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The hon. Member for Ochil and South Perthshire (Gordon Banks) is obviously a worthy successor to his predecessor, who was a superb Chairman of the Trade and Industry Committee. The hon. Gentleman's business interests and experience will stand him in good stead in following in the footsteps of his predecessor, who is now a Member of the other place. We look forward to hearing from the hon. Gentleman again on matters to do with industry, business and regulation.
I concluded, as I am sure many of my hon. colleagues did, that the speech made by the Minister of Communities and Local Government was extremely complacent. He flagged up the areas in which the economy was doing wellyes, we do have low unemployment and reasonable economic growthbut he said nothing about the loss of manufacturing jobs when he was challenged to do so by my right hon. Friend the Member for Wokingham (Mr. Redwood). He did not say anything about the balance of payments, the record UK trade deficit, or the fall in our productivity. Nor did he say anything about the offshoring of manufacturing jobs. He did not mention, for example, the fact that Sony has recently announced that it is to move a lot of its jobs in Bridgend offshore from this country.
The Minister did not say very much about our loss of competitive position, which is very serious indeed. My right hon. Friend the Member for Wokingham mentioned the fact that we have fallen in the World Economic Forum's league rankings from fourth position in 1998 to 14th position today. That is very
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worrying indeed. The Minister said that we were doing better than countries such as France, Spain and Italy, but they are not even in the first 20 in those rankings. The point is that we are way behind the USA, Singapore, Australia, Norway, Japan and some of the smaller European countries.
The Minister should take on board the fact that the overall picture is far from rosy. The problem is that we are undermining many of the important supply-side reforms that took place in the 1980s and 1990s. That matters, and we have fallen in the league of world competitive rankings entirely as a result of excessive regulation and red tape. That observation is backed up by every independent commentator, including the CBI, the Institute of Directors, the Engineering Employers Federation, the British Chambers of Commerce, the Federation of Small Businesses and the Forum of Private Business. When describing the level of regulation that had been put on business, my right hon. Friend the Member for Wokingham mentioned a figure of £40 billion-plus since 1998. In fact, the CBI's figures are worse, because they show that the annual level of increase is £6 billion. That obviously works out at an even more worrying figure.
In the few brief moments available to me, I should like to examine some of the drivers of regulation, and to work out what we could do to reverse them. One of the main drivers is undoubtedly the European Union, which is responsible for roughly 40 per cent. of all the regulations affecting industry and business in this country. As my right hon. Friend pointed out, we should not just sit back and take every one of those EU directives on the chin. When the Conservatives were in government, we had an opt-out from the social chapter.
The Prime Minister may talk about the deficiencies of the European business and social model, rail against some of the directives coming down the track, and complain bitterly about the agency workers directive, but we are completely powerless to do anything about it. We can argue our corner, but because we are signed up to the social chapter, we have no right of vetowe have to implement whatever the directives require. We have no flexibility whatever. Therefore what the Prime Minister says about the deficiencies of the EU social model, and the need to move closer to the American model with a free market economy, will mean nothing unless we can get back an opt-out from the social chapter. It was claimed that that was impossible, that we would have to renegotiate various treaties and use our bargaining position, and that it would be completely unfeasible. How negative is that? If we go in with that attitude, of course we will not make progress. The Government have made it clear that they are not interested in changing anything for the better.
The second driver of excess regulation, as I see it, is gold-platingthat peculiar British habit and tradition of extending the scope of directives, not taking advantage of derogations that might be on offer, and providing much tougher sanctions than demanded by the directive. There
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are many examples of that, but I will give just one, which I examined when I dealt with employment matters from the Front Bench in the previous Parliamentthe EU part-time workers regulations, implemented through a statutory instrument in 2000. The EU directive stated that part-time workers must have the same rights as full-time employees, but left member states to decide how to implement the requirement. The UK regulations, however, included a provision that UK firms must issue any part-time employee who queried their terms and conditions with a written statement setting out all the reasons within 14 daysa much more onerous provision than in any other EU country. No wonder the British Chambers of Commerce argued that that was a classic case of gold-plating. Until we get a grip of this peculiar UK phenomenon, we will not significantly improve the situation in terms of excessive regulations.
Obviously, the third driver is Her Majesty's Government. All Opposition Members know that they have interfered and deliberately over-regulated. For example, Employment Act after Employment Act has put more burdens on business, escalating central control and intervening the whole time. In many areas, the Government have gratuitously and unnecessarily placed extra burdens on business.
That goes hand in hand with what I have described as the fourth driver of excessive regulationadministrative creep, or the extent to which government has grown in size. As my hon. Friend the Member for Havant (Mr. Willetts) has pointed out many times, the bigger government becomes, the greater the propensity to regulate and interfere. I find the sheer extent of that growth very worrying and disturbing. One of the statistics that the Chancellor of the Duchy of Lancaster did not mention was the change in central Government employment since 1997. He talked about how well the economy was going, and how unemployment had fallen, but he did not mention the 1 million job losses in manufacturing. Obviously, they have been compensated for by the huge increase in jobs in central Government. One would have hoped that Britain would be at the forefront of trying to drive forward wealth creation, but while central Government employment has fallen by roughly 8 per cent. in countries such as France, Germany, Sweden, New Zealand and Italy since 1997, the UK lies in second place in the Organisation for Economic Co-operation and Development world chart, with an increase of 8 per cent. Of course we need more doctors, teachers and nurses, but we do not need all these people interfering.
One example of that is the Department of Trade and Industry. Many of the great industries have been transferred out of the state sector into the private sector. One would have expected the DTI to become smaller. Far from it: its budget has risen from £2.7 billion in 1998 to £5.2 billion in 200506, and the number of civil servants and other employees has almost doubled.
Nothing that we heard from the Minister will do anything about those drivers. We heard nothing from him about how the compensation culture will be dealt with. We heard nothing about the huge extra burden imposed on businesses by the increase in insurance premiums, and nothing about the time and effort that businesses must now devote to employment tribunals in
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an attempt to combat that compensation culture. Unless we can change attitudes in Whitehall and reverse the "big government" process which means more interference and more regulation, we will not be serious about deregulation, wealth creation and encouraging entrepreneurs.
In today's Daily Telegraph, the new Minister for Industry and the Regions, the right hon. Member for Cardiff, South and Penarth (Alun Michael)he will deal with small businesses and enterprisewent on about wealth creation and the importance of helping small businesses. Unless we have a serious policy to reverse the drivers of regulation, and unless we give serious consideration to measures such as those in my party's manifesto, which refers to a really tough, imaginative deregulation Bill, everything that the Government sayalthough it may be well intentioned and entirely genuinewill have very little impact on the ground.
I wait with bated breath to hear the Minister's winding-up speech, which I hope will give us some hope that the Government will act. Judging by what his colleague said earlier, however, I am not particularly optimistic.
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