Examination of Witnesses (Questions 80
MONDAY 26 NOVEMBER 2001
CB AND MR
80. When will that be implemented by?
(Mavis McDonald) I do not know because it will partly
depend on individual departments' speed of getting that up. I
think the buildup over the last year since the work was done on
the report has been quite significant.
81. Finally a question about enforcing arrangements.
The report refers to the Gaming Board as an example of how the
RIA provides an opportunity to look at the whole method of regulation
and whether it can be done differently and the fact that big public
quoted companies are involved in gaming means that there is a
reputational interest and therefore they have had their own compliance
departments put more resource into that. How widespread is that
phenomenon and how often does it lead to a complete re-think on
how regulation is done?
(Mavis McDonald) We do suggest to departments in the
guidance that they look at methods of compliance and the effectiveness
of enforcement and the NAO report says this is an area again where
we might think more between us about giving better guidance and
better examples of how you might do this. There are quite a few
cases where departments have retreated from full regulation because
they thought the cost of enforcement on the impact they were trying
to achieve was going to be disproportionate and one or two examples
are given in the report; rules in relation to butchers' shops
and so on is one. We do have examples of the kind of combination
of the two things coming together to change the approach adopted,
including not going down the regulatory route at all.
82. A question about the overall burden of regulation.
Where do you think we shall be at the end of this Parliament in
terms of the overall level of regulation, the overall regulatory
burden compared with where we are now? Will it be lighter or heavier?
(Mavis McDonald) I am sorry, I am sure I am beginning
to sound repetitive, but we do not measure the cumulative burden
in that sense. Ministers take the view that the role of the RIU
on advising them is about getting the balance right. Given that
we are working with a shifting scene, there is no target end result.
What it is quite important to do is to establish the kind of approach
adopted in the RIA for all new policy development of proportionality,
of proper discussion earlier so that people really understand
the impacts of what they are doing and providing the simplest
way and then helping people after the event to understand what
is involved in implementation. Things have happened already. The
SBS now ask for 12 weeks before anything comes into effect, so
there is time for them to help get people geared up and ready
when implementation comes into effect. Those are the areas in
which we can improve the climate without necessarily being able
to give you a direct answer to your question about the total burden.
Chairman: We cannot really ask you on that;
we have to focus on the RIAs specifically. You have done your
best to answer that question.
83. My experience is slightly different from
some of my colleagues. I would tend to take the view that were
it not for regulation and legislation quite a number of businesses
in this country would have small boys climbing chimneys. Does
that seem a fair point to you?
(Mavis McDonald) The principles of appropriate regulation
which were set out by the Better Regulation Task Force certainly
include protection of vulnerable groups and the health and safety
of the general public. That is where questions about the right
balance of the kind of regulation you need certainly are brought
84. We seem to feel that small businesses are
always greatly put upon, but there are quite a few small businesses
in my areas which have certainly been in the habit of selling
out-of-date foods to relatively poor constituents of mine and
indeed have watered the beer. It was very, very unwise in a number
of pubs ever to drink the dark rum, because that was what all
the slops went into. I take a slightly different view from some
of my colleagues. Since we are recounting personal stories, one
of my early jobs used to be in a bakery where, when the vans came
back to the bakery with the unsold pies, my job was to break open
the pies, take the meat out and throw it into the meat which was
being prepared for the next day's pies. Theoretically there were
pieces of pie which had been there since the opening of the bakery.
I presume we look to people like yourselves to save us from that.
To what extent is it true that small businesses are never going
to be happy anyway, so we should not actually bother trying to
satisfy them? They are people who are unreasonable, they are like
the weather: it is something about which we get complaints but
what is the point?
(Mr Andrews) The very strong message the Small Business
Service receives from the small businesses we talk to across the
country in a whole variety of different sectors is that by and
large they are perfectly content with regulation that broadly
meets the principles that the Better Regulation Task Force have
set. They want the regulation to be transparent, they want to
know what it is they actually have to comply with, so that when
they are throwing the meat pies into next day's meat pies, at
least they know they are breaking the law, which is very important.
They need to feel that there is some accountability for the process,
that actually someone is responsible for managing the regulation
properly, someone is responsible for the overall regime. That
is an important point that small businesses respect. There is
a very important point about proportionality and a lot of the
discussion we have had has been about balancing the costs and
benefits. Where you have perhaps some particularly sensitive industrial
sector, by and large they would accept that there is need for
a very specific carefully focused regulation. Small businesses
generally, certainly reputable small businesses, want to feel
that regulation is applied consistently, that it is applied in
a sensible way across the board. To answer your very particular
point, which I well understand, they want to feel that it is targeted
on the people who are trying to evade the system, trying to break
the rules. One of the themes I have tried to pursue is the importance
of enforcement. What we would argue from the small business point
of view is that it is very important that the local enforcement
efforts are targeted on those companies who are deliberately seeking
to evade regulation. Where companies make honest mistakes that
should be recognised.
85. Great. I understand that. That is a very
fair point, particularly the last one. May I just mention that
it is a peculiar combination that we have in front of us: a man
who used to sell hamburgers and a woman called McDonald. I wonder
how much planning went into that attendance here today. May I
turn to the question of the EU from which at least 40 per cent
of our regulation comes? To what extent in assessing how this
should be implemented here, do you take into account the fact
that there are differential patterns of implementation elsewhere
within the EU?
(Mavis McDonald) As normal, when we are negotiating
a European directive, and it is a UK negotiation, then we would
expect to know where all parts of the UK stood and what the variations
of the regimes were and that they would be part of the teams which
were engaged in either the working parties working at official
level or whatever negotiation was going on.
86. No, this is not the question of negotiation
about what should be in the directive. It is a question of once
you are actually implementing it. I have had frequent complaints
from businesses in my constituency that we adopt all the EU regulations
to the letter and a lot of their competitors abroad do not bother
at all and why are people doing this so unfairly. You can see
the point there, can you not? If Spanish, Italian, Greek competitors
are breaking all sorts of regulations which are costing them,
why should they abide by them. Is that something you take into
(Mavis McDonald) It is something which individual
departments who know their markets take into account certainly.
In my experience where companies have reported back that they
have found completely different or unfair implementation of directives
abroad then we have followed it up with the Commission, but it
is quite a tricky one to get on the agenda.
87. So the remedy you would see there is that
you pursue it through the Commission which in turn then has to
pursue it with the relevant country, which of course is pretty
meaningless because if they have not been doing it before, they
are not likely to change. Do you not consider in these circumstances
providing for a level playing field by loosening your grip?
(Mavis McDonald) If it is a directive which is in
the process of being developed then we would hope that those comparisons
would be part of the context within which the UK was formulating
its position. Once a directive is in operation, then we have procedures
here which make it a law here, so we would expect that once we
had the legal framework in place in the UK, then we would have
systems which expected people to abide by that legal framework.
We do have some examples, which have not to my knowledge particularly
come through the RIA management route where complaints have led
to the Commission taking up with other member governments the
way in which they do carry out the implementation, but it is a
difficult process to work through.
88. That is a very cumbersome exercise, is it
(Mavis McDonald) Yes.
89. Therefore British business is entitled to
be unhappy about rigorous enforcement of EU regulations which
are seen as optional by other jurisdictions.
(Mavis McDonald) I mentioned earlier the transposition
conference we had had. That is part of a general discussion we
have been trying to have to promote the kind of approach to balance
and lightness of touch in following through our own detailed implementation
which we have adopted for RIAs more generally.
90. Is that a long way of saying basically that
in these circumstances you are prepared to have a slightly lighter
touch and you recognise that everybody else is ignoring it?
(Mavis McDonald) We would view our role as encouraging
our colleagues here who are dealing with Europe, when thinking
about the way in which they are negotiating directives and then
thinking about the implementation, to adopt the kind of approach
and principles that we are adopting for RIAs here in our own legislation.
91. That is as far as I am going to get on that
one. May I clarify whether or not you believe that there is a
lower hurdle in the EU for the implementation of regulations?
You have stressed to us the extent to which it is really quite
a difficult and intricate business and you assess things very
carefully. I have the impression from many of my colleagues in
my constituency that they feel the EU rushes out regulations without
proper study more than we do perhaps in this country. Is that
(Mavis McDonald) I have to confess my own experience
is limited to certain areas of EU activity so I cannot answer
across the board. It partly depends on the nature of the relationships
you have with the particular part of the Commission which is responsible
for developing policies. In some areas it is easier to get alongside
and work collectively to develop it than it is in others.
92. That does not answer the point I was making.
I was really asking whether or not you think in general there
is a lower hurdle in the EU than there is here.
(Mavis McDonald) I am not sure I really understand
93. It is actually a pretty fair question. If
you do not want to answer it, just say so, but it is a pretty
fair and clear question.
(Mavis McDonald) I am being genuine here. I do not
quite understand what you mean by lower hurdle. If you mean: do
I think the kinds of regulations which come out of the EU are
easier for people to leap over than the kind of hurdles which
94. No, almost the converse in a sense. The
hurdle we have here before we introduce regulation will be higher
and they are more likely to rush out regulation in the EU willy-nilly.
(Mavis McDonald) My own experience suggests it varies
depending on which part of the Commission you are dealing with.
In some areas that is true and in some it is not.
(Mr Andrews) It is important and we can do a lot more
particularly for small companies to push information through to
the European Commission about the particular issues they are dealing
with and the small firm interest in those issues. That is very
important and we need to do that. We have set up, and the Small
Business Service is part funding, a little representative office
in Brussels to try to coordinate the work of the various small
business representative organisations in Brussels which lobby
the Commission and other Member States on these issues. There
is quite a lot we can do.
95. May I turn to the particular example which
is mentioned in the report about the minimum wage and the process
by which you decided not to put information about the minimum
wage on pay slips and the vested interests which are involved
in that. It does strike me that all of the negotiations you undertake
are all very much with those who have a vested interest in minimising
the effectiveness of these regulations, the lightness of touch
and all the rest of it and that there is no countervaling influence
on your consideration from representatives of the poor, the underpaid,
those who are most likely to be exploited, those who represent
those who work in the caring industry. I have had a number of
constituency cases where people have been told the national wage
does not apply to them. They have gone along and believed that
for a while, in circumstances where something like, to choose
one example, the printing of information about the minimum wage
on a wage slip would have overcome that difficulty. Clearly the
interests of these poor people have been disregarded. How do you
strike that balance between the vested interest which would seem
to me to have captured you and the countervaling interest of Government
(Mr Andrews) We have not been captured by vested interests
but I would make one observation which is that it is very important,
whether it is the Small Business Service or any department, that
we make very clear to small business, indeed any business, what
is required of them. I certainly think we are doing a lot to make
very clear to people running small businesses what it is they
are expected to do under the law. That perhaps is a partial answer
to your concern.
(Mavis McDonald) The national minimum wage was something
about which there was a great deal of consultation. It is possible
to help departments make sure that they access the groups you
are talking about in the course of the consultation to get that
kind of response back in as well. I do not know enough about the
detailed ways in which DTI works through this but at some point
there is a judgement for Ministers on where they think the balance
lies in response to the consultation.
96. Up to a point. Here is an example where
deregulation or assessment has let down a particularly vulnerable
group. You clearly have been thereabouts arguing the case on behalf
of what is seen to be your constituency; you are there representing
the views of small businesses in these matters. In this whole
process no countervaling argument is being put unless it is the
Ministers themselves who originated the policy, but they will
have so many other balls in the air, that the system is therefore
rigged against those people who are in greatest need and do not
have anyone to speak for them.
(Mavis McDonald) The regulatory impact unit's view
is not just to see that the small business views are represented.
The small business views are clearly fed into the process in order
to make sure that they are heard. The kind of commentary the regulatory
impact unit will want to make back to a department about how they
are proposing to handle their RIA would be about the range and
extent of the consultation they are having with all the interested
97. May I start right at the beginning and ask
you whether you can tell us in your own words the purpose of a
regulatory impact assessment?
(Mavis McDonald) The purpose of the regulatory impact
assessment is to make sure that as a new policy is developed which
might lead to more regulation, the full impact of that regulation
is thought through, the alternatives to achieving the desired
benefits of the policy change are assessed in relation to regulation
or other types of approach to rollout and that the widest possible
consultation and engagement with those who will be affected by
the proposed change takes place before final decisions are taken
which may well have additional costs on some of the people who
will be affected by the change. It is about balance and proportionality.
98. Going back to something Mr Gibb asked earlier
about whether the costs to society are taken into account, you
would say, would you, as I understand your original response,
that yes, that is one of the things which would get taken into
account but a number of other things as well such as cost to businesses
and so on.
(Mavis McDonald) Yes.
99. Going on from there, it seems to me that
a lot of regulations I have come across in the House result from
something happening, some disaster taking place. There was a case,
was there not, a while back where some canoeists got drowned and
we immediately started wondering what we could do to make sure
adventure holiday companies were better regulated so that this
did not happen again? How in that sort of situation, if you are
proposing new regulations, would you cost the effect on people's
(Mavis McDonald) Even in tragic circumstances like
that where people want to make a change, you can still have a
wide discussion about the real impact of what you are proposing
to do and whether it is the best way of targeting on the precise
change you are proposing to effect and whether you are proportionate
or not. Indeed in that particular one, people are re-visiting
whether or not the requirements were too heavy for the impact
which was sought. Even if you are attaching the highest value
to life, it does not mean that we cannot do a proper assessment
of the way in which you want to effect the change to protect life.