Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 300-319)


24 JUNE 2008

  Q300  Mr Davies: It has been contested and I will give you some references if you like.

  Baroness Vadera: The idea was to ensure that there was sufficient focus and clarity on the issues around regulatory reform. It therefore became a part of a new department which has regulatory reform in its name. There is now a Secretary of State for Regulatory Reform; there is a junior minister—me, in this instance—focusing on regulatory reform. It is a key part of the agenda for competitiveness of the British economy, both the public and private sectors both of which have efficiencies we need to extract and get our competitiveness up, and it was therefore a part of the department that is structured around competitiveness. It was important for it to be close to and to be able to use and leverage off the relationships of one major stakeholder, which is business, and we believed that it would therefore create this clarity and focus in highlighting what it needs to do by giving it something that is its own department in this. It is business enterprise and regulatory reform.

  Q301  Mr Davies: I do not know that I personally find it immensely convincing because what has actually happened is that you have taken the BRE away from the heart of government, the centre, the Cabinet Office, which has a droit de regard as it were across the whole government machine that is objective as to any individual department and put it within the silo structure in one of the silos in government. There have been two lines of criticism about this. One is that it has involved you in being captured by the business and enterprise aspects of the BERR and so you become excessively concerned with business burdens and with relieving business, which is a very noble cause to which we are all devoted, but that you have tended to neglect, therefore, other aspects of the de-regulatory agenda, particularly those affecting the general public and the environment, that kind of thing. The second line of criticism I have seen is that it has made you less effective in the EU because it is the Cabinet Office that essentially drives the agenda in terms of what we are saying in The Council of Ministers on what our priorities are in the EU; and that you have not, therefore, been able to play as strong a part as you might have done in the parallel exercise that the Barroso Commission have undertaken to try to deregulate or better regulate at the EU level. How do you respond to those two quite separate criticisms, but both of which emerge from or are directed at, this change of structure?

  Baroness Vadera: I already gave an answer in part to the first element is why we are perceived to be captured by business. I do not believe that we are captured by business; it is a process of making decisions in government that we come to a decision collectively. I have worked with the BRE from before I became a minister and joined BERR and I am perfectly well aware of how it functioned and what it did while it was in the Cabinet Office and obviously what it does now. I do not believe that it is captured by business, or has been in any of these two institutions, and I do not perceive that there has been any change in that at all. I do not think that is the case because of the way in which we make decisions which is that actually we do have to balance it. It is better regulation, it is not de-regulation, it is not just being captured, but it is also meant to be analytical and if people are not rigorous and analytical they will certainly find that I will be on their case. I just want to come on to the point about the EU. I really very strongly refute that. I think that the BRE has been incredibly successful at the EU level and I would like to give you one example. It was successful in getting the EU to undertake the Admin Burdens exercise for itself for EU legislation. But, more recently, since it has moved we have been successful in persuading the Commission and the Member States in the Small Business Act of putting better regulation as a central piece. So in the Small Business Act when there was a lot of discussion around whether it should be around a whole bunch of other things, which included all sorts of subsidies of finance and everything else, what we have managed to do is put as the central centrepiece of the Small Business Act that there is going to be better regulation around Common Commencement Dates, around specific issues of "think small first", which are based on the UK model. So basically what the BRE has already developed has now influenced what the EU is going to do for the Small Business Act; so this accusation is actually not borne out by any reality.

  Q302  Mr Davies: So are you aware that Defra has given us evidence that they think that your move from the Cabinet Office to the Business Enterprise and Regulatory Reform Department has diminished your influence in Brussels?

  Baroness Vadera: I would not accept that for a single second and if Defra have—

  Q303  Mr Davies: You would not accept it but are you aware of it?

  Baroness Vadera: I was aware that you have had some interesting discussions with Defra during the hearings, about which I have read because I read some of the transcripts and some of the material that was provided to me. But I would also say, as I said before we are not always popular with departments and it is not our job to be popular with departments.

  Q304  Mr Davies: No, it is certainly not your job necessarily to be popular. As a good minister I am sure you are alive to sentiment in your own department. Would you say that it is a general consensus among the officials who work for you and up to you that the move from the Cabinet Office to the Business Enterprise and Regulatory Reform Department was a good and sensible one?

  Baroness Vadera: My sense of it, quite honestly, is that people were a little bit destabilised at the start but they settled down very well, and my sense of the mood—which I think Jitinder and William would be better able to speak to because they represent the people you might be worried about—is that it is very upbeat now because they have seen that we are having an impact.

  Q305  Mr Davies: And your assessment is that this move has increased your leverage on the government machine, your ability to influence departments in the right direction so far as regulatory reform is concerned; is that right?

  Baroness Vadera: I believe that it has given us a higher profile; I believe that having a Secretary of State has allowed us to focus on this issue at the Cabinet level. I believe that I have been able to use the Secretary of State and other leaders—

  Q306  Mr Davies: Would you give me a direct answer, please, to my question? Do you believe on balance that it has increased your leverage on government?

  Baroness Vadera: Yes.

  Q307  Mr Davies: Do you agree with that, Mr Kohli?

  Mr Kohli: Yes, I do. I do not believe that we would have made regulatory budgets happen in a document other than the Enterprise Strategy. It is looking into a crystal ball and trying to guess, but that would have been significantly harder from within the Cabinet Office than it has been here. But as Shriti said, it has of course been destabilising. Going from one building to another building, all learning brand new systems—

  Q308  Mr Davies: Mr Kohli, we all know about that; the question is whether people think it is a worthwhile exercise, whether the result is worth the effort and the short-term disruption, and you are telling me that you think they do think it was a good idea and worth, therefore, the disruptive costs. You agree with that too, Sir William?

  Sir William Sargent: Absolutely, yes.

  Q309  Mr Davies: Let me move on to something else that does relate to the EU, and it is the issue of gold plating. Have you in the BRE at any stage done a quantified study of the legislative initiatives that have taken place in this country—largely they would have been statutory instruments—in response to our obligation to implement EU directives, which have been implemented minimally—in other words what has been transposed in domestic legislation has been the minimum required to implement the Directive concerned—and those which have been implemented with additions, with some incremental material added at the initiative of the British bureaucracy. Have I asked the question in a rigorous and clear fashion?

  Baroness Vadera: Yes.

  Q310  Mr Davies: If so, can you give me an answer to it?

  Baroness Vadera: We have not done a quantitative study, we have done the Davidson Review, which looked at the practice of what had happened and attempted to drill down into various areas to give us a view. So it was not a comprehensive, quantitative study because nobody has done a comprehensive quantitative study of legislation at all.

  Q311  Mr Davies: Why not? You are in a position to do it.

  Baroness Vadera: It would be impossible to do because we would be doing it for a long time. The Administrative Burdens target study took us a year or 18 months to do. But when we looked at the methodology of how best to do this we came up with what was eventually done by the Davidson Review. The Davidson Review found that obviously there were instances of gold plating—there clearly are. There are some departments I see from the transcript that you found had a greater prevalence of doing that than others; but, nevertheless, it was not as widespread as you might think—the IoD I understand told you that it was not as widespread as you might think—but there clearly are instances where it is done. We have therefore done two things, one of which is to give clear guidelines of what ought to be done and how things ought to be transcribed. The second is to ensure more rigorously that we do impact assessments for the elements that are additional and extra and that they are justified.

  Q312  Mr Davies: Those two points are important and I want to come on to them. But it is also important for us to have a picture of what the current position is, and we are talking now in terms of mere vagaries. You say, "It is not as extensive as you think." You do not know half of what I think; I actually do not know how extensive it is, I do not have a clear picture myself. Even you as a minister do not have a clear picture. We are talking about more extensive or less extensive than someone might say or someone might think and this seems to be a very unsatisfactory situation where we do not actually know the extent of the problem, either in absolute terms ie how many of these directives have been implemented a non-minimalist fashion; and we do not have any picture in inqualitative terms of what is the actual burden of the additional regulation which we have taken on board and imposed on our citizens of this country which will not necessarily have been imposed on other Members of the Single Market in the course of the same Single Market Programme. Those are two very serious questions and you are telling me that after all the years of the BRE's existence you are still no way to helping us to reach an answer to them; is that right?

  Baroness Vadera: No, I am not saying that. What I am saying is I think that it would be disproportionate to try and find a single number that gave you the answer, "Yes, the answer is 12" or 42 or whatever it might be.

  Q313  Mr Davies: Do you have an idea in terms of order of magnitude? Is it 100% addition—

  Baroness Vadera: If I may finish answering your first question, you said that you were concerned about the quantitative and I have given you the answer to the quantitative; and you were concerned about the qualitative, and I do not accept the few that we do not have a qualitative sense. We do have a qualitative sense, it is set out in the Davidson Review and I would be very happy to show it to you, and give you a sense of that, which gives you a good qualitative sense of what is actually happening. There are certain departments—you have grilled one of them, I was delighted that you grilled one of them specifically on the issue of gold plating. But in the main we are finding that there is not a problem and there is nothing wrong with having individual regulations if they are found to be proportionately correct, that we ought to be doing them, and if they have been through an impact assessment. So the process that we have in place to ensure that things do not happen when they are not justified are the impact assessments. It cannot be the case that everything is not justified if it is gold plating—it is simply not justified under any circumstances.

  Q314  Mr Davies: I gather there are some Members of the Union that take the line—the Italians take the line—that they should just implement these directives in a minimalist fashion. It seems to be to be a rather attractive model.

  Baroness Vadera: That is like saying you should never have any regulation; we cannot decide anything—

  Q315  Mr Davies: No, no, that we should never take advantage of the European directive to add domestically conceived additions to it. If there is a case for a domestically conceived regulation in that area it should be justified independently of the directive and from the EU.

  Baroness Vadera: It is justified. I am sorry, it is justified independently. It says very clearly in the impact assessment, "Is this an implementation that goes beyond the minimum?" So separately taken out as a line. Would you rather that we set up a completely separate piece of legislation for domestic regulation as opposed to EU regulation? That does not really go with the principles of better regulation and Common Commencement Dates.

  Q316  Mr Davies: One last question. You said you had a qualitative and not a quantitative view of the extent of the problem.

  Baroness Vadera: Yes.

  Q317  Mr Davies: Can you give me an answer quantitatively in terms of orders of magnitude? Do you think that the element of gold plating, as I say, if it is 100%, let us say half of the regulations in these areas are in fact of domestic conception rather than minimal enforcement of the directive? Is it 10%, is it 50%? Do you have something in terms of orders of magnitude that you can tell us about your private perception, your intuitive perception based on your experience?

  Baroness Vadera: My perception would be that it is significantly lower than 50%, which is the first number that you threw at me; and I would say that it would be above the 10%. I would say again that the most important thing is that each element of a legislation has to be justified through the impact assessment, regardless of its origin—the origin is not as relevant as the fact that it is proportionate and justified.

  Q318  Mr Prisk: With regard to your plans for regulatory budgets for departments can you give us a yes or a no whether or not European legislation would be included within those proposals?

  Baroness Vadera: Yes.

  Q319  Chairman: Finally on this section, have you contemplated the BRE having a physical presence in Europe?

  Baroness Vadera: I would take the view that it does have a physical presence in Europe.

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