Regulatory Impact Assessments

– in the House of Lords at 2:45 pm on 29th March 2004.

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Photo of Viscount Goschen Viscount Goschen Conservative 2:45 pm, 29th March 2004

asked Her Majesty's Government:

Whether they believe that the regulatory impact assessment procedure is effective in ensuring that the benefits of regulation justify the costs.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, Ministers sign off regulatory impact assessments to confirm that they are satisfied that the benefits of regulation, where it is necessary, justify the costs.

Photo of Viscount Goschen Viscount Goschen Conservative

My Lords, if the system is to be taken to be working well, could the Minister quantify the benefits that justify the more than £30 billion of regulatory costs that the British Chambers of Commerce calculates to have been imposed in the United Kingdom since 1997? If the Minister disputes the latter costing, could he give us his own?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, welcome though the report British Chambers of Commerce Burdens Barometer was, some of the claims that it made were misleading. Some of the costs that were seen as red tape were actually the value of the policy to recipients, for example, the enhanced maternity rights for women, the minimum wage for 1.5 million workers, and better working conditions. Regulation is valuable. When the noble Lord was in government, no doubt he was the begetter of regulations. I could read out a long list of highly desirable regulations. We must look at the benefits of regulations as well as the costs. I am not able to provide a cost estimate, but the BCC cost assessment is somewhat wide of the mark.

Photo of Lord McNally Lord McNally Shadow Minister (Broadcasting), Culture, Media & Sport, Deputy Leader, House of Lords

My Lords, would a greater deterrent to over-regulation be if Parliament had better scrutiny of regulation, not least in secondary legislation? So much of the over-regulation comes from Ministers using powers long after Parliament has passed the original Act. For example, the Licensing Bill that we passed for 24-hour licensing, has just had 198 pages of guidance notes published by the Home Office. Some of that guidance should have been closely scrutinised by Parliament, and there should be a reform that allows Parliament to look at secondary legislation much more thoroughly before Ministers use their powers under it.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I agree that Parliament is the place where regulations should be closely examined. Your Lordships' House does a fine job in that, through the Select Committee on Delegated Powers and Regulatory Reform. The Commons already has a regulatory reform committee. Your Lordships' House debates and considers in great detail those statutory instruments and orders that come before it. We do a good job in that respect, and I am intrigued by the noble Lord's example. I am sure that Members of your Lordships' House can think of many positive examples of regulations that they consider each and every day of the year.

Photo of Lord Peyton of Yeovil Lord Peyton of Yeovil Conservative

My Lords, if the noble Lord was really satisfied with his Answer to my noble friend, I suggest that he has no grounds for it at all. It was about the most casual brush-off to an important Question that I have heard for a long time. My noble friend seeks to know whether the Government have any idea at all about the cost to themselves of their regulatory exercises, and, even more difficult, but more important, the cost to those who are obliged to obey and observe some of these absurd rules.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the whole purpose of the regulatory impact assessment process is to measure costs and benefits. It is not an easy task to quantify in the way in which the noble Lord suggests. In some ways, the British Chambers of Commerce report tells us that. Things that report sees as costs are actually, in some senses, savings, for example, the working time regulations, which the BCC report claims cost £11.1 billion. In fact, the assessment is that those regulations probably saved businesses somewhere in the region of £13 million. This business of costs and benefits is perhaps much more complex than the noble Lord would like to think.

Photo of Lord Glenarthur Lord Glenarthur Conservative

My Lords, if, as the Minister said, these regulations are regularly scrutinised, can he say how many regulations have not been taken forward as a result of an adverse regulatory impact assessment?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I can give some examples of regulations that have not been taken forward as a consequence of an impact assessment. The United Kingdom was successful in convincing the European Commission to drop the proposal on emissions limits for vehicles following an RIA; after a consultation, the Government's powers to take control of financial markets following a terrorist attack were considered unworkable and would have undermined London's competitive advantage, and that regulation was dropped; and the recent changes to transfer pricing rules were heavily influenced by the regulatory impact assessment. Following a consultation on analysis and costs, it was considered that they would be disproportionate for small businesses and, as a result, small and medium-sized businesses were exempted. Those are three examples I can cite to the noble Lord.

Photo of Lord Haskel Lord Haskel Labour

My Lords, does my noble friend agree that many regulations today lay down not what people should or should not do, but the standards which a society such as ours should try to live up to?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, my noble friend speaks a great deal of sense. That is exactly one of the purposes of regulation. It is also there to ensure fairness at work, better health and safety, the promotion of equality of opportunity, to tackle fraud and to improve maternity leave arrangements. Those are the kinds of matters that the vast majority of sensible regulations cover. I cannot believe that noble Lords opposite would want to argue with them.

Photo of Lord Cope of Berkeley Lord Cope of Berkeley Conservative

My Lords, given that some of the individual regulations may be desirable, does the Minister acknowledge that it is the cumulative weight of all the costs—the cost of taxation as well as the cost of regulation—that crushes small businesses? It is that cumulative weight that the Minister has refused to try even to evaluate in response to my noble friend's original Question.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, it is perhaps worth taking a longer view on these matters. If you look at some of the independent evaluations of the regulatory regime in the United Kingdom you will discover that they believe Britain is the place in which to invest. The World Bank's Doing Business in 2004 publication named the United Kingdom among the top 10 countries, out of 130 countries, with the least regulation. That is a powerful endorsement from a major institution. While understandably concerned about regulation, I believe that noble Lords opposite too often forget its benefits.