough. It should be used only by a Government in the context of a system for reducing regulation generally. We debated review clauses in the context of new clause 1, but such a mechanism should be only one element of an intention to introduce sunset clauses on all future regulations and legislation that have the effect of increasing burdens.

Photo of Ian Stewart Ian Stewart Labour, Eccles

The hon. Gentleman said what the Bill should be used for. Does that mean that the Conservative party will not honour its commitment when the new Regulatory Reform Committee looks at the Vaccine Damage Payments Act 1979? The Government have promised that changes to that legislation will be made at one of the Committee's first meetings.

Photo of Andrew Lansley Andrew Lansley Shadow Minister for the Cabinet Office and Policy Renewal

I am surprised at that question, as the hon. Gentleman was an assiduous member of the Standing Committee. In our deliberations, I offered the reform of the 1979 Act as an example of something that we did not oppose. I said that we supported it. However, he will recall that my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) has told the House that the Opposition believe that that proposal for reform of legislation should have been included in the Queen's Speech, and achieved by primary legislation.

It is not for me or the Minister to anticipate the contents of a Queen's Speech. An extension of the vaccine damage payments scheme might be achieved by means of a regulatory reform order or primary legislation. However, the House should not be under the misapprehension that we would not want to extend the scheme.

Regulatory reform orders should be used in the context of a deregulatory initiative across the board. Sunset clauses have a part to play, as does the reform of institutions established by the Government such as the panel for regulatory accountability, the better regulation taskforce, the regulatory impact unit, and so on. They are all very well, but do not deliver the objective sought by business.

Essentially, two things are needed. The first is a stronger agency—a deregulation commission with the power to block additional burdens imposed by legislation and to examine them under a special procedure before they are proceeded with. In that way, business could have a voice with influence in Government to limit legislation.

We also need an audit of the burden that regulation imposes on businesses. We need to establish a baseline in order to create regulatory budgets which will have the progressive effect of reducing the overall burden on business. Unless we do that, precisely the opposite tendency will apply. There is a tendency for Governments to increase the burden of regulation systematically over time, as is happening under the present Government. That is inevitable, not only because they do not have a system to reduce regulation, but because it is often their intention.

Each year, the Institute of Chartered Accountants carries out a survey of its business advisers, looking at the cost to businesses of complying with the legislation that came into effect in the preceding year. That is not the total cost of complying with legislation, but a measure of the in-year change in the burden of new legislation. In 1999 it estimated that the cost to micro-businesses, or businesses with up to five employees, was £1,700. It rose to £3,600 in the year to July 2000. For small businesses, which for this purpose were defined as businesses with up to 50 employees, the figure was £4,700 in 1999 and £8,000 in the year to July 2000. That illustrates that it is not simply that there is an excessive burden of legislation and regulation, but that the rate at which it is being imposed is still increasing and needs to be reversed.

Photo of Mr Peter Pike Mr Peter Pike Labour, Burnley

Does the hon. Gentleman accept that in theory the new committee to be established by the Bill could conduct an inquiry into the way in which the Act was being used, and in a year's time, for example, could publish a report raising some of those points? Given the additional debates on Select Committee reports in Westminster Hall, the issue could be debated if the opportunities that the Government are anxious should be used are not seized as a result of the new Act.

Photo of Andrew Lansley Andrew Lansley Shadow Minister for the Cabinet Office and Policy Renewal

The hon. Gentleman makes an important point that I was going to touch on later—that it is important for the legislation to be reviewed. In response to an earlier debate, the Minister made it clear that it remains the Government's intention to conduct such a review and to report some three years hence in relation to the procedures, the order-making process and the constitutional and other procedural issues, but not in relation to the policy as the Government regard that as having been settled.

The hon. Member for Burnley (Mr. Pike) made the very fair point that the Regulatory Reform Committee, if it is to be so styled, could indeed undertake such a review. My hon. Friends and I would welcome that because, at the risk of repeating myself, we all tend towards legislation and regulations where, to put it in military parlance, we fire and forget. We need to see where the bullets hit and what damage they do. If they have the intended benefit or better, that is all well and good, and I am sure that the policy that lay behind any particular regulatory reform order will be seen to have been vindicated.

Without debating with the hon. Member for Milton Keynes, North-East (Mr. White) the estimates of what the compliance and other impacts of the Regulation of Investigatory Powers Act 2000 will be, it is also legitimate for people to take distinct and differing views of the impact of legislation that is passed through the House, so it is vital that we do not treat the policy as given and then move on. In that respect I hope that, even at this late stage, Ministers might revise their intention and make it clear that they will participate and help the new committee and the House to look not only at the policy, but at the effectiveness of the regulatory reform orders that are introduced, at their compliance with the structure of the document set out in clause 6, and at whether the orders have the effects that were intended.

On that point, I thank the Minister for writing to me, to the hon. Member for Burnley and to the Chairman of the Delegated Powers and Deregulation Committee in another place about the process of preliminary consultation. It will be much to the advantage of the Regulatory Reform Committee, the House and consultees if they are given direction as to the issues that will have to be addressed in the document specified in clause 6.

Notwithstanding the Minister's positive response, it is not the purpose of the preliminary consultation to apply the tests proposed in one or two of the regulatory reform order consultation papers. I do not dispute the importance of the fair balance and desirability tests under clause 3, but they are for Ministers and the House to apply—on advice from the Regulatory Reform Committee. The Minister noted that preliminary consultation should not attempt to make judgments or to reach conclusions before information has been acquired. It thus seems premature to make judgments as to desirability or fair balance before a document is laid before the House. Those matters do not belong in the preliminary consultation process.

Other matters, however, should be covered: the burdens that are to be affected; the reduction or removal of burdens; the imposition of burdens; whether necessary protection is removed; whether reasonable expectations are to be frustrated; and the savings and increases in costs. Indeed, if the Minister wants to take this path—although the measure does not require it—the question of specific impacts on particular persons or groups could be addressed. The Minister referred to the importance of considering the disproportionate impacts that sometimes affect small businesses. He rightly said that we should always consider the exemption of small businesses from legislation that may have disproportionate effects on them owing to their lack of internal resources for dealing with it. If the document and the preliminary consultation provided for under clause 6 could identify such impacts, it would be useful.

During Report stage, my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) referred to risk assessment. In one of the consultation documents, the Home Office, too, expressed the issue in terms of risk assessment. It is important to do so; I have no criticism of that. Often, in the pursuit of spurious accuracy in compliance cost assessments, there is a tendency to fix a figure and ignore things that are more difficult to quantify or that are the subject of variable assumptions. At certain points in the consultation document, it is important to include risk assessment so as to assess the assumptions—to work out how sensitive the compliance costs are to the factors in the proposal and to the assumptions made as to how those factors will apply.

I do not want to delay the House, as colleagues may want to speak. If we have the opportunity to use the legislation, we shall set it firmly in the context that I have described. Although the Minister did not accept our amendments, I hope that the Government will stand by not only the undertakings that they have already given—not to introduce large or controversial measures; not to proceed with a regulatory reform—

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office)

We have given a commitment not to introduce large and controversial measures—that is an important point.

Photo of Andrew Lansley Andrew Lansley Shadow Minister for the Cabinet Office and Policy Renewal

I beg the Minister's pardon; he is right. Fire safety legislation is large by anybody's measure—it remains to be seen whether it is controversial.

The Government have undertaken not to introduce large and controversial measures; not to proceed with a regulatory reform order in the light of an adverse view from the Deregulation Committee, the Delegated Powers and Deregulation Committee or the Regulatory Reform Committee; and—in the light of our discussions—to proceed through preliminary consultation in a form that is much more geared to the House's scrutiny requirements.

I hope that, even if Ministers will not necessarily give undertakings to that effect, they will none the less continually respond when the legislation is in use, whether it is a Labour or a Conservative Administration that have occasion to do so. I hope that they will simplify legislation and make it more comprehensible. We discussed such an amendment in Committee and sought to do so again on Report, but did not have an opportunity.

I hope that Ministers will ensure that there is the sort of review process that we discussed and that codes of practice, which we have not discussed to any great extent during the passage of the Bill are in line with the enforcement concordat and with the further recommendations of the better regulation taskforce as time goes by.

I also hope that Ministers will use the powers only in the spirit in which they are intended and always with a substantive deregulatory effect. I hope that they will examine critically the use of the powers if they have benefited the public sector or significantly increased burdens, notwithstanding judgments they may make about desirability.

A strong deregulatory purpose should lie behind the regulatory reform orders that are made. I hope that the legislation will be used for the purpose for which the whole procedure was first created back in 1994.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 6:31, 5 April 2001

I appreciate that it is tempting fate to say that I shall be brief, since every speech this afternoon has started with that preface but lasted half an hour. However, I will be brief, partly because much of the work on the Bill was done by my hon. Friend the Member for Weston-super-Mare (Mr. Cotter), who also sits on the Deregulation Committee. I shall simply summarise our broad approach to the Bill.

From the outset, we have supported the principle of the Bill and we regard it as useful legislation, but we have been somewhat concerned about the constitutional implications. We have attempted to deal with those concerns through amendments, some of which were successful in the other place and some of which were not.

In general, we are probably a little obsessed with the quantity of regulation. Quantity is important—tax complexity, for example, is important in itself—but the real issue is how to get a mechanism for distinguishing between necessary and unnecessary and good and bad regulations. That is the crucial issue with which this reform must deal.

The Minister gave the reasons for the Bill and I do not need to repeat them in detail. Essentially, the 1994 legislation was insufficient in its scope. This legislation will enable batches of related regulations to take effect. Several references have been made to the fire safety regulations—an interesting test case. I am particularly interested in those as I have been involved in the work of the all-party fire safety group and I know about the impatience of fire officers for regulatory reform and an overhaul as quickly as possible.

The second positive point is that, as far as I can gauge, most business federations—the Federation of Small Businesses, the Institute of Directors and the chambers of commerce—despite having some reservations about the Bill, regard it as a welcome signal that is worth supporting.

Some of my hon. Friends' earlier concerns have been met, in particular, through clause 1(3), which was introduced by Lord Goodhart in the other place and built in a commitment that any change should be deregulatory in its effect and therefore help to tackle some of the concerns that have been expressed at considerable length this afternoon that the legislation could be used for re-regulation rather than deregulation

There are several constitutional concerns. One is the big constitutional issue of the potential for the Bill to be abused. The Minister has just dealt with that with his commitment not to introduce large and controversial measures under the provisos of the legislation. We hope that that commitment will be observed.

We were concerned that there is, perhaps, an undue reliance on ministerial subjectivity in the tests and we hope that the new committee, when it is established—we were not successful in agreeing amendments to deal with this—will apply its own objective test to Ministers' subjective estimates of benefit.

The reporting process is the other important issue that has been referred to at some length this afternoon. The Conservatives are pushing the five-year review, the Minister has his three-year review and in Committee we argued for a one-year review. We hope, in particular on the basis of the intervention of the hon. Member for Burnley (Mr. Pike), that the new committee will take up the spirit of those attempted amendments and report annually to ensure that the Bill achieves its objectives.

My final point is that an awful lot depends not on the letter of the legislation, but on its spirit. We will look for two things to ensure that the Government are committed to the spirit of deregulation, the first c f which is how they approach regulatory impact assessments. In commenting on new clause 1, the Conservative spokesman, the hon. Member for South Cambridgeshire (Mr. Lansley), made some useful remarks about how they are abused or not taken sufficiently seriously.

I hope that the Cabinet Office, perhaps with the Government economic service, will produce a paper explaining the methodology of regulatory impact assessment and how it can work consistently, so that it becomes not an empty ritual, but a serious measure not only of the compliance costs of regulation but of its overall economic impact, positive and negative.

The other element of the spirit of the Bill is consultation. Many, of the problems with the working time directive, for example, simply arose because Whitehall officials and Ministers did not take sufficient time to talk to business, or even the trade unions, about the way in which the complicated regulations would come into effect. A combination of proper consultation and a rigorous, consistent measure of impact assessment would do much for the spirit of the Bill on top of the formal legislative changes.

Photo of Owen Paterson Owen Paterson Opposition Whip (Commons) 6:36, 5 April 2001

I should like briefly to deal with the Minister's earlier comments, which were complacent. He made all the right noises, but he and the Government do not understand the crushing burden of the relentless juggernaut of regulation being imposed on business every day. He did not reply to my intervention.

The British Chambers of Commerce has estimated the cost to be £9.62 billion—a huge sum. That has a devastating impact, especially on smaller businesses. Last December, the president of the CBI—the representative of large businesses—said: simplification of existing laws is very welcome, but it will not ease concern about the relentless build up of new regulations". The Minister underestimates how much legislation exists and how difficult it is for smaller businesses to cope with it.

I should like to touch briefly on one new law that will have a most dramatic impact on a sector that is very much in the public mind at the moment. As was said on Report, there is concern in the agricultural sector about the future of small abattoirs. There is not time to mention the impact on the Meat Hygiene Service. What is most interesting in the example that I shall cite is that, through the Food Standards Agency, the Meat Hygiene Service highlighted the dangers of the Restriction on Pithing (England) Regulations 2000, which I mentioned on Report.

Currently, 254 abattoirs—about two thirds of those that still survive the current crushing burden of regulation—use the pithing process. In brief, it involves the insertion of a rod into the brain of a stunned animal to break down its nervous system to stop it kicking. A bullock can cause severe damage in an abattoir—its death throes can maim and kill people. It is a most important process in small abattoirs and it is vital for craft abattoirs. The whole organic meat industry is most concerned that small abattoirs should continue to be locally based near to the sources of livestock to keep production, processing and markets close together. There is a consensus in the countryside that it is a good idea to keep small abattoirs going.

Last year, the president of the Small Abattoir Federation predicted that small butchers will have nowhere to buy their meat and it will be a huge social, economic and animal welfare disaster if that measure were passed. The federation was told in October that it was likely to come into effect on 1 January, and there were protests in the industry. On 22 February this year, the federation was sent a letter, informing it that the measure would not be applied until 1 April.

The measure was introduced under the negative procedure, laid before Parliament on 20 February and it became law on 1 April. I have talked to the Under?Secretary of State for Health, the hon. Member for Birmingham, Edgbaston (Ms Stuart), who has been most sympathetic and understanding.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. The hon. Gentleman's comments are wide of the mark. He must talk about the Bill's contents.

Photo of Owen Paterson Owen Paterson Opposition Whip (Commons)

I am aware of that, Mr. Deputy Speaker. I was citing a specific example, because I would like the Minister to tell me whether such a measure could be improved when the Bill becomes law.

A piece of legislation was introduced and the Under-Secretary of State for Health took a real interest in the problem that it created. She took the trouble to go to an abattoir, saw the problem and agreed with the assessment of the Food Standards Agency—the Meat Hygiene Service is often rebuked for over-regulation—that the jobs of workers in abattoirs could be put at risk and that insurance costs might rise so dramatically that abattoirs could be closed. Unless substantial investment was made, many would not be able to carry on.

The Under-Secretary kindly said that I could bring a delegation to see her but, because of the foot and mouth crisis, sadly no one was free. Despite her sympathy and interest, this small measure, which is hardly known to the rest of the world, became law. However, it will put at risk many craft abattoirs, so will the Minister answer a simple question? Will the Bill improve the chances of minimising the impact of such regulations and will it preserve the small businesses that suffer so much from them?

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire 6:41, 5 April 2001

It is a matter of regret that, because the debate on new clause 1 went on for so long, my devastating attack on aspects of the Bill that would have been illustrated by my speech on amendment No. 4 was not reached.

Conservative Members welcome anything that will reduce the burdens on business. The Government might be the master of spin, but the substance is starting to wear thin, so we remain to be convinced that the Labour leopard has changed its spots.

When we were in government, the Labour party told us that it would cut red tape and that the better regulation taskforce would deal with all these matters. However, the number of regulations has soared and Lord Haskins is on record as saying that the taskforce has not worked. Reality sits ill with what the Minister said. I leave it to the House to decide whether he or the British Chambers of Commerce is correct when we consider the impact of Government policies on small businesses.

My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) has illustrated the extreme costs that have hit small businesses over the past four years. A mere handful of regulations have been altered under the Deregulation and Contracting Out Act 1994, but it surely would have been possible for the Government to make the system operate more effectively. They have done nothing, so after four years—and 30 days or so before a general election—they introduce the Bill saying, "We will deregulate; we will save small businesses", but we must ask, "Will they? Will they keep to their word?"

I admit that the Government are saying all the right things about deregulation and the explanatory notes describe the 50 or so areas that can be tackled by being simplified. However, the House and the country should not forget that the Bill is only half the equation. The other half is the sausage machine that turns out regulation after regulation. There is nothing that will stop a vast number of regulations appearing.

I caution everyone against getting too enthusiastic about the Bill. It is larded with phrases that suggest that the Minister's hand is firmly on the deregulation tap, but we must see whether he ensures that the tap operates at full bore or is reluctant to let it rip. The Bill is larded with phrases such as "if it appears to the Minister", "if the Minister considers it appropriate" and "as it appears to him". It is very much in the Minister's hands to control the effectiveness of the Bill.

We should worry about what the Committee was not allowed to change. In particular, I am concerned about the Government's reasons for rejecting our amendments. We asked to reduce the impact of the ministerial hand and to put more power into the two deregulation Committees, but that was refused. We were told that the Minister should have control. In today's long debate on new clause 1, we asked for a five-year review, but he came up with reasons why that would not be a good idea. The truth is that had new clause 1 been successful, it would have given the Committees the power to consider the regulations in sequence every five years, subject them to the provisions of clause 6 and, if necessary, tell the Minister that they should be changed. That would have put the Minister under pressure to deal with them—but no, he wanted to keep the power and control in his hands.

My hon. Friend the Member for South Cambridgeshire moved amendment No. 3, which was grouped with amendment No. 2. They were designed to reduce the way in which the Government can use the Bill to add to burdens on business. Again, our request was refused. The Committee desperately tried to make life easier for the small business man and woman. We wanted the Government to accept an amendment to ensure the use of plain English in regulations. Indeed, the Minister for the Cabinet Office twice assured the House about that on Second Reading. She said: We— the Government— have taken active steps to ensure that what regulations are introduced are necessary, simple, and easy to understand and implement. She went on to tell us that she chairs a panel on regulatory accountability whose key task is to scrutinise Departments' regulatory proposals and ensure that they meet that high standard. I call Ministers to come to the panel and justify their proposals if the panel thinks that they do not meet its criteria."—[Official Report, 19 March 2001; Vol. 365, c. 23.] We wanted to help and support her in that task, hence the amendment. The Bill must fall within those parameters. It has 15 clauses and is 11 pages long, but it has taken the regulatory impact unit of the Cabinet Office—the guardian, according to the Minister, of the interests of small business—58 pages and, I estimate, just over 30,000 words to explain its purpose.

I shall resist illustrating my case by working out how many words there are in the Lord's prayer, the creed and the declaration of American independence and ending up with the number of words in the regulatory requirements for the import of caramel, which run to tens of thousands. The fact is that small businesses are visited by inspectors who are experts in their subject. They know everything and expect the small business man to be an expert. That is not fair or right because regulations can be extremely complex.

However, we said "Amen" to the right hon. Lady's words because we thought how right she was, but, despite her assurances, in Committee we ran into a brick wall in the shape of the Parliamentary Secretary. When we argued for plain speaking, he said: it is important that the law is precise, even if it is not in plain English. He went on to claim: When people's freedoms, liberty and costs are involved, it is better to be precise than to insist on the objective of plain English, which is a subjective opinion".—[Official Report, Standing Committee A, 27 March 2001; c. 31–32.] I do not accept that we cannot phrase our regulations in plain English. They do not have to be open to a subjective interpretation or contain a series of words that might be misinterpreted or read a different way by the courts. Our businesses require regulations to be short, sharp and clearly understood. If there were more time, I would have liked to bring to the House a pile of incomprehensible regulations that would take hours to read, with no one being any wiser after having done so because they are incredibly complicated. However, time is not on our side.

I shall draw my brief remarks to a close by repeating that the Opposition welcome the Bill, as we welcome anything that will reduce the burdens on business. We recognise that business is the growth engine of our economy, and we want to see it go from strength to strength. However, the proof of the pudding will be in the eating, and I look forward to the Minister implementing the Bill quickly during the few days that he has left in his position. He can rest assured that when we are in power, I shall look forward to my hon. Friend the Member for South Cambridgeshire busily making sure that the Bill is effective, and if he does not work hard at it, I will chase him just as I will chase the Minister.

Photo of Graham Stringer Graham Stringer Parliamentary Secretary (Cabinet Office) 6:50, 5 April 2001

With the leave of the House, I shall reply to three points. The hon. Member for South-West Hertfordshire (Mr. Page) has made the same objective analysis of the Conservative party's prospects in the general election as he has of certain provisions in the Bill. I am afraid that despite spending many hours in Committee, he has not understood the importance of the consultation process and the consensual approach of the Deregulation Committee and the Delegated Powers and Deregulation Committee.

The hon. Gentleman talked about the power in the Minister's hands, but the real importance of the supra-affirmative process lies in the fact that the Minister has his or her judgment checked by one of the Committees. If there is no consensus in the Committee, the proposal will return to the Minister. During the seven years in which the Deregulation and Contracting Out Act 1994 has been operating, consensus has always been achieved on the Committee's final decision. Achieving that consensus is much more important than all the safeguards about being proportionate, not removing necessary protection and upholding the freedoms that one could normally expect to enjoy. Those safeguards are important, but in the past the Committees have operated as a significant safeguard, and I expect that they will do so in future. The hon. Gentleman misunderstood that point and underestimated the power of the Committees in the process.

The hon. Member for North Shropshire (Mr. Paterson) asked about pithing. The answer is that it depends entirely on the origin of the regulations. The powers in the Bill are directed at primary legislation, so if the regulations on pithing did not originate in primary legislation, which I understand they did not, the Bill will not apply to them.

I finish on a theme that has run through the debates here and in the other place. There is consensus in the House about the fact that no one wants to place unnecessary regulatory burdens on business, but to have a serious debate about the cost of regulations, it is necessary to define the word "burden". It is not helpful when Opposition Members or organisations representing business mix in with regulatory costs the costs of policy implementation. For example, the cost of implementing the minimum wage—of increasing wages—is not a regulatory cost, and there are almost no such costs associated with the minimum wage. The Government make no apology for improving the conditions of working people in this country.

Question put and agreed to.

Bill accordingly read the Third time, and passed, with amendments.