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Mr. Peter Bone (Wellingborough) (Con): Is my right hon. Friend aware that the Joint Committee on Statutory Instruments recently reviewed European legislation and found that many European directives were so badly drafted that, if it had been domestic legislation, it would have been rejected and sent back to the Department? The Government must impose penalties as required by EU legislation, but the instruments are often so badly drafted that business does not know whether it has complied.

Mr. Redwood: My hon. Friend has put his finger on an important problem. I remember when I was a Minister cursed with the task of transposing such directives into national law. On one occasion, I was so frustrated by what I thought was the over-regulatory nature of our draft—it was something like a 100-page draft to implement a 10-page directive—that I said, "Let's just implement the directive as it stands, because it is clearly less onerous than the civil service draft we have come up with. I then received extremely strong and pompous legal advice—I suppose that I am not meant to reveal this, so I shall call it non-legal advice—the burden of which was that it was wrong to make the directive the law in Britain, because it was so badly drafted that we could face infraction proceedings. It was apparently seen to be the task of British civil servants to try to make good law out of bad and to ensure that it fitted into our British legal codes.

Mr. Heald: Does my right hon. Friend agree that one problem is that, once European law is implemented in a member state, there is not a proper process for reporting back to Europe—the Commission and the Council of Ministers—that the regulation does not work on the ground, that it is appallingly badly thought through and that it needs reform? Does he have any thoughts on how the process might become more two way?

Mr. Redwood: That is where British leadership could come in. We should try to persuade like-minded
 
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member states and in due course the Commission that the European Union needs a way of death for bad legislation, just as surely as it has an effective way of birth for new legislation. It would be better if we paused for reflection and had a year with no new legislation in the EU, other than perhaps amendments to existing EU regulations where they are not working. A period of reflection would create more space and allow the removal of some of the unnecessary burdens.

The Under-Secretary began the debate by saying that the problem is not hugely serious, because Britain is still high up the competitiveness league. As my hon. Friend the Member for North-East Hertfordshire pointed out, we have slipped from fourth to 13th in less than a decade since this Government came to power. Ministers should be very worried about that—in some rankings, we are down at No. 22. I do not want my country to settle for being 13th or 22nd, because if one is 13th or 22nd, one does not even get on the list of locations when people decide where to put a new car plant or steelworks. There is a lot of chunky, footloose investment around the world, of which Britain used to get more than its fair share because it was more competitive than other countries. Over the coming months and years, Britain's share will fade, because we have slipped too far down the competitiveness league. The subject of today's debate—too many clumsily enforced regulations—is one reason why we have slipped down the competitiveness league, and we need legislation to tackle that important issue.

The Bill is silent on tax regulations. We need a method of reforming our tax codes and reducing the burden of some of our taxes, which would contribute to restoring competitiveness. The famous IR35 was an attack on self-employed people, particularly in the computer industry, and it did a lot of damage: some people gave up, while others were driven offshore. Why have the Government not done something about that decision, which should be reversed? If the Bill is not amended, it cannot be used to achieve that result, because it does not involve tax.

Why have the Government not done something about the deferment of national insurance? If my constituents have more than one employment and if their situation has not changed, they must go through an elaborate administrative ritual every year of tabling information in order to get so-called deferment, whereas in practice they do not have to pay any extra national insurance if their main employment involves paying the full amount under the law as it stands. Why do they have to go through that complicated administrative ritual? That is a little example, and there are hundreds more throughout our tax codes.

The Conservative party would like to see substantial deregulation of local government, because there has been too much centralisation and too many burdens have been placed on it. We would love to see the fair value and comprehensive performance assessment regimes scrapped in their entirety. We have taken outside advice on the matter, which has told us that that would save £1 billion. That money could either be returned to council tax payers at a time when they are not getting good value for money and are paying too much or—this would be a choice for elected
 
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councillors—it could be ploughed into front-line services to strengthen any areas in which they are deficient. The Government could use the Bill as a vehicle to change the rules affecting local government.

Regulations bear down much more heavily on small businesses than on large businesses—naturally, because large businesses can afford the extra cost of compliance workers and specialists who can lobby Government to try to move regulation in the direction that they wish, and then to employ specialists to avoid the worst of the impact of the regulation when it is in place. Small businesses do not have that luxury. In a small business employing five or 10 people, the one or two people at the top do not have time to lobby Governments to try to move things in their direction; they scarcely have time to implement regulations fully and often have to spend a lot of money on expensive outside consultants to tell them what they mean and what they have to do to get up to speed. We heard the estimate—it was a good guess—that regulations effectively cost a small business five times as much as a big business because of the impact on its fragile cost structures and stretched management resources.

We should institute a review of all the small business exemptions with a view to levelling them up so that more businesses can be taken out of the scope of many of these regulations. We will then have more small businesses and more jobs, with all the associated benefits.

The issues before the House are straightforward. I get the feeling that there is agreement across the parties, and on the Treasury Bench, that we need to deregulate because there are too many unnecessary regulations, and that while some may be desirable, the costs are not proportionate to the beneficial consequences. I would add that many regulations achieve precisely the opposite of what they set out to achieve. If we had a system of review, as many Members would like, more of that would become obvious, and the case for removing or amending the harmful regulations would, in turn, be more obvious.

We would welcome a Bill that made it easier to cut the burdens and to repeal regulations that are having unfortunate consequences. This Bill, however, allows the Government to re-regulate without reference to the House in a way that is the opposite of deregulation. Given that Ministers have failed to provide clear examples of how they are going to use these powers, I fear that they will find among Labour Members, as well as elsewhere, that it is difficult to make the case for the Bill as it stands.

I have given a few ideas out of my list of 63—I will not bore the House with the whole list, but Ministers have it—of regulations that could be stripped out to the benefit of this country's economy, leading to the creation of more jobs, an improvement of our competitive position, and a lightening of the burden on many individuals who are frustrated by heavy-handed and excessive regulation.

Will Ministers listen and come up with a practical programme? Will they understand that grandstanding with these rather crude bits of legislation is not the same as running a deregulation programme? Can we soon have a Cabinet Minister who means business and cuts through the jungle?
 
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4.37 pm

Stephen Hammond (Wimbledon) (Con): I am honoured to follow my right hon. Friend the Member for Wokingham (Mr. Redwood), who has spoken about deregulation in some depth. The Bill has two significances—the regulatory significance and the parliamentary constitutional significance. The hon. Member for Cannock Chase (Dr. Wright) said he hoped for a Queen's Speech that contained no regulation. If he had looked at last year's speech, he would see something far from that—it committed the Government to promoting efficiency, productivity and value for money, but also said that legislation would be introduced to streamline regulatory structures. That phrase should concern us all.

When I made my maiden speech in this House, I mentioned the need for a bonfire of regulations, so it was with unbridled joy that I found myself put on to the Select Committee on Regulatory Reform, assuming it to be a Committee where we would discuss, among other things, deregulation. At my first meeting in July, Members can imagine my disappointment when I was told by the Chairman that we were allowed only to look at anything enacted by the Regulatory Reform Act 2001 and that deregulation was not part of our remit. My initial hopes were immediately dashed.

We must be pretty cautious about the confidence that we can have in this Bill. Can we have more confidence in the Bill than in the Regulatory Reform Act 2001, which clearly failed to stem the tide of regulation that has become a Government hallmark? The Bill's intention may be laudable, but it must be accompanied by a step change in the Administration's culture and attitude. We need a determined effort to shake off the Government's tendency to interfere, regulate and inspect every element of business activity. I acknowledge the need for protection, but it must be balanced by the need for deregulation.

The Government set up a Better Regulation Task Force, a Better Regulation Executive and a Better Regulation Commission. They have as gargantuan an appetite for creating quangos as for creating regulation, but do they have an appetite for deregulation? The Bill may or may not be a step in the right direction, but does it take that radical step away from the regulation culture and provide for the deregulation that British business needs?

Concerns about part 1 have already been expressed and I want to mention briefly my exchanges with the Under-Secretary in the Regulatory Reform Committee. Part 1 contains enabling powers for Ministers, by order, to reform legislation or implement the Law Commission's recommendations. No one would argue with the Bill's stated ambition to improve the current regulatory reform order system or to deliver non-controversial proposals for simplification. It is implicit that simplification might lead to substantive changes.

When the Under-Secretary gave evidence to the Select Committee, he used the example of data sharing between Departments. Although not specified, there is an implication of additional powers to amend primary legislation, not deregulation. In the past, Acts have included gateway provisions so that information and data sharing could be done in a way approved by Parliament. Why, therefore, should we should extend
 
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the regulatory reform orders procedure in the circumstances that we are considering? The answer lies in the point that the hon. Member for Plymouth, Devonport (Alison Seabeck) made—it revolves around the definition of "controversial".

When the Under-Secretary gave evidence to the Select Committee, he mentioned safeguards. Does the Bill include anything that allows us to distinguish between common sense and controversial? In the Select Committee, he discussed not only "controversial" but "highly controversial" as well as "common sense". I made the point that one man's definition of controversial or even highly controversial is another man's definition of common sense. I want to ensure that the distinction is capable of assessment, tightly drawn and in the Bill.

Clause 2 states that orders can amend, replace or repeal any legislation. The explanatory notes state:

That is clear, if somewhat worrying. However, in evidence to the Select Committee, the Under-Secretary said something different. He stated:

"Restate" and "replace" are not the same. "Restate" implies powers to clarify legislation; it does not necessarily mean altering the substance. The explanatory notes imply one thing, but the evidence given elsewhere suggests that the Under-Secretary intended another.

We all understand the Government's wish to correct errors and omissions, but there is a worry that the Bill may lead to more poor quality legislation without proper scrutiny. There seems to be little in the Bill to protect us from that. Clause 2 will widen that scope and go a long way towards giving Ministers the general power to repeal and amend primary legislation. Like many other hon. Members, I want the Minister to reassure us that there will be a distinction between restatement and replacement, and that the tests that set out the confines of his ministerial power will in the Bill and will have substantial effect.

I questioned the Minister in some depth in the Select Committee about the effects of clauses 13, 14, 15 and 16, and particularly about whether the 60-days provision was really necessary. He said that the Government had consulted with business and that 60 days might not be proportionate for considering all regulatory reform orders—RROs. I take his point, but I hope that he takes the point made at that time that the reason for the 60-day examination period was to give the House the chance to undertake proper parliamentary scrutiny of the orders. Not all the proposed procedures will allow that length of parliamentary scrutiny or, indeed, enough scrutiny at all. Many of the delays involved with RROs have nothing to do with the Committee or the parliamentary scrutiny stages. They are often caused by Departments being unable to go through the consultation stage with stakeholders beforehand or to marshal the information that is needed to go into the legislation. Indeed, the bulk of the delay is a result of those factors, rather than of the parliamentary scrutiny.
 
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The Minister spoke earlier about the Hampton report. Part 1 of the Bill will allow the Government to push forward some of the recommendations in that report—including the subsuming of the 31 national regulators into about seven—where that is not already being done under separate legislation. I have some concerns about that. The reduction from 31 to seven will consolidate the bodies involved, but it might not necessarily involve deregulating or getting rid of regulation. I would like reassurance that that reduction will bring about a major sense of deregulation. Super-regulators are no better than small regulators—they can still mean more regulation and they certainly do not guarantee a light touch. The great danger is that they are less responsive and more unwieldy, and they certainly do not listen to the needs of an industry or a sector.


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