Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 60-68)


1 APRIL 2008

  Q60  John Hemming: The BRE is suggesting what to me is not a credible figure as the savings to business from scrapping the need for private company AGMs. Do you think it is a credible figure that people generally have saved £45 million by not having to have private company AGMs and is the abolition of the need for a company secretary having any effect?

  Mr Fell: This for me again is all about chipping away at the baseline burden. Where we are coming from on that is quite frankly that small businesses do not have huge amounts of shareholders, so the cost of holding an AGM is not immense to them in the first place, but it is a step in the right direction. I think it is about getting as many of these cumulative wins as we can.

  John Hemming: I have had a small company for a long time. We have not really had AGMs but we have documented the AGM. That is the standard practice.

  Dr Naysmith: That is right; I agree with that. That is the process.

  Q61  John Hemming: The process has been to document the fact that one occurred and get everyone to sign for it.

  Mr Ehmann: Can I add to that? I do not want to refer constantly to the Dutch and the Danish, but the Dutch did find in their conclusions that one of the reasons the reduction measures did not deliver everything they had hoped for was that enterprises did not always comply in full with the obligations that were abolished, which is essentially what you are saying, and that employers have retained certain administrative procedures for their own purposes even if there is no statutory obligation for them to do so. I think what some of those show is that unless you understand how businesses are operating on the ground and will operate there is no point engaging in a process of ticking figures here.

  Ms Low: If we were seeing substantial savings they would be reflected in things like our Burdens Barometer and at the moment they are not there.

  Q62  Chairman: But equally, if these figures are so nebulous, does it not raise questions about the accuracy of throwing out £66 million as your barometer?

  Ms Low: No, because the Burdens Barometer is based on impact assessments and the admin burdens exercise was based on the Standard Cost Model and we say that methodology is flawed.

  Q63  John Hemming: In the case of the private company AGM I am not sure that was ever deemed to be in contradiction of the 1983 Act or the 1986 Act, whichever it was.

  Mr Ehmann: Nonetheless, John, if only 43% roughly speaking of our membership are aware of that change then—

  John Hemming: I was not aware of the change.

  Q64  Dr Naysmith: You are just in the process of destroying my reason for existence by saying what you are saying. I have been on this Committee for about seven or eight years and you might something like say, "Get a life, please", but we put through the changes to the fire safety regime and it was probably the biggest change and the biggest deregulationary reform that we have put through on this Committee. It was not the most controversial. The most controversial one was births, marriages and deaths registration which we eventually had to abandon because it was too controversial. The fire safety regime in 2007, in the summary of Departmental Simplification Plans, claimed £53 million in savings from scrapping the fire certificate regime as a result of the changes. Is that credible? The reason I ask is that, instead of sending out fire officers to investigate premises and the businesses having to pay for those investigations, nowadays it is more of a self-certification and there has been a big reduction in the number of visits required to premises, so that must somewhere register as a saving, certainly to larger businesses.

  Mr Fell: I would agree with that and I do not think on any of these measures we are saying they are a bad idea; I think we are saying they are a very good idea. From our perspective the costs are always going to be indicative of where burdens lie and if it helps to focus attention on some of these areas then that is a good thing, and I think that is a much more useful exercise than arguing about the exact pounds, shillings and pence that are attached to them.

  Ms Low: I am afraid I cannot agree with that. The Manchester Business School compiled this piece of work and it is the only effective mechanism for quantifying burden on business that exists. Over the years we have consistently asked the Government to take over the database the Manchester Business School holds and do it themselves but we have never been taken up on that offer. I would say that the fire safety regulation is a great example because it took six years, as you will well know, and was as a result of good old regulatory reform of the Act, and I get that to £67 million in savings.

  Q65  Dr Naysmith: Of course, some of the savings will be on the side of the Fire Service as well because they can now do other things.

  Ms Low: Which is a good win.

  Q66  Dr Naysmith: Yes.

  Mr Davenport: The big problem with all of these figures is that if there are figures in there which have a question mark on them, like the figures you were mentioning, it calls into question the whole thing and that is when it becomes a danger, because quite easily the whole thing can be completely disregarded because of one set of figures, and that is a concern.

  Mr Fell: I would entirely agree with that point about if they are wildly inaccurate then it discredits the entire operation. What I was meaning though is it needs to feel in the right ball park. We will all be noticing if it is not and making noises about it. I think it is about making sure that the focus is pointing in the right direction.

  Mr Ehmann: I agree. I think the abolition of the fire certificate was given to us last year by the Better Regulation Executive and we wanted to use research about whether businesses noticed the change, and we thought it was unfair to just ask a simple question about has the regulation got better, worse or is it much the same, but also to ask about specifics and whether they noticed them. The removal of the requirement to have a fire certificate I think registered about 70% recognition, so it was the best of the three that we asked about, but still you are talking about three in ten businesses not knowing about that, which I think is quite strange. What you did see in the follow-on question when you asked about these three issues that had had a change, "In light of that do you feel the Government is doing enough?", and whilst it was not 1% it was significantly higher; it still was not a great figure, I must admit, was that on those three issues what it demonstrated was that businesses just had not really noticed those changes, and when you did explain it to them there was a higher recognition and approval of what the Government had been doing on this agenda.

  Mr Davenport: If I can come in there on a slightly different thing, I was involved with the Unfair Commercial Practices Directive which is one that is going through Parliament at the moment. That is going to remove 23 pieces of legislation but it is very difficult to tell a business that 23 pieces of legislation have been removed because they are not going to see it, and that is where the problem lies. It is about perception and making sure that any figures that are issued have logic to them. I listened to a programme that went out on the Birmingham network television only recently and they were saying about the amount of people that were sleeping rough, and we ended up with in the whole of Warwickshire there were two people sleeping rough. The reporter went round and within 20 minutes had totally blown the whole thing out of the water and it discredits the whole situation. I think exactly the same thing happened here.

  Q67  Dr Naysmith: The fire safety regime had, as I recall, something like 79 or 80 different overlapping regulations that were wrapped up into one, which was much simpler.

  Mr Davenport: Much simpler, yes, which is what UCPD is doing.

  Q68  Chairman: So despite the problems that you have identified this morning you would still all concur that Britain is a great place to do business in? Sure. We have kept you here for an hour and three-quarters and you have been very frank with your answers, for which we are extremely grateful. Is there anything you would like to add in conclusion?

  Mr Ehmann: I would simply leave the Committee with the remark (paraphrased) of David Arculus, which is that if all this process brings is government departments feeling somewhat better about the burden that is not what we are looking for here.

  Chairman: Can I thank the four of you very much for your attendance this morning and for your notes, and hopefully for some follow-up notes on the points we have pressed you on. If, during the course of this inquiry, other information comes your way that you think would be helpful please feel free to pass it on to us. Thank you very much.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2008
Prepared 21 July 2008