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21 May 2008 : Column 360

On the elements of the Bill itself, we owe a great debt of gratitude to Philip Hampton and Richard Macrory for their work, which has identified practical and important considerations. However, as we have heard, questions need to be answered today, or certainly in Committee. The talk about the local better regulation office sounds alarm bells. It may be well intentioned, but we have seen too often that what starts as a well-intentioned initiative grows out of control. We can imagine that in a little while the Minister will say, “Well, the local better regulation office is working so well that we will have regional better regulation offices as well. Then, to make sure that it all comes together, we will have a national better regulation office.” An entire new arm of bureaucracy and administration would be set up. That is not the way in which we should be going.

We also want to know how the new body will prevent over-zealous implementation. The businesses in our constituencies often tell us that the problem is not regulation, but how it is interpreted by people from health and safety and Government Departments. A company in my constituency told me of its experience. Every year, it took on people from the local community college for work experience. A couple of years ago, health and safety representatives told it that it could not do that any more because it was a dangerous environment in which to work.

I am talking about a retail establishment. First, its management were told that the young people could trip up and down the step in the shop as they were carrying things around. Secondly, there was—even more dangerously—a till in the establishment. I did not think that unusual in a shop. However, if a young person was bending over when the till opened, he could be hit on the head. The health and safety representatives refused to allow the shop to offer work placements to people at school. That was not down to regulation; no regulation anywhere in this country says that children should not work near tills. It was a case of an over-zealous inspector, who damaged both that business and the aspirations of young people.

My hon. Friend the Member for Wellingborough talked about inspection for the sake of inspection. The underlying problem is that as a society we are becoming too risk-averse—we are trying to eliminate the downside and risk. Risk, however, is part of an entrepreneurial, successful society, and if we do not encourage people to take sensible, calculated risks, we will damage our opportunities to deliver the growth and economic success that we want.

Part 2 of the Bill relates to the primary authority. We need to know from the Minister how it will ensure fairness for small businesses and a level playing field with big businesses, which can choose where they are regulated. Take the example of two neighbouring shops—one is large and regulated remotely, perhaps hundreds of miles away, and the other is regulated locally. How can they both be on a level playing field, given that they are accountable to different primary authorities? We need greater clarity on that.

We also want clarity on part 3, which is about civil sanctions. We welcome measures that track all rogue traders. We know the problems, headaches and pain that such traders cause our constituents and we want tougher action against them. However, as a result of
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the Bill, 27 different regulators—an awful lot—will be given the powers to impose civil sanctions. How will we stop the tendency for them to go for easy pickings and focus on smaller businesses that will not appeal? The regulators may use the full force of their powers against such smaller businesses, but not against the more serious offenders.

The comments of the noble Lord Lyell of Markyate have been cited. He said that the regulators would be the investigator, prosecutor, judge, jury and sentencer. In British law, we are not familiar with that concept, which represents a completely different approach from that of the legal system that we have had in the past. Perhaps the Minister can tell us whether there has been a precedent. The issue causes understandable concern.

Lorely Burt: In other areas, are we not used to regulators having those various powers, which are not necessarily always used inappropriately? I am thinking about the Financial Services Authority, which has the power to do all the things that the hon. Gentleman has mentioned. Is he saying that he does not think that such powers are appropriate in any circumstances?

Charles Hendry: They certainly can be appropriate, but we need clarity about how the system will work. At the moment, that area of the Bill is opaque; it is establishing a principle, and the devil will be in the detail. We can have effective regulators, which have a light touch and achieve what they seek to do; alternatively, we can have those that go for the easy pickings, are intrusive and do not get it right. One of the things that we have to explore in Committee is how to get things right. If we do not, the credibility of the Bill may be undermined.

Mr. Cash: In the discussions on the Lisbon treaty and the Legislative and Regulatory Reform Bill, which became a 2006 Act, proposals in my name were put forward that asserted the supremacy of Parliament so that, beyond gold-plating, we could ensure that the legislation was consistent with the will of Parliament and the people of this country. Conservative Front Benchers have said that we need constitutional safeguards. I do not want to take my hon. Friend too far down that route, but does he accept that we need to insist on that?

Charles Hendry: I was both listening carefully to my hon. Friend and watching Mr. Deputy Speaker during his intervention. My hon. Friend is absolutely right that we have to listen carefully and take note. He is a doughty campaigner on such matters, and we should jealously protect and guard the primacy of this Parliament.

On civil sanctions, the Minister needs to tell us how he would answer the CBI’s request for there to be an independent review before a penalty is issued. Business needs to know that the process will be fair, and that if it feels that it is being treated unfairly, it will have a chance to have its side heard—and not by the person who assessed it in the first place, or who would judge or pass sentence on it.

There is a range of such issues, and there are more detailed questions as well. For example, how will the process work? Will there be cautions before fines are
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imposed? How many cautions will there be? What sort of offences will be covered—minor or more serious infringements? When our constituents get a penalty notice because they stayed a couple of minutes too long at a parking meter, that causes profound aggravation—they see it as an enormous extension of the state and an intrusion into their lives. Although sanctions can play an important part in regulation, we need to know that they are being used properly.

There is a range of questions about the Bill. It is not a bad Bill; it has a lot of good elements and is moving in the right direction. However, the devil will be in the detail. We are not opposing it on Second Reading, but we will be studying it extremely carefully in Committee, because significant changes need to be made. We will be addressing those issues in Committee to decide whether we can support it further.

2.58 pm

The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas): As my hon. Friend the Minister made clear in his opening remarks, the Bill is motivated by the work of Philip Hampton, who, in his 2005 report, “Reducing Administrative Burdens”, identified two major and costly problems with the enforcement of regulation. He found, first, inconsistencies in the way in which businesses were treated by local authority regulatory services and, secondly, inflexibility in an enforcement regime that gives regulators the choice of pursuing offenders only through costly criminal prosecution or informal advice regardless of the scale of the offence, preventing a proportionate response. The Bill will deal with both those issues and fundamentally improve the way in which regulation is enforced.

As my hon. Friend also made clear, we have listened to concerns raised in the consultation process that we have undertaken and in the other House, and we have amended the Bill.

Lorely Burt: The Minister talks about consultation. The Bill has been through the House of Lords and has been considerably improved, but why was part 4, on regulatory burdens, never subject to consultation and tagged on at the end?

Mr. Thomas: If the hon. Lady will forgive me, I will come to her point as I make my way through my remarks.

I agree with the hon. Member for Wealden (Charles Hendry) that this has been a particularly interesting debate. We heard a series of important contributions, not least from the hon. Member for Stone (Mr. Cash), from my hon. Friends the Members for Ellesmere Port and Neston (Andrew Miller), for Stafford (Mr. Kidney), for Amber Valley (Judy Mallaber), and for East Lothian (Anne Moffat), and from the hon. Members for The Wrekin (Mark Pritchard), for Beverley and Holderness (Mr. Stuart) and for Wellingborough (Mr. Bone), as well as from the hon. Members for Brent, East (Sarah Teather) and for Huntingdon (Mr. Djanogly).

The hon. Member for Stone was, characteristically, first to intervene from the Back Benches. As I have said on other occasions, I have long thought that he
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deserved greater recognition from within his own party, and perhaps a spell on the Front Bench would suit him well.

Mr. Cash: I am sure that it is only an oversight by the Minister, but I was in the shadow Cabinet for three years as shadow Attorney-General and shadow Secretary of State for Constitutional Affairs.

Mr. Thomas: All I would say to the hon. Gentleman’s Front-Bench colleagues is that it is perhaps time for him to come back to their Front Bench. I have seen reference to other more mature Conservative Members returning, so perhaps it is time for him to do so.

I do not say that because I agree with the hon. Gentleman’s points about Europe. I would continue to encourage him to reflect on and change his position on Europe. Perhaps in so doing, he might like to talk to the hon. Member for Wellingborough about his experience in the travel industry, where the timeshare directive has helped to make a real difference for British and for other consumers. I realise that I made a small error by not inviting the hon. Member for Wellingborough to the EU consumers conference that my Department recently held, at which we considered how we can further improve the regulation that comes from Europe to help British and other European consumers to benefit from better consumer law, and, crucially, to assist the operation of British businesses’ services to their consumers.

Mr. Bone: I am sure that the Minister would not want to give the impression that I thought that anything good was coming out of the European Union. The European regulations that affect the travel industry are so confusing that it has no idea how to interpret them. As a small travel agent, I had no idea, and most travel agents just ignored them. The Minister should not give the impression that these regulations from Europe are clear and helpful.

Mr. Thomas: I am sorry to hear the hon. Gentleman’s intervention, because business has largely welcomed, for example, the unfair commercial practices directive. We have just put that into legislation in the form of the Consumer Protection from Unfair Trading Regulations 2007, which come into force on Monday, which his own colleagues endorsed and supported, and which will allow British consumers to see trading standards authorities taking tougher action against those who perpetrate scams and all sorts of other activities by rogue traders. I recognise and accept that we need to continue to engage with the European Commission and other member states to continue to see improvements in the quality of EU regulation. Equally, however, let me challenge the hon. Gentleman by saying that he, too, should recognise that many of the directives that come from Brussels are supported by British business, are welcomed by British consumers and make a genuine difference.

Mr. Cash: I am interested in what the Minister is saying. The Timeshare Act 1992 is one of the 200 enactments referred to in schedule 3. Clause 4 refers to enactments under section 2 of the European Communities Act 1972 and to others that overlap with
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those and come from European directives. It also says that the Secretary of State may by order remove any enactment from that schedule and remove any matter from subsection (3) of the clause. Yes, we want to reduce unnecessary burdens and make things more transparent and accountable, but the Government are woefully at fault, because although they want to achieve certain things they will not bring themselves to the point of doing so. We have to add, “notwithstanding the European Communities Act”, and I will table an amendment to that effect.

Mr. Thomas: I am sure that my hon. Friend the Minister will welcome the chance to continue to engage in debate with the hon. Gentleman in that area. I should point out to him that the unfair commercial practices directive and the consumer protection regulations have allowed us to deregulate a whole series of areas of legislation, to simplify the position for British business and to ensure that trading standards and other authorities can take tougher action in support of British consumers.

My hon. Friend the Member for Ellesmere Port and Neston rightly asked whether the Bill will make a significant difference to trading standards and local authorities. It will introduce a series of additional powers to help them to take appropriate action to ensure that consumers in the UK get a good deal, not least because, as my hon. Friend the Member for Stafford said, we face problems with rogue traders operating in our constituencies across the UK. They bring down the reputation of legitimate businesses and unfairly undercut them, and many put at risk British consumers, particularly those who are vulnerable. We need to ensure that trading standards authorities have the appropriate powers, and the Bill will help in that regard. My hon. Friend the Member for East Lothian raised a further series of points that I shall come to later.

I was interested by the observations of the hon. Member for The Wrekin. In previous lives, he and I served on Harrow council together. He mentioned the 80 per cent. of enforcement action that is taken by local authorities. Perhaps when he comes to reflect on this debate he will recognise the sad state into which Harrow council has fallen under Conservative control. According to the Audit Commission recently, it is the worst-run authority; it is run by Conservatives and run into the ground. I suspect that people in my constituency will increasingly see the words “Conservative-run” and “well-run council” as oxymoronic.

Mr. Graham Stuart: For the record, I am sure that the Minister would want to be fair and to acknowledge that of the councils recognised as excellent a majority are Conservative run.

Mr. Thomas: I trust that the hon. Gentleman will travel out to Harrow and hear my constituents’ frustration at the way in which Harrow council is being run since the Conservatives took control, and perhaps he will—

Madam Deputy Speaker (Sylvia Heal): Order. I feel that we must now bring the debate back to the Bill under discussion. That applies, of course, to all Members of the House.

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Mr. Thomas: I beg your pardon, Madam Deputy Speaker; I was provoked.

The hon. Member for Wellingborough challenged me on the Floor of the House to accept a bet that the LBRO would not double its budget and its staff by the end of its first year in office. I am a Methodist and not usually up for a gamble, but I am willing to accept his bet. Madam Deputy Speaker is here to officiate. The hon. Gentleman suggested £5; I would be willing to raise it to £10 if he is willing to accept the—

Madam Deputy Speaker: Order. I think that we had better get back to the rules of debate. We will leave the betting elsewhere.

Mr. Thomas: The hon. Member for Wellingborough also mentioned the success of the two businesses that he was able to set up and run, and the fact that because of the good sense—if he will forgive my saying so—of the electorate in the constituencies in which he stood, he was able to see those businesses develop under a successful Labour Government. He is no doubt personally better off as a result.

Mr. Jim McGovern (Dundee, West) (Lab): Does my hon. Friend accept the figures that seem to suggest that under the previous Tory Government, 1,000 businesses per week were going bust? Under this Labour Government, 100 new businesses start up every day.

Mr. Thomas: I accept the point that my hon. Friend makes, and no doubt he is seeing the benefit in employment and increased income for his constituents, which I and, I suspect, Opposition Members—if they were willing to be completely transparent in this debate—are also seeing in our constituencies. One pays tribute to the ingenuity and talent of business people throughout the UK who flourish under the economic conditions that my right hon. Friends the Chancellor and the Prime Minister have helped to ensure are in place.

The hon. Member for Wellingborough spoke about local authorities being far less efficient than small businesses. If he was referring to the experience of small businesses in my constituency suffering under the yoke of Conservative-run Harrow council, I would have sympathy for his comments.

Mr. Bone: I was trying to make a serious point about the impact assessment. I could not see why the local authority costs were an estimated £13.6 million for the year while the saving was only £14.2 million for local authorities. There seems to be something wrong there, perhaps with the impact assessment. It does not seem to ring true, does it?

Mr. Thomas: I will come to the hon. Gentleman’s points about the impact assessment.

The hon. Member for Brent, East made a series of points, some of which I am sure she will want to raise in Committee, but one or two of which I will refer to in this debate. The hon. Members for Huntingdon and for Wealden made a series of important points about the Bill, and I hope that I will be able to address some of their concerns. No doubt its passage through Committee will provide further reassurance to them. I have to say,
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however, that when they veered away from the specifics of the Bill, they made a series of intemperate and inaccurate comments about the current business climate. The business community will view with considerable scepticism lectures from them and other Conservative Members about the problems that it faces, when their party was responsible for two massive recessions in the 1980s and 1990s, in which business after business went to the wall, job after job was lost and many business men and women lost their homes and considerable amounts of money as a result. They might think that the business community has forgotten what it was like to operate under a Conservative Government—I think that they will be sadly mistaken come the next election.

Mr. McGovern: Will my hon. Friend give way?

Mr. Thomas: Indeed.

Madam Deputy Speaker: Order. I ought to say to the hon. Gentleman that it is not custom and practice for a Parliamentary Private Secretary to intervene on his Minister.

Mr. Thomas: I shall go on to address some of the other issues concerning the amount of deregulation that has occurred under this Government. Perhaps I should just reflect on a series of measures that we have introduced to make it easier for businesses to operate—for example, through the way in which employment law documentation has to be put together. New approaches were introduced that chief executives from the business world welcomed.

The Companies Act 2006 introduced a series of measures to make it easier for businesses to operate. Some 500,000 to 750,000 private companies will no longer need to hold an annual general meeting as part of a wide series of changes to company decision-making processes, and £45 million of annual savings will be delivered as a result. Moreover, 60,000 private companies will no longer need to appoint a company secretary, saving each of them considerable sums. Further examples of the approach that the Government have taken to help businesses include helping them to communicate electronically. Independent estimates show that that change could save larger companies up to £400,000 a year, on a single mail-out. Those are just a few examples of the difference we have made to the regulatory burden.

Mr. Stuart: What impact does the Minister think the removal of the requirement to have a company secretary will have in the real world on small businesses that are currently required to have one?

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