HC Deb 22 May 1996 vol 278 cc250-8 12.30 pm
Mr. Anthony Steen (South Hams)

It is always a delight to see you in the Chair, Madam Deputy Speaker— and an equal one to see my right hon. Friend the Chancellor of the Duchy of Lancaster present to answer this debate. Normally, Adjournment debates are answered by a junior Minister, so to have a Cabinet Minister present is a delight, particularly as my right hon. Friend is well known for his interest in, and campaigning zeal for, deregulation.

Deregulation is firmly part of the Conservative party's ideology and folklore, having been around for nearly 20 years. The 1979 manifesto commitments were concerned with freeing up the markets, creating less restriction for individuals and boosting an enterprise economy. The 1985 White Paper, "Lifting the burden", charted the deregulation course for the next decade. The message was simple: The amount of regulation which new and established firms face acts as a brake on enterprise and the wealth and job creating process. By January 1994 a deregulation task force had been established, headed by none other than Lord Sainsbury. Contemporaneously, another White Paper, "Cutting Red Tape", was published. In addition to the deregulation task force, which consisted of dozens of committees and hundreds of captains of industry, a special deregulation unit was established within the Cabinet Office, employing 43 officials especially chosen for their deregulatory fervour. The cost was £1.3 million per annum.

Parliament passed the Deregulation and Contracting Out Bill in 1994, and the Prime Minister threw his full weight behind the deregulatory initiative, saying that deregulation was at the heart of the Government's economic strategy. One year later, progress is at best disappointing and at worst deeply depressing. That Bill spent 16 hours and 11 minutes on the Floor of the House and another 92 hours and 56 minutes in Standing Committee. Among other things, it established the Select Committee on Deregulation—a fast-track system by which secondary legislation could be repealed, which has never been done before in the life of this Parliament or of this institution.

In 1994, the Government promised that they would refer one deregulation order a week to that Select Committee. Unfortunately, 100 orders never materialised. Instead, we have had to be content with 25 orders to date. They favour people who want to go greyhound racing, to go dancing on Sunday—I have nothing against that—to change the length of the school day and to sell salmon on Sunday in open markets in Scotland, and they allow local authorities to use their pay-and-display parking meters more flexibly. The Deregulation (Gun Barrel Proving) Order 1996 saves private business £200 but—wait for it— cost £10,000 to draft and print. To achieve all that, the Deregulation Select Committee has sat 34 times for more than 50 hours.

Deregulation has spawned an entire new layer of bureaucracy, created new buzz words and produced a new layer of Government. The Leader of the House, a Cabinet appointee and the Prime Minister are all concerned with deregulation—without it, some might not even have jobs. There is a deregulatory Minister in every Department.

Pamphlets, circulars, booklets and departmental reviews are churned out. Experts and advisers are to be found in local government, and even the Institute of Directors has deregulation advisers. The cost is enormous.

The Select Committee is just one deregulatory initiative. Lord Sainsbury's task force, which has been taken over by Francis Maude, is another. The task force suggested that 605 pieces of legislation were ripe for repeal, and the Prime Minister added another 400. Of more than 1,000 measures identified, 643 have been repealed—but few have had the impact that Conservative Members would like. Comparing that figure with the 7,845 statutory instruments added to our legislation since January 1994 puts the matter in perspective. Admittedly, many of those instruments correct complicated or inadequate primary legislation such as the Jobseekers Act 1995 and the Children Act 1989, but that does not explain the need for 3,243 new statutory instruments already this year.

The volume is reaching such a level that it is impossible for Members of Parliament or Ministers to scrutinise them properly. Why, despite Parliament's intentions, and the commitment by the Prime Minister and the Cabinet to deregulation—which I whole-heartedly support as a number one priority to help industry—is deregulation not happening? It is not an absence of intention or good will on the part of Ministers or officials, but a question of the long-standing culture and ethos of the country, whereby Ministers and Whitehall see their modus vivendi as passing bigger, better, longer and more complicated laws with cleverer and more experienced officials drafting, amending and improving them. The culture is not to repeal laws, reduce the volume of legislation, or cut the number of bureaucrats or red tape—although one would have thought from all the speeches and good intentions of Ministers that a great deal more was happening. Regrettably, there is a deep shadow between intention and action.

The problem is in the public psyche, which has been conditioned to believe that rules and regulations solve problems, when they do not automatically do so. All of us receive letters from constituents demanding that we introduce new legislation. How often do Members of Parliament receive letters demanding the repeal of laws? The public have been conditioned into believing that they are better off taking less responsibility. They suffer from the illusion, and the erroneous belief, that life is better being hemmed in by a false sense of security created by additional rules and regulations.

There are also the buzz words of safety, security and hygiene. One cannot change anything in legislation covered by those three words because they are sacrosanct and have a mystique with which nothing must interfere. If that perception is to change, rewards for goals achieved must be reversed. In future, civil servants should be promoted not for proposing and drafting new legislation but for finding a way of reducing the number of laws on the statute book.

Deregulation is unachievable until the root cause of regulation is tackled, which means a culture shock of gargantuan proportions. Inaction in legislative terms must no longer be viewed as sloth, but as prudence. Ministers should be judged not by the number of statutory instruments that emanate from their Departments but by the paucity of legislation coming from their offices. If the Government's aim is to lift the burden off the backs of the people, a stick and carrot approach must be introduced—a carrot for those who implement deregulation and a stick for those who do not.

Consider, for instance, the deregulation order—one of the 25—on building certificates. It is said that the saving to business will be £68,000; but only recently it has emerged that there will be an additional cost of £350,000 for employing more local government officials to take over the administration. So the money saved to private business is simply transferred, six times over, to local authorities. The stick should have been used in this case.

The cost compliance assessment is another example of the shortcomings in this process. The Government rightly insist that such an assessment accompany every piece of legislation, highlighting the additional burden on private industry imposed by the legislation. Unfortunately, the compliance cost assessment does not highlight the additional costs to Government and local government. That excellent idea—emanating, I think, from the Prime Minister—is thus defective because it deals only with the additional costs for private enterprise, not with those for the public sector.

The culture Shockwaves must not stop at Dover: they must cross the channel to Brussels, from which directives, rules and regulations are spewed out at an alarming rate. The number of directives, to be sure, has declined, from 66 in 1993 to 19 this year, but the number of rules and regulations has otherwise continued at nearly 1,000 a year. They are so dispatched that most manage to avoid scrutiny by the European Parliament, the Council of Ministers or Westminster Members. Commission officials are using a procedure that denies every Parliament in Europe the opportunity to challenge the Commission's official view. Bureaucracy in Brussels has found a device in the treaty of Rome enabling it to erode the fringes of our lives, but with no accountability.

That is fundamentally wrong, and if the Brussels bureaucracy were not enough, our own officials compound the problem by hijacking European directives and adding burdens to them, going beyond the minimum requirements in the directives. The result is even more obligations imposed on those who live in Britain.

Gold plating has been outlawed by Cabinet Ministers in terms similar to those used by the Secretary of State for the Environment, who pledged last November on the Floor of the House that he had a strict rule that no European legislation could be gold plated in his Department. The Minister for Agriculture, Fisheries and Food has said something similar. What about all the gold plating that has already taken place? It has been going on for nearly 25 years. Why do we not pull out all those directives and remove the add-ons from them?

Mr. Iain Duncan Smith (Chingford)

I have come in specifically to listen to my hon. Friend's speech. One of the core problems, surely, is that civil servants here and in Europe want to tidy up the process of democracy and get things running quickly and smoothly. Therein lies the problem with statutory instruments—the more quickly we ram them through this place, the less chance there is to consider them carefully. If people have the opportunity to examine them slowly and ask questions about them, there is more chance of their emerging in the right form.

Should we not try to change the system here and return to scrutinising more of the documents on the Floor of the House, to slow them up?

Mr. Steen

I am all for anything that will stop this place becoming a county council and power leaking away to the Brussels bureaucracy. I am most grateful to my hon. Friend for joining in this important debate.

In answer to my parliamentary questions to all Government Departments suggesting that we remove the add-ons, Departments wrote to say that they could not even tell me how many add-ons there have been in the past three years, let alone the past 25, because the exercise could be done only at "disproportionate cost". Disproportionate to what?

In the past three years, the Department of Trade and Industry has implemented 33 directives; MAFF has implemented 113. Surely, with our modern technology, officials could find out which of those directives have been added to. If they lack the time, what about using the 43 staff in the deregulation unit? They could be put to work on this important task straight away.

A good example of the damage done by gold plating is a small oyster farm in my constituency which, for the past eight years, has successfully sold about 70,000 oysters a year. It has been vetted and approved by the local environmental health people from South Hams district council. The farm uses a system that recycles sea water— a system introduced by Captain Philip Gibbon, a well-known environmentalist who is hostile to pollution.

The proprietor uses a system that is entirely consistent with the rules in the European Community's shellfish hygiene directive 91/492/EC. There are seven identical farms in the Netherlands which seem to operate successfully without falling foul of Dutch or EC law. The problem, therefore, is not the local health officers but the Government's officials in Weymouth, who are refusing to grant a licence to Captain Gibbon.

The problem is further compounded by the lack of an appeal mechanism. During the passage of the Deregulation and Contracting Out Bill, I and other colleagues pressed for a local appeals mechanism. If officials and business men disagreed locally, there should be an appeal procedure in the local magistrates court, we argued. The Government opposed the idea; two years later, all we have is a consultative draft statutory instrument—yet another one.

So Captain Gibbon has nowhere to go. He has closed the plant. Do we want to create small firms or close them? Ours, after all, is supposed to be the party of small business. Yet Captain Gibbon has been clobbered by regulatory initiatives and the zeal of MAFF officials. All he can do now is go—believe it or not—to the European Commission; or he can take up the suggestion of the Fisheries Minister and go to the Ministry with the chief environmental health officer of South Hams district council and MAFF officials, whereupon the Minister will try to act as judge in the case.

Deregulation is just not happening in the way we were promised. It is proving much more difficult than we thought at first. A stick and carrot approach should be introduced: promotion for those who deregulate and demotion for those who do not. Let us get rid of private Members' Bills in their current form. What we want are private Members' deregulatory Bills. Members in the new Session should be allowed to introduce only deregulatory measures, not new legislation.

I also suggest a review of the gold plating on all the directives implemented here over the past 25 years. That should be done in the next three months by the deregulation unit in the Cabinet Office. Just as the Treasury approves all Government Departments' expenditure, the Cabinet Office must do likewise for all statutory instruments, directives, rules and regulations emanating from Government Departments. The Cabinet Office should vet every statutory instrument and should have a Treasury-like veto on deregulation. The Minister could make a great deal of progress in this area.

Compliance cost assessments should include the additional cost to the public purse, not just that to the private purse. They should also list the numbers of additional officials and the cost of employing them incurred by any new deregulation measures. Above all, we must work for a change of culture, in Whitehall and at Westminster so that, with renewed vigour, we can tackle the blanket of red tape which continues to suffocate enterprise and unnecessarily to hold back our national economy.

12.48 pm
The Chancellor of the Duchy of Lancaster (Mr. Roger Freeman)

I welcome the debate and congratulate my hon. Friend the Member for South Hams (Mr. Steen) on it. It is noticeable that, while Conservative Members take an interest in the subject of deregulation, not a single Opposition Member is here for the debate. We have noted not just the Opposition's lack of interest but even their hostility to the notion of deregulation, to the unit in the Cabinet Office and to the deregulation task force. We have an immense task before us, and I thank my hon. Friend for taking such a close interest in it.

I sometimes feel like a remote descendant of King Canute. The tide of legislation—primary and secondary, European and domestic—keeps coming in, and one does one's best, with the help and support of my hon. Friend and Government colleagues, to stem it. As life becomes more complicated, we inevitably need more regulation, but it has to be better and simpler. When we introduce new regulations, we must take the opportunity of repeal.

My hon. Friend rightly referred to the need for a change of culture. That change of culture must occur not only in Whitehall, but in Brussels. I shall have something to say about that in the remaining 11 minutes of the debate.

My hon. Friend was right to stress the importance of small businesses and the impact of regulations on them as employment growth depends on small businesses. I have long believed that regulation should be a rhetoric-free zone. The devil is in the detail. It is boring, it is difficult and, as the Duke of Wellington used to say, it is very hard pounding, but it is essential work.

I shall divide my remarks equally between a brief resume of what we have achieved so far and what we need to do. I note from the Order Paper that tonight we shall be asked to vote on three excellent deregulation measures resulting from the deregulation and contracting out procedure. My hon. Friend is right to say that we have laid only 26 such measures and 12 have become law so far, but more significant measures will be laid.

I commend the cheque truncation order, which will save the banking industry many millions of pounds by avoiding the unnecessary circulation of old cheques once they have been drawn, debited and credited to accounts.

The compliance cost assessment procedure is working reasonably well. I take my hon. Friend's point about public sector costs and I shall look again at that part of the procedure. We have just published a new booklet on the other side of compliance cost—the risks and benefits to society of proceeding with legislation. I commend that new booklet to the House and I have circulated it to all Departments. In respect of all legislation—primary, secondary, European and Whitehall generated—we should be looking at the cost and the benefit and taking a deep breath and deciding not to proceed when Ministers are not convinced that there is an overwhelming case for proceeding.

We are looking at statutory instruments ex poste—or after Ministers have approved them. I shall say more about that in a moment. In respect of Europe, I am going to Brussels on Tuesday, to the Internal Market Council, which will consider a resolution that I hope will commend itself to most countries. It instructs the Commission to adopt new policy procedures in respect of the impact of regulations on small firms and to reaffirm the principle of proportionality, and it urges the Commission to draw up directives that are goal based and not prescriptive.

I am pleased that the Commission has adopted new procedures—before agreeing directives and proposing them to Councils of Ministers—on the principle of consultation, assessing the costs, improving the principle of the fiche d'impact system that has operated for a number of years—I believe, unsatisfactorily—and re-emphasising the need for subsidiarity, that is, not legislating in the first place if it is not necessary.

I am pleased that, since November, when we began our campaign in Europe, we have reaped some modest fruits of that effort. We have achieved an exemption for unit pricing for small businesses. That is a small but welcome step forward. Following the Internal Market Council meeting on Tuesday, the Commission will set to work on codifying and simplifying blocks of legislation in respect of Intrastat—documents dealing with imports and exports in Europe—and construction products in an attempt to simplify the regulations to enhance Community trade. I hope that next year we shall simplify regulations on machine standards and food hygiene.

We have published a new checklist for Departments dealing with gold plating. My hon. Friend is absolutely right to focus on that and I have to admit that he is correct. We are now looking to stop gold plating. My Department does not have the staff or resources—even with my 42 excellent civil servants—to go back not just 24 years to accession, but 700 years of statute law.

I also have good news to report. Yesterday, my right hon. Friend the Minister of State at the Home Office announced the proposed new fire regulations. I am delighted to say that there is no gold plate on those proposed United Kingdom implementing regulations following the European directive. It has been a long, hard-fought battle involving proper discussion between all Departments, but we are not imposing measurable financial burdens on British businesses by implementing those regulations.

Mr. Steen

I congratulate my right hon. Friend on his achievements with the new fire regulations. I know that he has fought long and hard and he has managed to put out most of the fires. If his Department does not have sufficient staff, could he not ask other Government Departments that have tens of thousands of officials to help? Each of his Cabinet colleagues could be responsible for looking at the past three years gold plating in the directives relating to their Departments.

Mr. Freeman

Yes, I shall, but not necessarily in that precise way to that or time scale. It is important that we review what has happened in the past.

Sir Donald Thompson (Calder Valley)

I admire the way in which my right hon. Friend has stuck to his task of deregulation, which often resembles wading through treacle. Perhaps one of his civil servants could make a list of our successes—telephones, airways and even lifts come to mind—to be circulated among our partners in Europe to show that deregulation really works.

Mr. Freeman

I gratefully accept my hon. Friend's excellent suggestion. I had it in mind to produce something during the summer describing exactly what we have done so far and our plans for the future. I might consult my hon. Friend on its exact form and content.

Mr. Duncan Smith

Will my right hon. Friend give way?

Mr. Freeman

Perhaps my hon. Friend will allow me briefly to make progress as I would like to outline our plans. We need to review existing directives. I would single out the electromagnetic compatibility directive, which is causing many problems.

I would like to lay shortly our model appeals order, which will be open to Departments to include in their own primary legislation so that we have a sensible procedure for appealing to tribunals. I take the interesting point made by my hon. Friend that there could be an anomaly in respect of his constituent's oyster farm. We are proposing a new procedure to appeal to tribunals, but not to magistrates courts. I believe that my hon. Friend's constituent has a right of appeal to a magistrates court under the food safety legislation, but only on a point of law and not on the merit of the case. So the debate has raised an important matter that I shall now review.

Mr. Duncan Smith

As my right hon. Friend the Leader of the House is sitting next to him on the Front Bench, perhaps my right hon. Friend could pass on to him the suggestion that the House should have a better mechanism to slow down the process of debate, which is not good enough. If the statutory instruments procedure allowed for a further stage of consideration, that would help.

Mr. Freeman

I take that point. I am grateful to my hon. Friend for putting it on record once again. I know that my right hon. Friend the Lord President will read the record of the debate and note that point.

Let me deal with two final points, both of which are extremely important. The first relates to enforcement and the right of appeal—not necessarily in a legalistic sense— and to the problems of disproportionate enforcement at the point of the consumer and how the average citizen is affected by an enforcement order or procedure initiated by a trading standards officer, an environmental health officer or a health and safety executive officer. We have in place, by following the procedures of sections 5 and 6 of the Deregulation and Contracting Out Act 1994, a mechanism by which one can ask the official for a written explanation of the procedures, but we should consider going further. I should like to consider carefully, possibly with the advice of my hon. Friends who take an interest in deregulation, how we can empower the citizen and give the citizen the right to raise quickly and automatically a concern about the method by which a regulation is enforced.

On the flow of legislation, I am not convinced that we need a single conduit through which all statutory instruments flow in the Cabinet Office. That would be unwieldy, although I shall reflect on it. I would like all Departments to use the compliance cost assessment and risk assessment principles properly, and all Ministers to be satisfied in all instances of statutory instruments affecting business and industry that proper procedures have been followed.

I should like to reflect further on the general procedures through which we handle statutory instruments. There are 3,000 a year, although probably no more than 1,000 affect businesses and industries. I am grateful to all my hon. Friends who, unlike Labour Members, take an interest in deregulation. I look forward to working with them.

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