Small Business, Enterprise and Employment Bill
The Committee consisted of the following Members:
Fergus Reid, Committee Clerk
† attended the Committee
The Minister for Business and Enterprise (Matthew Hancock): It is a great pleasure to serve under your chairmanship, Mr Robertson. Clause 13 signals the Government’s ongoing commitment to reduce burdens on business, embrace new technology and deliver more public services digitally. Part 2 is about reducing regulation, and clause 13 specifically does that by imposing a statutory duty on the Secretary of State to ensure that by the end of May 2017 a streamlined system for registering new companies is in place.
We have an ambition to make Britain the best place in the world to start and grow a business, and the clause is part of delivering on that ambition. Rather than inputting the same data several times to incorporate and register for taxes, a new company will be able to provide their information just once, digitally, to incorporate with Companies House and to register with Her Majesty’s Revenue and Customs for corporation tax, VAT and PAYE. We have already reduced the burdens in that area. Companies House has saved £20 million for companies by lowering its fees using digital filing, and HMRC has reduced the overall administrative burden of taxes on business by £250 million by 2015, often using new technology.
Clause 13 uses a statutory target to demonstrate, in the strongest possible terms, the commitment to improve the current system and to ensure that it is given the highest priority across Government to deliver a solution as quickly as reasonably possible. We are committed to a service that is easy to use and cost-effective. The new system will be developed with businesses’ needs at its heart, involving businesses at every stage and adapting the solution in response to their feedback. In simplifying how companies are set up, we hope to save entrepreneurs time and money to ensure that they can do what they do best: starting and growing their businesses.
Toby Perkins (Chesterfield) (Lab): In much the same way as human beings are said to hatch, match and dispatch, businesses are born, develop and branch out. Unfortunately, on occasions, they come to an end. Everyone accepts that some kind of process is required to manage the transitions. As policy makers, we have the duty to ensure that the procedures are as simple and
In addition to the Better Regulation Executive, Labour put in place the regulators’ compliance code and set up the Regulatory Policy Committee to provide independent scrutiny of proposed regulatory measures put forward by the Government. As my hon. Friend the Member for Streatham (Mr Umunna) has made clear, it is important that the Department for Business, Innovation and Skills is not just the voice of business at the heart of Government, but is working strongly with other Departments to ensure that all regulations from any Department are tested against the impact they will have on the business community and on Britain’s capacity to be competitive in the modern world.
Labour introduced the Legislative and Regulatory Reform Act 2006, which gives Ministers certain powers to make legislative reform orders that remove or reduce burdens resulting directly or indirectly from legislation, with significant safeguards to prevent abuse. The House of Commons Library estimates that our programme of simplifying regulation delivered savings of £3 billion a year to business. When anyone talks about the previous Government’s record on regulation, we cannot talk too often about the savings and the efforts that went into ensuring Britain is a great place to do business, while keeping the regulatory burdens on business to a minimum.
We are pleased that the Government are building on that work through the clause, which we support. It places a duty on the Secretary of State to ensure that a system is in place by 31 May 2017 that provides a streamlined company registration system. We welcome the two principles inherent in that proposal. The first is that Government should use digital platforms to interact with businesses where possible. Labour has been calling for many years for such electronic developments to save small businesses and the state time and money. Back in 2012, the insolvency practitioners’ professional body R3 set up a working group to design a new online report on delinquent directors, replacing the antiquated paper system whereby forms were manually filled in and transported by courier up and down the country. That work enjoyed tremendous support but was stopped at the time by BIS because the Government had a moratorium on new regulation for micro-businesses. Despite the fact that 82% of insolvency practitioners wanted to change to an electronic system—a digital system that would make life easier—the fact that the Government had said there were to be no new regulations prevented it from being introduced. We tabled amendments to the Deregulation Bill earlier this year to bring about such a change but were unsuccessful in persuading the Government to help small businesses in that way. We are very glad that, with this clause, the Government seem to accept our basic principle and we will fight for this change when we get to the latter stages of the Bill.
The second principle inherent in the clause is that business registration should be as straightforward as possible. It will not surprise my colleagues—though it may surprise some Government Members—that when Labour left office in 2010, Britain was ranked by the World Bank as the easiest place in Europe to set up a business. In fact, it was ranked the fourth easiest place to do so in the entire world. When we hear the Government say that they want to take steps to make it easier for people to set up businesses, we of course support that. We are the party that made Britain the easiest place in Europe to set up a business between 1997 and 2010, and we will be right behind the changes for that reason. The Government could always do more to simplify regimes—even efficient ones. We think this is a sensible change.
Ian Murray (Edinburgh South) (Lab): On streamlining company registration, could we look at a step before that? When people are setting up their own business, they are often not sure which kind of business they wish to set up—for example, they could set up a partnership or go down a different route—and whether they should register for corporation tax. There could be some flexibility in providing a pre-registration stage to ensure that we have the right kind of company for the business.
Toby Perkins: One of the great things about the shadow BIS team is that we are open to new ideas and are constantly looking for ways to improve the system that we will inherit in 2015, when my hon. Friend the Member for Streatham becomes the Secretary of State. My hon. Friend the Member for Edinburgh South is absolutely right to say that we need to look at every stage of the business cycle, even the embryo stage prior to taking the plunge and setting up a small business. We are looking at how to make setting up a business easier and more efficient, and at how to make the regulations more robust. My hon. Friend is absolutely right to say that.
Currently, at least two Government agencies need to know about a company’s birth: Companies House, the main company registrar in the UK; and Her Majesty’s Revenue and Customs, the tax authority. Later on in the business life cycle, there are VAT, PAYE and corporation tax hurdles to jump. The picture is not the same for our competitors. Many of the emerging economies of south America provide compulsory membership of their national chambers of commerce, so all those interactions take place with just one organisation, which can also act as a powerful lobby group on behalf of its member businesses. That important idea was proposed by Lord Heseltine in his report “No stone unturned”. However, I recognise that business support groups are legitimately concerned about which organisation would take on that role and whether making registration statutory would affect businesses’ independence. Although the clause is a step towards making the process of registering a business easier, there may be other ways in which we can simplify it and minimise the regulatory burdens when businesses get themselves going, employ staff and pay taxes.
The clause requires the Secretary of State to deliver a truly simplified system of company regulation that is electronic and provides businesses with a single receipt for all processes, and we are pleased to support it. My hon. Friend the Member for Streatham looks forward to standing before the House on 31 May 2017 and
Matthew Hancock: I shall speak very briefly to clause 14, which will ensure Parliament is kept informed about the progress made on clause 13 by requiring the Secretary of State to publish a report at regular intervals during the lifetime of the project. We propose to have two reporting periods: first, a period from the project’s commencement up to 31 March 2016; and secondly, a period covering the subsequent 12 months. The reports will provide Parliament with an update on the progress made during those periods to ensure that we put in place a system of streamlined company registration.
Toby Perkins: What should we expect from the reporting procedures between now and 2017? What progress should we expect to be made by March 2016, and what steps will businesses see between now and then?
Matthew Hancock: We hope to see substantial progress, building on what has already happened, between now and the end of March 2016. We want to put more services from Companies House online and make them more broadly available, in order to make the process of finding out how to register a business as efficient as possible. That is what I hope.
Toby Perkins: I of course entirely agree with the principles that the Minister outlines, but will he be more specific? By March 2016, how will things look different from today? We will have this report in March 2016, with steps being taken by May 2017, but what will actually be different for businesses by then?
Matthew Hancock: As I said, I hope that we will be able to make interim progress, but what I really care about is that we get to a full, agile, streamlined system by 2017. I do not want to go further than saying that I hope we make significant progress to show that we are on track, because what really matters is that we are on track to deliver a system that hangs together, that works across Government and that brings together as much registration across Government as possible. The report will help answer the hon. Gentleman’s question by ensuring and insisting that we deliver in time.
Toby Perkins: We supported clause 13, so of course we also support clause 14 and agree that the Secretary of State should be accountable to Parliament for the new duty that the Government are being given. I am slightly surprised that the Government are not able to
Matthew Hancock: There is a good reason why I do not want to put more on the record: I do not want to jeopardise the best possible delivery by 2017 by insisting that, in a year’s time, the project second-guesses what is necessary in order to fit with comments that I, as the Minister, am making in Hansard now. I want us to be able to deliver a complicated IT project. Government IT projects are difficult enough to deliver on time without having to hit a description written in Hansard of what we now expect to happen in the interim, with the consequent full expectations for the delivery of this Bill. I want to ensure that the project happens, happens properly and happens at the set date, and I want to ensure that the Secretary of State reports on the way.
Toby Perkins: I thank the Minister. I may be being optimistic, but I suppose there is a timeline and project plan for the work that needs to happen once we have approved the Bill. I suppose that has all been costed, budgeted and timed. Clause 14 is simply about a report in 2016 and 2017 to update the House on the progress that has been made. The idea that it would damage the process if we, as Members of Parliament, knew what the Government intend to achieve, and that it makes the Government less likely to be able to deliver, is a spurious point. None the less, it is the Minister’s point.
We strongly agree with the principle that Ministers should be accountable to Parliament for their performance in supporting British businesses, just as Ministers must be accountable to Parliament for their performance in managing the national health service. Businesses are the lifeblood of our economy and the employers of so many of our constituents, so businesses also require the Government’s focus and support. As the Bill passes through the House, the Minister should reflect on whether it would better help the House to deliver on the principles of the clause in holding the Secretary of State to account if we knew what the Government expect to have been achieved and delivered on behalf of businesses by March 2016.
The principle of ensuring that Ministers are accountable is why the Opposition not only support clause 14, but also tabled new clause 4, which builds on the principle by creating a new duty on the Secretary of State to make a statement to the House at the end of every financial year outlining what the Government have done to support British small and medium-sized enterprises in the previous 12 months. I had hoped that new clause 4 would be discussed along with clause 14, but I hope that when the time comes the Government will support the new clause.
The idea of having the Secretary of State make a report, which has been mooted by Members on both sides of the House, will be an important factor in focusing the Government’s mind on supporting and delivering for Britain’s great small businesses and ensure that their concerns are taken seriously. Britain’s small businesses are in some ways at a competitive disadvantage because of the lack of a proper industrial strategy supported by Government. For example, we are the only country in the G8 without a proper state-backed business bank. If Ministers were directly accountable to Parliament for their performance in backing British small businesses, even Ministers in this unloved Con-Dem Government—it is hard to find anyone in it who thinks that it is really where they would like to be—might wake up to their responsibilities and take the necessary action, which includes reducing the business rate bill, as suggested by my right hon. Friend the Leader of the Opposition, and freezing energy prices until 2017 to save the average small business £1,800 a year. Those are precisely the sort of things that a future Labour Secretary of State would report back on to Parliament in an annual statement.
The clause is a step in the right direction and we will support it today. My preference would be that the reports, including those in new clause 4, are made orally to the House so that all Members are able to question the Secretary of State on their progress and commitments, and so that small business owners across the country can watch the statement for themselves and make their own judgments. Will the Minister confirm whether he expects a statement to be made on the Floor of the House? Will he be doing anything to encourage that to happen? Would having a publicly announced plan as to how the principles of clause 13 will be delivered by 2016 and 2017 prevent the Government from doing so? The explanatory notes state that the Government consider the May 2017 deadline to be “stretching but achievable”, but obviously do not state what would happen were it not met or how Parliament would be able to hold the Government to account on the various steps on the road between now and 2017. Will the Minister clarify the consequences and think again about producing a road map to enable the House to hold Ministers to account on the timeline?
Matthew Hancock: It seems slightly like we are dancing on the head of a pin. As I said before, the process of reaching a simplified, streamlined company registration system involves IT changes that are difficult to introduce but necessary. They are challenging but doable. The process involves a lot of consultation and testing with businesses to ensure that it works properly. In this type of project, we are clear about the end goals and the need to consult all the way through. I will therefore not prejudge what should happen halfway through, and asking us to do so misunderstands how project management is most effectively done.
Our proposal is that the report is not an oral one. This is an important project, but there are many important projects, not least as part of the Bill. We propose that it should be a report to Parliament. As with most reports to Parliament, there are many opportunities to then debate those issues on the Floor of the House.
Matthew Hancock: I do not know whether the hon. Gentleman genuinely thinks that his contribution helps to achieve the goal of having a streamlined company registration system. I am absolutely sure, having run projects in Government, that the best way to get there is to have a clear goal and then consult on the process. He suggests that we set out today exactly where we should be in 2016 and not allow the project team to move off that. I am afraid that I will not make their lives more difficult in that way; I will support them in getting to the goal by 2017. He apparently supports that goal but does not seem to want to help us get there.
I know that does not answer the hon. Gentleman’s question, but that is because what he is asking for is unhelpful. I want to have the project delivered by 2017, which we think is realistic. There will be a written report in the first instance but Parliament has many opportunities—for example, Back-Bench debates and Select Committees—to debate reports laid before it. Normal parliamentary processes will decide whether it gets elevated to an oral debate and how much time is allocated in Committees or on the Floor of the House.
“(cA) an assessment of whether and, if necessary, the extent to which, any business, having challenged a regulator, has been discriminated against thereafter as a consequence.
(cB) recommendations for mitigating steps to be taken if an assessment mentioned in paragraph (cA) concludes that discrimination has taken place.”
Ian Murray: It is always a great pleasure to serve on a Committee with a fellow Scot in the Chair, Mr Robertson. Congratulations on the referendum result—for the record, we won it by 55% to 45%. We welcome the thrust of the clause and what it tries to achieve. However, we want to ensure that small businesses are not discriminated against in any way when challenging regulators or, indeed, trying to enforce issues with regard to the clause.
Many small businesses say to me and my colleagues that a key issue in how they operate is not regulations but the way they are enforced, as well as their relationship with regulators at a local authority level or anything up to central Government level. We have failed to persuade
The purpose of amendment 74 is to ensure that the reviewer’s report has due regard to any impact that a business encounters if it has challenged the decision of a regulator. Indeed, that is the intention behind clause 15(4), which says that a report should be produced that gives
Amendment 74 requires that the measure goes just a little step further on the production of that report, which should provide an assessment of whether and, if necessary, the extent to which any business having challenged or, indeed, just queried a regulator has been discriminated against as a consequence of that approach. There should be recommendations for mitigating steps to be taken if an assessment mentioned in the proposed new subsection (cA) of our amendment, which looks at the discriminatory features, concludes that discrimination has taken place.
With amendment 74, we are not asking for any remedies but if a report is being produced, it would be only right and proper for those issues to be taken into account. The fear of small businesses would be that they would not want to challenge a regulator or reviewer of those regulations, on the basis that they could be subject to other regulations or, indeed, that the number of visits or assessments for that particular business could be increased.
We always fear that. When I ran my own small businesses, if we made a complaint about an authority, there was always the fear that regulatory inspections would increase, the business would be informally blacklisted, and so on.
If a business feels that, having made a challenge, it has subsequently been subjected to an increased level of assessment from the regulator, it should be able to report those concerns to the reviewer, as mentioned in clause 13, and find out how they could possibly deal with them through that particular reporting mechanism. If that becomes a requirement of the reviewer, businesses can feel safe in the knowledge that they can challenge regulators on decisions that affect them and that they feel are unfair, without fear of retribution or other unpleasant consequences. I do not want our proposal to sound draconian but it is really about a perception. What most small businesses fear most from regulations, whether employment regulations, health and safety
or whether additional employees will be required. There are no details on that in the Bill, as far as I can determine, so perhaps the Minister would answer that question directly when he gets to his feet. I can see that he has jotted that down so that he can answer it; I am looking forward to the exact number, if he is able to provide that.
“is ‘grafted onto an existing position’ as a Non-Executive Director as suggested in the consultation document, SBACs may not be as independent as necessary to ensure a unbiased view untainted by existing culture within particular regulators.”
We have no problem with the clause or Government amendment 21, which is a drafting amendment, but we want the Minister to confirm what the appointment process for reviewers will be. Will the reviewers be drawn from the regulators’ existing employees? Does the Minister agree that it is important to clarify that point to show that the reviewers are impartial and independent and ensure that they instil confidence in the regulators and the small business environment?
Matthew Hancock: I am grateful for the opportunity to have this debate—it often says that on my speaking note, but in this case I genuinely am. The Opposition’s point is important, so it should be recorded and its spirit should be taken into account. There is one specific reason why we should resist the amendment: there is a problem with it, which I will come to. Nevertheless, its broad thrust, which is that the appeals champion should take into account whether an individual business has been discriminated against, is important, and I agree with it.
The difficulty is that the amendment requires that if evidence of discrimination is found, the appeals champion must make recommendations to mitigate it for the businesses concerned. My concern is that if the appeals champion must make an assessment of each individual business, they will end up not only looking into each individual case, which is fine, but reporting on each case. Therefore, they will end up doing the work that they are supposed to be overseeing.
The purpose of the appeals champion, which is set out in clauses 15, 16 and 17, is to ensure that at a senior level in all regulators there is somebody with a statutory
Mark Garnier (Wyre Forest) (Con): On the subject of the regulators, I am slightly confused about where the financial services regulators, in particular the Financial Conduct Authority, stand on this issue. I am not sure whether they are specifically covered by the Bill. Will the Minister clarify whether the financial services regulators will be covered by the small business appeals champion provision?
Matthew Hancock: I am grateful for that question. The Financial Conduct Authority and the Prudential Regulation Authority will not be covered by the small business appeals champion because they are already subject to more extensive statutory accountability and scrutiny than other non-economic regulators. We are creating a route for small businesses to go down to ensure their concerns are taken into account. That principle is already embedded for those two regulators. In fact, a stronger route is already set out in legislation.
Toby Perkins: I entirely support what the Minister is attempting to do here. Provisions in the Deregulation Bill mean that a whole variety of regulatory bodies now have a growth duty, which could ultimately lead to businesses taking their regulators to court if they feel they have not delivered on that growth duty. What thought has the Department given to ensuring the right balance between regulators being answerable, and still being able to get on with their regulatory functions without being cowed by powerful interests?
Matthew Hancock: That is an important point. The purpose of the appeals champion alongside the growth duty is precisely to ensure that the organisation has a duty to consider impact on growth and that there is a route for statutory recourse. Someone within the organisation will have a statutory duty to ensure that the appeals process works for small businesses. We have chosen the statutory route to allow someone within the organisation to make these arguments in favour of growth, in the same way that regulators have statutory duties in many other areas. Too often, the onus for regulators is on the regulation coming into effect, without any statutory requirement to consider how that might minimise the burden on businesses.
Through our deregulatory work, we have found some areas of deregulation where the purpose is to remove regulation altogether. That is fine, but there are other areas where we can get exactly the same policy outcome with a lower burden on businesses just by doing it more effectively—for instance, ensuring that inspections of a business from different inspectorates happen at the same time, or that guidance is written in plain English
Toby Perkins: I am grateful for that explanation, which aids the debate. I do not want to revisit the debate on the Deregulation Bill about the growth duty and organisations such as the nuclear installations inspectorate being held to account for how they deliver on it, but we need to be very conscious that regulators still have a statutory responsibility. We absolutely want them to support growth, but what safeguards are there to ensure that we do not end up with weakened regulators that say, when there is a catastrophe, “We were so worried about the growth duty that it undermined safety”?
Matthew Hancock: This is not about the growth duty; it is about the small business appeals champion, but the structure is similar. I do not think we will go down the route mentioned by the hon. Gentleman because regulators have statutory duties which they must, by statute, carry out. This is a question of ensuring that someone listens to concerns about how statutory duties can be carried out with a less negative impact on small businesses. I am grateful for the intervention because I found it useful to clarify that point.
Mark Garnier: I apologise for interrupting my right hon. Friend as he gets into full flow. Before he turns back to the amendment, may I press him a little further on the Financial Conduct Authority and the PRA regulator? Various constituency MPs will have smaller independent financial advisers that are regulated by this. Will he go a little further on how he will make sure the FCA is included in what the Government are trying to achieve in the Bill?
Matthew Hancock: Yes, of course. I am happy to return to that point on Report. We must make sure that the way the system is organised is practical and proportionate, but I will take that point on board and make sure that the interaction between the two systems works as well as possible and more broadly, as my hon. Friend says.
Returning to amendment 74, one of the key principles of the duties of the champion is that they should not interfere in individual cases or individual regulatory decisions. Clause 15(5) spells that out explicitly. We did this deliberately to ensure that the integrity and role of the regulator is not undermined—precisely the point made by the hon. Member for Chesterfield. We would not want the appeals champion themselves to be the process for the appeal. They should be inside the organisation to assess whether the appeals process has worked. Requiring the champion to assess whether any business has suffered discrimination, and then potentially to make recommendations to address that, might make them the final arbiter of appeals and therefore
Ian Murray: I appreciate what the Minister is saying, but let us say that a small business executes a complaint through the reviewer, and goes back to them and says, “Yes, there was a problem with the regulations, the procedure and the process, but since I have brought this to the attention of that body, it has been very difficult to deal with”. Is that not the kind of thing that should be dealt with? The report should therefore say that there is a problem with how the regulations have been enacted, because a legitimate complaint was made and essentially, the body said to that business that it will make life more difficult for them.
Matthew Hancock: Yes, I agree that it is critical that businesses should be able to make a complaint or an appeal without fear of discrimination or reprisal. That is why, under the existing statutory duties, the scope of the champion’s yearly assessment and the recommendations can cover this. I think this debate has made it clear that it should, but the report will be able to consider whether the regulator has adequate processes and procedures in place to ensure that businesses that challenge a regulator are not discriminated against. However, I would not want the amendment, as I interpret it, to require them to report on the behaviour in each individual case, because they might end up getting involved in a process they are designed to oversee.
We intend to set out the role of the champion in more detail in statutory guidance, on which we will consult in the new year. We will hold a series of workshops to seek the views of business and other stakeholders on precisely how the details will work, to make sure that this works for small business. I hope the hon. Member for Edinburgh South has been reassured by my response regarding the broad picture, and will agree to withdraw his amendment.
Government amendment 21 is a technical amendment. Clause 16 gives the Secretary of State the power to bring regulators into the scope of the policy to appoint a small business appeals champion by secondary legislation. The amendment corrects a drafting error to make it clear that the regulations themselves are subject to affirmative resolution, not the power to make the regulations. As I said, the amendment is minor and technical and I hope the Committee will support it.
Ian Murray: I think the Minister is coming to the end of his remarks, but he has not really answered the questions about the appointment process for reviewers—whether they will be existing or new employees of the regulators, and whether they will be encouraged to be impartial.
Matthew Hancock: Yes, it is envisaged that the appointment will normally, but not always, be somebody of seniority within the regulator with good links to the businesses that are covered, such as a non-executive director. Many regulators are covered by the clause and their needs will be different. The primary guard against the hon. Gentleman’s concern is that the provision will be a statutory duty on somebody within a regulator. Regulators, by their nature, act on statutory duties.
Ian Murray: I appreciate what the Minister said—and it does not say that in my notes: I genuinely do. However, I do not accept that the process is robust enough. That was the principle behind the amendment. The way the champion is being developed seems to be as a non-executive director at the regulator, who will produce a report and a review on the basis of whether the processes work for a small business, if they receive a complaint. It is a bit like the Independent Police Complaints Commission: the police investigating the police on procedures of the police. We do not want the regulator to be in that position.
The Minister said that the Government would not want to put in part of the review in the reporting documentation any discrimination procedures that may need to be put in place because they would not want the reviewer to be involved in determining individual cases. However, if it is a non-executive director of that regulator, there will be some involvement—at board level, I would have thought—if a complaint has been made about the processes of that regulator. Surely such a thing would go to quite a high level in the organisation. There may be a whole level of seriousness—from minor procedural difficulties to pretty serious ones, that end up at board level. There will be a non-executive director in the regulator who is the champion of small business, essentially determining whether that small business has been wronged in some way, and producing a report to say that the procedures of that regulator should be amended. It is surely right that, as part of that reporting process, an assessment be made of the impact of the organisation’s regulations on whether businesses have made a further complaint about being discriminated against.
Matthew Hancock: Is the hon. Gentleman prepared to withdraw his amendment on the grounds that the report should not necessarily be published on the basis of the individual complainant? I agree with the thrust of what he said about ensuring that the issue is taken into account properly. I am confident that the matter can be dealt with by ensuring that the details of its implementation are put right.
Ian Murray: I appreciate the Minister’s reassurance. If the guidelines will take into account that kind of process, I am happy to withdraw my amendment. We will hold the Minister to account for what I think is close to a promise that he just made to the Committee. I beg to ask leave to withdraw the amendment.
This amendment corrects a drafting error (it is the regulations themselves that are subject to affirmative resolution procedure and not the power to make them).
Matthew Hancock: In speaking briefly to clause 16, I will mention clause 17, which is consequential. Clause 16 gives the Secretary of State the power to bring regulators into the scope of the policy to appoint a small business appeals champion, which we have just debated. Regulatory functions that have been devolved to Scotland, Northern Ireland or Wales will not be included in that secondary legislation. Regulators in Scotland, Wales and Northern Ireland will be in scope only for aspects of the regulatory powers reserved to the UK.
The regulatory landscape is complex, with more than 50 regulators potentially within scope, and it would be disproportionately complex to put them all on the face of the Bill, so a secondary power is essential to ensure the policy stands the test of time. It will allow us to make changes if, for example, a future Government decide to move regulatory powers into a statutory body or agency. This is a standard method that has been used successfully to define the scope of the regulators’ code. It is also our approach to defining the scope of the growth duty for regulators, which recently came before the House in the Deregulation Bill. We intend to begin shortly a public consultation on the list of regulators to be brought within scope of the policy. The list will be subject to the affirmative procedure, so the House will have the opportunity to scrutinise it.
Clause 17 enables the Government to issue guidance on how the role of the small business appeals champion should be implemented. It provides that the champions must have regard to the guidance when they undertake their formal duties and that any guidance issued must be published. Clause 16 is an essential element of the small business appeals champion policy.
“(aA) lay a statement of each amended thing before each House of Parliament to be approved by affirmative resolution procedure before the amendment is implemented;”
We are thankful for your efficient chairing, Mr Robertson, which has enabled us to fly through the clauses. However, we must now stop and reflect on clause 23 and our amendment. Amendment 75 pertains to clauses 18 to 23, but we thought it was most appropriate to table it in relation to clause 23. This is the first time I have ever read the word “thing” in a Bill—it is an interesting use of language. That is why our amendment uses the term. It would be interesting to get the Minister’s view of the
Andrew Griffiths: I am delighted to hear the hon. Gentleman’s support for deregulation. That is really encouraging. Will he commit the Opposition to supporting our one in, two out rule should they win the next election?
Ian Murray: The hon. Gentleman asks a question about regulation and that is essentially what our amendment is about. We think that each Parliament place should determine regulation. He talks about the one in, one out rule—[Interruption.] He talks about one in, two out but the Government have talked about one in, one out. This is about the quality of regulation. The entire Bill has actually—
Ian Murray: We are promoting the amendment because each Parliament should, through the affirmative procedure, be able to determine what the Government of the day do in terms of this regulation. We have no problem in supporting the one in, one out rule. In fact, my hon. Friend the shadow Secretary of State for Business, Innovation and Skills said that.
We fully support the principle of having a regulatory environment that reduces the burden on business. The thrust of our amendment is to test that principle in Parliament each year by the Government of the day coming forward with what they wish that regulatory environment to look like.
Sheryll Murray: Will the hon. Gentleman therefore commit the Opposition to continuing the trend of reducing the burden of regulation on business and not increasing regulation, should they succeed next May?
Ian Murray: I will answer the hon. Lady’s question first. We think that the exclusivity clauses in zero-hours contracts are a good piece of regulation to resolve some of those issues. It is about good regulation. We have tabled the amendment so that this comes before the House in a positive fashion at the start of every Parliament, for it to determine the regulatory target for the Business Secretary and the Government of the day. That is the right thing to do. We have supported the rest of the Bill’s provisions—clauses 18 to 22 have already been approved. We agree with the Bill’s premise but this is about the value of those regulations.
Matthew Hancock: The purpose of these clauses is to ensure that a target is set by the Government at the start of each Parliament for the burden of regulation. That takes into account the hon. Gentleman’s point about the quality of regulation. We have a target of one in, two out. He has just said that he supports a one in, one out target, which is essentially a more regulatory position. The question put by Government Back Benchers, which he has refused to answer, is: does he support, in the next Parliament, under this clause, a one in, two out target—yes or no?
Toby Perkins: My hon. Friend is doing very well. It seems we are in the same place on this, yet attempts are being made to create a false division. I know he is keen to get back to the amendment rather than be dragged into other matters, but does he agree with me that many businesses say that there is a huge number of regulations that made no difference to them—redundant regulations—that are being got rid of in order to bring in new regulations, and they do not think that under this Government the amount of time they spend on regulation has reduced at all?
Ian Murray: That is why the raw figures are so difficult to achieve. It is about the quality of regulation. Many of the people who came to speak to us last week in the evidence session posed that question. The British Chambers of Commerce said the same—it was not as easy as just having raw numbers; it was about the quality of regulation—and that is essentially the purpose of our amendment. Actually, the interventions from Government Members emphasise the fact that they should support our amendment, so that at the start of every parliamentary term a Government could come to the House with an affirmative resolution on their target for the burden of regulation, and it could be voted on. That seems a perfectly sensible approach. We could all have the debate at the start of every Parliament. In eight months’ time, when my hon. Friend the Member for Streatham is Business Secretary, he will have a view of what the burden of regulation should be and will bring it to the House for debate.
Chris White: Earlier in the sitting, a Labour Member claimed that the Opposition are the friend of business. Is not that claim completely devalued by the fact that they are not prepared to make any commitment to reducing the burden on business?
Ian Murray: That was an utterly ridiculous intervention. I have said time and again that we appreciate and support the principle of the deregulatory process, as in the clauses that we have just passed without debate. It is completely ridiculous to suggest that we do not support any reduction in regulations on business. I emphasise again, and will continue to emphasise, that all the Opposition Front Benchers here have run our own businesses and realise what regulation is, but let me say to the hon. Gentleman that cutting health and safety regulation and employees’ rights at work is not necessarily good for business—indeed, it is bad for business, because what businesses want is a level playing field. They want regulations on their business imposed fairly, they want fair enforcement, and they want a level playing field for
Matthew Hancock: First, on a factual point, the number of businesses that perceive regulation to be an obstacle to success has fallen from 62% in 2009 to 51% in 2014. However, I think that 51% is still too high. Anybody listening to this debate—and believe me, they will hear about it—will hear the Opposition refusing to commit to our one in, two out target on the burden of regulation, unless the hon. Gentleman stands up now and commits to it.
Ian Murray: The Minister is at it again, isn’t he? We are debating our amendment, which essentially says that at the start of every Parliament the Government should bring to this place their deregulatory target for that session of Parliament. We cannot bind a future Government on legislation; it is up to each Government to determine that. I can only emphasise again that my hon. Friend the shadow Secretary of State for Business, Innovation and Skills said quite clearly at the Dispatch Box on Second Reading:
So to suggest that we do not want to reduce the regulatory burden on business is, frankly, absurd. That is what my hon. Friend said on Second Reading, and we have just supported clauses 17 to 22 in their entirety—[ Interruption. ] The Minister is chuntering from a sedentary position that we are against it. I do not know how many times I can emphasise that we are not against it. Perhaps the Minister would like to listen to the fact that we are not against the target for reducing the regulatory burden on business. He knows that, and to suggest otherwise is completely wrong.
Mark Garnier: I am grateful to the hon. Gentleman for giving way. I hesitate to press him too much, but he is suggesting a subjective measure to reduce the regulatory burden. Businesses want a quantitative solution. They want to feel that it is something they can grab hold of and say, “This is definitely something that is helping us.” That is why the Government are talking about a one in, two out reduction of regulations. Does he not grasp the point that businesses do not need to have to go through a plethora of regulations? They want to see specific numbers guaranteeing that they will see a reduction in the number of regulations with which they have to comply.
The Chair: I say to hon. Members that they have an opportunity to take part in the debate. Some of the interventions are almost speeches in their own right, so perhaps hon. Members could take that on board and make a contribution, rather than an intervention.
In this debate the Government tend to miss that it is not about the quantum of regulation; it is about the quality of regulation. It is easy for Governments and Oppositions to say, “We will slash x, y and z from regulations,” but that is completely and utterly meaningless; it has to be done on the basis of the regulations that we will take out and the regulations that we will put in. There is sometimes a great drive to regulate a particular industry. The Government, for example, were dragged kicking and screaming to regulate payday loans, which they did not want to do because they then had a target of one in, one out. In that example of regulation, we should have been protecting people from payday loans, rather than hiding behind the one in, one out approach to regulation. That is one example, and I have yet to hear the Government tell us what regulations they want taken out on that basis. I can give lots of examples of where people want regulations to be introduced to protect the most vulnerable in society and small businesses in this country.
Mr Iain Wright (Hartlepool) (Lab): Good afternoon, Mr Robertson. Will my hon. Friend the Member for Edinburgh South respond to the intervention by the hon. Member for Wyre Forest, who talked about subjectivity and objectivity? Is it not a fact confirmed by the World Bank that it is getting more difficult to start a business in this country? Last year, the UK was ranked 19th, with it taking 13 days to complete the process of starting a business. This year it is getting worse. We have fallen down the rankings to 28th in the world. In Afghanistan it takes only five days to start a company. We are lower in the business rankings than Afghanistan, Burundi and Mongolia on the time it takes to start a company. Should we not be addressing that? That is what the amendment will help to do.
Ian Murray: I am delighted by the short speech—known as an intervention—by my hon. Friend the Member for Hartlepool. He is absolutely right that, as my hon. Friend the Member for Chesterfield said at the start of this sitting, under the previous Government the UK was No. 1 in Europe and No. 4 in the world for starting a business. The figures we have just heard from my hon. Friend the Member for Hartlepool show that that is no longer the case. To be behind some of the countries that he suggested when it comes to starting a business and being a business owner shows the problem that we have had. Do not take it from me. In its written evidence to the Committee, the British Chambers of Commerce said:
Ian Murray: Again, that is another meaningless figure from the hon. Gentleman—he just stands up and throws figures around without putting them in context. The previous Government, from 1997 to 2010, created 1.2 million businesses and hopefully we will see many more set up in the years ahead.
The significant chuntering from Government Members shows that their economic plan is failing. This week we have seen that while unemployment is down the deficit is up, and that PAYE tax receipts are flat when a significant increase was expected. That is telling of the quality of our economy, in exports in particular.
Oliver Colvile: May I point out that it is individuals who start up businesses? Indeed, I did so during the time when the Labour Government were in power. It was me, however, who came up with the idea, with my business partner.
Ian Murray: I am not quite sure what question the hon. Gentleman was asking—[ Interruption. ] I will be delighted to come back to the amendment. The hon. Member for Plymouth, etc. said that he started his own business. Let me emphasise again that I did so, too.
For the record, I refer Members to my entry in the Register of Members’ Financial Interests, which shows the businesses that I have started as well as my non-remunerated directorships with other businesses. When I was running my own small business, what was key was not the number of regulations, but their implementation and quality. To take health and safety and the example of a local authority inspection for food safety, it was the regularity, consistency and quality of those visits that was the issue, not the regulation itself. That is the whole point of our amendment: to allow the Government to come forward at the start of every Parliament, propose what they think the regulatory impact on business should be and have that voted on in this place.
Ian Murray: I hope that the hon. Gentleman’s intervention will be on the basis of our amendment, because that is what we want to get to and I have hardly started on it. He will be desperate to go for lunch soon and, thanks the health and safety regulations that are in place, he will not get poisoned.
Andrew Griffiths: It is exactly on that point. The hon. Gentleman raises a number of regulations from local authorities. Will he therefore welcome the fact that the Government have reduced the number of regulations that councils can impose on building standards from 100 to 5? That is surely good for business.
Toby Perkins: I want to give extra weight to my hon. Friend’s point. The Library has said that the previous Government’s deregulatory measures save businesses £3 billion, yet this Government’s Deregulation Bill, with more than 100 clauses, will save a total of £30 million a year. Does that not demonstrate the difference between the action delivered by a previous Labour Government and the rhetoric and hot air—changing the way that yarn is sold and so on—provided by this Government that does not make much difference to many businesses?
Ian Murray: That is absolutely right. My hon. Friend’s intervention emphasises the point I have been making since the start: it is about the quality of regulation. The British Chambers of Commerce said exactly that in evidence—that the problem with regulation is not necessarily the burden on companies, but rather the unfair and heavy-handed implementation of it. It is very easy to throw around figures of one in, two out, two in, one out, and shake it all about, and all the hokey cokey that goes with that, but we need practical examples of what that means. The impact assessments that the Government would put forward will show what the impact on business would be. The Deregulation Bill, with over 100 clauses, merely reduced the regulated burden on business by more than £30 million. So we have to see what the impact of that will be.
Ian Murray: If the hon. Gentleman just lets me read another paragraph from my contribution before he intervenes, his question may be answered. I emphasise this: it is right to remove unnecessary regulatory and legislative burdens from individuals, civil society, businesses and public sector organisations. I do not know how many times I am going to have to say that for the Government to realise that we support them in these clauses. One would think that we did not, given the way that they have been trying to bend it into something that is not the case. We need to be mindful of the quantity of regulation we impose on business, but it is equally important, if not in some circumstances more important, to ensure that the quality of the regulation is up to scratch. My hon. Friend the Member for Chesterfield said quite clearly that the Labour party has a proven track record of doing that in government. We set up the Better Regulation Executive.
Mark Garnier: The hon. Gentleman talks about the stuff that the Labour party got rid of, but it did not get rid of stopping the offence of a person not reporting a grey squirrel on their land, or the burdens and regulations that micro-manage the location and design of no-smoking signs. It did not, when in government, get rid of the regulation whereby childminders who give food to children have to register as a food business with the FSA. He asked for examples and there are many.
Ian Murray: Well, Mr Robertson, honestly I think that the hon. Gentleman has just emphasised the quality of regulations. The grey squirrel regulation is, indeed, something that is probably never used, so removing it from the statute book makes no difference at all. He emphasised my point. He can stand up in the Chamber and say, “We’ve removed the grey squirrel regulations so we have taken a regulatory burden off business and corresponded to our parliamentary burden with one in, two out.” However, one regulation might put tens of millions of pounds of burden on business. His example shows that our point is absolutely right; it is about the quality, not the quantity of regulation. I hope he will bring a ten-minute rule Bill to have that particular regulation struck from the statute book, on the basis that he seems to be so passionate about removing regulations on business.
Let me go back to where I was. We set up, as my hon. Friend the Member for Chesterfield said, the Better Regulation Executive to improve the design of new regulations, simplify existing regulations, and improve how they are communicated. We put in place the regulators’ compliance code, and set up the Regulatory Policy Committee to provide independent scrutiny of proposed regulatory measures put forward by the Government. Our programme of simplifying regulation delivered £3 billion of savings a year to business. It is about the quality rather than the quantum of regulation that is removed. We introduced the Legislative and Regulatory Reform Act 2006 which gives Ministers certain powers to make legislative reform orders that remove or reduce burdens resulting directly or indirectly from legislation, with significant safeguards to prevent abuse. I hope the Minister will take his hon. Friend the hon. Member for Wyre Forest up on removing the grey squirrel regulations because he has the power, under the Legislative and Regulatory Reform Act, to do that. He may do so over lunch today. That would certainly be one more regulation out of the pile.
Labour’s approach saw that regulation was never too arduous, ensured that it maintained the confidence of the business community and showed that regulation works best when businesses are better off when they stick to it than when they do not. That is the issue about the level playing field that we spoke about earlier.
It is right that the Government work to remove unnecessary regulations from small businesses, but we must recognise that, as the report “The impact of regulation on growth” commissioned by the Government in May 2012 found, the relationship between regulation and growth can be positive and negative depending on the type of regulation considered. I hope that the Minister recognises that, and that good regulation can have benefits for businesses and consumers. Many businesses in my constituency often say to me, as their local MP and a member of the shadow business team, that they
If the Secretary of State intends to amend the business impact target, the interim target, the qualifying regulatory provisions or how the impact of the target is assessed, the amendment would require them to lay out the changes in a statement to both Houses of Parliament, which must be approved by affirmative statutory instrument. If the Secretary of State wishes to use the power in the Bill, it seems prudent to require them to report to the House and let us know what they intend to do with the business impact target or whatever else. The amendment would allow both Houses to scrutinise properly the proposals that the Government bring forward under the target. Improving regulation for businesses is about more than gimmicky titles. With the grey squirrel intervention, we heard a gimmicky title for what the Government propose to do here.
The amendment would give us the opportunity to question the Government’s one in, two out approach to regulation. If Government Members had given me the chance to get through my contribution, we could have started to discuss the Government’s one in, two out approach, which clearly fails to recognise that sensible and proportionate regulation, introduced and implemented properly, can promote healthy, competitive markets. Conservative Members have spent so long telling businesses that any problems they face are down to Government regulation that they feel duty bound to throw out as much regulation as they can without a clear sense of direction or notion of what it is meant to achieve. We have already heard that the Deregulation Bill in its entirety saved businesses only £30 million.
We are concerned about the fact that there has been no formal consultation on the business impact target proposal. Will the Minister clarify why that was the case? Does he intend to hold a formal consultation on these proposals?
We seek assurances from the Government about the important regulations that underpin environmental protection, which are consistently raised by the Environmental Audit Committee. Perhaps the greenest Government ever would like to assure the Committee that they will keep environmental protection regulations on the statute book to ensure we satisfy our commitments to the environment. Does the Minister agree that the business impact targets in clauses 18 to 24 should not be used to remove valuable regulations merely because there is a need to introduce a new regulation in another area, and that the Government should regulate for the needs of small businesses as well as removing regulations?
Matthew Hancock: I think we have just heard one of the most pro-regulatory speeches imaginable in a small business Bill debate. The hon. Gentleman’s arguments were all about why we should not have a one in, two out target. He refused to commit to a one in, two out target and obfuscated about why we should not always be trying to improve regulation. I thought it was pathetic.
Matthew Hancock: No, because I am going to set out my policy. So far, the one in, one out and one in, two out policies have saved businesses £1.5 billion a year in reduced burdens. The hon. Gentleman is absolutely right that it is not about the number of regulations but the burden of regulations, and that is exactly how the target is set. We have reviewed 5,600 regulations, and more than 3,000 of them will be scrapped or improved, which will save £850 million each year by the end of this Parliament. The Government’s reduction is having an impact, and the purpose of having a statutory target is to insist that every Government are accountable for the amount of regulation that they bring in.
The hon. Gentleman said that things such as the grey squirrel regulation do not matter because people ignore them, but I think it is much better to be a country in which people live under the rule of law and which does not have regulations that people do not abide by. And, by the way, we have already abolished the grey squirrel reporting requirement, along with many others. I can give the hon. Gentleman a long list of ridiculous regulations that the Government have removed.
Ian Murray: I am delighted that the Minister has at last given way after a few minutes of casting aspersions on what we are trying to achieve with the amendment. He fails to understand what the British Chambers of Commerce and other organisations have said to us: it is not about the quantum of regulation, but how it is used and its quality. Indeed, one thing I did not mention when moving the amendment is the number of times that regulations change. Those are the key issues for business, rather than one in, two out. If the Minister has removed the grey squirrel regulations, did that count towards the target for reducing the burden on business?
Matthew Hancock: Well, of course, because regulations count towards it, but they are counted in terms of burden. The hon. Gentleman is completely right about burdens, but that is precisely how the target is met. The UK’s ranking has improved from 89th in 2010 to 37th in the global competitiveness report on how burdensome it is to comply with a Government’s administrative requirements—precisely the goal that he was setting. The rise has been significant, but 37th in the world is by no means good enough. Labour Members have made it clear that they have no aspirations to climb further up the table because, for all their talk, they refuse to commit to the one in, two out target.
Turning to the amendment, the hon. Gentleman is quite right to pick on the word “thing”. The “thing” is shorthand for the business impact target, the interim target, the scope of the target or the methodology of the target. I take very much the spirit of the amendment, but I want to go further than I have in response to some other Labour amendments. We want to ensure that the scrutiny mechanisms for the target are as robust as possible, and, given the debate we have had, the more robust, the better. We are content to take away the amendment and consider further opportunities for strengthened parliamentary scrutiny. There is a complex interdependence between making something subject to an affirmative resolution and the consequences for the legislation in question if it is outwith the target. Nevertheless, I understand the starting point and principle behind the amendment.
We want as much scrutiny as possible, especially if a Government propose to loosen the one in, two out regulatory structure. I therefore propose to return to the principle of the amendment on Report, but I am glad to hear the broad and widespread support for the clause as a whole and for the group of clauses, which will make it a legal requirement for every Government from now on to publish their deregulatory target and how they will reach it. We will publish further details on how that will be implemented, but on that basis I hope that the hon. Gentleman will not only support the clauses but withdraw the amendment, and that he will await the proposals, which I am happy to discuss with him, on how we can increase public and parliamentary scrutiny of the target.
Ian Murray: I will not delay the Committee for too long, but is it not remarkable that after all the bluff, bluster and nonsense from the Government Benches, the Minister agrees with the amendment? I have never