Examination of Witnesses (Questions 100
MONDAY 14 DECEMBER 2009
Q100 Lord Bradshaw:
You are the second person who has sat there in the last month
who has cast doubt on the way the British Government puts a lot
of emphasis on cost-benefit analysis and other countries in Europe
do not. Have you any idea of the proportion of countries which
hold out the cost-benefit analysis as a sort of totem and how
many people do not? Are we in a very big minority?
Ian Lucas: I cannot give you a proportionate
approach, because I think it will differ in different individual
cases, but I do not think we are in the majority in this. I think
that is the furthest I can go.
Q101 Lord Dykes:
I see that, quite unusually, you speak German.
Ian Lucas: Ein bisschen!
Q102 Lord Dykes:
I wondered if you had had a chance to discuss with German colleagues
the Wirkungsabschätzung, the impact assessments, and
the way they use them?
Ian Lucas: Strangely, I did meet with Eckart
von Klaeden, who is the new minister in Germany (who was appointed,
I think, last month) earlier this month. I did not specifically
discuss with him impact assessments, but I did discuss working
more closely with the Germans in terms of the Better Regulation
Agenda as a whole. Certainly, we regard impact assessments as
very important within the UK. We had a very constructive meeting
and we talked about perhaps organising a seminar together to talk
about better regulation and, as part of that, we would want to
be talking about impact assessments and the progress we might
be able to make within the European Union. We are always seeking
to attract friends.
Q103 Lord James of Blackheath:
Minister, we have been getting some reports coming to us that
the focus both of the UK and some other Member States on administrative
burden reductions is disintegrating the logic of integrated IAs.
Does that ring any bells with you?
Ian Lucas: It rings bells with me. I do not
accept it. I think that administrative burden reductions are very,
very important. When I talk to business and many other individuals
within the UK, when they think about the stock of regulation they
think very, very hard and make strong representations to me about
the importance of administrative burden reductions, and I think
that it is important that is in my mind when I am looking at the
issue of regulation. I think it is in my mind but it does not
dominate what I do.
Q104 Lord James of Blackheath:
I think I am hearing you say you disagree with the thrust of the
question. So why do you think we have been getting such strong
representations along those lines? What is the misapprehension
that is being given?
Ian Lucas: I think it is the misapprehension
that that dominates the approach that we have to regulation, because
I think what we want to do is improve the regulations brought
forward. With regulations we, therefore, look at cost-benefit
analyses, we also look at environmental, social and economic impacts
of regulation. We do have a broad consideration of the various
impacts of regulation, but, as far as existing regulation is concerned,
we are conscious of the representations that we get from business,
for example, about administrative burden, and that is important.
We want to try and reduce burdens for business as far as we can.
Q105 Lord James of Blackheath:
Do you think it is possible that people are reporting what they
expect to see rather than the reality that they find?
Ian Lucas: I do not quite understand the question.
Q106 Lord James of Blackheath:
I am wondering whether people are projecting their belief in what
might be happening rather than reporting on the firm evidence
of what they have seen?
Ian Lucas: Do you mean the bit that is representative
of organisations from business?
Q107 Lord James of Blackheath:
I only put it that way because you are quite at variance with
some of the reports that we have had, so I am just trying to find
out why we may have had such different reports.
Ian Lucas: For example, we asked for evidence
of regulations with which business was dissatisfied recently.
The Institute of Directors came forward with 300 regulations,
or something approaching thatI
speak from memoryasking us why these particular regulations
were in place. Some of them, because we carry a broad approach
to the regulations, we regarded as necessary and defensible, and
we said so, but with a number of them we took on board what the
IoD had to say and actually were acting on them. A number of them
we were actually acting to limit the regulatory impact already.
So we have an approach to regulation that is broader than narrow
cost-benefit economic impacts but we do regard reducing administrative
burdens as very important.
Q108 Lord James of Blackheath:
That is very helpful as background to what may still be something
of a conundrum for us, but, moving on, the Commission has recently
published a Communication on the action programme for reducing
administrative burdens. What is your assessment of the Commission's
progress in meeting the target of a 25 per cent reduction in administrative
burdens by 2012?
Ian Lucas: Firstly, we greatly welcome the Commission
Communication, because I think that shows the extent of the culture
change within the Commission, the fact that such a challenging
target is being pursued. But it is very challenging and it is
going to be very difficult to achieve. I also think that it will
be some time before businesses within the European Union will
actually feel the benefit of the proposals, because the Commission
alone cannot deliver the target; there has to be a buy-in by the
Parliament and by the Council too. The steps forward that the
Commission have made in recent years have begun to be taken on
board by the European Parliament but perhaps less so by the Council,
and I think that the progress that the European Union will make
will be constrained by the lack of buy-in right across the board.
Q109 Lord James of Blackheath:
Thank you for that. I think that goes to some part of the answer
to the final bit of the question here, but there is one bit I
will ask you. If, indeed, the Government's claim that they have
been working to promote the benefits of better regulation with
the MEPs and Member States' representatives in the Council, as
I think you are referring there, could you give us an account
of the actions that you have been undertaking in this respect
Ian Lucas: As I mentioned earlier, I personally
have met with the German Better Regulation Minister to discuss
with him our Better Regulation Agenda in the UK and how we can
meet with the Germans and discuss the way that we are going to
take matters forward. My colleague, Lord Davis, has met with several
key German and UK committee chairs, including Sharon Bowles, who
heads up the Economic and Monetary Affairs Committee, and Herbert
Reul, who chairs the Industry Research and Energy Committee, and
better regulation featured prominently in those discussions; and
I am going to the European Parliament in the New Year to promote
this agenda too. I also understand that we have contact at official
level with UK and German committee chairs and their assistants.
Q110 Lord James of Blackheath:
Beyond the early New Year, what are the other major objectives
that you have coming?
Ian Lucas: As far as better regulation is concerned?
Q111 Lord James of Blackheath:
Yes, so far as this process.
Ian Lucas: What I would like to be doing is
trying to broaden the focus of impact assessments and trying to
extend the idea of the Commission producing impact assessments.
For example, as regards any proposal being brought forward by
the European Parliament or the Council, to try and embrace impact
assessments from them too so that we have a more informed assessment.
Lord James of Blackheath: Thank you,
Minister. That is very helpful.
Q112 Lord Plumb:
I think my question follows closely the question you have just
been answering from Lord James. You used the phrase earlier to
Lord Whitty when you said, "Government takes the rap when
developing legislation", and I would suggest none more so
than with SMEs. It is the SMEs who perhaps are more critical of
general legislation because they find it more difficult to get
to grips with it, whilst there are people in perhaps larger companies
who can the better cope. But in this, of course, dealing with
the Commission, it is supposed by the test that is already set
by the Commission for the SMEs to encourage the Commission to
think small first when developing that legislation. Do you think
that is so? Do you think they are doing that and does it adequately
reflect in the impact assessment?
Ian Lucas: I feel very strongly about this small
business aspect, because I used to run a high street solicitor's
firm as a sole practitioner in Oswestry in Shropshire and I am
very conscious of the wide burdens imposed on small enterprises
of all sorts. Therefore, I think the fact of the SME test is a
very positive step forward. It is very early to assess it as far
the EU is concerned, but we were encouraged by the Commission
actually adopting a proposal to exempt micro-enterprises from
more complex EU accounting requirements, which we strongly support,
and we are also lobbying ourselves, the UK Government, to mitigate
the disproportionate cost of regulation on SMEs. So we think it
is now on the agenda in a way that it has not been before, and
it is a very powerful tool in terms of having it there to use
in argument as far as taking positions with other Member States
is concerned. We are early in the process as far as the impacts
of that are concerned, and I cannot come up at this stage with
concrete examples of what it has been able to achieve, but I think
it is very prominently on our own agenda and the recognition by
the EU institutions of its importance will be helpful in putting
the case forward from now on.
Q113 Lord Plumb:
I think a lot of people would welcome that answer, but at the
same time they would immediately come back and say, "We will
believe it when we see it", because they have heard this
so many times over recent years. The other question that concerns
them is they sayit may not be true but nevertheless they
say"We obey the law but does every other country?
Does the same impact assessment apply in all other countries?"
If you can explain to them that other countries do obey the law,
or at least give them that satisfaction, that may help at the
same time, of course, as reducing the amount of legislation and
the impact that that legislation has on their business.
Ian Lucas: I think there is a perception, which
I hear in my surgeries, that we abide by these regulations and
other countries do not. It is a difficult trick for me to pull
to say that other countries do not abide by EU regulations. I
am sure that they would say that they do and that they do enforce
them. But I think the fact that this is now on the agenda as far
as respecting the position of smaller enterprises and the fact
that the European Commission has adopted a proposal to exempt
micro businessesall of that is positive as far as smaller
businesses are concerned. You can be assured that I want (to use
that dreadful phrase) a level playing field as far as the EU is
concerned, because we want to be able to compete with all other
Member States on an equal footing and I do not want anything in
place that is going to prevent UK business from doing that.
Q114 Lord Rowe-Beddoe:
Following on, if I may, on this whole question of SMEs, actually
Lord Plumb dealt with the question of perception, but, in general,
I was greatly encouraged by your written responses because I think
that you were highlighting areas that are of great concern to
the SME sector. At least we have heard that in evidence. The previous
evidence that we have heard argued, for example, that the EU consultations
are too complex for SMEsthat is something which came throughas
well as they are too high level for individual stakeholders to
engage with. What are your comments to that?
Ian Lucas: I probably agree with that, but that
is too short an answer. I agree. I was talking about engagement
earlier on. One of the real dangers of any proposed legislation
is when it really adversely affects a particular business. It
is very difficult for a small business to keep abreast of what
all the proposals that are going around are from legislative bodies,
whether they be the Welsh Assembly Government, whether they be
the UK Government, or whether they be the European Union. I think
that the representative organisations do a very good job in this
respectpeople like the Federation of Small Businesses and
the Institute of Directorsand they try to keep an eye on
matters, and it is important that we make that as easy a process
as we can for them. I think that in government what we need to
be pressing for is as early highlighting of any legislation, or
draft legislation preferably, that comes forward as possible.
We need to have a close relationship with those representative
organisations and we need to encourage them to shout out loud
if there is something on the horizon, even, that is going to cause
difficulty or needs to be looked at in a different way. I also
think that we need to be as accessible as we possibly can to business
directly. We have tried to do that through organisations like
the Better Regulation Executive and using the website routes as
far as we possibly can, but I think more business needs to be
aware of the existence of that and the fact that they can contact
Q115 Lord Rowe-Beddoe:
Thank you. The other thing is, again, in support generally of
what you wroteand you used the disagreeable phrase of the
level playing fieldthere does seem to be an enormous lack
of joined-up thinking between the three parts of the European
Unionthe Council, the Commission and the Parliamentwhere
you are getting all this conflict, in fact. However, I have got
a last question. How could the system be improved in so much as
the cost of producing data that is required at times during this
consultation period is something, we have heard, which discourages
SMEs from participating? How can we address that and what are
the UK's comments?
Ian Lucas: I think, firstly, one of the difficulties
is that the consultation period that the EU uses is very short.
It is only eight weeks, which is shorter than you normally use
at the UK government level, and is a very demanding deadline for
a small business that is particularly affected by a proposal to
actually respond to, devote the attention to and then submit information
to. So I think that we need to think about extending that. We
think the SME envoy from the EU has a role in this and really
needs to promote the importance of engagement between smaller
business and the European Union: because I suspect that it is
a much more difficult task for a smaller business to engage with
the behemoth that is the European Union than perhaps some of the
larger organisations and multinational companies. We have got
a small firms consultation database, and we do use the Better
Regulation Executive website and encourage contact as far as we
possibly can with any proposals. I am a great believer in draft
legislation as well. I think it is important that any ideas that
are coming forward should be put forward in draft, if at all possible,
and that maximum consultation takes place, because the more consultation
that takes place the better for legislation at the end of the
Lord Rowe-Beddoe: Thank you.
Q116 Lord Dykes:
We are dealing with a system of the separation of powers, which
is new for British citizens but is very familiar to Americans,
and sometimes the Americans understand those processes more than
many citizens in European countries. Can I turn your attention
briefly, Minister, to the Inter-institutional Agreement, which
does provide that there should be impact assessments done on the
significant amendments to legislation by both the Council and
the Parliament, particularly when it is a major change, or a fairly
major change at least, suggested in the proposed draft legislation.
We are disturbed to learn that that is not apparently happening
as much as we might have expected. What is the Government's view
about that, and is there anything that might be done to alleviate
Ian Lucas: We think it is hugely important,
because if impact assessments are to work, then, clearly, the
assessments have to be made on the proposal that is actually going
to be implemented. It is no use having an impact assessment on
an original proposal that is then going to be amended substantially
and is, therefore, implemented an on entirely different basis
to the calculation on which the impact assessment was made. So
we think it is very important indeed that this should develop.
The European Parliament has begun to do some work in this area,
and we would like to see the Commission, perhaps, play a role
in this. I think that was highlighted in some of your earlier
evidence. There might be a slight degree of scepticism about the
impartiality of the Commission in this in that the suggestion
may be madecertainly not by methat they might try
to defend their earlier position rather than give informed advice
on an amendment, but I am not sure that that is a particularly
valid criticism. I think that it would be very helpful for there
to be a developing culture, not just in the European Parliament,
but also in the Council for any significant amendments that are
proposed at that stage to be supported by impact assessments.
Q117 Lord Dykes:
Would there be a danger that, if the Commission did do that off
its own bat, as it were, that would be regarded as slightly ultra
vires to say the least? Although everyone is getting entry
around the Lisbon Treaty procedures now, that will only unfold
as time passes, basically, and we are only just starting. So should
the Commission intervene with further assistance on IAs if the
EP requests it, or if the Council does as well, but mainly the
EP, I suppose, or should it just do it off its own bat anyway?
Ian Lucas: The Commission is developing some
expertise in producing the impact assessments. I do not think
that capacity is particularly there within the European Parliament
as yet. I am not sure whether the individual Member States would
be seen as sufficiently impartial to be able to produce their
own impact assessments, although I think that is better than having
no impact assessment, quite frankly. So I think the source of
the impact assessment is perhaps less important than the fact
of the impact assessment. Initially, at least, we should have
the information to try to have a more considered and informed
debate about substantive amendments.
Q118 Lord Dykes:
Would it be legitimate for a national impact assessment, both
from a government or a national parliament, to be made on the
basis of representations from one or more trade associations or
lobby groups and just taken as evidence of a problem which the
government or parliament would then pass on, or should it examine
the arguments itself before doing that?
Ian Lucas: I think we must examine the arguments.
I do not think any government should be simply relying on a lobby
briefing in order to make a proposal.
Q119 Lord Dykes:
After all, those groups can always lobby direct to the European
Parliament, as will happen more and more now.
Ian Lucas: Yes.
3 The actual figure is 269 Back