Enterprise Bill

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Mr. Tony McWalter (Hemel Hempstead): Does the hon. Gentleman envisage the report containing details of the investigations that have occurred even if no decisions have been made—in other words, incomplete investigations? That would be volatile and could put a company in the embarrassing situation of being reported as being investigated when no one has decided whether the grounds for the investigation are substantial.

Mr. Waterson: In the real world, the fact that a company or section of industry was being investigated would come out anyway. It is difficult to keep such matters quiet. I promise the hon. Gentleman that we will come to that matter later, and the potential effect that it would have on share prices will also have to be examined.

There may be scope for movement and we are not in the business of prescribing every last detail. We hope that the people involved will be serious, well qualified and able to sort out their own procedures to a large extent. It may not be necessary to name individual companies, but it is important that people who have dealings or fear that they may have dealings with the OFT can look at how it has approached matters. As the OFT goes on, a growing body of precedent will grow up. The report should also show how the OFT is approaching the slightly dry tasks that we are assigning to them in this legislation. Perhaps above all, the report should show, I hope, a thread of consistency throughout its approach to different situations.

Those are all concerns that have been raised, in particular by the Confederation of British Industry in a briefing. The briefing starts by saying that it warmly welcomes clause 4 but thinks that the Government should go a step further in requiring a detailed summary of the decisions and investigations, as I have suggested. It makes the point that the European Commission's annual competition reports provide useful summaries of recent cases and that that model should be adopted here. It thinks that there is potential for the OFT's reports to be too broad and general in form and therefore not much help to businesses and their advisers. I would rely on the example of the European Commission's competition reports for that purpose. I have never practised in that area of law, but the issue is clearly one that people will study in advising companies about the situations already covered by the Director General of Fair Trading or by the European arrangements.

I envisage the reports being of similar benefit. They should not be the dry, glossy reports that Members of Parliament often receive, which are immediately consigned to the wastepaper bin or to a corner of the

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office, never to be seen again. They should be real, living documents that companies, individuals and their legal and other advisers thumb through regularly. The CBI takes the view in its briefing document that a calculation of the costs should be imposed on business by OFT investigations over the preceding year. It states that such investigations

    ''often impose huge costs and other burdens on business, both in terms of professional fees and also distraction of senior management from their core activities.''

It goes on to point out that that is why the Government are now obliged to produce regulatory impact assessments to look into the likely extra burdens of proposed legislation on business. I fail to see why the OFT should be treated any differently.

In a nutshell, we are saying that the OFT should do its own annual regulatory impact assessment because in the long run that is healthy for its relationship with business and commerce. If the OFT starts out with an antagonistic attitude towards companies or some of the consumer situations in which it will be involved, that will not benefit the consumer, business or the OFT itself.

Mr. McWalter: Does not the hon. Gentleman agree that while companies might sometimes have to incur expenditure to comply with the legislation, they may also gain immensely from the existence of fair trading, as unfair traders will be forced to amend their nefarious ways? To comply with the spirit of the hon. Gentleman's amendment would require not only an indication of the costs of compliance but of the benefits that accrue to companies as a result of fair competition.

Mr. Waterson: Human nature being what it is, it would be surprising if the OFT's annual report did not trumpet its achievements—or perceived achievements. I am sure that that will happen. As has happened recently, we will embark on investigations that do not come to anything. Business ultimately has to carry the can and to pick up the costs. It is an issue that worries the CBI and its members; as it says in its briefing, it is a question of not just the direct costs of hiring lawyers or accountants but of the indirect costs of management time being spent on something not related to the company's core business. All that should be considered.

I do not know of it, but there may be some vast body of guidance that could be made available to the Committee on the rules for preparing regulatory impact assessments. I have expressed my scepticism about the guidance prepared for the Bill. It stretches credulity to say that it will place no extra burden on business. I would love to know how the Government reached that conclusion.

Dr. Pugh: No one doubts that the clause is laudable, but I have a residual doubt about how practical and realistic the amendment is. Much of what the hon. Gentleman has spoken about touches on the opportunity cost to business, which is notoriously difficult to assess. Part of that cost would involve answering questions from the OFT about how much it

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had cost it in the first place, which would be another complication. Will the hon. Gentleman explain what method of assessment he favours? There is no point in tabling an amendment if it is not practical and realistic.

Mr. Waterson: That has put me on the spot. The short answer is no. The long answer is that it is not my task to produce criteria. I threw the Minister a lifeline: there must be a vast amount of guidance on how the regulatory impact assessments are produced for Bills such as this. It still amazes me that such a conclusion has been reached with regard to the Bill, but that is another issue. Something similar could be used as a guideline for the OFT. I hope and expect that the amendment will be accepted. If it is, I expect the OFT to set out its own guidelines. Rather than reinventing the wheel, however, it would be well advised to reach for that large tome, which must exist for the purposes of legislation. I suspect that even now it is working its way down Victoria street towards us.

I reinforce what the Department of Trade and Industry says about the extra costs at all levels of the proposed legislation. Burdens on business have risen almost exponentially under the Government. It is estimated that an extra £15 billion of costs has been placed on business. In January, the Ernst and Young survey concluded that the UK economy does not aid entrepreneurial endeavour. Few of us have the findings of the 2001 UK Global Entrepreneurship Monitor far from our bedside table. It concludes that the UK continues to lag behind countries such as the United States, Australia and Mexico in overall entrepreneurial activity.

The British Chambers of Commerce produced the figure of £15 billion of red tape. I suspect that that is already out of date, as was reported in the Financial Times on 25 March. Even that figure does not include the financial cost of the national minimum wage, which I notice went up yesterday or today. The Institute of Directors has attacked the Government's promise to cut red tape and, in a survey, 93 per cent. of its members believed that the problem of excess bureaucracy had got worse.

The British Chambers of Commerce have produced their own burdens barometer, which contains a long and detailed list of all the legislation and regulation introduced by the Government that they say cause extra burdens on businesses. There is not only red tape, but extra taxes. The CBI has just come up with its latest figure on business tax under the Labour Government, which it says has risen by £5.8 billion a year. That is a considerable increase on the CBI's previous figure of £5 billion. The list of red tape measures goes on and on: trade union recognition; maternity leave; additional maternity leave; parental leave; time off for domestic grievance; the right to be accompanied in such matters; the part-time workers' directive; the minimum wage; stakeholder pensions; the Welfare Reform and Pensions Act 1999; and the working time directive.

Miss Johnson: Is the hon. Gentleman saying that he would end all those provisions?

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Mr. Waterson: That is a game that two can play: in this case, one Government Minister and one Opposition spokesman. We always get such a reply from as elevated a figure as the Prime Minister downwards. However, that is not the point. It is not for us to pick out individual provisions that we do not want or that we want to reverse. Ministers must accept the cumulative effect of all those measures. I regularly talk to the CBI and the Institute of Directors and they often have no quibbles with individual measures, such as those contained in the recent Employment Bill.

The problem occurs when one adds them all up. If a company employs more than a handful of people, it quickly arrives at the position where it must employ an extra person simply to keep abreast of all the forms, red tape and regulation. That is the cry of British business, both large and small, and it is why we must be careful not to allow the Bill to heap more burdens on business. We have to navigate between the proverbial American rock and the hard place—between the good of improving competition and helping consumers and the bad of harming business and indirectly harming consumers who, after all, are either employed by them or consume their products at a particular price. We must be careful and it is no good Ministers pooh-poohing over-regulation. All they need to do is talk to business organisations up and down the country.

I make no apology for again quoting The Independent—hardly an organ of the Conservative party—on the Bill:

    ''these are largely candy floss measures which fail to address the main problem facing Britain's enterprise economy—namely the growing burden of regulation, especially as it concerns the labour force . . . the Government's pro-business agenda is at odds with its social objectives, for business will always do best if the Government simply gets out of its way.''

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