Examination of Witnesses (Questions 100-120)|
29 APRIL 2008
Q100 John Hemming: You are implying
in that that the BRE should set up a forum for them to discuss
Mr Cullum: There is an opportunity.
There is an undoubted need for it and the BRE you would think
were a fantastically well-placed organisation to do it. Some of
this is about trying almost to apply the principles of better
regulation to the process of better regulation and the BRE, in
the sense that we would argue that a lot of better regulation
is about culture change, that it is not just about compliance
and being heavy-handedwhat I believe the Financial Services
Authority used to refer to as "Nike regulation" when
you say to people, "Just do it." How do you get beyond
that and achieve culture change? Rather than the BRE just using
tools which are sometimes a bit tick-boxy or about quantity rather
than quality, trying to reinvent the relationship with regulators,
so that it is more discursive, more about ideas exchange, and
more about culture change within regulation.
Q101 John Hemming: One of my hobby
horses is taxman regulation processes. One of the particular things
is that if somebody's annual return for tax credits gets lost
in the post and therefore they do not get it in time, they have
to pay back all their tax credits, which is an odd regulatory
decision. Do you think HMRC should fall within the BRE's remit?
Presumably your employees have encounters HMRC quite a few times.
Ms Veale: Indeed they do. I would
have thought there was a very strong argument for that. It has
a particular role which we are interested in, in enforcement of
the national minimum wage, of course. It seems quite strange that
it is detached. It is not something we have given a great deal
of thought to, but now you have put it to me I would think there
was a huge, impelling logic to having it.
Mr Cullum: I am not sure how it
works but I know they have their own in-house better regulator
arrangements, in that they have Teresa Graham, a former Better
Regulation Commission colleague, as an in-house better regulation
scrutineer. She is a forthright, intelligent person, who I am
sure does a good job in challenging them, but it does seem an
odd omission. Certainly from the consumer and citizen side, it
is a very obvious area of regulatory burden. For us, a large part
of this story is trying to minimise the number of organisations
who say, "Our role as a regulator is so different from everybody
else's that we are not going to play" because a lot of the
themes are common
Q102 Dr Naysmith: I have a couple
of questions on the health and safety and employment regulation
and its interaction with other regulation. Is the BRE working
well with regulators such as the Health and Safety Executive to
produce more effective and risk-based regulation in this area?
Ms Veale: I think that has been
a success story. It is not finished: there is a lot more to do.
People are particularlyand quite rightlyvery sensitive
about health and safety legislation and regulation, because of
the important role it plays in protecting lives, apart from anything
else. Certainly that is one of the very positive impressions I
have picked up, that there is a lot of work going on together
with both the organisations. I think it has been quite a sea change,
for the Health and Safety Commission. It is a fairly long-lived
and highly respected organisation that had its own culture that
went along with it. I think there is a particular feeling with
health and safety regulation that you have to be terribly careful
before you change anything. From what I have heard from trade
union commissioners on the Health and Safety Commission they have
taken this issue extremely seriously and are doing it very methodically
and doing it in a way that will not frighten the horses because
they take quite a scientific evidential approachwhich is
good. We would not want to rush them. As far as I can gather the
BRE is working within that culture.
Q103 Dr Naysmith: They claim they
have halved the number of forms that employers need to fill in.
Is that your experience?
Ms Veale: Yeswhich is very
good. Form-filling has its place and I know that it is necessary
afterwards if you end up in court, but there must be much easier
ways of doing things. It is easier for trade union officers, much
easier for safety officers, if the systems they have to comply
with are much easier to use and make the most of modern information
Q104 Dr Naysmith: Do you think it
has made any difference to compliance, either better compliance
or less compliance?
Ms Veale: I do not think that
has really been properly measured. We are not hearing anything
negative, so from that I suppose you could draw the inference
that it is not causing problems. Whether it is making things better,
I think we would have to wait a little bit longer to assess properly.
I would not say there has been any significant problems with itwhich
is a good start.
Q105 Dr Naysmith: You have already
mentioned the reviews that are taking place in health and safety
and employment regulations, particularly in the area of dispute
regulation. Do you have any specific suggestions about what improvements
are required here?
Ms Veale: I think less of it,
really. The TUC has firmly come to the conclusion that you cannot
codify relations between employers and employees. It is just not
possible to do it. It is about human relationships. The clearest
example of why you cannot do that is the dispute resolution regulations.
They were highly well intentioned: the idea was to make sure that
all employers had procedures before they dismissed and that employees
had a grievance procedure they could use, but it very quickly
became obvious that if you start trying to write out a script
for how people will deal with each other it is never going to
work in a lot of situations. People became obsessed with the script
and how they did things, rather than the substance of the problem.
There were not fewer cases going to tribunal; there were the same
number of casesin fact the number of cases went upbut
the cases related to the procedures rather than to the substantive
complaint. That is very frustrating for both parties. It is quite
clear that those regulations had not worked at all and I would
salute the courage of the Government for having admitted that
something was not working and listening to the different voices
and making all those changes. You do, then, have to have the very
difficult task of substituting for that, because, if you have
accepted that the intention was good and that there was a need
to improve procedures, you then have to work out how you are going
to do it without prescriptive statutory regulation. Again, things
are developing and developing in a very positive way, and far
more use is being made of the ACAS code, which does have legal
status, in that it can be used in a tribunal proceeding, but you
do not sit there in your place of work making sure that every
line of the ACAS code has been complied with, because it is not
that kind of instrument. What is happening now is far more of
a prompt system, with rewards and penalties for transgressing
and doing things well. If you do make a mistake, you are going
to get the book thrown at you in a tribunal and you are going
to get money added to the amount you are going to have to pay
out to the employee; but on the other hand, if you have done things
well and there is a minor problem, the tribunal will be given
the freedom to take a very, very light touch approach and just
give the employer a bit of a telling offwhich is quite
right. I think that gets things back to how things should be.
I would just chuck in one more comment because I cannot resist
it: employers, understandably, complain about the volume of employment
litigation now on all sorts of issuesand I think that is
partly why the new dispute resolution regulations were put in
place, because of course in the old days, when I started out,
things were regulated voluntarily between unions and employers
far more extensivelyand I am not here to give lectures
on policy, but I would say that if you remove that form of regulationand
I know it had its warts and there were problems with it, but if
it disappears completely, as it has done now in some workplacessomething
will go in to substitute for it, unless you move to a society
that has no employment protection at all, which none of us would
want to have. If you are going to have some employment protection,
there has to be some means of enforcement; if you are not going
to allow that kind of workplace enforcement, I cannot see that
there is any alternative to having litigation. Our plea to the
BRE on that would be to throw away the political baggage and have
a look again at the tool kit and what could be done in terms of
making things better at work and getting the parties to do things
Q106 Dr Naysmith: How would you make
that come about? What would you suggest?
Ms Veale: I would do some pilots.
I would create some opportunities where you can test thathopefully
not to destructionand where you can see whether there is
a way of doing things through those means which achieves the same
end. You would not be able to suspend protection; you would have
to create a situation somehow where you can get to the same place
by a different route and to see whether that would deliver the
same result. You would have to keep the protection there, because
obviously you cannot strip away bits of employment protection.
Q107 Dr Naysmith: Do you know of
employers who would be happy to join those pilots?
Ms Veale: I think we could find
some good employers who we work well with who would be happy to
demonstrate by example how you can do things much better on a
collaborative basis. If that were to work, you could then see
if you could spread that out into other parts of the economy.
These days it would not necessarily be with unions but with some
sort of mechanism that replicates that employee voice, employee
buy-in. We are all really trying to get to the same place at the
Q108 Chairman: Perhaps employers
should throw away their lawyer's phone number and get a book on
Ms Veale: I entirely agree.
Q109 John Hemming: I would like to
come in on that particular point. There was a Middlesbrough caseand
you will know better than mewhere employees sued the union
for settling something that was not their best interest, which
destroyed the concept of collective bargaining. I believe that
went to the Court of Appeal and was changed in the Court of Appeal.
It does raise an interesting pointand I still employ about
130 people, so I am still quite a big employer; although, to be
fair, my staff are not unionised: it is a software house and you
negotiate with individuals to a great extentwhether it
is worthwhile using works councils/trades unions as a mechanism
to get a bit of equality of power, basically, between the employer
and the employee because it is unequal relationship by default,
dependent on complex factors, and whether that is an area to be
looked at from a regulatory point of view. There is no question
about it, for a lot of the legal processes there is a merit in
having no-win, no-fee lawyers around: they are not going to take
cases that are absolutely futile, there are issues about costs,
but I do think, yes, there is something to be looked at, and I
would be interested in expanding on that idea of alternatives
to litigation for protecting individuals in the workplace and
whether you have got other thoughts around that. You said not
necessarily for trades unions.
Ms Veale: Because they are not
there. I would love to set up a national trade union system where
everyone had a trade union in their workplace. We are not going
to get that and they would not be independent.
Q110 John Hemming: You are thinking
of works councils.
Ms Veale: Exactly, where you had
some sort of representative fora for employee voice and you had
a kind of deal, so that, if what is being done is generally going
in the right direction and is for the greater good of the greater
number, you would never be able to stop individuals having a right
but you would have to hedge that about a lot more. With Middlesborough
and other cases, the lawyers have worked out that not only can
they make money out of suing employers but they can sue the organisations
that do deals with them. That will completely undermine any remaining
collective bargaining in the private sector, and in the public
sector it is having a massively damaging effect.
Q111 John Hemming: Your argument
is that there would be some merit in perhaps limiting legal immunity
to representative groups who are doing that negotiation, so they
are not vulnerable to being got at all the time.
Ms Veale: If that were possible.
There are complications with EU law, as we are finding out. The
Equal Treatment Directive specifically includes trade unions,
so it would be very difficult to get an opt-out, but I am sure
there is some way of nuancing it so that you had some sort of
time lags built in. That is what we are trying to look at at the
moment, so that nobody loses their right but the way in which
the right is accessed is
Q112 John Hemming: A lot of the time
it is the parameters within which you can take litigation. If
it is a very broad parameter, then it is not so much of a problem.
Ms Veale: Yes.
Q113 John Hemming: If it is very
narrow and precise, the costs of that have a big impact.
Ms Veale: Exactly.
Q114 John Hemming: It is an interesting
topic. I am also involved in the management of Birmingham City
Council, and the single status pay and grading review. Obviously
the difficulty with the trades unions is you cannot negotiate
with the trades unions and agree something if they will get sued
by their members as a result of them agreeing somethingwhich
does not create a very good negotiating environment. What are
your views on the Regulatory Enforcement and Sanctions Bill?
Ms Veale: It is not something
to which we have paid a huge amount of attention. We had some
sympathy with some of the points the local authorities were making
about the local better regulation offices, but our main concern
was to ensure that the Hampton Review and those aspects of enforcement
it instigated were properly interpreted into the law. So far,
we are reasonably satisfied with the outcome. We have not been
actively lobbying on the Bill, which I think you can take as being
a sign of general approbation, but I suspect the NCC know an awful
lot more about this than we do.
Mr Brooker: The NCC is actively
lobbying on the Bill. We certainly welcome the aims, which are
to improve consistency in the way that consumer protection is
enforced locally and to modernise the sanctioning tool kit. We
are concerned at the way the Bill was presented by the ministeras
I touched on earlier. Consumers were very much treated as an afterthought
in legislation rather than putting them right at the heart of
it. To be fair, the Bill, now it is more or less through the Lords,
is in a much better state than it was when it started. The Government
have made a couple of concessions; in particular, excluded from
the primary authority principle occasions when there is significant
risk of serious harm to human health or the financial interests
of consumers. But we do have concerns on remaining points; in
particular, there is a pre-emptive right for business to appeal
a proposed enforcement action, even if the enforcing authority
and the primary authority are in agreement with what should happen
next, and we think there is scope there for well-heeled businesses
to use lawyers to delay legitimate enforcement action or even
to deter hard-pressed local authorities from taking action in
the first place, so that is an area that we want to remove from
Q115 Judy Mallaber: Sarah, you have
criticised business and employers for often not distinguishing
between policy and administrative costs when they have made complaints.
You have suggested that that attitude is also seeping into government
decision-making. Can you expand on that and give some examples?
Ms Veale: The classic example,
which is in our evidence, is maternity legislation. It has not
been changed radically but extended, so that women have a longer
period of paid maternity leave. The problem with the business
lobbying on that, which I think the BRE did absorb, is that there
was, I think, quite a naked attempt to conflate the administrative
issues with policy objections. I think that really what the businesses
were objecting to was extending the period of paid maternity leave.
They said that this made additional administrative burdens and
they could not cope, as if it was much more difficult to let a
women have nine months' paid leave than to let a woman have six
months' paid leave, whereas, in fact, I would have thought the
exercise of providing cover, statutory maternity pay and so on
would not have been any more difficult between six and nine months.
I think it would be much better if there were to be some honest
debates about policyand we are perfectly happy to engage
in debates about policy all day and every daybut to pretend
that the objections were to do with the costs of running something
I think are disingenuous. There is a lot of help given, especially
to small firms, in dealing with maternity absences. I really feel
the two things were blurred in together. The trouble is, if the
voice is loud enough on those sorts of issues and manages to create
a storm of upset about administrative burdens, the temptation
then for organisations like the BRE is to accept the evidence
they are given without looking behind it. If you go and talk to
some small business owners, you will find that it comes out in
a rather ugly way, as have some of these recent comments made
by some quite senior
Q116 Judy Mallaber: Alan Sugar.
Ms Veale: Quite. I was not going
to name him, because he is getting too much publicity already,
but comments have been made that there is no point in employing
women of childbearing age because they are only going to cause
you loads and loads of problems. That is detestable, in my view.
On the other hand, at least this a view put forward about not
wanting to employ people who are going to cause a nuisance in
the workplace and not seeing employers having a role in contributing
towards ensuring that women who have babies can go back to their
jobs and all the rest of it. It beggars belief to try to pretend
that this is not policy objection and it beggars belief to arguelike
the small firms do to try to get it considered respectablenot
by saying what Alan Sugar says but by saying, "It is all
just too difficult. If you make it easier then it will all be
all right and we will not object" but they never say how
they would make it easier. You cannot have the objection to the
administrative burden and not provide some sort of solutionunless
the truth is that you object to the policy and you are not interested
in the solution because you just want the Government to stop doing
it. I think it is using the burdens argument as a disguised way
of arguing for a different policy. I think that is disingenuous
and I worry that the BRE make it into that sort of mindset. I
would urge it to do its job of dissecting information and sending
people out there to talk to one or two real, small businesses,
instead of always listening to the voice of representative so-called
organisations which, sometimes, I think, are a bit lazy themselves
perhaps in collecting real hard evidence and extrapolating from
that proper arguments about how you would do things better.
Q117 Judy Mallaber: Is it always
clear what the difference is between the administrative cost or
burden and the policy? I was at a small business breakfast recently
and maternity rights was one of the big things raised by them.
When I tried to pin down one of them, the concern they expressed
was not knowing when the person was going to return to work: if
only they had clarity at the beginning and it was set out at the
beginning rather than the employee being able to say, "Not
long before she came back," that would ease the burden. Is
that a burden or is it a policy issue? Is it always clear or is
there sometimes a blurring between the two?
Ms Veale: I think there is probably
more of a genuine blurring there, but there is nothing that can
be done about that because human nature is human nature, things
take their course, and it is practically possible for women to
predict precisely when they would like to return to work. I think
the Government have done what they can, with gentle measures like
the "keeping in touch" phase, which is an excellent
initiative whereby the employer can now feel confident that they
can talk to the woman whilst she is off and not get into trouble
for it, and make sure that they have conversations regularly,
so that there is a better ability to plan when the person is coming
back. But I think that is an inevitable consequence of a lot of
women now working -which has generally been extremely good for
the economy. Leading employers would say that through employing
womenwho are outperforming boys a lot now at universities
and schoolsthey are ensuring that they have absolute access
to a pool of talent without which I do not think they would survive,
but have to accept biology, which is that women still do have
the babies and will need some time off work. Again, I think you
get into much more complex arguments about how far employers have
to shoulder social burdens, but employers operate in the community
and they have to accept that this is what is happening today:
you cannot turn the clock back. They just need to ensure that
they do ask, and they should ask volubly, for as much help as
they can get with managing the situationthat is perfectly
legitimatebut stop wrapping up arguments objecting to the
fact that women are workingwhich some of them still do
object toin bogus arguments about how difficult it all
Q118 Judy Mallaber: Is there evidence
that the confusion between policy and administrative costs or
burdens is affecting how government looks at these issues and
Ms Veale: It is hard to see exactly
where that is happening. One good example of it would be the way
in which the Working Time Regulations operate. There has been
so much fuss made about all the difficulties in giving people
their holidays and their rights to time off, that what has happened
in fact is that it has done businesses more harm than good because
they have now constructed a raft of regulations that are practically
impenetrable in order to protect employers from these administrative
burdens. In a way they have created more burdens by trying to
avoid the burden of doing what the policy objective was. On that,
you feel like saying, "The policy is to give people a decent
holiday and to make sure they are not working excessive hours
for the good of them, the company, and everyone else. The easiest
way to go about that is to negotiate it in each workplace."
It really is, because then you get something that fits the purpose,
fits the requirements of that particular workplace and gives the
basic protection, instead of having this great wad of regulation,
which is really where the problem is. That is an example of where
you have substituted an attempt to compensate for administrative
difficulties with good policy objectives that could be sorted
out in a completely different way.
Mr Cullum: I suppose part of the
problem is that if you wrongly categorise what is an administrative
burden from the start and then say you need to cut the number
of administrative burdens by 25%, you are making life difficult
for yourself if some of them are not real administrative burdens
and are going to be impossible on a policy basis to remove. I
have not looked at the BERR list of administrative burdens for
a while, but when I last looked at it there seemed to be quite
a few which were about providing consumers and, indeed, employees,
with information. There is an administrative process associated
with that, but that is not administrative burden in the sense
that that programme was designed to identify. Things like giving
consumers a copy of a contract which they have signed, on a policy
basis seem highly appropriate. Okay, there is an administrative
task associated with it but, in a regulatory sense, the administrative
burden would be if you then had to post a copy to John Huttonbecause
that is the bit which is not about policy, it is about unnecessary
intervention which requires you to do something which is separate
and pointless. If you create a list which has lots of fake administrative
burdens and then say you must cut them, you make it much harder
to achieve the quantity requirements which are there. I guess
there is a question then: Does it push you to make some of the
wrong decisions in order to get your administrative burdens score
Q119 Judy Mallaber: Does the BRE
distinguish between tasks and burdens?
Ms Veale: I suspect, exactly as
Philip saysand you could become quite cynical about thisif
you are given an objective to reduce something and make it far
less onerous, if the way it has been introduced has added all
sorts of reporting requirements that you are not quite sure about
but which you tucked in for various reasons, that would make the
task in reduction subsequently much easier. I am not quite sure.
Am I misunderstanding you, Philip?
Mr Cullum: If I think everybody
knows who is involved in this that the administrative burden exercise
is flawed, it is trying to do the right thing, which is it is
trying to get to some sort of process which will drive culture
change by creating a bit of imperative into why they must try
to remove some bits of regulation. But I remember speaking to
people involved in regulation within government two or three years
ago and saying, "There are all sorts of flaws in what is
administrative and what is an administrative burden," and
being told, "We know this is flawed, but, hey, that is history,
the process is going, it is just a question of getting on with
it." It could be the time is right for a bit of a review
as to how effective that process has been.
Q120 Chairman: That is very helpful.
Certainly I think the Committee would welcome any further observations
you might like to submit on that particular point because it does
help to quantify the scale of the task facing the BRE if some
of the so-called burdens should not be included in that list.
Perhaps I could thank both the NCC and the TUC for giving evidence
today. I would invite you, before we formally close, if you have
anything else you think you would like to add, now is your chance.
Mr Cullum: Perhaps I could pick
up on something Sarah said which I thought was terribly interestingit
was the slightly throwaway remark about the importance of pilots.
Sometimes regulators take what I think of as the Heathrow Terminal
5 approach to introducing things: they just do it en masse
and see whether it works, but there are some examples of things
being piloted quite effective. In one of the examples which we
are very supportive of is the Food Standards Agency scores-on-the-doors
approach. It is all about environmental health, information in
the windows of restaurants and pubs that serve food, and about
inspection. It is a fantastic way of conveying information very
clearly to consumers. There was a big debate about the most effective
way of presenting the information and the solution was to trial
a number of different options, which they have now narrowed down
to two they are consulting on with a view to implementing one
at the end of the year. That felt like quite an effective approach
and yet it is not really something which regulators in general
tend to do at the moment. I think the tendency is to desperately
seek a solution to something or seize on what they perceive to
be the solution and then say, "That's it, we are going to
go for it," and there is something about trialling it which
should be better. I thought that was a very good point.
Ms Veale: It was not supposed
to be a throwaway point. It is a serious point. We are all for
pilots: testing things out before you run them out, to use that
awful jargon, would be a very good thing.
Dr Naysmith: It could be usefully used
by some government departments introducing policies as well.
Chairman: On that point, thank you very
much for your time.