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Brian Cotter (Weston-super-Mare) (LD): Would it be useful to supplement impact assessments with an annual report from the Government on the cumulative effect of regulations introduced over the previous year? That would be a useful way of assessing the annual impact of regulations on businesses.

Jacqui Smith: The hon. Gentleman makes an interesting suggestion. My hon. Friend the Minister for
 
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Employment Relations, Competition and Consumers tells me that there will be an annual statement on employment rights. However, I am wary of the suggestion proposed in the ten-minute Bill to which the hon. Member for Eddisbury referred that we should introduce a few more assessments of our assessments. We would reach a situation in which we undertook regulatory impact assessments on regulatory impact assessments, but that would neither deregulate, nor cut bureaucracy.

The DTI is helping businesses to adapt to changes to employment law in practice. We have limited the introduction of all new domestic employment regulations to two commencement dates per year: 6 April, the start of the tax year, and 1 October, when the minimum wage is revised. We are consulting on whether to extend that approach and the areas in which it could be done.

Since January 2000, under the vigorous leadership of my hon. Friend the Minister for Small Business and Enterprise, the Government have undertaken several measures to reduce the burden of regulations on small businesses. Employers with four or fewer employees are now exempt from requirements to provide access to stakeholder pensions and to deduct pension contributions. We have increased the company law thresholds for small and medium-sized enterprises to the maximum possible under EU law, thus doubling the amount of investment eligible for first year capital allowances. My hon. Friend the Member for North-West Leicestershire (David Taylor) referred to this year's increase in the audit exemption threshold, but to respond to a point made by the hon. Member for Eddisbury, I hardly think that an increase in the threshold from £1 million to £5.6 million represents a standard form of annual uprating—it is a major increase. Of course, the increase in threshold benefits a further 69,000 companies over and above the 820,000 that are already exempt, and that measure alone is expected to save companies £94 million a year.

We have modernised and simplified value added tax and cut corporation tax. Such actions explain why an Organisation for Economic Co-operation and Development review of EU countries in January 2004 showed that the UK had almost the lowest administrative costs and the fewest regulations for entrepreneurs in the EU. That picture is confirmed by business leaders. Earlier this year, Charles Dunstone, the founder of Carphone Warehouse, stated:

"I have to say as we run businesses in 11 European countries, there is no doubt in my mind that the UK is the easiest place to run a business as far as regulation and red tape is concerned".

However, as the hon. Member for North-West Norfolk (Mr. Bellingham) pointed out, we need to find alternative solutions to regulation, which is why, in our approach to corporate governance, we regulated where necessary to bring transparency to directors' pay, but we took take a non-statutory approach, on the whole, to the problems caused by the Enron and WorldCom scandals. The DTI initiated Derek Higgs's work on the role of non-executive directors and the Financial Reporting Council commissioned Robert Smith's report on the role of audit committees. Their recommendations were included in a combined code produced by the FRC that has already made a significant difference to the effectiveness of audit committees and non-executive directors.
 
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The Enterprise Act 2002 includes many key instruments for deregulation, including codes of practice, which were approved from the Office of Fair Trading. They provide a non-statutory but nevertheless effective means of offering more consumer protection, particularly in used car sales; car repair and servicing; credit, including debt management and credit repair; funerals; travel; estate agents' services; and direct marketing. Regulatory reform is therefore a priority. International surveys show that the United Kingdom is at the forefront of such reform. The World Bank's "Doing business in 2004" included the UK in the 10 countries—out of a total of 130—with the least regulation.

We are not complacent. Regulatory reform is a priority and the regulatory reform action plan published in December 2003, to which the hon. Member for Eddisbury referred, includes over 650 deregulatory measures that apply across Whitehall. We have already delivered on 300, including simplification of the capital gains tax regime; reduced tax and regulatory burdens for small businesses when starting up; a VAT simplification package; and amendments to maternity pay, benefiting an estimated 10,000 employers. The Government have laid more than 24 regulatory reform orders before Parliament, 17 of which are already on the statute book.

The DTI has led the way on better regulation, including the setting up of the vehicles industry policy and European regulation group—snappily titled VIPER—which brings together a range of businesses involved in the automotive industry and allows an earlier and more robust consideration of policy options. In an independent survey, VIPER stakeholders gave the group a ringing endorsement. That approach to consultation is now being extended to the chemical, construction and retail sectors. We will, however, go further, which is why, in the Budget in March, the Chancellor announced a review of inspection and enforcement by Philip Hampton to identify what the Government can do to ease the burdens faced by businesses, and why we have announced new measures for strengthening the scrutiny of major regulatory proposals, including a panel chaired by the Prime Minister whose members include David Arculus, chairman of the Better Regulation Task Force, and William Sargent, chairman of the Small Business Council.

The motion refers to the disadvantages of Europe and European regulation—a matter that the hon. Member for Eddisbury raised, as Conservatives are wont to do. I wish to highlight the importance of raising the European game on better regulation, but first it is worth responding to the Conservative myths about the constitution. In our negotiations on the constitution we got what we wanted on the economy. We rejected tax harmonisation, protected our energy interests and achieved the right legal status for the charter, which is to be based on principles, rather than rights that could undermine our own national practice. The EU constitution will not result in more regulation, as it gives more power to national Parliaments. It is about enlargement and reform and will increase the opportunity for our businesses to operate in a bigger trading area than the US and Japan combined, as EU trade accounts for some 3 million UK jobs. It provides
 
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a strong base to pursue our agenda. The UK is a strong voice in Europe for competitiveness and competition and for better regulation. We are leading the campaign for regulatory reform in Europe. We are making that commitment a reality, working with the Irish, Luxembourg and Dutch presidencies, which all share our aims.

We are leading the work on better regulatory impact assessments, including assessment of the impact of new proposals on Europe's competitiveness. We are calling for more engagement with stakeholders and for further simplification, taking our regulatory reform programme into Brussels and working with the Commission and European partners. That is on the agenda for the European Council now. We did not need to wait for the new constitution to do that.

We have shown what we can do through active engagement, particularly with regard to the REACH—registration, evaluation and authorisation of chemicals—proposals on the chemical industry. By engaging actively and focusing on the need for light-touch but effective regulation in a crucial area, we have already reduced the cost to industry by more than €10.5 billion, working with business in the UK and across Europe to challenge the Commission's proposals. We are still on the case, looking for streamlining and simplification, and working with business to improve the environment for us all.

The Government are committed to ensuring that we have light-touch regulation, that administrative burdens are kept to a minimum and that existing regulation is kept under review. Regulatory reform remains a priority. Today we have had the chance to outline some of the progress that we have made. The debate has also given us the chance to challenge the view that regulation is never necessary. There are times when we will take action to protect the vulnerable, defend the environment and promote fairness at work. By so doing, we will support and protect good businesses, build a competitive framework for enterprise and continue the economic success that we have delivered in the past seven years.

5.57 pm

Malcolm Bruce (Gordon) (LD): I listened carefully to the 35-mintue speech from the hon. Member for Eddisbury (Mr. O'Brien), which was delivered at considerable speed. I assumed that it would contain some radical, innovative proposals, but it amounted to a rant, devoid of any serious practical proposals.

Perhaps we should all acknowledge that regulation and deregulation is a difficult area. Often, when businesses complain about regulations and are asked to spell out how we should deal with them, they are unable to be specific or they cite regulations that we would not want to get rid of. For example, the chambers of commerce include in their deregulation proposals the asbestos regulations, but we know we must deal with those. We should all recognise that we need better regulation and, yes, less regulation.

The Minister mentioned the Better Regulation Task Force, and she is entitled to take comfort from its proposals that are supportive of the Government.
 
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However, there are other proposals from the taskforce to which she did not refer, but which contain a mechanism that is valid—that we should apply a principle of new for old. In other words, new regulations should lead to the termination of old regulations, there should be an attempt to limit the number of regulations, and wherever possible, regulations should have sunset clauses so that they expire. If they have to be renewed, they have to be rejustified and the debate is reopened.

We welcome the fact that the Prime Minister has said that it will be a priority for the UK presidency of the European Union to promote deregulation. We on the Liberal Democrat Benches will watch with interest to see how the Government take that forward, and we would be willing to feed constructive suggestions into that process, given that European regulations account for 40 to 50 per cent. of all regulations in the UK, as the Better Regulation Task Force identified.

The Government's track record has not been fantastically successful on some of the more important EU regulations. The Government have tended to come in late and try to resist the regulations, rather than being an organic part of the shaping of them. I cited in our amendment the directive on fridges, end-of-life vehicles and electrical and electronic goods.

On that point, Madam Deputy Speaker—it may be a matter for the administration of the House—the Table Office would not allow me simply to say that we were concerned about the fridges regulation, but required me to refer to:

"the chaos of the UK application of European Council Regulation No. 2037/2000 requiring the removal of ozone-depleting substances from refrigeration equipment".

The Table Office required two lines in place of the word "fridges", which may be indicative of an attitude of mind that pervades the House and is perhaps shown by some civil servants. We need to accept simpler expressions.

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