Regulatory Reform Committee Inquiry

"Getting Results: the Better Regulation Executive and the Impact

of the Better Regulation Agenda"

1.1 Introduction

1.1 The TUC represents 59 affiliated unions with a total of nearly 6.5 million members. Members of TUC affiliated unions are employed in a wide variety of industries, sectors and occupations. The TUC welcomes the commitment of the Government to better regulation. Trade unions are essentially organisations that regulate relations between employees and employers, largely on a voluntary basis. We believe that while it is essential to have in place a floor of statutory employment protection measures, as far as possible statutory regulation should be kept out of employment relations.

1.2 The TUC welcomes the opportunity to submit evidence to this inquiry. Our submission focuses on the workplace, as that is where we operate. Nonetheless our members are also consumers, tax payers and users of the NHS and local authority services, so we have a general interest in how regulation is applied, how it evolves and why it is there. We have been represented on the Government's former Better Regulation Commission and are represented on the new Regulation and Risk Advisory Council. We engage regularly with the Better Regulation Executive.

1.3 The TUC believes that the debate about employment regulation should take into account the positive advantages of employment rights. Employment rights help labour markets to operate more effectively by creating security, reducing poverty, inequality and social exclusion, and promoting the long-term trust relationships that are essential if the UK is to succeed in internationally competitive markets.

1.4 In this submission we look first at the impact of the better regulation agenda, then at the work of the Better Regulation Executive.


2.1 The Impact of the Better Regulation Agenda

2.1 It is difficult to assess the impact of the Better Regulation agenda to date as reforms take some time to have an impact and much of what has been done is still only in the early stages of application. There has been a big emphasis on burdens on business, not only in terms of employment and health and safety regulation but also in terms of other areas of regulation, for example in relation to the environment, and consumers. There is a danger that that the Government is viewing the impact too much in terms of whether or not the business community is satisfied. While business is an important constituency there are other important constituencies that are affected by regulation. The TUC has also been concerned that insufficient attention is paid to the benefits of regulation, both to businesses and to other communities.

2.2 We have concerns about the methods used by the BRE to assess the impact of regulation, which seems to be using the crude measure of quantity, rather than looking at how the regulation is actually working. Focussing on quantity is likely to encourage departments to excise regulation that is voluminous or old, rather than regulation that is ineffective. Some regulation may be voluminous but effective, other regulation may be old but still fit for purpose. Less regulation may make life more simple for regulators, producers and providers but may expose the regulated to greater harm.

2.3 We are also concerned about a growing habit of viewing employment rights only as a constraint on employers. Industrial and social relations are seen as a zero-sum game, in which any advance for those at the bottom must mean losses for those at the top.

2.4 The laws, institutions and practices that make up employment regulation do more than simply affect the degree of labour market flexibility in the economy. They were introduced to achieve positive social and economic objectives, which are valuable in themselves, and the extent to which these objectives are achieved should be included in any assessment. As Robert Solow commented in his Keynes lecture:

"Every one of these regulations or restrictions was intended to promote a desirable social purpose. Some may do so ineffectively or inefficiently. That is worth knowing; but the fact remains that wholesale elimination of these 'rigidities' is neither desirable nor feasible."[1]


2.5 Some politicians and economists bitterly opposed the national minimum wage, because it would reduce wage flexibility; it would, we were told, increase unemployment and inflation. In fact, price rises in 1999 (the year the minimum wage was introduced) were lower than in the previous year. Employment rose by 250,000 in that year, and it has continued to rise alongside the minimum wage. 18 per cent of firms affected by the 2001 increase responded by increasing their use of new technology, and the minimum wage has also been responsible for modest increases in training and improvements in retention and motivation in the low-paying sectors.[2]

2.6 The national minimum wage has made life better for many low paid workers. 1.2 million received a pay increase, with black and minority ethnic workers and disabled people gaining disproportionately;[3] and over a million people have gained from each subsequent increase.[4] The national minimum wage has reduced the gender pay gap by about 1.5%.

2.7 It is just as misleading to consider the rights introduced by the Working Time Directive only in terms of reduced flexibility. These rights enhance the efficiency of firms and the country as a whole, through improved health and safety - excessive hours are linked to the likelihood of having a road or industrial accident or of over-exposure to dangerous chemicals and to such conditions as cardiovascular disease, diabetes, stress and depression.[5] There is also evidence that the long hours culture restricts women's progress in the labour market, harms parenting and undermines family life and is linked to low productivity, high labour turnover and failure to innovate.[6] We know that, despite the severe limitations resulting from the opt-out, the Working Time Regulations 1998 led to 6 million people getting an increase in their holiday entitlement, including 2 million who had previously had no holidays at all. This is a large increase in the total of human happiness, and it is shocking that many politicians and commentators pay it no attention at all.

2.8 We need these rights to have the force of law because there are far too many employers who will do nothing, even when better conditions would be in their interests, helping them to maximise the contribution their workforce can make to the organisation. The Working in Britain Survey found that "managers are pragmatic enough to adapt to change in the way they treat their employees when it is required of them but few seem willing to take any positive initiative to introduce workplace reform to meet worker demands or aspirations."[7] The survey was carried out when the Government was considering the right to work family friendly hours, a debate that took place after several years of exhortation and advice; the survey found "precious few signs that most employers in Britain are planning in the near future to improve benefits for employees with specific family responsibilities beyond the bare legal requirement."[8]

2.9 Getting rid of employment legislation would not make the problems it addresses go away. Remove rights and workers will try to defend themselves through their unions. Weaken the unions and they will turn to the courts. Businesses hate the 'compensation culture' that has long been a feature of US employment, where unions have been weak and regulation set at a low level for many years. Its rise in this country has precisely mapped the move to deregulation and attacks on unions.

2.10 These examples, which relate to employment regulation but may be equally applicable elsewhere, are included to demonstrate the complexities of impact assessment. It is not necessarily going to be the case that reducing the volume of regulation is going to have any real benefits to the economy, to society and indeed in the longer term to businesses.

2.11 The TUC supports the principle of better regulation - it is not in the interests of employees to have cumbersome, impenetrable, unnecessary or outdated regulation applied to them. Nonetheless we do have concerns about an observed tendency among some lobby groups to conflate the mechanisms of regulation with the policy objectives that the regulation is intended to deliver. For example, some employers' organisations have criticised the recent extension of maternity rights as being a burden on business. In fact they are no more a burden in administrative terms than the unextended regulations were: the real objection was to the policy decision to extend the period of paid maternity leave. There is a legitimate argument for simplifying maternity regulations but it should not be used as a proxy for reducing the entitlement of mothers to paid time off. It is, of course, legitimate for business organisations to argue for policy change but it is disingenuous to disguise this as concern about administrative difficulties. The failure to distinguish between policy and administrative problems has in some cases started to seep into Government decision making about regulatory reform. This will, in the long run, not help the cause of better regulation. It may also affect the way in which the Government assesses the impact of the better regulation agenda.

3.1 The Better Regulation Executive

3.1 The TUC supports the role of the Better Regulation Executive (BRE); it is important that there is a part of the Government specifically charged with checking existing and proposed regulation to ensure that it meets the principles of good regulation. The designation of officials in every department to take responsibility for better regulation and work with the BRE should assist with delivery of better regulation in a consistent way. It will also ensure that within that general consistency there is room for appropriate variation to suit the particular circumstances of what that department is regulating.

3.2 Our own experience of better regulation has been in the employment area, including health and safety. We have submitted evidence to various recent Government consultation exercises, including the Hampton Review and the McCrory review of penalties. Copies of TUC responses can be provided to the Committee on request.

3.3 We had some concerns about the re-location of the BRE from the Cabinet Office to the DBERR in the summer of 2007. Our concern was that if the BRE were to be in the department for "Business and Enterprise" its main focus would be the regulation of business. Whereas there is a need to ensure good regulation of business it should not displace efforts to achieve good regulation across government. It is perhaps too early to judge whether or not the move has had this effect.

3.4 The TUC commends the BRE for their active willingness to engage with stakeholders including the TUC and hopes that the BRE will continue to engage with a wide range of stakeholders and not just those associated with business. This should help them to withstand any political pressures on them to help the Government to deal with particularly vociferous single interest groups.

3.5 There are two areas of particular interest to the TUC in terms of what the BRE does. The first of these is how they measurement impact. Our concerns about the measurement of benefits were outlined earlier in this response. Our particular concern about the BRE's approach to measuring the impact of employment regulation is an apparent tendency to accept the "evidence" presented by some employers' organisations without seriously questioning the validity of the evidence.

3.6 For example, the British Chambers of Commerce (BCC) produces a Burdens Barometer, which assumes huge costs, for example, associated with the adjustment provisions in the Disability Discrimination Act. This is not a matter of "red tape" - it is a cost that results from enabling disabled people to work. Presumably the BCC does not object to the policy objective of enabling disabled people to work; there is a legitimate argument about whether or not the State should provide financial assistance to SMEs in making adjustments to allow disabled people to work but that is not a matter of "red tape", nor, for that matter, is it a cumulative "burden". (As a tempting aside, barometers measure atmospheric pressure on an immediate basis not a cumulative basis - otherwise they would be of no use whatsoever as indicators of the atmospheric pressure at any one time).

3.7 The second area of interest to the TUC is the assessment of how regulation is being enforced. There is clearly a link between the quality of regulation and its enforcement. If regulation is badly drafted, or ill-conceived it will be difficult to enforce. This will defeat the policy objective in two ways. Firstly, it will be hard to ensure that bad or illegal practices are effectively dealt with and secondly it is probable that some producers or providers will ignore them altogether, sometimes with the tacit collaboration of regulators.

3.8 The BRE should monitor and evaluate enforcement of regulations. This could be done partly by ensuring that departments and agencies do it routinely, and also by picking out sets of regulations either randomly or where real evidence of difficulty is produced and investigate how enforcement is working and whether the regulations are delivering the desired policy objective.


4.1 The TUC is grateful for the opportunity to submit evidence and looks forward to meeting the Committee on 29th April.

[1] "What is Labour-Market Flexibility? What is it Good For?", Robert M Solow, Proceedings of the British Academy, Dec 1998, pp. 189-211.

[2] The National Minimum Wage, Low Pay Commission, 4th report, 2003, pp 61, 231 & 236.

[3] Ibid, para. 2.16

[4] Ibid, para. 2.20.

[5] The Use and Abuse of the 'Opt-Out' in the UK, TUC, 2003, quoting: The use and necessity of Article 18.1(b)(i) of the Working Time Directive in the United Kingdom, Barnard et al, EC, 2003; Working Long Hours, HSE, 2002; 'Married to the Job', Occupational Health and Safety, July 2001; Working Long Hours: A review of the evidence, Kodz et al, DTI Employment Relations Research Series 16, 2003; Living to Work Survey, CIPD, 2003; Reducing at-work road traffic incidents, Work-Related Road Safety Task Group, HSE /DTLGR, 2001; 'Working Long Hours and Health', J M Harrington, BMJ Supplement, Vol 308, 1994. TUC analysis of the 2002 Labour Force Survey looking at hours of work and rate of industrial injuries, found a consistent gradient, with people working under 16 hours a week having an accident rate per hundred workers of 1.5, while those who worked more than 60 had a rate of 4.9.

[6] Ibid, quoting: Barnard et al; Parenting in the 1990s, Ferri and Smith, JRF, 1996; Step-parenting in the 1990s, Ferri and Smith, JRF, 1998; How do they find the time?; Dex et al, JRF, 2003; The Business Context of Long hours Working, Hogarth et al, DTI Employment Relations Series 23, 2003.

[7] Taylor, Managing Workplace Change, ESRC, 2002.

[8] Op cit


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