Examination of Witnesses (Questions 1-19)
MR CLIVE
DAVENPORT, MR
ALEXANDER EHMANN,
MR MATTHEW
FELL AND
MS SALLY
LOW
1 APRIL 2008
Q1 Chairman: Welcome everyone and thank
you for coming to give evidence today. I think you have had a
good briefing on what we are seeking to do. It is four important
organisations giving evidence today. I appreciate that some of
the questions might be directed at one of you and others may think,
"I would like to comment on that," and if there is time
we will take comments from as many as possible, but if there are
other things you want to supplement your comments with in writing
after, please feel free so to do. There are a couple of other
members who will be joining us who are detained at other events
at the moment, but if you are happy we will get straight in. Perhaps
for the record the four of you could formally introduce yourselves,
starting with Ms Low.
Ms Low: I am Sally Low and I am
Director of Policy and External Affairs for the British Chambers
of Commerce.
Mr Fell: I am Matthew Fell, Head
of Corporate Affairs at the CBI with responsibilities including
the Better Regulation Agenda.
Mr Ehmann: Alexander Ehmann, Head
of Parliamentary Regulatory Affairs at the Institute of Directors.
Mr Davenport: Clive Davenport,
the Chair of Trade and Industry at the Federation of Small Businesses.
Q2 Chairman: Thank you and welcome.
Can I start off by asking all of you: do you believe that the
BRE has a firm grip on its own objectives?
Mr Fell: My take on that is the
BRE in a sense has two key roles to play in this whole agenda.
At a strategic level its job is to act as a champion of better
regulation right across Whitehall, and I think it has put in place
a number of processes and systems in order to help drive that
agenda. Then, secondly, it has a more pragmatic role in a sense,
which is working with colleagues across Whitehall to reach practical
solutions on how we go about implementing or determining particular
policies to achieve the correct outcomes. I would very much describe
their role as a journey. I think there is a lot of effort and
a lot of processes which have been put in place but, quite clearly,
there is more to do on that agenda. From the CBI's perspective,
I think we would see it as important that there is an increasing
focus on the flow of new regulation. I think we need to better
communicate changes which have been made to date on deregulatory
measures. I think finally we would welcome an increasing focus
on some of the real impacts on business that we might draw down
to a little bit more this morning.
Mr Ehmann: If I might add something
to Matthew's comments. Broadly speaking, I think we would share
the same view. I think it is important to point out that it is
far easier to deconstruct a process than it is of course to create
one, particularly in an area as difficult as deregulation, and
I think we should acknowledge the effort that has been put in
there. That said, if one takes a specific initiative of the BRE
like the simplification plans and the Administrative Burdens Measurement
exercise, which I am sure we will come on to later, one does get
the instinct that the whole process is rather more driven by outputs
than outcomes, and what I mean by that is that the target does
seem to be the 25% empirical reduction rather than the shift in
perceptions that the IoD would argue is absolutely critical to
the process, so if there was an accusation I would float out there
I would say where there is more effort that needs to be done is
a recognition of this slightly more holistic necessity, which
is to make sure that business, in this case, recognises it is
different. The only other thing I would add is that there is perhaps
a lack of clarity about what the Better Regulation Executive and
the agenda more broadly is expected to achieve beyond 2010. I
think the process up until 2010 may or may not yield results,
but there is a question about whether that just sits within a
vacuum or whether there is a wider strategic goal for the Government.
Mr Davenport: I would certainly
endorse my two colleagues' comments and there are two things I
would add. The first is that my feeling is that when the BRE was
brought into BERR as an organisation, it certainly made things
more efficient, it was less confrontational for a start, which
was certainly an advantage, and the other thing is that as far
as the legislation is concerned, I think the focus needs to be
much more on the problems that are encountered at the smaller
end of the market. The larger end of the market can handle changes
in legislation. The average proportion is that the small business
has six times more load on its administrative time when it has
an alteration in assessment, so that is the only addition I would
put forward to you.
Ms Low: Again, I would broadly
endorse what my colleagues have said. If we are looking at the
BRE as having two functions, the first to reduce the stock of
regulation and the second to tackle flow, on the first part of
that I think there has been success and things like the Hampton
Review have brought about a new approach to risk-based enforcement
which has been useful, and there have been a number of other positions
that the BRE have adopted to address issues around the stock.
With regard to the flow, when we look at a publication that you
will be familiar with I am sure that the British Chambers of Commerce
publish, which is the Burdens Barometer, in which we have been
looking at impact assessments since 1998, what we have seen, and
also endorsed in the report that we published yesterday, is that
actually in the first four years from 1998, about 130 impact assessments
per annum were coming through and this has now increased to 300
per annum, and I think that basically points to the fact that
the BRE has to heighten its influence across Whitehall to bring
to bear greater pressure to reduce that and tackle that flow of
new regulations coming into being.
Q3 Chairman: In your note to us you
suggested that it was a mistake for the BRE to withdraw from detailed
scrutiny of impact assessments. Following on from that, what exactly
do you think their role should be: policeman; think-tank; deliverer;
teacher? Can it take on the role of deliverer of the kind of joined-up
government that we would all like to see and, in your judgment,
is it using its resources efficiently if it examines every impact
assessment?
Ms Low: I certainly think there
is a strong case to be made for the BRE to adopt, as I have said,
a much more robust stance with regard to its policing of departments
across Whitehall through the impact assessment mechanism, and
whilst we see the production of a top sheet as being fine in its
way, it does not really address the fundamental issue. We have
devoted an enormous amount of time to studying the analysis of
impacts and for example, when looking at the disproportionate
impact of regulation burden on small firms, you see that only
1% of impact assessments quantified in the last 2006-07 year quantified
the additional costs of regulation for small firms in those impact
assessments, and we believe on behalf of the network of chambers
of commerce, 100,000 businesses, that whilst culture change is
important—and I think the top sheet is a way of bringing
about some culture change—fundamentally the measurement
and analysis of impacts of the burdens on whatever is the recipient
or whoever is having to carry out the regulation, namely business
in our case, is absolutely vital to the process, and so in response
I do not think that that is an inappropriate use of resources
for BRE to carry out that role across Whitehall.
Mr Fell: Just to pick apart the
two elements of your question, as I said at the outset, I think
the chief role of the BRE is to act both as champion and then
pragmatic helper, if you like, with other government departments.
In terms of scrutiny of impact assessments and how good and robust
they are, I again think that is a journey where there has been
progress. I think if you look at impact assessments today, they
are better than they were, say, five years ago but, quite clearly,
there is more to do. Where I think they are useful is to provide
an indication of cost/benefit analysis, and for that to be helpful,
quite clearly, there needs to be good quality scrutiny of those
if they are to be robust and to be useful as a policy tool. In
addition to that robustness, the other issue that is particularly
important for impact assessments is their timeliness. I see a
number of colleagues getting quite frustrated when impact assessments
come out at the point of consultation, thinking particularly in
the tax arena for example, HM Treasury, where it would be useful
to have more dialogue before we reach formal consultation stage
to say "are the figures and the assumptions that you have
built into your impact assessments correct?"I think more
emphasis on that informal dialogue before we get to the proper
consultation stage, to understand the different factors that go
into impact assessments, will be just as useful as the BRE taking
on a greater scrutiny role.
Q4 Gordon Banks: I suppose I should
declare that I am a Member of Federation of Small Businesses before
we start. I wonder how good the BRE at getting their objectives
across to organisations and especially small companies which are
not represented by people in your organisations, et cetera, because
the majority of small businesses are not represented by anybody
other than the people who are running the small businesses? Do
we fail to get the message across to these small businesses?
Mr Fell: Perhaps if I just carry
on on that theme for a moment. I think the importance of using
intermediaries is quite a good example. I see the Department for
Business this morning has issued a notice that it is contacting
20,000 accountants and solicitors to set out the changes on the
Companies Act that are coming into force. I think the greater
use of intermediaries that small firms will typically turn to—their
solicitors and accountants—for advice and guidance is perhaps
the best way to reach that audience that you are talking about.
Mr Davenport: I would say that
as far as small businesses are concerned, the biggest problem
we have is that the information does not get fed down, and whatever
information does get fed down tends to be in, shall we say, "Whitehall
speak" and the average business does not really understand
it, so it gets filed in the bin fairly quickly and forgotten about.
That is not what it is about. The whole thing is about informing
people. If I can just give you one example. The Ministerial Challenge
Panel did an enormous amount of work to promote the Local Better
Regulation Office. The idea of that office was to produce a more
even standard for councils throughout England and Wales. I have
seen one document from the LBRO. I think if I can get the chief
executive to sign it, it would be quite good because it would
be worth quite a bit of money! I have not seen it anywhere delivered
to any business at all. How on earth the LBRO can be expected
to glean information to produce better performance if it does
not inform the people that are its customers effectively I am
not quite sure. The whole of the government system needs to get
its communications act together a lot better than it does. One
of the comments I would also like to make is about the HMRC. I
am not quite sure whether the HMRC is included in the BRE reviews
and, if it is not, I am quite intrigued to know as to why not;
it is a department the same as any other.
Mr Ehmann: If I might add a couple
of extra points. I think all of the points my colleagues have
made are absolutely right, but there are two examples I can give
you of how the BRE is perhaps not getting the comms aspects of
this agenda across as well as might be hoped. To echo the point
about HMRC, and I would really emphasis that, we asked our members
what was the last government agency or department they had physical
interaction with or over the telephone, and for two-thirds of
our members the most recent interaction was with HMRC. It seems
therefore bizarre that that is the department that uses the least
amount of leverage in this process. I would really echo that point.
I think the other thing is if you look at some of the initiatives
that have been announced, to pick just one, there is something
which I think is now called a different name but it was the portal
for simplification suggestions from business, the recognition
levels in the NAO Report are incredibly low, and when we did some
work on this in a report called Words or Deeds back last
year, one of the proposals that we put forward was that purely
on forms and administrative burdens, the Government might want
to consider putting at the bottom: "If this irritated you,
there is a place for you to go and make that representation",
because at the moment there is a complete lack of join between
the point of burden and reporting that burden to a government
department or agency. To expect a business to think when they
come across some kind of advertising, if they do, of this channel
for communicating, "Oh yes, the burdens that bother me are
..." is frankly not going to happen.
Ms Low: I would just like to say
that I think the best way of communicating with business the benefit
of what the BRE is achieving is by showing the proof of the pudding.
We have measured in our Burdens Barometer a cumulative burden
of cost on business of £66 billion this year; it was £10
billion when we first started the exercise in 2000. This year
for the first time we actually saw some negative readings which
showed that in three cases there were examples of regulations
that had been the subject of regulatory reform orders. That amounted
to £67 million-worth of reduction of savings, if you like,
which admittedly is only one-tenth of 1% of the overall £66
billion figure, but that is important in that it starts to show
impact, and we were happy to trumpet that fact. There are a number
of issues that we have with legislation in this area because it
is a very hard to actually redress the balance once something
is in place. It is very, very difficult to turn the clock back.
However, showing the proof in the pudding, showing to businesses
what has happened by using hard figures is a very powerful way
of communicating the benefit of the work being done within government.
Q5 Chairman: Talking about the proof
of the pudding, you have mentioned twice your Burdens Barometer;
do you publish the methodology behind it? For example, is it measuring
net burdens or simply new burdens? Does it take into account changes
in a piece of legislation that are on the positive side of the
equation or does it just add up all the negatives?
Ms Low: It adds up the burden
to business which comes from the impact assessment as recorded
so we do not measure benefits in that way.
Q6 Chairman: So it is not true to
say that in net terms the Government has placed £66 billion-worth
of new burdens on business this year?
Ms Low: The main reason we do
not measure benefits is that in hardly any cases are they actually
quantified within the impact assessments.
Q7 Chairman: Can I finish off this
section by asking a very simple question: should the BRE concentrate
on one major strategic vision or should it continue to pursue
a number of goals based on what it is likely to get results on?
Mr Davenport: I think from our
point of view we are almost into a position of "if it isn't
broke, don't fix it". Multi-visions can be confusing anyway.
I think what it is doing at the moment is beginning to work. The
problem we have is that it takes an inordinate amount of time
for it to work and changing things dramatically now would be more
confusing and would dissipate the energies that are already being
directed in the areas that they are.
Mr Ehmann: I think the initiatives
in the areas of work of the BRE are broadly acceptable to the
Institute of Directors. As I said earlier, I think there is a
case for bringing those together under somewhat of a strategic
aim, and I think the key component of that aim has to be about
changing perceptions. If the BRE were a regulator, for the sake
of argument, its role would be dictated by what you were hoping
for it to achieve, so in the case of economic regulation it would
be to create a market which operated effectively. I would say
that the BRE's mandate should very much be to bring about a change
in perceptions amongst the business community primarily but also
amongst others to say that the regulatory environment in the last
four years has improved, and tangibly.
Q8 Chairman: Any counterviews?
Mr Fell: I would underscore what
I said . I think the BRE's primary function is to champion the
Better Regulation agenda right across government. I think it has
put in place a number of measures to do that and that journey
is going in the right direction, and I think that the reform agenda
would go at a slower pace without the role of the BRE doing its
job as it is.
Q9 Lorely Burt: My first question
is directed mainly to the FSB. Clive, you said initially that
there is a ratio of six to one in terms of the impact of regulation
on small businesses. The Government has got this mantra of "think
small first", so I am intrigued to know what you think of
that. In your submission, you say that new legislation should
specifically analyse the potential impact and costs to small businesses
and adapt a proposed regulation accordingly. Could you elaborate
a little bit on that and what specifically you think the Government
should do to achieve that?
Mr Davenport: That is a large
question.
Q10 Lorely Burt: It is, sorry.
Mr Davenport: The problem for
many years, probably 20 years, with government is that as small
businesses have increased as a proportion of the total GDP of
the nation, the perception in government of that proportion is
not really taken account of. Government, by its very nature, tends
to look at the large picture and at very large sweeping things
to be able to create a result as fast as possible with a minimum
amount of financial impact. The problem with small business is
because of the disparate types of business that small businesses
are, the Government cannot really get a handle on that situation,
and that causes it a lot of heartache. They are aware of the situation
but not quite sure, I do not think, how to handle it. Being engaged
more with businesses directly would give them a big insight. I
can remember the previous Director of the BRE, who was doing the
Ministerial Challenge Panel, Mitchell Lehman(?), spent a week
in Scotland and was absolutely mortified at the situation of the
energies that had to be expended in small businesses. He came
back and from the anecdotes screamed around the corridor for a
week at the amount of work and effort that goes into a small business,
and the amount of damage, effectively, that one small piece of
legislation can create. I think that is a classic example of the
way civil servants really ought to be involved more with small
business and they would become more focused on what should happen
to them.
Q11 Lorely Burt: I would like to
drag civil servants from behind their desks and send them to industry
as part of their induction just to give them an idea of what is
going on there.
Mr Davenport: Indeed, that would
not be a bad idea.
Q12 Lorely Burt: There are moves
afoot to do that. When we interviewed BERR, they were saying there
was a senior civil servant induction process to do that but I
think it has got to be a culture change right the way through
really.
Ms Low: I think it is a good idea
of course for civil servants to spend time within businesses to
understand the management issues that the burden of regulation
imposes on a small business, the extra cost that it imposes, and
all the other problems such as not being able to command economies
of scale, etcetera, but I do think we have to be realistic about
what sort of culture change a civil servant spending a week or
so in a business is going to manage to achieve, because that particular
gentleman has now moved on to a different department so all of
that learning has effectively been lost. This is the problem.
We facilitate via the chamber of commerce network lots of trips
like this and they have always been valuable and they have been
very good to show the host business that somebody cares, that
somebody is listening, and that central government is awake and
alert to the particular problems, but for us I would say that
that is a limited benefit and I think that really there is no
substitute for a much more robust and, as I set out, much more
of a policing effect. If you look at the hard evidence, when we
carried out our impact assessment report last year, which is the
supporting report to the Burdens Barometer piece of work, it said
that in 8% of the cases of impact assessments that were coming
through they had quantified the additional costs of regulation
for small firms and carried out a small firms impact test. The
impact assessment report that we published yesterday recorded
1%, so it is actually going down, and that is a problem and that
is something which needs addressing with much more hard-hitting
measures I would suggest.
Q13 Lorely Burt: Absolutely. Can
I go on and talk mainly to the IoD about the perception of business
on delivering results and how you feel that could be better improved.
You say in your submission that 1% noted an improvement to the
regulatory environment and 46% of your respondents felt that regulation
had worsened over the past 12 months, and you go on to talk about
investing more in communication with firms. Would you like to
elaborate a bit more on that?
Mr Ehmann: Yes I think delivery
and communication are interlinked, so if you will excuse me I
will touch briefly on delivery. If I contextualise the point that
you have just made which is the 1% that recognised any change
in the first year of the Administrative Burdens Reduction and
the simplification plans, if you look at the two other countries—and
we may come on to international comparisons—ahead of us
in this process, the National Audit Office of Denmark remarked
in their analysis of their process that from an examination conducted
by the chamber of commerce in Denmark in December 2006 it happened
that eight out of ten businesses were of the opinion that the
administrative burden in 2006 had been largely the same as in
2004. The report goes on to give quite a mixed picture and a slightly
negative one about what the process achieved. In this process,
eight out of ten said it had not improved. Our analysis says that
half of businesses were saying it has gotten worse, so I think
the picture is more stark, and we must recognise that, otherwise
we will end up with results similar to Denmark's, if not worse.
I think the ways to fix that are very wide and the reason I touched
on delivery as an important point is because, clearly, if delivery
is not significant and is not targeted in the right areas that
business would want to see it in, then communication by its very
nature will never fix that problem. That would be propaganda of
a sort so that would be very difficult to do. I think that more
effort does need to be channelled into making sure, as I touched
on earlier, that things like the Simplification Portal and much
more of the work of the simplification plans and the agenda for
reducing administrative burdens relates to genuine suggestions
by businesses themselves. That would to some degree counter the
problem that we face. I think the second point is about where
there are areas of significant achievement making sure that that
is communicated to the correct audiences. The point that I raised
in our written submission was that whilst I do not expect, and
certainly our members would not expect government to be able to
communicate directly with every business in this country in an
effective and bespoke way, there are business organisations like
ourselves, and indeed many more out there, trade associations,
and it would not be difficult to understand the demographics of
their membership and to therefore create not perhaps completely
bespoke packages of what had been delivered but something with
a lot more resonance for their membership. I quoted in our written
evidence that we have been given a document with about ten regulatory
improvements, including the deregulation of beryllium injections.
I am sure our members at some level are interested in that but
I imagine less so professionally! I think the issue was it came
with very little understanding of our overall membership, and
more effort needs to go into that.
Q14 Gordon Banks: I wanted to pick
up on the point that you have just finished making. I come from
a construction background and having run my own business for 19
years, there needs to be a much more focused approach to particular
industrial sectors. In my business for instance, and the analogy
I always use, I do not need to know how to dispose of fridges
because of some new EU regulation but I need to know of the issues
that are relevant to me in the construction sector, and that is
the real challenge, and it probably goes back to what I was saying
in the first part of the questions, yes, we can communicate through
organisations like yourselves but how do we get this information
through to the people who are not in organisations such as yourselves?
In the government portal that we use—or some people use—do
you not think it would be much better if there were industrial
sectors within that portal so that there is a certain amount of
regulation which is obviously relevant to everyone, health and
safety stuff et cetera, but there is a lot of specific stuff,
and would it not be better if there were sectors where the construction
industry could go, where the motor retail industry could go, where
the fridge disposer could go to look at particular regulations
that are relevant to their individual businesses?
Mr Fell: Jumping in slightly,
I would say perhaps the portal is not the best place to do it
but I absolutely endorse the sentiment about packaging up, if
you like, deregulatory measures to say, "How should this
make an impact for you? If I am in a given sector employing a
certain amount of people then these are the things that should
be making a difference to your lives and helping you out."
If they communicated it in that way rather than a broad brush
message that has some relevance to some people and not to others,
I think that would be a much more effective way of getting across
the messages and making sure that people actually take up the
changes in a beneficial way.
Mr Ehmann: I think that is absolutely
correct. Whilst you are absolutely right in saying that there
will be businesses out there that are not part of a membership
organisation or do not have some kind of representative who you
can channel communication through, if you look at some of the
questions we asked back last year, apart from a general question
about whether regulation is getting better or worse—we asked
about three of the initiatives that the BRE seemed most proud
about having achieved, and one which strikes me (it is quite wide
ranging anyway) is the abolition of the requirement in certain
circumstances for an annual general meeting. The recognition rate
amongst our membership, of which 73% are SMEs, was only 43%. I
agree there is a question about what you do about people who are
not members of membership organisations, but there is still a
problem with people who are members of membership organisations,
so I would argue let us tackle that first because it is an easier
one to win.
Ms Low: Just a quick point to
add about making the information more sectorally based, there
is some best practice which came out of Hampton on things like
the retail enforcement pilot and I think there could potentially
be scope to develop that line of thinking where you have got the
simplification of a process. In enforcement there is a communication
job to be done in there as well and also cross-cutting across
all local authority boundaries looking specifically at sectors.
John Hemming: I will start with a declaration
of interest. I have been in business on my own account for 24
years during which period I have in fact been a member of a chamber
of commerce but I am not longer; I resigned a couple of years
ago, but I am still, I believe, a member of the Federation of
Small Business. That is I think I have sent off the cheque!
Q15 Chairman: It is in the post.
Mr Davenport: Let me just check
that!
Q16 John Hemming: I intend to be
a member of the Federation of Small Businesses, let us put it
that way. We have all encountered regulation generating organisations
and you have that on one side and on the other side you have attempts
going on to simplify regulation. One of the eternal problems of
politics is measurement and how you measure what you are trying
to achieve, so the question as to whether the chambers of commerce
have another mechanism or whatever. We have the Standard Cost
Model which focuses on the administrative burdens. Okay, it is
an easy target but it does at least give you something definable.
Shall we start with Matthew as he is nodding, what is your view
in respect of the Standard Cost Model and whether it is worth
looking beyond administrative cost or whether we should focus
on administrative cost because although we have only hit one per
cent so far it is a sort of deliverable?
Mr Fell: I think the Standard
Cost Model on simplification plans was the original game in town,
which was tackling that administrative burden, and clearly that
was an important step. I think when we all gave a broad endorsement
to that approach, we did so knowing that the Standard Cost Model
did come with its faults but it was perhaps as good a tool as
there was of providing an indicative cost about the areas to tackle.
If you pick a department that we are pretty familiar with, the
Department for Business, Enterprise and Regulatory Reform, and
you look at their simplification plans, then the big ticket items
that it flags up suggests that they sit in employment, in company
law, and in consumer law, and for us at least that would feel
about right, so I think it is a useful tool for pointing in the
right direction and providing indicative costs of the problems
to tackle. That gets at the administrative burden and where I
think increasingly the focus should shift is on that whole policy
burden and the flow of new regulation as opposed to chipping away
at the stock. I think there is quite an exciting proposal that
came out of the Budget to look at the notion of regulatory budgets,
which might be more effective in looking at some of those flow
issues, and on the policy burden not just the administrative side.
Q17 John Hemming: You mention the
issue of employment law and cases like Ivan v Wand (?)
obviously have a substantial impact. Is that something that you
have thought of?
Mr Fell: I think at the end of
the day these are all tools that we use to help us make informed
decisions and I do not think that we should ever get to a situation
where, whatever measurement tool we use or approach to costing,
it completely overrides making an informed decision, but it helps
us make decisions and then it is for the elected Government of
the day to decide how they go on a particular policy choice. I
think if there are more tools out there that help us make informed
decisions—
Mr Ehmann: I think Matthew is
broadly correct. I think there is a question about whether we
would, looking at it again, have chosen this process today? I
am slightly undecided on that particular issue and I think again
not to want to use our other European colleagues but the Dutch
Audit Office said their government selection of reduction measures
should concentrate on the legislation that creates the greatest
burden, that is not perhaps surprising, but they found that information
from the baseline measurements can distort the actual burden,
since the measurements are based on a series of unrealistic assumptions.
Enterprises find those laws and rules that they do not understand
to be the most burdensome. It really goes back to the key point;
the process is not fundamentally flawed but what needs to happen
is a closer calibration between the process and genuine business
suggestions for how to improve it. If I can briefly say, we submitted,
through that same portal again, about 35 suggestions last year
and from an IoD perspective, certainly wholeheartedly, none of
those were adopted. It touches on Lorely's earlier comment which
is when we confronted Government with this—and these were
suggestions on behalf of small and medium-sized businesses, which
was the purpose of the portal—one answer that was given
to us was that GlaxoSmithKline had good success with this process.
I think that shows perhaps a misunderstanding of the small business
aspect but also about how we actually elicit genuine suggestions
from members in an interesting and innovative way.
Ms Low: From the outset, we have
expressed reservations about the Standard Cost Model, particularly
about the methodology.
Q18 John Hemming: What aspects of
the methodology?
Ms Low: Yes and the way that it
calculates cost.
Q19 John Hemming: In particular,
what is the reservation about the way it calculates cost?
Ms Low: The Standard Cost Model
essentially takes three different companies as examples, takes
a median, and assesses the cost of the regulation from the data
from three firms and, if it is 20% either way, it will measure
that. It is unlikely that just three businesses are going to exhibit
the sort of costs that meet that criteria. For example, in the
UK you have got ten different sectors of industry, six different
business size bands, and that would create about 60 cells of data
to start to analyse. If you get into that kind of methodology
then you are creating a flawed methodology for the future. One
of the problems, and we have set all this out in Deregulation
or Déjà Vu which we have sent to the Committee,
is there was a rush to endorse the Dutch model as the Standard
Cost Model and then various other mechanisms that have been deployed,
without properly looking at other systems or bringing to bear
more rigour, as we have said, in the impact assessment process
that we already had going in the UK, so I think that was a mistake
and, as we have said in a number of our reports and documents,
that is one of the reasons we have problems with that and about
the quality of UK impact assessments across the board.
Mr Davenport: I fully endorse
what Sally just said. The fundamental thing about Hampton was
that the Dutch model was the model. Dutch structures internally
are not the same as British structures, and yet we now seem to
almost be in a position where Hampton is the mantra that we must
not touch, when I think that really we should be looking at the
whole Hampton principle in detail and examining where we can improve
it and where we can actually deliver to the end user a more efficient
and more concise process so that the end user can understand it
more easily and use it more effectively. There is no point in
having loads and loads of legislation if it is so complex and
unwieldy that the end user cannot understand what he is supposed
to be doing, and that is counterproductive in itself, and you
end up with the end user disengaging completely and that has its
own dangers. I think that is one of the foci that should be concentrated
on. The detail is much more important than the overarching scheme.
|
