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European Community Legislation (Impact) Bill [H.L.]

12.40 p.m.

Lord Willoughby de Broke: My Lords, I beg to move that this Bill be read a second time.

It will not have escaped your Lordships' attention that today is Waterloo Day. It seems particularly appropriate that the Bill I present is heavily influenced by the playing fields of Brussels. The purpose of the Bill is to require the relevant Minister to report to Parliament on the impact on British business of specific EU legislation that has been put into law either by a directive or which has become law automatically through secondary legislation and regulations.

It will be no news to the Government that businesses in this country, large and small, feel that their competitiveness is being seriously eroded by the never-ending tide of legislation which has been coming their way; most comes directly or indirectly from Brussels.

I should like to give your Lordships a few examples of some of those directives and regulations. There is the parental leave directive; the acquired rights directive; the working time directive; and the VAT directives in all their glorious variety. I think that we are now on the sixth VAT directive. The urban waste directive will add massively to the costs of fish processing plants. As one example, a firm of fish processors sent me information which indicates that their charges are likely to rise from £40,000 to over £1 million a year. We have the landfill directive. The dangerous goods safety adviser directive requires the use of a certified safety adviser during

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loading, transport and unloading of dangerous goods--and I am informed that dangerous goods under this directive will include Tipp-Ex and aerosols. The Birmingham Chamber of Commerce has estimated the cost of that directive at £580 million with a benefit to industry of only £30 million.

Then we have the multiplicity of regulations. I give two examples. The Dairy Products Hygiene Regulations run to 165 pages and require a PhD in microbiology and a law degree to understand them. Then we have the impending disaster to the rural economy caused by MAFF's current interpretation of the Meat Hygiene Service Regulations whereby small abattoirs, meat processors and their suppliers will be forced out of business by having entirely disproportionate costs forced upon them.

Then there are the fire regulations, the health and safety regulation and environmental regulations. I do not need to continue. Your Lordships get the general picture.

I wish to run briefly through the Bill. Clause 1 defines the purpose of the Bill and at subsection (4) states what the report shall include. Subsection (4)(c) requires the Secretary of State to assess what could or should be done to reduce the cost and burden on business. Paragraph (d) requires that the report contain separate chapters on the impact on business in Scotland, Wales and Northern Ireland. Subsection (5) requires that the impact assessment be laid before the UK Parliament by the end of May following the financial year to which the report relates. This gives the Government about seven weeks in which to prepare the report. This should ensure that the impact report is relevant and can be acted upon.

Clause 2 requires that the Secretary of State consult widely with all those affected and that arrangements be made and advertised to enable individuals and organisations who may have missed that consultation to make their own case to the Minister and his representatives.

Clause 3 requires the Minister of the Crown to state at Second Reading of a Bill what provisions, if any, the Bill contains to give effect to Community legislation, and what that legislation is. This is similar to the present statement on the face of a Bill which indicates compliance or non-compliance with the European Convention on Human Rights.

Clause 4 defines the Community legislation which is within the scope of the Bill, and the meaning of "impact" for the purposes of the Bill.

The Minister will probably say that there is already adequate scrutiny of EU legislation in our two Houses, and that in any case regulatory compliance costs assessments are issued whenever a new law or regulation is enacted. I do not agree that that is adequate. Nor, I believe, does the Federation of Small Businesses, the CBI, the Institute of Directors, or the Employers Forum on EU Social Policy, all of which I have consulted on this matter. The EU Scrutiny Committees report on selected EU legislation. As a Member of your Lordships' Select Committee I can testify to how much hard work goes into making those reports both thorough and balanced. But

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I can also testify to the fact that legislation and draft legislation pour out of Brussels at such a rate that proper scrutiny has become impossible, never mind the fact that the Commission bureaucracy seems to have major problems in getting the papers out within a time-scale which will allow for proper scrutiny. This has been the object of complaint by the Select Committee on several occasions, with little or no effect to date as far as I can see. In any case, scrutiny is no substitute for proper legislation.

The compliance costs assessments are inevitably imprecise. They come before the true costs can be properly assessed. I ask the Minister how widely these compliance costs assessments are distributed. Do the businesses which will be affected by them receive them as of right; or do they and their representative organisations have to find out what is in the legislative pipeline and then ask for them? That is the only question I shall ask the Minister. I hope that he will give me some comfort on that. I do not deny the usefulness of these preliminary assessments; and my Bill does not seek to replace them. It requires the Government to report on past costs annually.

If the costs for the year are roughly the same or less than the preliminary assessment, then all well and good. If, however, the costs are greater, the Government will have to explain how and why these costs have increased; how they got it wrong; and what they propose to do to put it right.

One obvious example is the effect of EU legislation on employment. Has a measure been job positive or job negative? If positive, fine; if negative, then Parliament should know that its enactments have damaged employment. On 12th May the noble Lord, Lord Haskins, who is in charge of the Better Regulation Task Force, made a most encouraging speech--it was his maiden speech--in an excellent debate on small firms. He said that,

    "bigger businesses have the resources to comply with complex regulations. Small ones do not".--[Official Report, 12/5/99; col. 1238.] I shall now present your Lordships with an astonishing statistic. Microcompanies--that is, companies with up to 10 employees or fewer--make up nearly 95 per cent of all businesses in this country, and they employ over 10 million people. They are the creators of new jobs. By contrast, big companies seem to cut jobs when the bottom line looks rocky. One has only to look at the headlines:

    "Barclays announced that 6,000 jobs are to go"; and--

    "Invensys shedding 5,000 jobs"; and this morning in The Times--

    "Prudential to cut 4,000 jobs". Small companies could replace those jobs, but they need support, not strangulation by regulation. They need directives to be applied flexibly, as they are in other countries of the EU, and not gold-plated by overzealous bureaucrats as all too often they are in this country. We need to take more advantage of derogations where they are available and need to interpret the spirit of the directive rather than its strict letter.

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For example, the preamble to the Social Chapter on Parental Leave--it is giving small business quite a headache--states:

    "This agreement takes into consideration the need to enhance the competitiveness of the community economy and to avoid imposing financial administrative and legal constraints in a way that would impede the creation and development of small and medium-sized undertakings". Therefore, there are such provisions, even in some of the more radical EC legislation, which ought to be taken on board.

This Bill is not anti-government. Indeed, it seeks to work with the grain of government policy in its endeavours to reform the European Union labour market. It is not anti-European; it is not xenophobic; and it will not cause us to miss the various trains, planes, boats and bicycles which are now so vital to our future well-being. However, it is anti the unnecessary legislation still flowing from an arrogant and discredited Commission and it is anti gold-plating. By the way, am I alone in wondering what this discredited Commission, which resigned en bloc and in disgrace only four months ago, is doing still turning out these regulations?

This Bill is pro employment and pro business, particularly pro small businesses, which are the lifeblood of this country's economy. During the debate on small firms, I was interested to note that my noble friend Lord Taylor of Warwick, whom I have never met or spoken to, asked at col. 253 of Hansard for an annual statement to Parliament on the costs of regulation and the Government's plan to reduce that cost in the following year. This Bill would do exactly that and would be welcomed by business and I hope by government. I commend it to the House.

Moved, That the Bill be now read a second time.--(Lord Willoughby de Broke.]

12.50 p.m.

Lord Bruce of Donington: My Lords, on reading through the Bill which has been presented by the noble Lord, Lord Willoughby de Broke, my first reaction was one of sympathy. Any information that is helpful to the business community and to the citizens at large is most welcome. Indeed, it may be within the recollection of your Lordships that for the past quarter of a century I have made repeated requests--I shall not say "demands"--for such information, and not always with adequate response.

Therefore, my first observation is that we are dealing with information about the past. It has no bearing on what is going to happen in the future, aside from the presentation of a report. Although it may be rumoured to the contrary, that I have little sympathy with Ministers, I have a great deal of sympathy with them. I know the time which they have at their disposal after they have dealt with the ordinary administrative affairs of their departments and carried out the tasks in their original brief and those added to it by the Prime Minister; and I must say that the requirements relating to the compilation of a report on the impact costs of EC legislation--on what happened in the past and after the event--are formidable indeed. I doubt whether any Minister working full-time on the preparation of a report on what happened last year would be able to spend a couple of hours a day going through the stuff before it finally reached its reform.

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Let us see what the Bill requires of the report. It is to be:

    "a summary of the views of the individuals and bodies consulted", and the consultative requirements are extensive. It is:

    "a summary of representations ... where the impact identified by the Secretary of State or by any individual consulted or from whom he has received representations ... should be taken to reduce or offset that impact". In addition to general assessments affecting Scotland, Wales and Northern Ireland, and the Scottish Parliament, the National Assembly of Wales and the Northern Ireland Assembly, not later than May after the financial year to which it relates the Secretary of State has to provide all those bodies with a report, but before he does so in relation to the year that has passed he must consult,

    "organisations representing business and industry, including small businesses ... trade unions ... organisations representing companies providing financial services ... registered charities ... organisations representing the legal and accountancy professions". I am glad to see that last provision and I look forward to any consultations which the noble Lord may care to have.

All that represents not only time that must be spent by the Minister and his senior and semi-senior civil servants, but time that must be taken by the people who are interviewed. There will be an additional cost on business to provide that time after the event, without being able to influence in any way what has happened. I do not believe that that is the right way of going about it.

Incidentally, I observe that one of the Ministers pre-empted today's debate by providing a Parliamentary Answer to a Written Question tabled in another place yesterday. Mr Brady asked the Secretary of State:

    "What estimates his Department had made of the cost of ... the social chapter's parental leave directive ... the works council directive ... and part-time work directive to British business".--[Official Report, Commons, 17/6/99; col. 204.]

In reply, the Minister indicated that he would issue a statement and that a regulatory impact assessment will accompany the draft regulations. Therefore, the noble Lord on the Front Bench can already claim that in part he has pre-empted what is required by the noble Lord.

It must not be assumed from this that I am not in sympathy with the broad drift of the proposals. Indeed, I am very much in sympathy. But it seems to me that the effort to impart information should be made before the regulation is approved and not afterwards. I have already indicated that even the production of the report ex post facto would take a long time. It might therefore be complained that providing the information before the regulation is approved will also take some time. But what does that matter?

I do not discern, and many of your Lordships will not discern, a demand by the electorate of Europe last week to be provided with more regulations. In fact, there was no demand for any regulations at all. Therefore, I ask myself whether the European population--made citizens of Europe at Maastricht--are loud with complaints that they have not been provided with any regulations for at least a year. On the assumption that the Commission stopped issuing regulations, on the assumption that the

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Council decided that the small amount of time it devoted to considering anything was worth while sacrificing, Europe might have a whole year without any regulations whatever and without raising the slightest complaint. Of course, the agricultural community would complain if from time to time agricultural prices were not amended in order to conform with exchange rate variations and so forth. But there would be no complaint.

Moreover, I regret to say that it is also the case that there is no realisation either in government or outside of the origins of the great majority of these regulations. I shall be dealing with that matter later today, time constraints permitting. As I shall endeavour to show at a later stage in our proceedings today, regulations emanate from hundreds of committees without any intervention of Ministers at all. Some of the regulations have a very great impact indeed on the lives of businessmen.

Unfortunately, I have not time to read examples of regulations made without any intervention from Parliament whatsoever and probably without any consideration even by Ministers. They have had considerable ill-effects on our business community. I can cite case after case, quoting the regulation concerned, where it has been sought to enforce it by the enforcement authorities in our own country on behalf of the Commission and ostensibly on behalf of the Community. Many of them have ruined individual businessmen. It has involved firms going into liquidation on account of the interpretation of measures that subsequently, through legal action--too late, of course--proved to be wrong.

Firms have gone into liquidation in this country and incurred vast legal costs because of an interpretation of Community regulations, all of which are covered in this Bill. Therefore, I urge Her Majesty's Government in reply to this debate, while legitimately rejecting it, that they should nevertheless take on board the lesson that is involved: that is, that all legislation brought from the Community to this country, before it goes on to the statute book or becomes enforceable, should be subject to an impact assessment. That would be done by the Government themselves and by business. The regulations certainly would not be missed in the country. There will be no clamour; no processions down Whitehall or assemblies in Trafalgar Square, or even in the country towns, protesting that people have had no regulations for a year. It would not even be noticed, in the same way as the public did not notice the European elections which took place last week.

Therefore, while disagreeing with the noble Lord's Bill on the ground that it deals with the past, on behalf of myself and I believe many others, I would like to thank him very much indeed for bringing forward this Bill, enabling ourselves and I hope others to learn from it and to make quite sure that any regulation from the Commission, from wherever it emanates, is subject to proper scrutiny and estimates by the Government of the impact costs before it reaches the statute book and is enforced. On those grounds alone I shall certainly give a fair wind to the Second Reading of the noble Lord's Bill so that it will enable further and profitable discussions of the real issues involved.

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1.3 p.m.

Lord Pearson of Rannoch: My Lords, of course I support this excellent Bill and congratulate my noble friend Lord Willoughby de Broke on his initiative in introducing it. However, I am not entirely sure whether my noble friend intends that his Bill should apply only to Euro legislation which will have been forced down our throats in any preceding year or whether the Government would be required to report annually on the result of all Community legislation with which we have been saddled since our tragic decision to join the European Economic Community, or Common Market as it then was, in 1972.

I feel sure that the latter requirement, if not already included in Clause 1, is essential if only to bring home to the Government and to the people of this country the full extent of the calamity which our adherence to the Treaty of Rome has brought us. If that means that the complaint made by the noble Lord, Lord Bruce of Donington, is extended to legislation which is even older than the legislation that he has in mind, then I suggest that Ministers and their civil servants could spend very much more time doing that and not pursuing new legislation in Brussels.

The people of this country have been assured by all three of our political parties and by our political media for at least 25 years that our membership of what is now the EU is a good thing. There is no serious debate about what life for this country might be like if we left the Treaty of Rome or the EU and maintained our present trading position with it. Both the previous government and this one steadfastly refuse an objective cost-benefit analysis.

So it is a great credit to the common sense of the British people that recent polls show that some 40 per cent of them want to leave the EU despite all the lies that they have been told by the aforementioned parties for 25 years and that a much higher percentage of them are certainly not going to be fooled into signing up to European economic and monetary union, that final prison door of full political subservience to Brussels, as the election last week clearly demonstrates.

This Bill goes to the heart of why the British people remain so staunchly and wisely Euro-sceptic. That means that they dislike the Treaty of Rome and everything which it allows the bureaucracy in Brussels to force on us. Euro-scepticism does not mean that most British people dislike the Continent of different European nations, each with its own glorious history and culture, which they admire and respect. We Euro-sceptics love that real Europe: we hate the Treaty of Rome and all its works.

We have only to consider a short list of those British interests which have already felt the dread hand of the crazy Bureaucrats in Brussels--and which I suggest that this Bill should cover--to see why that is so. Apart from our currency, those interests include our food, water, fisheries, agriculture, waste disposal, art market, slaughter-houses, Eurobond market, working week, herbal medicines, bridges, sparkling cider, lorries, take-overs, dairy farmers, towbars, whisky distillers, pheasant shooting, market gardeners, Civil Service, egg

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producers, taxis, cheese makers, paper rounds, boat builders, legal system, hallmarks, oak trees, duty-free shopping, ponies, condoms, the roast beef of olde England, the London bus and the excellent lavatory designed by Thomas Crapper.

Behind every one of those damaged or threatened interests lies an almost incredible saga of bureaucratic excess and ineptitude in Brussels, which has often been gleefully made even more damaging by our bloated bureaucracy and pusillanimous government Ministers here.

Of course, I do not have time to go through each one now, but if any noble Lord wants to challenge me on any one of the interests that I have mentioned, I will be delighted to give him the full, ghastly, unexpurgated story of how Brussels came--

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