Second Reading

Part of Small Business, Enterprise and Employment Bill – in the House of Lords at 5:24 pm on 2nd December 2014.

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Photo of The Earl of Lindsay The Earl of Lindsay Conservative 5:24 pm, 2nd December 2014

My Lords, I welcome the Bill in its many parts. I particularly welcome Part 2, having had a long-held and active interest in better regulation. In that context, I should declare an interest as a former member of the Better Regulation Commission and the Risk and Regulation Advisory Council. I am at present a member of the better regulation strategy group, which advises the body chaired by the noble Lord, Lord Curry—the Better Regulation Executive. With this background, I shall talk about the four measures to which he also referred, which are set out between Clauses 17 and 34. The first is the proposed duty on Ministers to appoint an independent small business appeals champion to each national non-economic regulator. Driving greater efficiency, accountability and transparency into the interaction between regulators and those they regulate has to make sense, as does having a simpler, more effective, more transparent, less costly and better understood series of processes by which small businesses are able to challenge regulators’ decisions and behaviour.

For both the small business community and government to be confident that regulators are delivering against the goals relating to appeals and complaints set out in the new statutory regulators’ code is a positive step. Equally, ensuring that regulators have appeals and complaints processes that work well, are fit for purpose, rectify wrongs with minimal delay and are sensitive to businesses, in particular small businesses, will help to address any inefficiencies and unintended outcomes arising from the implementation of regulations.

The second measure I welcome is of very much greater significance in terms of the breadth of the benefit it will bring to the business community and civil society. This is the proposed duty on the Secretary of State to publish a business impact target, similar to one-in, two-out, for the duration of a Parliament. I believe that the one-in, one-out, and now one-in, two-out, approach has been and is working well. It is providing a powerful incentive on departments to measure, reduce and offset new burdens on business. It is important that future Governments maintain this progress and ensure that the regulatory system is as streamlined as it can sensibly be and delivers desired regulatory outcomes as efficiently as possible. I therefore wholly endorse a statutory requirement that the Government should publish an overall target for the economic impact of new legislation for each parliamentary term as well as a mid-point milestone target. I endorse that there should be transparent reporting of the burdens on business arising from new regulations and that the reporting should be underpinned by robust independent verification. The current Regulatory Policy Committee has proven itself to be very effective in providing robust independent verification, and this

Bill rightly ensures that the Regulatory Policy Committee or a similarly capable body will continue to do so in future. I equally endorse departments being subject to annual and final-year reports that include assessments of: actions taken to mitigate the impact of new regulations on small businesses as part of the annual and final reports; and instances of gold-plating as part of the same reports.

The third measure that I welcome is the proposed duty on Ministers to ensure that, where appropriate, all new regulations affecting business will contain a statutory review provision on a five-year cycle to ensure that regulations remain effective and necessary and that businesses are not subject to unnecessary burdens. I recall that it was a continuing concern of the Better Regulation Commission that too little legislation and too few regulations were subject to post-implementation scrutiny and the benefits that can arise from such a process. The causes of better regulation and good government are both well served through regular reviews that assess the extent to which the original objectives of regulations have been achieved, and if not, why not; and whether those objectives remain appropriate, and, if so, whether they could be achieved in a less burdensome way.

This proposal is especially welcome in the context of the Deregulation Bill, which is currently before the House. Two important lessons arise from the Deregulation Bill. The first is that seeking to retrofit better regulation and deregulatory principles to the stock of existing legislation where there are no built-in reviews is a much more difficult and time-consuming proposition than seeking to improve the flow of new legislation where one can embed such principles at the start. The second lesson is illustrated by the sprawling nature of the Deregulation Bill, which shows just how widespread and inherent the need is to be able to revisit regulations and revise them as and when necessary. All legislation and all regulations, however well intended, intelligently designed and shrewdly enacted at the outset, have the propensity over time to become the cause of inefficiencies, anomalies and other consequences that were never originally intended or anticipated.

Relying on the occasional so-called portmanteau Bill to address regulations that are no longer fit for purpose, as is the case with the current Deregulation Bill, is an inefficient way in which to tackle an inevitable problem. However, embedding a rolling statutory review provision on a five-year cycle, as is proposed in this Bill for new regulations, is altogether a smarter, more intelligent and more efficient approach to updating and correcting regulatory inadequacies.

For a similar reason, the final measure I shall briefly touch on is the intention to create statutory definitions of small and micro-businesses so that, where appropriate, those two crucial sectors can be exempted from regulations that are judged to be disproportionately burdensome. Ensuring that all new regulations affecting business are not only reviewed regularly, but that small and micro-businesses in appropriate circumstances can also be exempted, has to make sense. I look forward to seeing this Bill have a successful passage through this House.