Examination of Witnesses (Questions 20-39)
MR CLIVE
DAVENPORT, MR
ALEXANDER EHMANN,
MR MATTHEW
FELL AND
MS SALLY
LOW
1 APRIL 2008
Q20 John Hemming: We are now about
halfway through the Administrative Burdens Reduction Programme
and perhaps have seen a 1% reduction on the Standard Cost Model.
Is it best, steady as you go, to keep going down the same route
or should we be revising the target or aiming to revise the Standard
Cost Model?
Mr Davenport: I think BRE is already
having its problems in trying to achieve this 25% on 25% on 25%.
It is starting so scrabble round a little bit to see where it
can be doing things that will comply with that model. I think
if we are going to make it work for the next half, it is a matter
of refining it, improving it, looking at the whole process again
to see whether there can be improvements in other areas to make
the whole thing more efficient and improve that 1%.
Ms Low: We are in the Admin Burdens
exercise, as you say, and I think it has merit in terms of continuing
with that exercise, but I do not think, as we have said, with
the impact that it is achieving that it is really setting out
to achieve the benefits for British business that we feel we need
it to do. One other thing to say on the Standard Cost Model is
that we have also had problems with the "business as usual"
exercise which was built into that model, which I do not think
for a number of reasons was the right way to approach it, because
effectively it managed to shave off a large percentage of the
overall figure in ways that we would not have endorsed.
Mr Ehmann: I think the starting
point is that the lessons that we can take from the Dutch and
the Danish show that we cannot do exactly what they did because
I do not think that will produce a satisfactory end result in
2010, so I think we to change things and up the ante in some areas.
Just to contribute a few which I have mentioned earlier and some
of my colleagues have as well, HMRC must be involved fundamentally.
I do not think we can achieve valuable change without that. We
need to look at whether simplification plans are too heavily backloaded
towards 2010. If they are, then I think there is a genuine problem
in trying to convey to businesses that this is a serious agenda
over the next few years and it will be very difficult for business
organisations like ourselves to be supportive of the process if
in a year's time, if we go back (which we will) and ask a similar
question, we still do not notice any improvement amongst our members'
perceptions, so we must start delivering more quickly. As I said
earlier and I will not labour the point, we have got to communicate
much more effectively and in a much more bespoke way. We have
got to elicit business suggestions rather than sit within government
and devise a good way of reducing burdens. The other thing is
we need to plan for beyond 2010 for this to be credible, otherwise
there is a feeling that it is perhaps government holding in its
stomach to reach 2010 and afterwards there is a chance that all
sorts of things could befall us. The last thing I would contribute,
which seems to me to be the elephant in the room, is some sort
of appraisal of culture in the Civil Service. By that do not mean
in an ephemeral sense; I mean what is the incentivisation structure
and how does one progress within the Civil Service in relation
to regulation and deregulation and the better regulation option.
Q21 John Hemming: That comes to the
difficulty of measuring quality which of course you cannot do.
What you are saying is not to change the 25% target but to do
things earlier that are planned for doing later?
Mr Ehmann: I am saying do something
slightly differently and I am saying do some other things which
are not being done as well.
Q22 John Hemming: Okay, Matthew?
Mr Fell: My starting point would
be: this is the game in town so we should not rip it up and start
again. It has at least started to change culture in that there
are now teams of officials working to identify ways of simplifying
legislation to get them to that 25% target, and quite clearly
some departments will get there and some might not, but everyone
is pointing in the right direction. The challenge for me lies
in that this is meant to be a net reduction and I think there
has perhaps been an overfocus on looking at the existing stock
of legislation, and coming on to some of Alexander's points about
what is coming down the pipe, I think we need a little more emphasis
on that so we do achieve that net reduction. I think that will
be useful going forward if that is where more of the emphasis
was put.
Q23 John Hemming: So summing it up,
put on the foot on the accelerator; go roughly in the same direction;
but have somewhere to go after 2010?
Mr Ehmann: Yes.
Mr Fell: That is good for me.
Q24 Judy Mallaber: The BCC has argued
for better linkage between EU and UK impact assessment processes.
Do you think that our emphasis should really be on what you would
regard as the burden of EU regulation and improving EU impact
assessments rather than the current emphasis on the Administrative
Burdens Reduction Programme and the 25% target? Would you like
to switch that emphasis based on your statement that 71% of your
Burdens Barometer figure is EU-sourced legislation?
Ms Low: It is true that a large
proportion of the cumulative burden is EU-derived. What we would
like to see from the UK's perspective is the UK Government pushing
much harder at a much, much earlier stage to ensure there is a
much better link in establishing what the impact assessment of
what might become a Directive is going to be. I think that having
a partial impact assessment at that early stage, three years before
we see a Directive for example, could yield much better results
in terms of stemming that flow of EU-derived regulation. Out of
that 71%, the number of regulations that come from the EU, there
are actually more in number but fewer of greater value within
that number, so we need to address that as well. It is essentially
about looking at the UK Government pressing much harder at the
earliest possible stage. That is the most important point to be
made. We are not at the moment; we are very much focused on implementation
and implementation deadlines and timings and dates as a UK Government
rather than being bolder and requiring better analysis at the
earliest possible point. That can bring the added benefit of better
data to draw from when the proposals are being considered at an
EU level, which has to be a benefit in terms of having better
quality policy-making and more informed policy-making.
Q25 Judy Mallaber: Can you give some
examples of some of the areas that you are most concerned about
in terms of EU regulation?
Ms Low: Assuming that members
of the Committee will have received this poster which has all
of the regulations listed in the Burdens Barometer and, as I say,
it is marked which ones are EU-derived and which ones are not,
I could not talk to individual ones out of that list because there
are so many, but I can certainly quote from a number of—
Q26 Chairman: Can you not give priorities
to which ones you think are the most burdensome?
Ms Low: The most burdensome for
small and medium-sized businesses tend to be the ones on employment-related
issues. Data protection is another very big burden on business.
The number of dangerous substances, sale and control of substances
and hazardous substances areas are some of the others.
Judy Mallaber: We are coming on to discussing
employment and health and safety so we can maybe pursue that further.
Q27 Lorely Burt: Just on that point,
we were talking about getting in there before EU regulations come
down the line; in your view is there any truth to the view that
once we have got the EU regulation, we are not doing industry
in Britain any favours by the way that we are then subsequently
interpreting those regulations? You hear the express "gold-plating"
and something I am fond of saying is, "Why are we doing it
to ourselves?" Is that your view?
Mr Ehmann: I cannot talk about
whether it is symptomatic of a widespread problem but I certainly
have been involved with some work that has been going on both
at a European level and domestic level here on an obligation called
the Intrastat where there is latitude to discuss potential simplification
of this process of reporting imports and exports of businesses.
What we found when we looked at this in detail was that the requirements
laid out by Europe were in fact added to by this Government, and
in the pursuit of simplification in Europe it puts one in a very
difficult circumstances for the Government to argue for additional
simplifications that are pan-European if it has not taken full
effect of the ability domestically it has to do so. I can certainly
say in that circumstance, yes, there was, but whether that is
symptomatic of widespread gold plating I do not know because,
as Lord Davidson's review suggested, it was not as widespread
as previously thought.
Q28 Judy Mallaber: So would you put
more emphasis on getting in at an earlier stage with EU regulation
rather than the current programme that we have? Do you think that
the emphasis should shift?
Ms Low: Yes.
Q29 Judy Mallaber: Is it realistic,
as you have suggested, that Member States should be required to
do impact assessments before the Commission get involved?
Ms Low: Partial impact assessments.
There should be a consultation and an estimate of burdens at that
earliest possible stage. It would not be easy to carry out a detailed
impact assessment at that point, but a partial impact assessment
looking at the potential impacts on business could be done at
that earlier stage.
Q30 Judy Mallaber: And would your
aim be to stop those regulations or just to look at how they are
implemented?
Ms Low: No, to enable the policymakers
and the politicians taking that piece of proposed legislation
forward to have a more informed view of what the impacts would
be and then, if the impacts and costs outweigh the benefits, then
that should be subject to scrutiny.
Q31 Judy Mallaber: Are there currently
any pan-European initiatives on this or is it very much just left
to the Commission and then the governments to look at it after?
Are there any pan-European initiatives that impact on business?
Ms Low: I would have to come back
to you on that. I cannot think of any off the top of my head.
Q32 Judy Mallaber: Moving on to another
aspect, you were a bit sceptical about the Dutch and Danish experiences,
but from the links between you and equivalent industry bodies
overseas, are there any examples of organisations similar to those
that we have operating that do things better or do things differently
that we can learn from?
Mr Ehmann: From the Institute
of Directors' point of view, purely from the conversations I have
had with other business organisations—and I am not talking
about formal links—I have not learned of any other best
practice but, as I said, I think there is a question about perhaps
not just business organisations being aware of foreign contemporaries
but also foreign governments being aware of the outcomes that
come from processes. What I find interesting about the Dutch and
Danish examples is that we embarked on a process that was not
even partially evaluated at that stage and the feedback from businesses,
as I dictated earlier, has not been as favourable as one might
imagine in those countries. I think that is particularly important
not just for UK business but also for us ensuring the productivity
of Europe as a whole, because clearly Europe and Germany, for
example, are embarking on very similar processes too. If this
process as currently constructed is not going to deliver results
we should surely pass on that learning too?
Q33 Judy Mallaber: Do you gather
information on what is happening in other countries and do you
talk to your equivalent organisations about it?
Mr Fell: My instinct is that a
lot of the debate has focused this morning on how we improve the
UK model and how the UK Better Regulation agenda could be enhanced,
and it is my experience that we are actually a little bit ahead
of the curve compared to Europe. The CBI certainly receive infrequent
visits from our sister federations who are quite keen to learn
about what is going on in the UK and apply that both in their
countries and indeed look to promote the agenda at an EU-wide
level, so it is certainly not perfect here but my sense is that
we are perhaps ahead of the curve as far as European countries
are concerned.
Q34 Chairman: By that do you mean
in terms of the direction in which we are moving or do you mean,
going back to Ms Low's Burdens Barometer, that we have in net
terms fewer burdens?
Mr Fell: I mean by use of some
of the tools such as impact assessments, whether it was simplification
programmes or common commencement dates, all the things that have
been introduced in the last three years, I think we are perhaps
ahead of the game in deploying some of those. Quite clearly, some
of the results have still to come through from that but I think
others are keen to learn from us and draw on our experiences rather
than there being people out there who are light years ahead of
where we are on this agenda.
Q35 Judy Mallaber: What about the
US? Do we have any knowledge about how the Office of Information
and Regulatory Affairs operates?
Mr Fell: I could very happily
come back to you with more detail later on that. I think the US,
contrasted to Europe, is perhaps the one area where there are
lessons to be learned from.
Q36 Judy Mallaber: Nothing you wish
to share with us at the moment?
Mr Davenport: Coming back to Europe,
we have a permanent office in Brussels and we are a key member
in ESBA, which is the European Small Business Association. We
are seeing European legislation now starting to come through,
albeit in its initial stages, on regulatory reform, so we are
a little bit concerned that we could end up with regulatory reform
on regulatory reform if we are not careful, Europe doing one thing
to improve things and then the legislation comes over here and
it gets churned again. There are some concerns about that at the
moment, but it is early days.
Q37 Chairman: Comments about the
US from any or all of you would be extremely interesting.
Ms Low: Could I just add that
we are members of Eurochambres and we are managing a number of
Europe projects across our European member chambers on this issue
and I would slightly take issue with that. I think we have good
mechanisms and good processes in the UK which serve as a good
model, but ultimately, going back to the root of that 71%, it
is important as well to identify and head off potentially burdensome
regulation at the very start of the process. That is one point
where pressure could be brought to bear more.
Mr Ehmann: Unfortunately, I do
not have anything additional to offer on Europe but what I would
say is that there is a lot of best practice floating around in
the UK in terms of other suggestions that are made abroad.
Q38 Dr Naysmith: Could I first of
all apologise for arriving half an hour late? It is always a dangerous
thing to do, to come in in the middle of a hearing like this and
then start asking questions, so if I start asking something that
has already been covered will the Chairman or you please tell
me to shut up and say, "We have done that", and we will
move on to something else. I am going to move on to talk about
the scrutiny of regulation, but before I do can I pick up a point
about gold-plating that was mentioned a few minutes ago? Every
time I meet a business group they tell me that things are different
in other countries; we gold-plate and they in Italy and France
and Spain do not follow the legislation. You mentioned, Mr Ehmann,
just a minute or two ago a study that had been done; it is probably
the BRE one of a couple of years ago, which claimed to have looked
at it fairly rigorously but that it really is insignificant, the
amount of gold-plating that goes on. Is that true or was that
playing down what is happening, or do we need a study that looks
at it properly and sorts that out?
Mr Ehmann: I think it is an issue
on which we at the Institute of Directors still do not have a
completely bottomed-out view on at the moment. The BRE's report,
as you rightly noted, by Lord Davidson suggested that the extent
of the problem was limited, if at all existent, in the UK. What
I would say is that, from the few pieces of regulation that I
in my role had to deeply get involved with, I found one example
in the last year from only dealing with a few in quite regular
detail and that was, as I say, this Intrastat reporting requirement,
so whether that is enough to launch a wider inquiry I do not know.
I think there is a wider question about whether the UK Government
has a culture of adding to, and I think that is a very serious
allegation. If we are adding to the obligation that comes out
of Europe that is a pretty serious problem and perhaps we need
to look at that.
Q39 Dr Naysmith: Would that not qualify
as gold-plating?
Mr Ehmann: Yes, it would indeed.
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