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Lord King of Bridgwater: My Lords, will my noble friend allow me to intervene? Will he, with his great experience, address the point which I do not believe is sufficiently reflected in either the Government's or Parliament's consideration; namely, the ability of the system to administer and deliver what Parliament has enacted? He and I have lived through a period in which all-party support led to the introduction of the Child Support Agency—which proved practically impossible to administer. The problems faced recently by MAFF and then DEFRA were almost beyond the capacity of that ministry to administer and cope. I believe that we now have problems with the tax credit scheme, in regard to which there is a similar qualification. Does my noble friend think that sufficient consideration is given, in terms of worthy measures that might be implemented, as to whether people really consider that the system and the organisation can actually manage to administer what Parliament has enacted?

Lord Freeman: My Lords, I am grateful to my noble friend. The short answer is "No". One of the reasons is the lack of practical experience on the part of those

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in our great departments—both Ministers and civil servants—but, secondly, the great rush that there always seems to be to introduce a Bill without thinking of the consequences down the line.

I shall conclude my remarks in a few moments by commenting on new proposals coming from the Procedure Committee of another place and from the Procedure Committee in this House which will go some way towards dealing with the problem referred to by my noble friend Lord King; namely, legislating in haste and repenting at leisure.

However, I do not want to leave the comments of the noble Lord, Lord Haskel, about living in a counter-regulation culture and the idea that everything in the garden is rosy. Perhaps I may briefly quote two leaders of industry, to whose comments I believe your Lordships should pay attention. The first is Mr Chris Humphries, a former director-general of the British Chambers of Commerce, whose comments appeared in a press release dated 20th January 2001:

    "Despite all the rhetoric, the reality is that government has dramatically increased the regulatory burdens that threaten small business competitiveness. Excessive red tape is stifling the very enterprises the Government is seeking to promote".

Those are considered words from someone who is much respected in industry.

Mr Digby Jones, the director-general of the CBI, was quoted in the Daily Mail on 11th August 2000 as saying:

    "They [businesses] would say that regulation is the most dominating feature of running business. It is no longer creating wealth it is having to deal with regulations".

The attitude that I am afraid both national and local government have to introducing not only primary but secondary legislation is that no risk should be taken in making detailed regulations or orders that any eventuality could arise that would embarrass either the Government or the Minister. There are no prizes for taking a balanced judgment about making sure that there is a light touch—that you are looking at the outcomes and not at the specific requirements or processes. In fact, civil servants and Ministers get the blame when things go wrong. So we are not a risk-taking culture.

I quote the chairman of the Audit Commission, writing in The Times on Tuesday, 6th May:

    "Extremely bright and committed people are shackled by a system that in no way balances the negligible rewards for success against the daunting penalties for failure".

So all the pressures are to gold-plate regulations, to make sure that the regulations are comprehensive and that every eventuality is considered.

What are the solutions? Briefly, let me look at government. Both administrations have tried a number of initiatives over the past 20 years, and particularly over the past 10 years. We had the regulation task forces, led by Frances Maude under the previous administration and by the noble Lord, Lord Haskins, in this Administration. They produced regulatory impact assessments. But all their work was advisory. At the end of the day, if the Minister and the Government did not agree, their advice was ignored.

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I pay tribute to both the previous administration and the present one for introducing the deregulation procedure. There is an example on the Order Paper today of an excellent piece of regulatory reform concerning sugar beet research and education. It removes one piece of legislation. But, frankly, that is a very small contribution to dealing with our overall problems. We are not dealing properly with the new flow of legislation.

I believe that within government we need a Minister of Cabinet rank responsible for vetting all primary and secondary legislation, with the support of advisers, and to be of equal rank with the departmental Minister—so that if it can be shown, not only by outside lobby groups but by internal advice, that there is an incremental burden on business, that Cabinet Minister would have the right and the power to argue with his colleagues that the Bill should not proceed.

Secondly, the Chancellor of the Exchequer must grip the problem of tax simplification. My noble and learned friend Lord Howe is chairman of the excellent Tax Law Review Committee. But that committee is examining the clarification of our tax law, not its simplification. The Chancellor should take the initiative and possibly rely on a Select Committee of both Houses of Parliament or on a group of advisers, or both, in simplifying year by year great chunks of our tax law and writing them into the Finance Bill.

I turn finally to Parliament itself. I believe that there is a good deal of work that should be commended. I pay tribute to the various committees of this House and another place which look at whether regulations are intra vires. But the Delegated Powers and Regulatory Reform Committee in this House and the Scrutiny Committee in another place are not dealing with the merits of regulation. I am very pleased that the Procedure Committee in this House has proposed and I understand that we are to have a new procedure in this place in the new Session of Parliament looking at the merits of delegated legislation. That is much to be welcomed.

I regret to inform your Lordships that a similar proposal in another place has been blocked by the Government—at least, that is how it appears. The proposal was to have a Joint Committee of Members of another place and of this House examining the flow of legislation and making a judgment—it must be said that this is a judgment about politics—as to whether the regulations are necessary. I ask the Minister whether it is true that the Government are blocking the creation of a Joint Committee to examine delegated legislation and, if so, whether the Government will think again.

3.40 p.m.

Lord Brooke of Sutton Mandeville: My Lords, I join my noble friend Lord Freeman in congratulating my noble friend Lady Hogg not only on having initiated this debate, and providing us with the opportunity of participating in it, but on the quality of the speech that she delivered. My late noble kinsman succeeded her late noble kinsman as Financial Secretary to the

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Treasury, and her late noble kinsman succeeded my late noble kinsman seven years later as Chief Secretary to the Treasury. It is therefore a privilege to follow her lead in this debate. This is approximately the anniversary of the last debate which was initiated from these Benches on this subject, which is at least an index that the problem has not gone away during the course of the ensuing year. I hope that I shall avoid duplicating anything that I said a year ago. I shall therefore follow my colleagues in erring on the side of brevity. I hope that I shall not repeat myself.

I acknowledge the proposals in the Budget for the alleviation, at least in some degree, of the problems thrown up by regulations and tax. I like to feel in a modest way that the fact that noble Lords on these Benches have continued to come back to these issues has drawn to the attention of the Government the fact that they needed to improve their record. That is our effect operating in slower time. I compare that with the real time proposals several years ago on corporate structures and international tax arrangements, where I heard, on the morrow of the Budget at one of those breakfasts put on by accounting firms, a tax partner at PricewaterhouseCoopers revealing his concerns about the arrangements which the Budget contained in that regard. Those of us who heard him in that audience were not surprised that the Treasury sought later that day to rubbish him. Indeed, I can recall it happening on the Floor of the House of Commons. Likewise, we were not surprised by the significant number of government amendments to the Finance Bill later in the summer in order to respond to the thrust of those earlier criticisms that he made.

My noble friend Lady Hogg alluded to the welcome reduction in micro-engineering in the Budget, and the Minister will know from the exchanges that he and I have had what pleasure that gives me. The fact that there has been so disappointing a take-up of tax credits is itself an index of how the complexity of schemes that the Chancellor introduces, particularly when they have to be understood by people who are not familiar with these issues, can be a deterrent to the take-up occurring on the scale that the Chancellor would wish. Before the present Government took office in 1997, I served on the Finance Bill with members of the present Government who were then in the Shadow Treasury team. I can remember the future Chancellor of the Exchequer's genuine commitment to increasing productivity and his enthusiasm for training and education. I admired them both.

Five-and-a-half years on from 1997, compared with the five-and-a-half years that went before, one can compare decently and fairly the productivity record in the nation as a whole between the economy under the then Government and the economy under this one. Some might say that five-and-a-half years is not a long enough time scale, but the present Government have been keen to demonstrate to us that boom and bust is now a thing of the past. In that regard the five-and-a-half years that they have been in office seem to me to be a fair comparison. I say in sorrow rather than in anger that it is a genuine disappointment that the growth rate in manufacturing and service industries

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has been less than a half of that which it was in the five-and-a-half years before the Conservative Party left office.

One can ask oneself why that might be? An obvious candidate is the reduction in manufacturing investment that has been occurring under the present administration. My noble friend Lady Hogg referred to that. That is an irony after the raid on pension funds that occurred in the first Finance Bill after 1997, when the Government's logic or rationale was that they wished to reduce the amount of dividends paid by corporations, so that that money would go into long term investment. I remember taking part in the Second Reading of the Finance Bill in 1997, and alluding to that aspect of the Government's policy as a mild example of chaos theory. The Chancellor was throwing quite a large boulder into the placid pool of pensions policy. Meanwhile, as happens under chaos theory, in due course little old ladies in sub-post offices up and down the country would be paying extra for their stamps because the Post Office pension fund was in difficulties. It gives me no pleasure at all to find that that is now what is happening—as I understand it the stamps go up in price tomorrow.

There are commentators who take the view that manufacturing investment is now at its lowest point since 1984. The Chancellor's forecasts of the level of manufacturing investment have dropped very sharply from the forecasts that he made in the Budget last year for the current year, compared with the one that he has made in this year's Budget. It is no surprise that in the list of six proposals that the CBI makes for ways in which manufacturing investment can be restored, the second is a reduction in regulatory obstacles. Inevitably figures will be exchanged in debates of this kind, and there is no way in which we will all end up with the same figures on the hymn sheet. However, there is reasonable agreement that the fiscal cost to business of the Government's policies since 1997 has been of the order of 47 billion, if it is carried through to 2005 under existing plans.

That is not quite as much as the largest warrant that I signed as a Lord Commissioner of the Treasury. Such a warrant has to be signed by two members of the Board of the Treasury. In the 1983 general election the only two members of the board who were in London were my noble and learned friend Lord Howe of Aberavon and myself. I joined him in signing a warrant for 49 billion. A million here and a million there soon adds up to serious money and 47 billion is a pretty inexorable burden for business to carry by comparison with what it was carrying before the present Government came into office.

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