Examination of Witnesses (Questions 128-139)
BRITISH CHAMBERS
OF COMMERCE
30 NOVEMBER 2004
Q128 Chairman: Good morning. Miss Owens,
perhaps you could introduce your colleagues and we will get started.
Miss Owens: I am Emmeline Owens,
Principal Policy Adviser at the British Chambers of Commerce.
On my right is Lewis Sidnick, our Employment Policy Adviser and
to my left is Francis Toye, Managing Director of Unilink Systems
and Software.
Q129 Chairman: I would like to start
this morning with the Burdens Barometer. Maybe you could tell
us how it is calculated and are there are any applications or
any similar calculations done across Europe for similar burdens
and how they are dealt with?
Miss Owens: The Burdens Barometer,
the £30 billion that we actually use, is the cost of 35 major
regulations in the UK ranging obviously from the Working Time
Directive through to a range of environment regulations and other
employment regulations since 1998. So far as I am aware, the Regulatory
Impact Assessment System we would like to see rolled out across
the EU. Particularly a figure that we use—£30 billion—does
not actually include the cost of specific policy introductions
like the National Minimum Wage; that is a separate figure of around
£13 billion so far as I am aware since it has been implemented,
the actual policy cost. Having said that, our RIA database of
900 regulations builds upon this; this is the cost of 35 major
regulations to business and it has been increasing year-on-year
since 1998.
Q130 Chairman: Why do you think it has
not been done in Europe?
Miss Owens: It is something that
we are looking to see rolled out. Obviously various cost and benefit
analyses have been done, certainly in the UK; 40% of these Regulatory
Impact Assessments come from the EU legislation.
Q131 Chairman: Do you not think it may
be the case that in fact the Europeans have a rather more balanced
attitude to this than you have and that they think that regulation
in itself, although it may be a cost, it may also be a benefit
and therefore to be put in this rather biased fashion is perhaps
not a particularly helpful way of looking at the costs on business.
Mr Sidnick: I think that the reason
that the growth in UK economy is higher than in any other EU country
is because we have a much more flexible labour market; the reason
that our businesses are competing successfully globally is because
we are monitoring the burdens and we are trying to keep the cost
of the burdens down. We are trying to keep the flexibility where
other EU countries—for example, Germany and France—have
more restrictions on working hours and their businesses cannot
compete as successfully. It is no coincidence that the UK has
the strongest economic growth in the EU zone.
Q132 Chairman: How does such an obvious
truth—if it is true—evade the concerns of the Germans
and the French?
Mr Sidnick: Our concern is to
make sure that the UK economy is competitive and they are now
recognising increasingly the importance of a flexible labour market.
In France they have had a 35-hour working week and they are realising
the restrictions that is putting on their business environment
and are now trying to go back on their 35-hour working week. There
is a similar situation in Germany. I think increasingly other
EU countries are recognising the importance of a flexible labour
market and are, in a sense, trying to catch up with the UK in
that regard.
Q133 Chairman: Do you think that this
is the biggest single problem facing small businesses in Britain?
Mr Sidnick: I think the burden
of red tape and regulation is the biggest single problem.
Q134 Chairman: Greater than taxation?
Mr Sidnick: At the moment our
taxation rates are relatively favourable and currently in the
last three to five years the cost of regulation is the area that
has rocketed. That is what our business members are saying is
their biggest concern, the rising concern of red tape. Our figure
shows £30 billion extra costs since 1997.
Q135 Chairman: One of the things that
could be charged against small businesses is that their policies
for the development of skills across the board is not very progressive
and not very well developed. We often hear about problems relating
to skills shortage. How significant do you think that is in in
terms of the performance of your members?
Mr Sidnick: It is extremely significant.
Our quarterly economic survey—which is the largest survey
of its kind—of 6,000 businesses each quarter has shown that
in the last 10 years the number of employers with recruitment
difficulties has actually doubled since 1994. The skills problem
is a big issue but we need to address that and the Government
is going in the right direction to address it. However, if that
is addressed it is not an open ticket to increase regulation and
look to solve the productivity problem through that means.
Q136 Chairman: Within your surveys have
you tried to distinguish between shortage of labour as against
shortage of skilled labour?
Mr Sidnick: A distinction between
skilled labour and labour?
Q137 Chairman: There are some people
who look for employees in the service industries where if they
can breathe and get out of bed in the morning they are eligible
for employment. There are others who require perhaps lab skills,
engineering skills and the like.
Mr Sidnick: There is a big problem
with basic skills in the UK and that is an area which needs to
be addressed. However, the real problem that businesses are complaining
about are high level skills. It is not just the ability to communicate
and operate computers and read and write properly; it is high-level
skills and that is why we need more businesses to undertake apprentices.
We need a greater focus on vocational education through the system.
If we do improve our current skills shortage our businesses would
not say that is a ticket to impose more regulation.
Q138 Chairman: I am sorry, I think you
are misunderstanding. I am not trying to argue that if you solve
one problem you then over-burden people with another. I am just
saying that I am surprised that a business organisation like yours
should be so obsessed with the regulation that issues of training
and taxation which one would have thought would be central to
the delivery of the service or the goods that the business is
set up to provide, that somehow these should be a poor second
or third in any list against regulation.
Mr Sidnick: Regulation is our
big issue because it is what our business members are saying is
affecting them. Skills is another top issue and there is a critical
skills shortage in the UK which needs to be addressed. These are
two problems that are right up at the top. Yes, skills is a problem
and the fact that a number of employers with recruitment difficulties
has doubled over the last 10 years shows the scale of the problem.
The biggest problem that our business members are saying is the
increasing tide of regulation that they are having to pay for.
Q139 Sir Robert Smith: One question on
the Burdens Barometer: it would be fair to say from your figures
I think that the bulk of the burdens are non-employment. What
is the split again?
Mr Sidnick: £12.68 billion
is employment and the rest up to the £30 billion is non-employment.
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