Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40. Was it your own hamburger stall or were you just employed to sell hamburgers?
  (Mr Andrews) It was a franchise. A number of my colleagues do, however, have direct experience of working in small businesses. We are taking some pains to recruit people to the team who have that sort of background and experience. We are certainly hoping to undertake some exchanges of staff with some of the representative organisations. We are hoping to recruit a retired local authority chief executive to work on our local enforcement work.

  41. Obviously there are lots of economists and cost benefit analysts and all this sort of people, but the issue is to understand what it means to someone who might be an entrepreneur, providing jobs and producing products to be overwhelmed with form filling when they could be doing something else.
  (Mr Andrews) May I tell you what we do do to try to inculcate that kind of understanding? Every member of my team has to spend a certain amount of time each year working with a small business.

  42. A hamburger stall?
  (Mr Andrews) No, we have expanded a little since then. We do cover some pretty small outlets as well. We have tried to visit local Chambers of Commerce particularly to meet the members there and to throw the agenda open, to discuss issues.

  43. What about secondments into these little businesses in the Chambers so people can work with them?
  (Mr Andrews) I have had one member of my team working with a small business this year. That is something we shall expand.

  44. On the cost benefit analysis of the working families tax credit, would you evaluate both the cost to the business of the form filling and the like alongside the benefit to the business of lower wage costs? Obviously the working families tax credit has allowed labour market access for more people who would otherwise not have been able to get a job. Are you able to make those evaluations or does that not come into the equation?
  (Mavis McDonald) We would expect our colleagues in the Inland Revenue to make that distinction between the policy implementing the working families tax credit and the precise requirements they imposed in terms of the information they needed, for example to collect the tax.

  45. My experience in talking to small business is that they jump up and down and they say the working families tax credit is awful and they have to fill in more forms. Then I point out that the fact is that if they did not have the working families tax credit their wage costs would be higher, their profit would be lower and they look at me aghast and realise I am right. Is that assessment done?
  (Mavis McDonald) That kind of assessment is implicit in the RIA process and the distinction we were discussing earlier about the costs of introducing a new policy that go with that policy and the actual costs of implementing the policy. It is the kind of area where we have several examples of where the RIA consultation has been successful in reducing some of those administrative costs.

  46. May I ask a before and after the event type of question? Tomorrow we have the pre-budget report and I do not know how detailed that is going to be. The way politics work in Britain is that things are suddenly announced. Would you have had any impact in terms of giving any advice beforehand of regulatory impact on possible considerations on the pre-budget report or is it the case that you engage after the announcement, trying to keep down the regulatory impact of some ideas?
  (Mavis McDonald) We would expect to engage where relevant after the announcement.

  47. Is there a problem here that things could be announced and then you could come along and say the regulatory impact is overwhelming and things are pulled back? Are there any examples of that?
  (Mavis McDonald) There are precedents about the way budget matters are approached and there is no exception to that kind of precedent for regulatory impact assessment. In some of the areas which are covered obviously there are ongoing discussions beforehand. With ideas like an aggregates tax for example, there was a lot of discussion before a decision was taken. There may be areas where there has been quite a lot of tension.

  48. In terms of Government efficiency and value for money and all these things which should be considered, it seems to me that the expertise you have at your disposal could be engaged before some massive announcement is made rather than having to unravel it and fall back a few steps. Is what you have just said about aggregates an example of where you are looking perhaps at the regulatory impact on different options in a pre-budget or budget report which would then be put at the disposal of the Treasury? Or is it just my imagination?
  (Mavis McDonald) That is an example of a proposal I happen to know about from a previous post, where Ministers had made it known publicly that this was something they wished to look at and they wished to understand the impact on industry of going down that route against the broader benefits to the environment of imposing the tax. We and the Treasury and Industry in that case, did quite a lot of work before Treasury Ministers took a decision on the way in which they wanted to proceed.

  49. Then Mr Gardiner pressed you on whether there had been any examples of a proposal being pulled and you said no. Is a regulatory impact assessment a requirement now?
  (Mavis McDonald) Yes, there is a formal requirement on Ministers to meet the requirements in there right up to the signing off of a formal statement as legislation comes to the House.

  50. How do you think departments look at you? I imagine myself as the Department of Health or whatever, a department, and you come along and say you are going to do a regulatory impact assessment. Do they take up these offers of urging a consultation with SMEs and thinking of alternatives to regulation? Are there any examples of anyone doing things like this? Does anyone take any notice in departments?
  (Mavis McDonald) Yes, there are examples. We do work quite closely with internal units within departments. We are meeting them all the time. That is the forum within which we exchange what is working well and what is not working well. The Small Business Service would be involved with us on that kind of exchange if we had particular difficulties.

  51. Are there any examples of where someone is thinking of a regulation, they want to do something, they have an objective, they think of a regulation and then because of this new culture they think of an alternative? Are there any examples of someone thinking of an alternative to regulation?
  (Mr Andrews) The problem with answering that sort of question is that a lot of the discussion is inherently confidential and behind the scenes. Often we are involved at a very early stage and we can indeed head off unwelcome proposals and we have done that.

  52. Can you think of any? It need not be Government, it could just be some civil servant thinking of an idea and somebody says "Why don't we do it like this?".
  (Mr Andrews) The public do of course. We have intervened on the various proposals on parental leave where we have published our response. You can read it. We opposed the automatic right to return. We have opposed the automatic right to flexible working. You can trace through the interventions the Small Business Service have made, but we have only made those interventions because we have undertaken really quite detailed consultations, a series of focus groups, and we have reflected the view of small business. We are not ourselves taking a separate policy line, but we are able to reflect back the practical views of small business. We have certainly done that in a range of areas. I have a member of the Inland Revenue staff working on my team for example. She has run joint focus groups with the Inland Revenue and small business on a range of issues. The Inland Revenue listen very carefully to some of the outcomes there.

  53. May I ask you specifically about small construction business? Without being disparaging about anybody, a lot of people in the construction business are good at construction, they are not naturally accountants or anything like this. The more regulation and form filling and this sort of thing, the more they are likely to be driven into black market and illegal operations. Would you accept that?
  (Mr Andrews) I do not accept that proposition as it stands, because I have no evidence for it. I would accept the importance of providing sensible guidance in a form which is usable and user friendly for a particular industry.

  54. When we had your colleagues from the Inland Revenue along and I put to them that they should be going around looking at building sites and whether specific work was being done and checking their trading accounts and all the rest of it. I do not know whether they did it, but it is clear that everybody has examples of builders going round fiddling and all this sort of stuff. It may be the case, to be fair, that they are avoiding this bureaucratic nightmare. Are there opportunities where you could give more support to small businesses in the building trade?
  (Mr Andrews) Yes, I am quite sure there are. The Inland Revenue introduced a regime for the construction industry last year and we are looking very carefully at that to see whether it is working effectively and to see whether there are any lessons we can draw about how it can be improved?

  55. We hear about sunset clauses and all this sort of thing. Is there a real push to try to reduce the net amount of regulation, both minimising new and trying to strip out old and obsolete and unnecessary, and to consolidate regulation and streamline? Are you leading the way on that?
  (Mavis McDonald) May I deal with your last point first?

  56. The builders?
  (Mavis McDonald) No, on stripping out regulation. We are actively working with departments asking them to look at the areas where they can use the new powers in the Act to strip out existing legislation.

  57. Do you have any success stories?
  (Mavis McDonald) We have asked departments to give us their plans by the end of the year. It looks as though there are significant opportunities including some which would consolidate on legislation. There are many fire regulations for example where we might pull a lot of deregulation together. We already have a reasonable programme going forward through the House Deregulation Committee, but we would expect to have the capacity to increase that as we get into the new year.

  58. Can you say to this Committee now that you anticipate that at least there will be a slowdown in the net amount of regulation, namely combining a smaller increase and some of them being stripped out? Would you see that as a personal target and ambition of yours or is that unrealistic?
  (Mavis McDonald) No, for the reasons I explained earlier the role of the Regulatory Impact Unit is to look at balance and proportionality. It is not to second guess Secretaries of State and what they think are relevant policy changes in their various areas. There are good reasons for regulation in some cases as well as poor reasons.

Mr Bacon

  59. May I start by continuing on this question of significant opportunities for stripping out regulation? I am sure village shopkeepers will be delighted to hear that. It says on page 16, paragraph 1.6, that the average village shopkeeper estimates he spends three to five days per month dealing with government administration. Do you find that figure unacceptably high?
  (Mavis McDonald) It sounds very high. I do not have detailed information on what was behind that figure.

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