Business Deregulation

HC Deb 30 June 2004 vol 423 cc366-407

Mr. Deputy Speaker (Sir Michael Lord)

Mr. Speaker has selected the amendment in the name of the Prime Minister.

5.1 pm

Mr. Stephen O'Brien (Eddisbury) (Con)

I beg to move, That this House regrets the decision of the Government to replace 'deregulation' with 'better regulation' and condemns its failure to deliver deregulation for British business; is alarmed that the Government is unable to quantify the number of new regulations generated since 1997; deplores the fact that the total cost of major regulations to business approved since 1998 now exceeds £30 billion, and notes with concern the negative consequences this is having and will have on small businesses in particular; further condemns the Government's decision to agree to a European Constitutional Treaty that will extend the legislative competences of the European Commission; calls on the Government to take urgent measures to reduce the burden of domestic and European regulation on British business; and further condemns Labour MEPs for voting in the European Parliament in favour of the Agency Workers Directive and the extension of the Working Time Directive in the UK. I draw to hon. Members' attention my declaration in the Register of Members' Interests. I have given the Secretary of State for Trade and Industry notice that I cannot be present for the winding-up speeches, and I am therefore disappointed that she has chosen not to turn up and focus on such an important subject. It is yet another example of her refusal to come to the House for a debate in Opposition time. She was not present when we held an Opposition day debate on post offices. As ever, the Government pretend that they need put up a Secretary of State only when a member of the shadow Cabinet is present. That is nothing to do with them. I am the Secretary of State's shadow and she should be here because business deregulation is a major issue for the future competitiveness of this country. There is a lack of will on the Government's part to take that seriously.

I welcome the debate, on Conservative initiative and in Opposition time, on the vital topic of business deregulation. If previous Conservative Administrations had not clearly understood and acted on the importance of setting business free, Britain would remain the sick man of Europe rather than being one of its eminent models of flexibility, at least until recently.

However, it is already clear that the 21st century global economy will be unrecognisable from that of the latter half of the 20th century. Liberalisation of markets through the World Trade Organisation, the enlargement of the European Union, the birth of the tiger economies, the prodigious rise of China and India, which compete not only on the basis of low wages but on high skills—each has 750,000 graduates every year—are all factors that drive up competitive pressures as never before.

Against such a background, it is time to audit the Government's actions—or, more accurately, inaction—on deregulating business since 1997 and to examine the implications of their policies for our productivity growth and competitiveness. I shall highlight the Conservatives' political will and practical, deliverable programme in government to identify and reverse the drivers of over-regulation of British business, which has suffered under the Labour Government.

In the 2001 manifesto, the Labour party made the following commitment: We will cut the time small firms spend on dealing with regulation". That followed the Prime Minister's pledge in 1998: Where regulations or alternative measures are introduced, this should be done in a light touch way". In the light of the Prime Minister's enthusiasm for a political debate based on reality rather than myth, I hope that the Minister—I had hoped it would be the Secretary of State—will acknowledge that the evidence suggests that, far from decreasing the amount of time that UK businesses, large and small, spend dealing with red tape, the Labour Government have increased it by an average of six hours a week per employer.

A CBI survey from the end of 2003 showed that 95 per cent. of UK businesses—an incontestable statistic in any survey—confirmed that they were having to spend more time dealing with red tape than they were five years ago. The most recent KPMG survey of small and medium-sized enterprises found that complying with regulations and red tape was the single issue of greatest concern, eclipsing other worries such as skills shortages, the rise in insurance premiums, and pension scheme deficits. In fact, the burden of regulation, which particularly and disproportionately affects small businesses, is now getting so out of control that a Select Committee report from the other place, published earlier this year, on the accountability—or rather, the lack of it—of regulators includes the following evidence from a group of financial advisers: The FSA handbook is vast and almost incomprehensible—the only way to look at it is via the search engine on the FSA website as apparently if printed out it would stand nine feet high". It is dispiriting—if not surprising, against such crushing regulatory odds—that a fortnight ago, HSBC cut 3,500 jobs from its British work force, taking the total of UK job losses to 7,500 over the past 12 months. HSBC blamed the £200 million extra cost of new financial regulations.

Mr. Nick Hawkins (Surrey Heath) (Con)

In the light of the important points that my hon. Friend has just made, would he agree that one of the things that particularly irritates businesses—especially small businesses, including many in my own area—is that when they try to ask the relevant Government Department legitimate questions about regulations, they are often told that they have to look at the Department's website? Many small businesses do not have the time or the facilities to spend hours looking at Government websites. The Government have an obsession with this. Does my hon. Friend agree that the point that he has just made particularly concerns small businesses?

Mr. O'Brien

My hon. Friend is entirely right. His understanding of the position is accurate. Naturally, I am glad that there is a website for people to visit; in many ways, that is progress in itself. At the same time, however, this shows the Government's lack of experience and achievement in customer service, given that the taxpayers money—businesses' money—is being used to provide a service to the very businesses that feel let down by the Labour Government on the ground that the information is not being produced in a customer-friendly way. A recent survey showed that only 17 per cent. of businesses recognised the schemes that were available to them from the Department of Trade and Industry. Furthermore, the Secretary of State herself has said that many of the schemes are not a useful use of taxpayers' money.

I was a former FTSE 100 manufacturing industrialist and small business operator before I entered Parliament five years ago, so I understand that a certain level of regulation will always be necessary. I also know from my experience of actively doing business in more than 10 countries on the continent that some EU legislation, particularly in relation to the internal market, has been positive in working against protectionist practices on the continent.

However, speaking from the perspective of someone who has had to comply with, rather than produce, business regulations, I see two things very clearly. First, it comes as no surprise to me—although it may to Ministers, who have no direct experience at the sharp end of business—that, as the Government have increased the time businesses have to spend dealing with red tape by more than 200 per cent. since 1997, as the last week's Peninsula survey confirms, there has been a corresponding reduction in productivity growth. That growth rate is currently barely more than half of what it was between 1993 and 1997.

Secondly, if an extra £30 billion has been placed on UK businesses since 1998—as the latest British Chambers of Commerce burdens barometer has calculated—it was inevitable that UK competitiveness has plummeted from fourth place in 1997 to 15th place today, as the World Economic Forum rankings testify.

Mr. John Redwood (Wokingham) (Con)

I am grateful to my hon. Friend for giving way, and I have declared my interests in the Register.

Is it not the case that 600,000 manufacturing jobs have already been destroyed under this Government, many of them by excessive regulation and taxation? They have been destroyed by the very Government who came to power saying that they were going to be good for manufacturing. Is that not a disgrace?

Mr. O'Brien

I am grateful to my right hon. Friend. No one is more assiduous than he in standing up for the interests of the wealth-creating and risk-taking part of our economy.

I mentioned the example of HSBC. Things have been tough for manufacturing for some time, however, particularly given the globalisation of manufacturing. Many have gone out of business that need not have done. The Government, through their control and command, have placed on those businesses regulations that have been both burdensome and unnecessary, to seek to achieve changes of behaviour that winning businesses would in any event have adopted for themselves. That is not a position that the UK can afford to be in.

David Frost, the director general of the British Chambers of Commerce, is absolutely correct when he says: Business is being held back by administrative costs and burdens. The great strength of the UK economy is its flexibility and if we are to successfully compete globally we must maintain this flexibility. Precisely for that reason, I have recently written twice to the Secretary of State, asking her to censure, and distance herself from, Labour MEPs who have voted on more than one occasion to scrap the UK opt-out from the 48-hour working week component of the working time directive, worth at least £9 billion a year to employers. Likewise, they have voted in favour of the temporary agency workers directive, which the CBI says would cost up to 160,000 jobs if implemented in the UK.

I regret to say that the Secretary of State has not answered either of my letters—and even worse, she has not bothered to turn up today. Until she is prepared to admit that the behaviour of her MEPs is unacceptable, she and her team will have to accept the charge that she and they are dangerously relaxed about the loss of UK plc's hard-won flexibility, against which she fought tooth and nail in opposition and on which the Liberals would only ever have an opportunity to chunter, as they would not understand the position—[Interruption.]

As we are no doubt about to be reminded—as the Liberals seek to say things from a sedentary position, which is where they are best left—the Government have taken superficial action to reduce the burden of regulation against UK business. On the surface, it is difficult to reconcile the various taskforces and eye-catching initiatives launched since 1997 with the fact that the Financial Times recently carried an editorial in which it asserted that this Government are so ideologically enamoured of regulation that it has become "the new Clause Four". Businesses effectively regard increased regulations as taxes by another name.

This Government's failure to take substantive action to deregulate, and their stubborn commitment to over-regulation, is explained by three factors. First, there is the natural inclination of a Labour Government to big government state interventionism. That has shown no sign of abating under nannying new Labour. According to the House of Commons Library, in the six full calendar years of Labour Government, the number of regulations passed total 23,322. On average, that is 3,887 per annum or 14.95 regulations every working day. That is up 53 per cent. on the number under the last Conservative Government.

Secondly, there is the burgeoning bureaucracy that naturally accompanies a big state. That bureaucracy is now so unaccountable that the Better Regulation Task Force recently admitted that it does not even know how many regulators there are—not "regulations", as it is misprinted in the Order Paper, although it does not know how many of those there are either. That is precisely the problem: it does not know what the cost of regulation is as a proportion of GDP.

Thirdly, on top of those domestic factors, there lies the superstructure of a centralising European Commission, whose legitimacy is not derived from a direct democratic mandate but a technocratic imperative to legislate and to regulate.

The combination of those three—an interventionist Labour Government, an out-of-control bureaucracy and a power-hungry European Commission—amounts to a hurricane-force storm of over-regulation, which the UK may not have the means to weather in the new, ferociously competitive global economy. That nexus of circumstances has created a serious structural presumption by this Government in favour of regulating in response to any given problem. In a context like that, the Government's initiatives to promote so-called better regulation are tokenistic and ineffectual.

Take regulatory impact assessments, for example. When they sign off an RIA, Ministers are required to assert that the benefits justify the costs. That, however, is a very different proposition from saying that the benefits must outweigh the costs. Justifying regulation is a considerably more subjective and ideological exercise than an objective measurement of estimated financial costs and benefits, which, incidentally, reveals that in 2002–03, the recurrent costs of regulation recorded in RIAs were almost 10 times the recurrent benefits.

Regulatory impact assessments are potentially useful instruments, but they are used neither effectively nor efficiently by this Government. That is demonstrated by a recent parliamentary answer that I received from the Minister for Small Business and Enterprise, who is in his place, on the subject of the costs to business of regulation: Information in relation to the estimated benefits and costs to business is provided in the regulatory impact assessment and is best read in the context of each individual RIA."—[Official Report, 22 June 2004; Vol. 422, c. 1319W.] Reading the estimated impact on business of regulation on a case-by-case basis is the worst strategy that could be adopted. If the problem of over-regulation is ever to be confronted successfully, it will be essential to replace that short-sighted approach to so-called better regulation with the more dynamic approach to deregulation pursued by an incoming future Conservative Government. That would represent a significant culture change, as it would involve assessing regulations by reference to their cumulative impact on business—in other words, in their totality, a favourite Labour word, rather than in isolation, and having regard to the actual drivers of regulation as well as the existing stock of statutory instruments.

I have given my full support to an excellent ten-minute Bill proposed by my hon. Friend the Member for Tunbridge Wells (Mr. Norman), who is present. It would require the independent post-auditing of regulatory impact assessments and their independent assessment in the first place. That would help to ensure that the collective costs of regulatory impact assessments did not outweigh the benefits.

Earlier this year I launched a business deregulation panel to advise me on practicable policy recommendations from a business perspective, on the basis of an analysis of what we have identified as the five principal drivers of over-regulation. They are the EU—of course—gold-plating, Government policy, administrative creep, and compensation culture. That analysis has been published in a pamphlet by the Conservative Research Department policy unit, and is available on www.conservatives.com/policies. I have a copy here.

The business deregulation panel consists of representatives from the Institute of Directors, the Federation of Small Businesses and the British Chambers of Commerce, as well as the economist Ruth Lea and senior figures from the business world including Martin Barrow, Malcolm McAlpine, Lord MacLaurin and Sir Paul Judge. I shall announce the Opposition's policies on deregulation in more detail following its recommendations, between now and the general election.

Let us look at the Government's record on business deregulation. The so-called flagship initiative overseen by the Cabinet Office is the regulatory reform action plan. It consists of 650 so-called deregulatory measures. I say "so-called" because, for instance, one was the creation of the new super-regulator Ofcom. There is, by the way, no implementation timetable: consequently almost two thirds of the measures remain unimplemented.

In his pre-Budget report statement in December 2003, the Chancellor announced 147 regulations for reform or removal that would be incorporated in the regulatory reform action plan. It subsequently emerged that only 25 per cent. of those 147 deregulatory measures—according to Ernst and Young—related to tax and red-tape issues affecting business. In fact, I recently received a parliamentary answer on the subject from the Financial Secretary, who conceded that Among the measures to reform there were several measures with direct benefits for business".—[Official Report, 17 June 2003; Vol. 422, c. 1045W.] So from 147 business deregulation measures, we are down to "several". In any case, given that the Government introduce an average of 15 regulations every working day, it has taken only about 10 days to replace the repealed regulations, even if they all related to business—which they clearly did not.

Another regulatory reform action plan of which the Chancellor speaks smugly was produced by the European Commission in 2002. The Commission's plans formed the basis of the joint initiative on regulatory reform announced earlier this year by the Chancellor and Finance Ministers of Holland, Luxembourg and Ireland. Here is the problem: at the heart of Government, the Treasury insists The scope of this programme includes reform or removal of existing legislation which is in force".—[Official Report, 27 May 2004; Vol. 421, c. 1727W.] However, the Commission's text is 100 per cent. clear: Our aim is not to deregulate or to interfere with the executive's or the legislator's prerogatives, and certainly not to restrict the Community's freedom of action". Perhaps it was the Chancellor's pique at being thwarted by the Commission that prompted him to tell the European Scrutiny Committee in April: it is unacceptable that 50 per cent. or more of regulations come from the European Union". Let me repeat that, for it is an astonishing admission. The Chancellor of the Exchequer believes it is "unacceptable" that 50 per cent. of regulations come from Europe. Where has he been for the last six years? He is not an innocent victim, but the Chancellor of a Government who, since 1997, have implemented more EU directives than had been implemented in the whole of the last quarter of a century. In that case, why on earth does he want to sign up to the new EU constitution, when it has emerged that the Government's own legal advisers admit that it will give European judges powers to erode the flexibility of the UK's labour laws via the charter of fundamental rights?

It is truly a bizarre spectacle. The Chancellor says that the level of regulation from the EU, which has cost British businesses £25 billion since 1998, is unacceptable, although he will happily sign up to a constitution that will extend the EU's legislative competences. Meanwhile, the Prime Minister says that "no one will support" an attempt to renegotiate the treaties that have transferred precisely those competences to the EU. In the Blair myth-making world, supinely and irresponsibly reflected in the Government's amendment to our motion today, which tries to claim that the debate is about being in or out of the EU, does that mean that the Chancellor wants to be out of the EU, or just out of his present job and into his next-door neighbour's?

The Chancellor's blundering admission also puts the Secretary of State for Trade and Industry—and her representatives today, as she is not present—in an uncomfortable position. It is the Secretary of State's habit to label as an extremist anyone who highlights the negative economic impact of Brussels legislation on British business and calls for a corresponding reduction of such legislation and legislative powers. They are no such thing. I hope that British business has taken note of the outrageous insult it is to all those risk-taking, wealth-creating business men and women that the right hon. Lady sees her job as getting in their way, rather than getting out of their way. It would be helpful if the Government and their Whips had not sought to peddle complete untruths in their amendment, which seeks to suggest that the Conservatives stand for withdrawal from Europe. That is the precise opposite of what is on the record, and of our policy.

Signing the EU constitution would be the final nail in the coffin of the Government's failed attempt to deregulate British business, given the already inordinate and disproportionate costs to UK business from EU-derived regulation. Recent research by the Conservatives in the House of Commons Library found that more than 60 per cent. of legislation is now European in origin. More than 80 per cent. of regulatory costs to British business since 1998 have resulted from Acts of Parliament that implement EU directives. That finding is astounding, but equally so is the fact that no one in the Government has ever bothered to establish for themselves that four fifths, or £25 billion, of the £30 billion cost of regulation to British business comes from Brussels.

Of course, some of the cost of overregulation is a result of the overzealous implementation of European directives into UK law—the phenomenon known as gold-plating. That appears to be another area of profound confusion for the Government. The Foreign Secretary recently told the CBI that we must ensure that we do not impose extra burdens on British business by 'gold-plating' EU legislation when we transpose it into our national law. Meanwhile, the Minister for the Cabinet Office recently informed me in a parliamentary answer that the Government explicitly reserve the right to gold-plate, when he stated that "Cabinet Office guidelines" include options that could go beyond the minimum necessary to comply with a European directive … particularly where the original directive is unclear"—[Official Report, 30 April 2004; Vol. 420, c. 1319W.] If directives are unclear, surely that requires earlier action to amend or forestall them. We should stop them in their tracks, not, as the Government prefer, gold-plate them just in case.

The problem of gold-plating is compounded by the Government's failure properly to scrutinise directives in the first place. An independent report on gold-plating recently commissioned by the Foreign Office states: During negotiations on a Commission proposal for a Directive, the UK is often represented by a junior officer with no legal training or experience, who attends meetings in Brussels without support, in particular full-time legal support". That situation is clearly unacceptable, and a future Conservative Government would take urgent measures to ensure that the British representative was appropriately senior and authoritative, and had the appropriate legal backup, to ensure that the UK representation at that vital early stage in the regulatory process was more effective—not least, that it could head regulation off.

The substantial facts about Labour's failure to deregulate business are glaring. Deregulation is for Labour Members a word like "constitution"—they whisper it, or fear to use it. We will shortly hear much rhetoric about better regulation and regulatory simplification, but those are smoke and mirrors: mechanisms, processes and structures that seem to do everything but reduce the amount of regulation coming out of the conveyor belt of Westminster, Whitehall and Brussels. A case in point are the regulatory reform orders, which one of the Secretary of State's predecessors described as a powerful and flexible tool to strike down or change unnecessary or over-complex regulation when they were created in 2001. Between 2001 and 2003, the Government passed 12,450 new regulations. How many regulatory reform orders did the Department of Trade and Industry introduce in that time? One. That would be comic, were the issue not so serious.

When Labour Members speak, they will tell us that previous Conservative Governments regulated. Of course they did, but they did so half as much as this Government, averaged out on an annual basis. In case there is any remaining doubt that the Conservatives are the only party to take business deregulation seriously, let me say that the Leader of the Opposition, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), has already made it clear that a future Conservative Government would include sunset clauses wherever possible in new regulations originating in the UK, would seek the return to our national control of the matters covered by the social chapter and would seek a genuine application of the principle of subsidiarity by returning powers from Brussels in much the same was as, for example, the current Dutch Government suggested earlier this month that they would like to do. Indeed, the contrast between the Dutch Government, who recently submitted to Brussels a list of 2,500 EU regulations for removal, and this Government, who sent the European Commission only a vague letter mentioning just 13 directives as "priorities for simplification"—as we know, that does not mean deregulation—was extremely telling. That shows how seriously the Dutch, and how weakly the British Government, treat the subject of over-regulation of business.

Mr. Michael Fallon (Sevenoaks) (Con)

Is my hon. Friend aware that when we in the Treasury Sub-Committee visited the Netherlands, we met at the Dutch Finance Ministry a director of legislative burden who had a staff of 17, and who was charged with reducing the administrative and regulatory burden by 25 per cent. over four years? They were getting on with it; why cannot our Government?

Mr. O'Brien

I am delighted to hear of that experience. Of course, to change the culture of politicians and those who work in Whitehall, we need to incentivise them to be deregulators and to recognise that it is only the wealth-creating side of the economy— business—that gives our democracy the choices that we rightly demand and need. So it is absolutely critical that we make sure that the Government put in place the proper incentives to achieve such a change in culture and management. It is clear that such incentives are woefully lacking, because of the lack of political will on the part of this Government.

David Taylor (North-West Leicestershire) (Lab/Coop)

Will the hon. Gentleman not give at least some credit to the Government for their successes in the field of deregulation? I am thinking in particular of the statutory audit of companies. In 2000, the turnover limit was lifted to £1 million a year, thereby exempting some 150,000 companies from the requirement to have a statutory audit. This year, the limit was raised to some £5.6 million, thereby exempting a further 70,000 companies. Surely measures such as statutory audits are much more cumbersome and onerous than many of the regulations to which the hon. Gentleman is referring.

Mr. O'Brien

I have some respect for the hon. Gentleman's views and experience, and I am very glad that this Government have sought to follow the trajectory adopted by the previous Conservative Government. Of course, value thresholds must be revised in order to keep pace with events. In a prosperous economy such thresholds will not last for long, which is what we would wish for such businesses.

More importantly, we should set against such considerations the various measures introduced in recent employment relations legislation and through the implementation of the information and consultation directive. As a result, exemptions do not apply all the way down the chain of companies. Such measures have to be taken into account in determining the real costs to business. We need to consider the resulting effect on management time, distraction of attention and confusion, along with a lack of access to appropriate information and to quality, affordable professional expertise.

Such issues need to be set against the point that the hon. Member for North-West Leicestershire (David Taylor) rightly makes, and we need to consider them as we examine our approach to deregulation, rather than picking out a single element. A Government who are neither familiar nor comfortable with the idea of the risk-taking, wealth-creating side of the economy will inevitably try to regulate it to fit in with their own culture. That is in contrast with the Conservative party, which understands that a democracy is best underpinned by—and is most likely to deliver quality of life, confidence, security and prosperity for its citizens through—a well-supported but ultimately undistracted business community.

My hon. Friend the Member for Huntingdon (Mr. Djanogly) introduced a ten-minute Bill to allow individuals or businesses adversely affected by proven gold-plating to force the Government to delete unnecessary provisions, or to revalidate them through primary legislation. Like the Bill proposed by my hon. Friend the Member for Tunbridge Wells, this Bill is a powerful potential weapon against the over-regulation that has been completely ignored by the Government, despite the fact that we have sought to be constructive by introducing such measures.

Mr. Redwood

I thank my hon. Friend for his generosity in giving way. I am delighted that he is against gold-plating, which is a very serious problem. But has he noticed that through the draft constitution, the EU will have a much more wide-ranging power to legislate directly, through both primary and secondary legislation? In some cases, commissioners will be able to put through secondary legislation with no reference back to elected politicians. Does that not mean that under the constitution—if it is accepted, and if the British people are foolish enough to vote for it—we will have gold-plating with knobs on from Brussels across the board?

Mr. O'Brien

I am grateful to my right hon. Friend, who will have heard the points that I made in precisely those terms earlier in my speech. I fully support his analysis.

The real issue, of course, is very much part of what happens in Europe today. I have had considerable experience of businesses trading across Europe and I know that businesses recognise a difference of approach. We know that one of the merits of our Anglo-Saxon culture—seen in America, Australia, Canada and here—is that common law helps to provide greater opportunities for flexibility and competitiveness. That stands in stark contrast to the more natural committee-based, codified continental system, which is incremental. Once one starts something, one tends to have to come to some result; one cannot simply draw a line in the sand and say that something is not proper or relevant for legislators and regulators to be involved with. We should enable businesses to be set free so that they do not have to worry about that. The EU constitution is precisely the worst example of that type of trajectory, which will over time cause businesses grave difficulty and a reduction in their competitiveness.

Equally, we will focus on the spring—if I can coin that word—or underlying culture of regulation. Rather than opposing the tide of statutory instruments on an individual basis—clearly we do that from time to time in the Committee Corridor, but it would be an exercise worthy of King Canute against the incoming tide of regulation under Labour—we believe that a far more strategic approach is to tackle the drivers giving rise to the statutory instruments in the first place. Hence, as I mentioned earlier, the business experts whom we have appointed to our deregulation panel are, as we speak this evening, examining ways of reversing precisely those drivers of regulation.

Finally, I want the Department of Trade and Industry to act as a champion for business, not be the arch-regulator-in-chief against British business. What on earth was the Department doing when productivity growth was sliding away and the UK's competitiveness was falling from fourth to 15th place in the global rankings? It is not as if the Department were starved of resources: its budget actually went up from £3 billion to £8 billion over the same period, not least to promote and service all its burgeoning regulations on business.

The truth is that the Department simply used its bloated resources to intervene on markets, draft regulations and create new quangos. In that sense, overregulation is an inevitable consequence of big government, which is one of the reasons why the Conservative party has always believed that the state should be small, the people should be big, and businesses of all sizes should be set free to prosper and grow. Over-regulation is the single biggest long-term threat to our future competitiveness in the global economy.

Dr. Doug Naysmith (Bristol, North-West) (Lab/Coop)

I thank the hon. Gentleman for giving way, particularly so late in his speech. He has made several references to financial services regulation and to an earlier Conservative Government. I am sure he recognises the importance of financial services regulation, so does he not feel ashamed at the lack of regulation that led to a number of very unrewarding outcomes for people who should be have been better protected by that Conservative Government?

Mr. O'Brien

In financial services, there will always be a degree of regulation, as there has been under previous Administrations of all colours. It is difficult for the hon. Gentleman to draw that rather partisan comparison when he supports a Government who have presided over the complete debacle over Equitable Life, which has affected so many of our constituents across the country. He should be careful to reflect on what motivates good behaviour and true management judgment. The last thing that underpins such behaviour and judgment are regulations which, although necessary to some degree in the financial services industry, are so extensive and tight that they remove the motivation to do the right things. We end up with stripped liability. It is not worth it. Everyone lives under threat, rather than benefiting from opportunities, though protections for consumers should be in place.

It is not as if I am alone in saying all this. Anatole Kaletsky recently noted in The Times: The consequences of over-regulation will be played out over decades, rather than months or years. In other words, the fact that the economy has not yet fallen apart at the seams is an abject argument for the Government to make, even if it is their habitual response, because we are still trading off the relative competitive advantage created by the labour market reforms of previous Conservative Governments. That is one of the principal reasons why we have been fortunate enough to enjoy a sustained cycle of growth for the last 12 years.

I am pleased that, as a result of that 12-year cycle of growth, the number of new business registering for VAT was 175,800 in 2002—the last year for which figures are available—though I note that that is 6 per cent. down from 1997 when Labour came to power. No doubt the Secretary of State for Trade and Industry will repeat her spurious claim that in the 1990s, you needed 28 separate licences, certificates and registrations to create some businesses. Now the figure is one form for many sole traders; and five forms for private companies".

Of course, businesses such as those that clean asbestos needed those 28 steps and under current procedures they still do; licences and regulation are necessary when dealing with possible hazards. However, when I started companies in the 1980s and up to 1997, they were started by filling out—yes, Madam Deputy Speaker, you've guessed it—five forms. Where is the progress? Yet another bit of Labour spin squashed.

The Labour spin doctors may also want to clarify the discrepancy between the claim made by the Secretary of State for Trade and Industry in a Labour party press release earlier this month that it now takes an average of one day to start a business … in the UK and the Chancellor's more sanguine claim—amazingly—made earlier this week, that it takes 24 days to set up a business in the rest of Europe but … seven days in Britain". Who should we believe—the Chancellor or the Secretary of State for Trade and Industry? Sadly, probably neither: perhaps the Government are missing Alastair Campbell after all.

The crucial test for the Government is whether British business will be prospering, innovating and expanding in a decade or more. Over-regulation is a poison that takes time to feed through the economic system—we need only look at Germany for an example of that—and there is only one antidote: a party committed to small government and big people, and a Government who get out of business's way—the next Conservative Government.

5.36 pm

The Minister for Industry and the Regions Jacqui Smith)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: welcomes the Government's commitment to better regulation and enterprise, which has contributed to the UK becoming one of the best locations in the world in which to start and run a business; welcomes the recent independent endorsements of the UK's light touch regulatory environment; applauds the deregulatory initiatives brought forward since 1997 which have contributed to a significant decline in the total number of regulations imposing a cost on British business; rejects outright the allegations claiming that the regulatory burden on business now exceeds £30 billion; supports measures taken to improve the regulatory environment for smaller businesses such as the removal of statutory audit requirements for small and medium-sized enterprises and the introduction of two specific commencement dates for employment regulations; congratulates the Government on signing up to the new European Constitution which promotes competitiveness and flexibility and which will ensure that national governments have new powers to scrutinise EU regulatory proposals; notes with concern proposals put forward by the Opposition which would damage Britain's relationship with Europe to the detriment of British business by withdrawing the UK from the world's largest common market; recognises the Government's constructive stance on the Agency Workers and Working Time Directives where it has maintained a position that promotes both fairness and flexibility; and calls on the Opposition to examine its own European policies which are consistently flouted by its own MEPs and Party members. I am pleased that the Opposition have given me this opportunity to report on the Government's achievements in providing the best regulatory and economic framework for businesses to develop and thrive in this country.

Listening to the hon. Member for Eddisbury (Mr. O'Brien) and other Opposition Members, anybody would think that UK business was doing badly. Is it not about time that the Opposition began talking up our business success and the economic climate that has helped to create it? In that climate, we have the lowest inflation for 30 years, historically low levels of interest rates and the highest employment rate in the G7—higher than any other major EU economy. The UK is the only country in the G7 to have continued positive growth in gross domestic product since 1997. In fact, the first quarter of 2004 saw such growth in the UK for a record 47th consecutive quarter.

Mr. Redwood

Can the Minister tell us why in her view more than 600,000 manufacturing jobs have been lost in Britain since Labour came to power?

Jacqui Smith

As the hon. Member for Eddisbury said, manufacturing has faced a difficult and challenging time over the past few years, not least due to the international situation, but I find that question hard to take from somebody who was a member of the Government during a time when boom and bust and record interest rates led to the decimation of our manufacturing jobs and many other jobs besides.

David Taylor

Is my right hon. Friend, like me, enchanted by the picture painted in that deep blue crystal ball that reveals Elysian fields where small and medium enterprises graze and run free of business regulation? Has she set against that the record in the black book, as evidenced by an outgoing Conservative Minister in 1997 who acknowledged that the Conservatives were rather adept at regulation? He said then that they interfered with almost every aspect of business and social life. He is the right hon. Member for Kensington and Chelsea (Mr. Portillo).

Jacqui Smith

My hon. Friend is absolutely right and I shall return, briefly, to the Conservative record.

Mr. Redwood

Will the Minister give way?

Jacqui Smith

No, I want to make some progress.

The economic climate is the reason why 115,000 new businesses opened for trading in England and Wales in the final quarter of 2003, 9 per cent. higher than the figure for the same quarter in 2002. It is why employment is at a new record level and why in February this year the International Monetary Fund upgraded the 2004 growth forecast for the UK to 3.1 per cent. from 2.4 per cent. What a contrast to the boom-and-bust years of the 1980s and early 1990s. It is not only Ministers who are saying that—it is confirmed by research on the global picture.

The hon. Member for Eddisbury should realise that we can quote KPMG surveys as well, particularly given that, in February this year, a KPMG survey showed that the UK has the lowest business cost structure among seven European countries. Globally, the UK came third, after Canada and Australia, among the 11 industrialised countries studied. It is the Conservatives who are determined to talk down our economy and our country.

Mr. Redwood

I am grateful to the Minister for graciously giving way. Will she please explain to the House why 600,000-plus manufacturing jobs have gone under this Government? We all know that the Conservative Government made a bad mistake in 1990 and paid a very dear price for it. This Government have now made a whole series of dreadful mistakes for manufacturing. Will she explain why, and what is she going to do about it?

Jacqui Smith

I began to explain. Those in a Government who presided over 673,000 manufacturing job losses in just one year in the 1980s are in a difficult position from which to lecture us, but we have recognised the challenges faced by manufacturing. That is why we produced the first ever manufacturing strategy two years ago, and it is why were are investing—for example, through the manufacturing advisory service—in services that have provided getting on for £50 million-worth of value added to our manufacturing companies. We recognise the challenges that manufacturing faces, but unlike the Conservatives we will not sit on our hands and watch our manufacturing jobs being destroyed.

I do not underestimate the concerns of business about bad regulation and the cumulative effect of regulation—I shall say more about how we are responding to them later—but we need a more sophisticated analysis than we received from the hon. Member for Eddisbury. Dare I say that we need more honesty about the role of regulation? The Government do not apologise for taking action to ensure decent pay and conditions for our people. Did the national minimum wage cause the job losses that Conservative Members claimed it would? No, it ensured that bad employers could not undercut good ones, provided an incentive to work and protected millions of people—the majority of them women—from poverty pay.

Regulation has a key role to play in stimulating competition, creating a level playing field, improving our environment and establishing minimum standards to prevent rogue practices. Regulations such as those that tackle bribery and corruption and those that combat late payment in commercial transactions support and protect good businesses.

I was extremely pleased to read an acknowledgement of our commitment on better regulation in the Better Regulation Task Force's annual report, which was published last week and stated that the DTI has put a great deal of effort into its work on better regulation. Of course, the Conservative party, which now cloaks itself in the flag of deregulation, was not always so unkeen to regulate. That is why it introduced 3,334 statutory instruments in the House in 1994. Were they all bad? Were they all unnecessary? Of course, the Conservatives did not do a very good job of deregulating when they had the chance. Those are not my words, but the view of the previous Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke). In 1999, when speaking about deregulation, he said: We kept trying, we never really succeeded. We are trying, and we are succeeding.

Mr. Henry Bellingham (North-West Norfolk) (Con)

The Minister is obviously right to say that the last Conservative Government did not make enough progress—we have accepted that—and she quoted part of the Better Regulation Task Force report that came out the other day, but did she look at the summary at the start of the report, where David Arculus said that he wants to see more use of alternatives, which is not yet the Government's first instinct? He also wants culture changes to be made a reality and more delivery on deregulation. If the Minister goes through the report in more detail, she will see that there is still a long way to go.

Jacqui Smith

Of course, David Arculus pointed out the especially good reputation and actions of the Department of Trade and Industry, but I do not disagree with his analysis. I shall talk later about the action that we are taking to find alternatives to regulation.

Regulatory impact assessments undertaken over the past six years have shown that the burden on business is decreasing. More than 90 per cent. of regulations impose no cost on business whatsoever, and although Conservative Members happily try to juxtapose a whole variety of different statistics about the Government as a whole and the DTI specifically, that is the important figure that we need to remember. We need to highlight the action that has been taken.

Conservative Members talk about employment regulation, but this Government introduced regulations to streamline the employment tribunal system and established dispute resolution as an alternative to employment tribunals. We eliminated most of the administrative costs of the working time regulations, and regulations on the national minimum wage and parental leave have a light touch.

Brian Cotter (Weston-super-Mare) (LD)

Would it be useful to supplement impact assessments with an annual report from the Government on the cumulative effect of regulations introduced over the previous year? That would be a useful way of assessing the annual impact of regulations on businesses.

Jacqui Smith

The hon. Gentleman makes an interesting suggestion. My hon. Friend the Minister for Employment Relations, Competition and Consumers tells me that there will be an annual statement on employment rights. However, I am wary of the suggestion proposed in the ten-minute Bill to which the hon. Member for Eddisbury referred that we should introduce a few more assessments of our assessments. We would reach a situation in which we undertook regulatory impact assessments on regulatory impact assessments, but that would neither deregulate, nor cut bureaucracy.

The DTI is helping businesses to adapt to changes to employment law in practice. We have limited the introduction of all new domestic employment regulations to two commencement dates per year: 6 April, the start of the tax year, and 1 October, when the minimum wage is revised. We are consulting on whether to extend that approach and the areas in which it could be done.

Since January 2000, under the vigorous leadership of my hon. Friend the Minister for Small Business and Enterprise, the Government have undertaken several measures to reduce the burden of regulations on small businesses. Employers with four or fewer employees are now exempt from requirements to provide access to stakeholder pensions and to deduct pension contributions. We have increased the company law thresholds for small and medium-sized enterprises to the maximum possible under EU law, thus doubling the amount of investment eligible for first year capital allowances. My hon. Friend the Member for North-West Leicestershire (David Taylor) referred to this year's increase in the audit exemption threshold, but to respond to a point made by the hon. Member for Eddisbury, I hardly think that an increase in the threshold from £1 million to £5.6 million represents a standard form of annual uprating—it is a major increase. Of course, the increase in threshold benefits a further 69,000 companies over and above the 820,000 that are already exempt, and that measure alone is expected to save companies £94 million a year.

We have modernised and simplified value added tax and cut corporation tax. Such actions explain why an Organisation for Economic Co-operation and Development review of EU countries in January 2004 showed that the UK had almost the lowest administrative costs and the fewest regulations for entrepreneurs in the EU. That picture is confirmed by business leaders. Earlier this year, Charles Dunstone, the founder of Carphone Warehouse, stated: I have to say as we run businesses in 11 European countries, there is no doubt in my mind that the UK is the easiest place to run a business as far as regulation and red tape is concerned". However, as the hon. Member for North-West Norfolk (Mr. Bellingham) pointed out, we need to find alternative solutions to regulation, which is why, in our approach to corporate governance, we regulated where necessary to bring transparency to directors' pay, but we took take a non-statutory approach, on the whole, to the problems caused by the Enron and WorldCom scandals. The DTI initiated Derek Higgs's work on the role of non-executive directors and the Financial Reporting Council commissioned Robert Smith's report on the role of audit committees. Their recommendations were included in a combined code produced by the FRC that has already made a significant difference to the effectiveness of audit committees and non-executive directors. The Enterprise Act 2002 includes many key instruments for deregulation, including codes of practice, which were approved from the Office of Fair Trading. They provide a non-statutory but nevertheless effective means of offering more consumer protection, particularly in used car sales; car repair and servicing; credit, including debt management and credit repair; funerals; travel; estate agents' services; and direct marketing. Regulatory reform is therefore a priority. International surveys show that the United Kingdom is at the forefront of such reform. The World Bank's "Doing business in 2004" included the UK in the 10 countries—out of a total of 130—with the least regulation.

We are not complacent. Regulatory reform is a priority and the regulatory reform action plan published in December 2003, to which the hon. Member for Eddisbury referred, includes over 650 deregulatory measures that apply across Whitehall. We have already delivered on 300, including simplification of the capital gains tax regime; reduced tax and regulatory burdens for small businesses when starting up; a VAT simplification package; and amendments to maternity pay, benefiting an estimated 10,000 employers. The Government have laid more than 24 regulatory reform orders before Parliament, 17 of which are already on the statute book.

The DTI has led the way on better regulation, including the setting up of the vehicles industry policy and European regulation group—snappily titled VIPER—which brings together a range of businesses involved in the automotive industry and allows an earlier and more robust consideration of policy options. In an independent survey, VIPER stakeholders gave the group a ringing endorsement. That approach to consultation is now being extended to the chemical, construction and retail sectors. We will, however, go further, which is why, in the Budget in March, the Chancellor announced a review of inspection and enforcement by Philip Hampton to identify what the Government can do to ease the burdens faced by businesses, and why we have announced new measures for strengthening the scrutiny of major regulatory proposals, including a panel chaired by the Prime Minister whose members include David Arculus, chairman of the Better Regulation Task Force, and William Sargent, chairman of the Small Business Council.

The motion refers to the disadvantages of Europe and European regulation—a matter that the hon. Member for Eddisbury raised, as Conservatives are wont to do. I wish to highlight the importance of raising the European game on better regulation, but first it is worth responding to the Conservative myths about the constitution. In our negotiations on the constitution we got what we wanted on the economy. We rejected tax harmonisation, protected our energy interests and achieved the right legal status for the charter, which is to be based on principles, rather than rights that could undermine our own national practice. The EU constitution will not result in more regulation, as it gives more power to national Parliaments. It is about enlargement and reform and will increase the opportunity for our businesses to operate in a bigger trading area than the US and Japan combined, as EU trade accounts for some 3 million UK jobs. It provides a strong base to pursue our agenda. The UK is a strong voice in Europe for competitiveness and competition and for better regulation. We are leading the campaign for regulatory reform in Europe. We are making that commitment a reality, working with the Irish, Luxembourg and Dutch presidencies, which all share our aims.

We are leading the work on better regulatory impact assessments, including assessment of the impact of new proposals on Europe's competitiveness. We are calling for more engagement with stakeholders and for further simplification, taking our regulatory reform programme into Brussels and working with the Commission and European partners. That is on the agenda for the European Council now. We did not need to wait for the new constitution to do that.

We have shown what we can do through active engagement, particularly with regard to the REACH—registration, evaluation and authorisation of chemicals—proposals on the chemical industry. By engaging actively and focusing on the need for light-touch but effective regulation in a crucial area, we have already reduced the cost to industry by more than €10.5 billion, working with business in the UK and across Europe to challenge the Commission's proposals. We are still on the case, looking for streamlining and simplification, and working with business to improve the environment for us all.

The Government are committed to ensuring that we have light-touch regulation, that administrative burdens are kept to a minimum and that existing regulation is kept under review. Regulatory reform remains a priority. Today we have had the chance to outline some of the progress that we have made. The debate has also given us the chance to challenge the view that regulation is never necessary. There are times when we will take action to protect the vulnerable, defend the environment and promote fairness at work. By so doing, we will support and protect good businesses, build a competitive framework for enterprise and continue the economic success that we have delivered in the past seven years.

5.57 pm

Malcolm Bruce (Gordon) (LD)

I listened carefully to the 35-mintue speech from the hon. Member for Eddisbury (Mr. O'Brien), which was delivered at considerable speed. I assumed that it would contain some radical, innovative proposals, but it amounted to a rant, devoid of any serious practical proposals.

Perhaps we should all acknowledge that regulation and deregulation is a difficult area. Often, when businesses complain about regulations and are asked to spell out how we should deal with them, they are unable to be specific or they cite regulations that we would not want to get rid of. For example, the chambers of commerce include in their deregulation proposals the asbestos regulations, but we know we must deal with those. We should all recognise that we need better regulation and, yes, less regulation.

The Minister mentioned the Better Regulation Task Force, and she is entitled to take comfort from its proposals that are supportive of the Government. However, there are other proposals from the taskforce to which she did not refer, but which contain a mechanism that is valid—that we should apply a principle of new for old. In other words, new regulations should lead to the termination of old regulations, there should be an attempt to limit the number of regulations, and wherever possible, regulations should have sunset clauses so that they expire. If they have to be renewed, they have to be rejustified and the debate is reopened.

We welcome the fact that the Prime Minister has said that it will be a priority for the UK presidency of the European Union to promote deregulation. We on the Liberal Democrat Benches will watch with interest to see how the Government take that forward, and we would be willing to feed constructive suggestions into that process, given that European regulations account for 40 to 50 per cent of all regulations in the UK, as the Better Regulation Task Force identified.

The Government's track record has not been fantastically successful on some of the more important EU regulations. The Government have tended to come in late and try to resist the regulations, rather than being an organic part of the shaping of them. I cited in our amendment the directive on fridges, end-of-life vehicles and electrical and electronic goods.

On that point, Madam Deputy Speaker—it may be a matter for the administration of the House—the Table Office would not allow me simply to say that we were concerned about the fridges regulation, but required me to refer to: the chaos of the UK application of European Council Regulation No. 2037/2000 requiring the removal of ozone-depleting substances from refrigeration equipment". The Table Office required two lines in place of the word "fridges", which may be indicative of an attitude of mind that pervades t he House and is perhaps shown by some civil servants. We need to accept simpler expressions.

Mr. Redwood

In the Liberal Democrats' interesting proposal to abolish the Department of Trade and Industry, which Department, if any, would then become responsible for deregulation, and which Department, if any, would go to Brussels to try to prevent some of these measures going through?

Malcolm Bruce

If the right hon. Gentleman will have a little patience, I will deal with that. I assure him that it is a significant part of what I want to say.

While I am on the subject of regulations, it is interesting to note that when EU regulations are being translated into British regulations, usually through the House and statutory instruments or other mechanisms, an analysis has shown that the UK has on average 334 per cent. more words than the second most wordy member state in the EU. In other words, all our regulations turn out to be infinitely longer than those that apply in any other member state. It does not follow from that that we are necessarily more regulatory; it may be that we are more explanatory. But it suggests that there is evidence of our adding detail to regulations, which our competitors in other member states do not do, and that needs to be considered carefully to ensure that we are not loading burdens on ourselves that the EU does not require us to. Ministers should be pretty watchful of civil servants who see some of these regulations as an opportunity to piggyback some of their favourite schemes that they were never able to get past Ministers when they were free-standing proposals for domestic legislation. That is a serious issue, and one reason why we need to deal positively and proactively with regulations.

Conservative Members' difficulty is that they have a general opposition to regulations and a general complaint that they add costs, but they are much less able to specify which regulations should be got rid of. That is not a cheap gibe. All of us would genuinely like to find ways to simplify regulations or to get rid of those that do not work. It behoves Conservative Members to come forward with specific proposals.

Mr. Stephen O'Brien

In addition to the points that I made about the culture that needs changing in order to resist the cumulative effect of regulations, which is what businesses really resist—naturally enough, examples do not flood in because people cannot be seen to be offside with what are generally regarded as health and safety measures, and so on, a reputation that they would not want—surely scrapping the horse passport regulations would be a good start for all those involved in the horse business, which employs many in my constituency for a start.

Malcolm Bruce

rose—

Mr. Bellingham

It will penalise my sister's two ponies.

Malcolm Bruce

The hon. Gentleman obviously has a personal connection. We may be able to do something about horse passports, although I do not know enough about that, but I do not think that that will transform the British economy overnight. We need practical proposals, and we need a mechanism for ensuring that they are properly evaluated. All of us have an interest in that. The question we need to ask ourselves is, given that a certain amount of regulation is required domestically for health and safety matters and even legitimate social matters, and for other reasons, and there are EU regulations that have to be incorporated into domestic law, how do we do that more simply and cheaply than we are? We all have an interest in bringing that about and we all need to ensure that the mechanisms are improved.

Looking back on the Conservative Government's record, I can find just as many quotes from the latter part of the 1990s complaining about Government regulations and the difficulties faced by businesses struggling with all those regulations—

Brian Cotter

My hon. Friend has been talking about the Conservatives' record. Does he agree that their current record is also worth mentioning? For example, their appearances at the Select Committee on Regulatory Reform was limited in the 2002–03 Session. The party has three Members serving on the Committee, but two of them have not attended it at all in 16 sittings. The Committee has had the opportunity to question Ministers, Departments and civil servants on nine occasions, but two Conservative Members have failed to turn up, while the other one has attended on less than 50 per cent. of occasions. That is an example of how the Conservatives are not doing in practice what they say they are going to do.

Malcolm Bruce

That is very interesting. I know that my hon. Friend is an assiduous attendee of the Committee. If Opposition Members have good ideas or believe that what the Government are doing is fundamentally wrong, the very least they can do is turn up, explain why and put their views on the record. If they do so, they may even have some chance of influencing what happens. [Interruption.] The trouble is that the Conservatives have never got used to the idea of opposition—perhaps the Liberal Democrats have more experience of it—but they will have to do so, as they will be in opposition for a long time.

As Home Secretary, the Leader of the Opposition introduced the immigrant workers requirement, which put an obligation on employees to be responsible for finding out whether anybody whom they employed was an illegal immigrant. The onus was on them to prove otherwise. That was a pretty mischievous measure in every sense, and it was very burdensome. I remember that employers complained bitterly about it, but the Minister who was responsible for the policy is now the Leader of the Opposition who says that he does not think that businesses should be overburdened with unfair and unreasonable regulations.

The right hon. Member for Wokingham (Mr. Redwood) asked me about our proposals for abolishing the Department of Trade and Industry. Of course, they are controversial, but we genuinely believe that there is a strong case to be made. Historically, the Department existed partly because we had a major manufacturing base and partly because there was a very large publicly owned sector. We have now privatised most of those businesses, and while there are regulatory responsibilities, there are no longer direct investment or management responsibilities and the manufacturing industry has declined.

In passing, I should say that I share the concerns about manufacturing, as I believe that an economy of the size of that of the UK needs a manufacturing component in order to be balanced and effective. Two issues need to be recognised. The first relates to the great days of Mrs. Thatcher, who I think is on record as saying that she did not care whether it was goods or services, as long as they added value. Secondly, we have to be realistic about the world in which we are operating and look at what is happening in China, India and the new Europe. It is very difficult to maintain a competitive manufacturing industry unless it is at the cutting edge, but it is not all bad news. Although we may be losing jobs, we are not losing business in all cases, as we are maintaining some core leading-edge businesses. Some of the jobs may not be great, but the added value is still significant.

Without the sort of direct Government input to which I have referred, do we need a Department that has a budget in excess of £6 billion and a staff of more than 10,000? Our conclusion is that not only do we not need the Department, but it is instinctively regulatory and is cumbersome and bureaucratic. There is an infinite variety of taskforces and working parties. I am not suggesting that nothing that comes out of them is of any value, but I have talked to many businesses that have concluded that many of the activities in which they are engaged are a substantial waste of their executives' time. One major company—I shall not name it—told me recently that it has now said that it will not send executives to such discussion groups at the Department, because it does not feel that doing so serves any useful purpose. The company said that it used to send people to the meetings partly because it hoped that something constructive might be achieved, but more out of a fear that if they did not go, its competitors would gain an edge.

That is one of the problems with many of the business assistance schemes, although it is interesting to see how the debate is developing. I saw a rather ironic article in yesterday's Financial Times suggesting that Digby Jones was about to launch a campaign of business men for bureaucracy, which would be battling to save the bureaucrats of the DTI on behalf of the business community, whereas it said that the Liberal Democrats were keen to get rid of them. That was a slightly ironic juxtaposition.

Many businesses say, "The process of applying for regional selective assistance or any other form of grant is long drawn out, cumbersome and time consuming. We may have to employ private consultants to make the case effectively, and we may not get the money in the end." Many other businesses complain that the money goes to their foreign competitors, which set up in this country and compete with British businesses that do not have access to the same grants. We conclude that it would be better if none of those schemes existed. in which case people would not have to waste time bidding and could get on with running their businesses in a competitive environment.

If such activity has a role, it is in the regions, where the business community, councils and regional development agencies have local knowledge and understanding and, given more flexibility and less central control, might deliver a better result. That is our case, which is worthy of serious consideration. We accept that it will be criticised, but we do not make it lightly, because we have thought it through and discussed it widely.

The debate is very short, so I shall quickly respond to the right hon. Member for Wokingham. A deregulation Minister should be appointed, with specific responsibility to examine all regulations and ask, "How can we do without them, simplify them, get rid of them, apply a sunset clause or exchange them for new regulations?" Such an appointment would not get rid of all regulation, but it would have a dynamic, because lower, lighter and better regulation would become an active, rather than reactive, process.

I shall address the part of the Conservative motion that relates to European regulations. The hon. Member for Eddisbury acknowledged that many of the single market regulations benefit business. If there were no single market, single market regulations would not exist, and we would need to develop products to meet the requirements of every member state, so every product would need 25 specifications to satisfy all the markets within the European Union. The single market regulations fit all countries, which must be beneficial. That does not mean that the regulations could not be simpler, better or farer, but they must exist if the single market applies.

We have taken evidence from Norwegian and Swiss businesses, which say, "The reality is that we must accept those regulations willy-nilly if we want to trade with the European Union," which they do, "but we have no say in shaping them and arguing our case, other than by bilateral discussion with the European Union." Switzerland has major food companies, pharmaceutical companies and industrial companies that trade across the European Union. The honest truth—this is an interesting point that Conservative Members should engage with and, if they are genuinely in the debate, will engage with—is that many in the business establishment in Switzerland are seriously concerned about Switzerland's detachment from the European Union. Their personal nightmare is Turkey becoming a member of the European Union while Switzerland is not, which would not be in the Swiss national interest.

Mr. Redwood

Surely all one needs for an effective single market is the Cassis de Dijon judgment, which states that if a product is of merchandisable quality in one country, it should be deemed to be of merchandisable quality in another. One does not need to set out how to make a tyre, steering wheel or windscreen in regulation.

Malcolm Bruce

That is a nice, neat hope and belief, but the right hon. Gentleman knows perfectly well that all negotiations on the single market are designed to ensure a fair and level playing field. This is not the time or place to debate whether Britain should be in or out of the single market and what effect that might have. All I am saying is that as long as regulations in the single market affect businesses in the United Kingdom, an early, proactive intervention to help shape regulations and to argue the British case is far better than leaving an empty chair. The Conservative Government were not present to argue the case, and the UK had to accept the outcome at the end of the day. That policy did not serve the national interest then, and it will not serve it in the future.

It would perhaps be better if all hon. Members acknowledged that regulation and deregulation are complex issues, and that none of us has the complete right answer. It is unreasonable to pretend that we can sweep away a load of regulations with no downside effects.

At the same time, we should never be complacent. We need to find mechanisms to get rid of unnecessary regulations, to make regulations that are justified and renewed through sunset clauses, and to play a proactive role in reducing and simplifying regulations as much as possible. I maintain that a smaller Department for deregulation instead of a large Department for dreaming up new regulations would be in the better interests of British business.

6.15 pm

Mr. Archie Norman (Tunbridge Wells) (Con)

I draw the House's attention to my declaration in the Register of Members' Interests.

In the 25 years of my business career and my 18 years serving on the boards of major British companies, I do not think that there has been a single year in which the burden of regulation has lessened. Throughout that period, business has complained about the growing problem of regulation. Lucy Neville-Rolfe of Tesco has said that the burden of regulation has increased every year since Gladstone, and I suspect that she is right. It is equally true that business men and the enterprise community will always complain about Government and regulation—that is as natural as farmers complaining about the weather. I agree with the hon. Member for Gordon (Malcolm Bruce) that this is a complex subject that is not easily resolved by simple banalities or through a deregulation committee or even a better regulation taskforce, but what is new about today's situation is the volume of regulation, the way in which it is enforced and the context in which business operates.

First, there can be little doubt that there has been an acceleration in business-affecting and employment-affecting regulation over the past seven years. That is not merely a political debating point: it is a fact. It is a matter of counting regulations and assessing the Government's own regulatory impact assessments, which I shall discuss later. It is also a function of Europe and, in this country, of the development of a claims culture and changes in the legal system. Consequently, regulation that is designed to be light-touch and to have a benign effect often has a much more pernicious effect on the workings of business.

Secondly, there has been a major change in the competitive environment in which British business operates. We now operate in a far more global market in which the regulatory effects and burdens on businesses in Korea, Singapore and Thailand have a significant effect on the profitability and investment prospects of British business. We need to face the fact that nice-to-have legislation may result in fewer jobs and a lower quality of life for our own people.

Thirdly, the business culture of this country has changed. The days when people went to work just to earn a daily crust, when it was the priority to protect employees from poor employers, and when there were widespread problems of bad employment have largely been eroded, although not entirely. Of course, to be competitive in today's British business world, management and employers have to provide a better-quality working life for their employees, because that is part of the way in which companies compete. The whole nature of business regulation therefore needs to adapt to reflect that context by rewarding and encouraging the successful, not trying to hold the best companies back in the interests of mitigating the downside effects of a few poorly managed ones.

Regulation is a chronic problem that is in the political system, and unless solutions are designed to be systemic they will not succeed. The regulation of business is driven by the popular tide—it is the popular thing to do. Ministers are unlikely to be promoted for doing nothing. They are unlikely to be promoted for introducing deregulatory orders, but are likely to be promoted for getting new legislation on to the statute book. Legislation is tangible, but costs are diffuse; nevertheless, they are borne by British business over time. It is hard to withstand the pressures of the popular media for new legislation, even though the long-term effect on the economy, and therefore on business, can be detrimental. It does not matter whether the legislation deals with maternity rights, minimum pay or pensions. All such legislation is understandable, and often benign, but the cumulative impact is death by a thousand cuts.

The House is not divided by the recognition that regulation has been and is a problem. Indeed, the Chancellor of the Exchequer has been forceful in identifying the burden from which British business suffers in inspection and the overlap of enforcement regimes. He is committed to a sector-by-sector review. The House is divided on understanding that the problem cannot be solved by rhetoric or good intentions but lies deep in the political system; resolving it is fundamental to the competitiveness of the British economy.

The problem is becoming acute. Of course, some of the cost of regulation is unquantifiable, but the Government measure most of it. The Minister for Small Business and Enterprise claimed that the British Chambers of Commerce calculation of £30 billion of cumulative extra cost was invalid. He may want to deal with that in more detail when he replies, because he knows that the BCC calculation is none other than the simple addition of Ministers' assessments of those costs through regulatory impact assessments.

It is fair to say that the cost is cumulative and not annual, but it is equally fair to point out that it is a gross cost, which does not take benefits into account. It does not do that because, in 75 per cent. of cases, Ministers could not be bothered to quantify them. It is therefore hard to do that, but costs of —30 billion add up to a substantial reduction in the profitability of British business and in investment. That also means a substantial reduction in profit and therefore in corporation tax revenue for the Government—probably some £8 billion that could be spent on employing new health and safety inspectors or, even better, on schools, hospitals and public services. The effect on profitability, business and the public sector is tangible.

Mr. Redwood

Does my hon. Friend agree that if, with good intentions, Britain and/or the EU imposes much higher environmental standards on our business, we could end up with the opposite of the desired effect when the business closes in Britain because the costs are too high and transfers to somewhere with practically no environmental standards? We thus lose the jobs and get more environmental degradation.

Mr. Norman

My right hon. Friend makes a profound point. We operate in a global market and there is no point in exporting quality jobs that become low-quality jobs elsewhere in the world.

It should not be a matter of debate between us whether regulations have increased under the Government. There have been 23,322 new regulations. A substantial proportion of them have come from Europe, but the figure represents an increase of 53 per cent. on the number of regulations that the previous Government introduced. That constitutes acceleration and a chronic problem, which needs to be tackled. The Minister for Industry and the Regions prayed in aid the Organisation for Economic Co-operation and Development. However, the same report that she cited stated that flexibility in the UK had been steadily eroded by ever-increasing regulation.

We are worried not only about the additional costs that regulations entail but about their long-term impact on the effectiveness of British business and our competitiveness in world markets. The Minister for Small Business and Enterprise has some weeks of experience of the business community and he knows that regulation also reinforces the power of big business. The small shopkeeper cannot afford the cost of regulation.

When I was chief executive of one of the largest supermarket chains in UK, we could employ a department of bureaucrats to handle any new regulation—whether it was new labelling or new food safety standards, we could handle it—but the individual shopkeeper could not compete. Regulation reinforces the power of the large enterprise at the expense of the small; it creates a barrier to entry.

The lobbying culture and the need for businesses to protect themselves against Brussels and the Government also reinforce the power of the large enterprise. British Telecom can afford to employ a regulatory department of more than 100 people to work with Ofcom, which in turn employs 800 expensive people to try to administer sector regulation. That opportunity is simply not available to the small technology company endeavouring to compete.

Secondly, the effect of regulation is to reduce our effectiveness in the growth of new industries. Although we are seeing a better performance in the British economy today than in some of our European competitors, we are not seeing comparative success against the far east or the United States in the new industries such as information technology and biotechnology. The test of whether we are developing a future capability is in our competitiveness in those industries.

Malcolm Bruce

The hon. Gentleman is making an important point about big business versus small business. Does he agree that a way of dealing with this issue would be for very small businesses to use more of the exemptions available to them, and to target those benefits and tax exemptions at micro-businesses, because the unit costs of dealing with regulations are much higher for those businesses?

Mr. Norman

There is a role for exemptions for small businesses, and we have seen some, in the form of the audit exemptions, for example. I believe that they can be taken much further, both in the framing of the regulation and in the way in which it is enforced. At the same time, however, we need to recognise that competitiveness is not just about small businesses, and that creating peculiar regulatory thresholds of size cannot be anything more than part of the answer.

The third impact of regulation that I want to draw to the Minister's attention is the way in which it affects business on the inside. All regulation reinforces the position of the internal bureaucrats in British companies. I do not mean that in a disparaging sense; I mean that regulation results in the burgeoning of internal compliance mechanisms in human resource and health and safety departments, for example. This involves people spending their career trying to prevent others from taking risks or working too hard, or to prevent enterprises from taking on new employees without thinking very hard about it. Those people are reinforced by regulation, and that has a determining effect on the nature of the enterprise culture.

A final point about regulation that is often missed by Ministers is that it erodes the productivity of the public sector, which is the fastest growing employment sector in Britain today. It is also the sector with the lowest productivity growth. A lot of the regulation being introduced has a greater effect on the public sector than on the enterprise sector. A good example of that is the Employment Relations Bill. I heard the Secretary of State refer in a speech on that Bill to provisions on consultation being provisions that would help to protect trade union member in the private sector. She omitted to mention the fact that more than half the trade union members in this country work in the public sector. What the Government are really doing is passing regulations to cover their own management failures. One thing that they could do to address the problems of poor employment practice, demotivated employees, high trade union membership and sclerotic workplaces would be to create a better management system for the public sector, which is where poor management practice in Britain is largely concentrated. Sir Peter Gershon, the Government's own adviser, has said that regulation now threatens the government's most cherished goal—improved public services".

The problem of regulation is serious and it is deepening, but the Government's response to it has been ambivalent. Of course, we have heard about the regulatory reform proposals. The hon. Member for Gordon may be aware that I sit on the Select Committee on Regulatory Reform. I was there yesterday, I obviously did not make much impact, but never mind. We welcome the regulatory reform proposals that have been made. It is encouraging to know, for example, that there are to be reforms on sugar beet research. Reforms relating to the museum of London also came through recently, and they are entirely welcome. However, we should not kid ourselves that this is an adequate solution. It is like standing in the path of an avalanche armed with a toothpick, and it simply will not address the problem. It is the system that is creating burdensome regulation, and it is the system that requires radical surgery.

I am referring not only to new regulation but to the archaeology of old regulation. We still have on the statute book an Act from, I think, 1928 that limits the quantities in which shops can sell flaked breakfast cereals. We are still restricting the weights in which bakers can bake loaves of bread. We still require shopkeepers to get a licence to sell game if they want to sell a shot pheasant. That is all completely antiquated. We are creating layer on layer of overlapping regulation, and there is no process in the system for unpicking the history and removing legislation that is often completely out of date and no longer relevant to today's business environment.

In addition, we are world beaters in enforcement in this country—we have thousands of enforcers. I challenge the Minister to name a single inspection or enforcement department that has diminished in employment numbers under this Government. Whether in the Health and Safety Executive or the Food Standards Agency, there have been additional enforcers, whose full-time occupation it is to go around harassing business. That sometimes brings about beneficial change. The fact that the numbers have increased on every count, however, indicates what business is spending its time doing and what it must face.

I wanted to come to the question of solutions. The Liberal Democrat spokesman talked about sunset clauses, and I want to raise some other issues. First, I ask the Minister to address more seriously the question of regulatory impact assessments. At the recent British Chambers of Commerce seminar, which he was sadly unable to attend, it was declared that RIAs, for the purpose of deregulation, were the only show in town. I have some sympathy for that view. Currently, it is one of the things that can be done early on to bring transparency to the effect of regulation on business. The Prime Minister said that a regulatory impact assessment is not an add-on to the policy process. It is an integral part of the advice that goes to Ministers". The Government have made that claim, and it is up to them now to deliver.

Yet today, RIAs are totally inadequate, and, as the Social Market Foundation has said, they are crafted with as little information as possible". A high proportion of them, as I have already said, do not even attempt to quantify the benefits, and there are numerous examples of the costs being completely miscalculated. For instance, the RIA for the Employment Relations Bill estimated a £43 million annual cost on business as a result of the Bill. It then failed utterly to quantify the benefits, but said that it could amount to hundreds of millions of pounds over 10 years. Hundreds of millions of pounds over 10 years could well be substantially less than the cost. There was no attempt to calculate the cost, and it was treated in a manner that can only be described as frivolous. Incidentally, that is not just a problem for Ministers; it is a problem for the House. When the House assesses regulations, it is entitled to have an objective assessment of the costs and benefits of that regulation. It is an insult not to provide it.

Equally, the extension of the working time directive to junior doctors was assessed as having a cost of —26 million. The pilot studies in NHS trusts alone have cost more than £50 million. It was simply an absurd and laughable under-estimate, and again illustrates that the Government are failing to take RIAs seriously. There are many other examples.

The Government's recent response was to say that they have set up a ministerial panel of regulatory accountability—a Cabinet Sub-Committee chaired by the Prime Minister. That is entirely welcome. Mysteriously, however, we are not entitled to know whether it has ever met, whether the Prime Minister has ever turned up, and what issues it is likely to consider. It is therefore entirely understandable if people conclude that it is just a piece of candy floss or protection, to hide the fact that the Government have no intention of taking RIAs seriously. The solution is to have them externally audited, either by a Government department independent of the legislators, or by the private sector. That could be done in cases of substance, or where there is a significant hurdle. It would solve the problem and would restore an immense amount of legitimacy to and confidence in business regulation.

I agree with the Liberal Democrat spokesman that sunset clauses have a role to play—but they are not a panacea. We need to be careful if we bring legislation back to the House every few years, as there is always the opportunity for Ministers to add to it and make it even more regulatory. There should be a systematic mechanism for removing legislation from the statute book. Perhaps some form of House of Lords regulatory reform Committee would be able to do that, and, as part of its role as a revising Chamber, make proposals for deregulation.

We need a much better mechanism for scrutiny of European legislation. That should not be a partisan matter, but one that can be agreed throughout the House. There should be a higher threshold for all the petty claims and tribunals with which companies have to deal. Benign legislation introduced for good reasons and designed to protect employees is now being used in a vexatious manner. We also need a mechanism enabling small businesses to appeal against disproportionate enforcement of legislation, which is threatening their livelihood and goes far beyond the original purpose of the legislation. Such constructive proposals will begin to address a systemic problem. We continually churn out too much regulation, which is disproportionately enforced.

The Department of Trade and Industry says: The UK remains a middle ranking enterprise economy. It does not possess an entrepreneurial culture to the same degree as the USA. I agree heartily with that, and I think that regulation has a great deal to do with it. We must recognise that the problem is not superficial. It is not a question of establishing a reform committee or a better regulation task force; it is a question of finding a systemic solution to a chronic problem. Only in that way can we create a truly enterprising society.

6.36 pm

Brian Cotter (Weston-super-Mare) (LD)

I agree with my hon. Friend the Member for Gordon (Malcolm Bruce) that this is a serious issue, and not one that is easy to address. Indeed, it involves many different issues. I was pleased to hear the hon. Member for Tunbridge Wells (Mr. Norman) talk about small shops, given his background.

Regulation has a disproportionate impact on small businesses, in comparison with larger firms. Small business people still often say that the Government do not understand their needs. As I have said before, I think that Ministers should consider a scheme whereby they and civil servants could be seconded to small firms—as has already happened with large organisations. Even a week working in a small shop or garage would educate them enormously about the problems experienced by small firms.

Small businesses feel that there is not enough consultation, and organisations such as the Federation of Small Businesses and the Forum of Private Business feel the same. They feel that they are sometimes not involved early enough in consultation about regulation, especially when it comes to regulatory impact assessments. As others have said today, it is important to ensure that such assessments are accurate, but we should also ensure that they are carried out at an early stage and published before primary and secondary legislation is presented to Parliament. Liberal Democrats feel that it would be better for them to be conducted independently than to be conducted by Government or civil servants, so that independent views could be obtained.

Any way in which the Government could reduce the burdens on small business and on business in general would be welcome, but let me echo the point made about inspection of small and other firms. Some 350 inspectors have the right of access to business premises. When the Liberal Democrats suggested that there should be a single inspector, we were asked how a single inspector could possibly understand all the different regulations and all the different aspects of regulation. That in itself is a damning indictment, suggesting that there are so many regulations that no single person could understand them. We still think that it would be better to have a single gateway inspectorate rather than 350 inspectors, all of whom must trundle through business premises.

In the short time that I have left, I express concern to the Ministers that the Small Business Service, which my party welcomed when it was introduced and which has done some useful things, has got slightly off track. In our understanding, it was to be an independent organisation—very much the grit in the oyster—to raise matters with Ministers from the outside. The Government have made the mistake, which we would put right, of making the Small Business Service part of the Government, rather than allowing it to be detached and able to say to them, "Hold on—we're representing business, and as the champion of small business we don't think that this regulation should go forward. We don't think that the Government are addressing the situation properly."

My party has many tangible proposals to put forward, including on the Department of Trade and Industry. We welcome debates of this nature as opportunities to put forward those points and to try to influence the Government and get changes made that will benefit business.

6.40 pm

Mr. Henry Bellingham (North-West Norfolk) (Con)

I declare my interests, which are in the Register of Members' Interests.

We have had an excellent debate, and a lot of ground has been covered in a short time. We have heard from several Members who are highly qualified on the subject. Does excessive regulation matter, does it destroy wealth and what are its consequences? My hon. Friend the Member for Eddisbury (Mr. O'Brien) came up with one very important point on the UK's declining competitive position, when he referred to the World Economic Forum ratings in which the UK has fallen from fourth place in 1998—when we were behind just Singapore, Hong Kong and the USA—to 15th place now, behind many European countries including Holland, Germany, Norway, Switzerland, Denmark and Sweden. That was one of the most revealing points made this afternoon.

We should examine declining UK productivity. Average productivity growth in the UK fell from 2.5 per cent. in the period between 1994 and 1997 to 1.6 per cent. in the period between 1998 and 2002. Average productivity growth in this country continues to trail that in the United States by a significant margin. That is why my hon. Friend the Member for Eddisbury was right to address that situation and make his serious points.

On the other hand, the Minister for Industry and the Regions, although she had some good points, was rather complacent. It is a great pity that she denied the figures from the recent report of the British Chambers of Commerce. That report, "The Burdens Barometer", calculated the combined cost of new regulations since 1997 and concluded that that figure had reached £30 billion. As my hon. Friend the Member for Tunbridge Wells (Mr. Norman) pointed out, those calculations derive from the Government's regulatory impact assessments, so for the Government to question those figures in their amendment is quite extraordinary.

The Minister was rather self-congratulatory on the wider economy and the overall unemployment situation. She can afford to be in some ways, for example when considering the 600,000-plus new jobs created in the public sector since 1997. However, as various hon. Members have pointed out, that is exactly the same figure as the number of jobs lost in manufacturing. Surely the growth in public sector jobs at that rate is simply not sustainable.

The Minister should be asking how much better the small and medium-sized enterprise sector would be were it not for the growth in regulation. The BCC report found that 85 per cent. of the 3,500 members surveyed stated their belief that their businesses would be more profitable were it not for increases in red tape. How much more corporation tax would have been raised if those businesses had indeed been more profitable?

The Government surely should be asking what will happen if the economy starts to slow, house prices slip back, equity release dries up, the jobs bonanza in the public sector becomes a distant memory and fuel prices go up. In those circumstances, the one remaining bright spot in the economy should indeed be the small firms sector—but not if it remains very heavily overregulated.

As I said, we have heard some excellent speeches, and the hon. Member for Gordon (Malcolm Bruce) was right to refer to gold-plating. In fact, we had a rare experience this afternoon. Two Liberal Democrat Front-Bench spokesmen on trade and industry contributed to this short debate, but we are none the wiser as to what they would do with the Department of Trade and Industry. What they had to say was fascinating but flawed. Which Department would really stand up in government for wealth creation, enterprise and small businesses? To be honest, their ideas just do not stack up.

We heard from my hon. Friend the Member for Tunbridge Wells, who has huge experience in business and is always listened to with great respect. I was particularly interested to hear him make a simple but often overlooked point—that regulation, red tape and burdens always have a disproportionate effect on small and micro-businesses. He drew on his experience of running very large FTSE companies to point out that they have rafts of employees and managers who spend all their time looking at regulations, red tape and burdens, and who can deal with the associated pressures in a way that small and micro-businesses and sole traders simply cannot.

My hon. Friend the Member for Tunbridge Wells was right to point out that we should look not at how well we are doing compared with some of our European competitors, but at our wider global competitors. He was also right to point out that we need to look at the archaeology of some of the older regulations on the statute book—and to look very seriously at sunset clauses.

What should the Government do, and what would we do if we were in office? Well, we would stop legislating in many of these areas. For a start, we would have no more employment Bills and we would reduce the size of government. In 1997, the DTI budget was £3.06 billion; in 2003 it was just under £8 billion. In 1997, there were 9,302 staff in the DTI; by 2004 there were 11,474. Huge chunks of industry have been moved to the private sector. The DTI should be doing much, much less, but doing it far more effectively and much better. We feel very strongly that large government equals bureaucrats, which equals more interference, which in turn equals more regulation.

What else should the Government be doing that they are not? They certainly ought to ensure that their regulatory impact assessment regime is working properly. As my hon. Friend the Member for Tunbridge Wells pointed out, there is a cultural problem. Good rules count for very little if Ministers and officials trim evidence to fit policy conclusions that they have already reached. I urge the Minister and the Under-Secretary to look carefully at what David Arculus said in his executive summary. He does praise the DTI for some of its work, but as I pointed out in an intervention, he makes it equally clear that there is a long way to go: Good practice needs to become common practice", and there is a need to make culture change a reality. The Government need to "deliver on deregulation" and to pay attention to paperwork burdens. That report needs to be read in full.

What else should the Government do? They need to make some serious progress on Europe. The hon. Member for Edinburgh, South (Nigel Griffiths) is one of the best DTI Ministers we have had for a long time. He is indefatigable, and he has undiminished enthusiasm and a lot of energy. He goes round the country championing the cause of small businesses, but he does so with one arm tied behind his back because of this Government's obsession with Europe.

Only a Government obsessed with Europe would have given up and thrown away our hard-fought opt-out from the social chapter. That is why my right hon. and learned Friend the Leader of the Opposition was 100 per cent. right when he said recently: Reinstating the opt out from the Social Chapter will be a key priority for an incoming Conservative Government. Without that, whoever is the Minister with responsibility for small firms, he will have one hand tied behind his back.

My conclusion is simple—we need to change what is happening in Europe, to change the culture in Whitehall, to deliver smaller and better government that gets off the back of business and enterprise, and to reverse the compensation culture. That is impossible under Labour. Labour Ministers, however well intentioned, will not succeed, because what is required is a change of Government.

6.50 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths)

This has been a good debate, with a number of thoughtful contributions. However, my hon. Friends have noticed a disturbing trend among Opposition day debates. The Opposition called a debate recently on third-world aid and fair trade, demanding that we do more and spend more. They halved overseas aid and now demand the opposite. They wanted a debate on schools, demanding that we do more and spend more, but they axed 48,000 teachers during their Administration and now demand the opposite. They condemn us for our successes and offer no contrition for their failures.

Today, the Opposition have excelled themselves. They picked a subject on which their record could not be more embarrassing. In fairness, I cannot in all honesty claim that they are not the world experts on this subject—not with 51,699 regulations passed by the last Conservative Administrations. Indeed, it was in 1992 that John Major gave the verdict on all the 35,496 regulations passed by Tory Governments since Baroness Thatcher became Prime Minister. That year, as Prime Minister, he told his party conference: It takes 28 regulations, licences or certificates just to start some businesses. He promised a bonfire of regulations and his deputy, now the noble Lord Heseltine, promised to take an axe to the red tape—keeping up his Tarzan image, no doubt. For five years, they toiled and toiled. What was the verdict on the 16,203 new regulations produced in that golden twilight of their reign? It was: We passed volumes of new rules and laws interfering with almost every aspect of business and social life. So said the right hon. Member for Kensington and Chelsea (Mr. Portillo) in 1997.

What is the position in Britain today when starting a company? The hon. Member for Eddisbury (Mr. O'Brien) asked me to clarify that. I can tell him that there is no more need for 28 licences and certificates. Someone can set up as a sole trader in the UK in a day and for less than £25. We have moved from having one of the poorest records, in 1992, to having one of the best in Europe now.

The hon. Member for Tunbridge Wells (Mr. Norman) mentioned the raft of lawyers, a point with which I have considerable sympathy. He said that he had been associated with businesses that employed many lawyers who could process regulations, but that small businesses could not afford lawyers. I say to him and the House that I do not want anyone to have to employ lawyers. I want the large corporations to be able to devote their resources to marketing, product design and the sales success that is making British business great.

It is important to acknowledge that, last year, 465,000 people started a business—the highest number in the history of the Barclay survey and up 19 per cent. on 2002. That is 465,000 new businesses. A decade ago, 422,000 jobs were wiped out in manufacturing in a single year of Tory misrule—our record of success, their record of failure.

Now, of course, the Conservatives have a new formula: the Howard nostrum and the quack cure for regulations, freshly imported from Florida—sunset clauses from the sunshine state. How many sunset clauses did they introduce? None. Sunset clauses were rejected by Baroness Thatcher as unworkable.

The Conservatives rail against gold-plating regulations. We heard a few examples during the debate, but the best is from the former leader of the Tories in Europe, Lord Plumb, who said: The way the meat directives were implemented destroyed respect for the regulatory system as a whole. They forced the closure of small abattoirs and cost thousands of jobs. That was in 1996. The culprits were his Government and their over-zealous interpretation of Brussels law.

The hon. Member for Gordon (Malcolm Bruce) mentioned the tendency for Britain to use more words, reflecting a recent study from the British Chambers of Commerce. However, the BCC should listen to its sister organisation, the German chamber of commerce, which produced a report in January blaming the German Government for their lack of clarity in transposing EU directives; fewer words left companies with vague legislation and no guidance. The very copping-out of directives that was advocated by the hon. Gentleman—although no longer, I hope—was rejected by Baroness Thatcher and every Prime Minister before or after her.

Our charge is clear. The Conservatives did not learn from their mistakes, but we did. We were as horrified as industry about the burdens that the new chemical directive placed on business, so we amassed the evidence and presented it to the Commission. The Prime Minister enlisted the support of the Presidents of France and Italy. We told the EU Competitiveness Council that the directive was not on. The result was that parts of the draft directive that would have cost industry £6 billion a year were dropped.

I reject the figure of £30 billion given by the hon. Member for Tunbridge Wells. The real cost of administering the regulations is only a fraction of that. We make no apology for our legislation for decent wages, paid holidays and reasonable time off for family matters.

It is only fair to look at the situation before 1997 and contrast it with what is happening now. There was no Small Business Service to fight for business; we created and funded it. There was no Small Business Europe taking the fight on regulation to Brussels; we created and funded it. We created the Better Regulation Task Force to tackle gold-plating. We created the small firms impact test and "Think Small First", and we require lawyers to focus on the impact on small businesses before drafting regulations.

We set a target of 12 weeks' minimum consultation for all regulations and 12 weeks for implementation. We created a panel of 1,000 small businesses to advise Government officials drafting regulations. We took the lead in the EU's better regulation action plan. We forced the Commission to bring in impact assessments of proposed legislation. We created the regulatory reform action plan. We require regulatory impact assessments and the Prime Minister has created a Cabinet Committee on RIAs, which he chairs. Now, we have common commencement dates for key regulations, and that is welcomed by all representative bodies for industry.

The regulations that we have introduced, such as those on late payment, have helped to cut the time for settling accounts from 49 days in 1997 to 41 days, while the European average remains 50 days. Everyone accepts that the vast majority of the Government's so-called regulations have almost no impact on business red tape. Nearly four in 10 statutory instruments are on temporary road closures and similar measures.

I end by offering the House a straight choice. Do we want the business climate of 2004 with the lowest inflation for 30 years, the lowest interest rates for 40 years, the lowest mortgage rates for nearly 50 years, the lowest level of corporation tax in history, the longest period of sustained growth for more than a century, the largest number of people in work in our history and record numbers of people starting in business? We have avoided the recessions that hit the United States, Germany, Japan, France, Italy and most other industrial economies during the world downturn.

Or, do we want the climate of a decade ago—

Mr. Patrick McLoughlin (West Derbyshire) (Con)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to

Question put accordingly, That the original words stand part of the Question:—

The House divided. Ayes 114, Noes 320.

Division No. 210]	[6.59 pm
AYES
Amess, David	Clappison, James
Arbuthnot, rh James	Clifton-Brown, Geoffrey
Atkinson, David (Bour'mth E)	Collins, Tim
Baron, John (Billericay)	Conway, Derek
Beggs, Roy (E Antrim)	Cormack, Sir Patrick
Bellingham, Henry	Cran, James (Beverley)
Beresford, Sir Paul	Curry, rh David
Blunt, Crispin	Davies, Geraint (Croydon C)
Bottomley, Peter (Worthing W)	Davis, rh David (Haltemprice & Howden)
Bottomley, rh Virginia (SW Surrey)
	Djanogly, Jonathan
Brady, Graham	Dorrell, rh Stephen
Brazier, Julian	Fallon, Michael
Browning, Mrs Angela	Flight, Howard
Burns, Simon	Forth, rh Eric
Burnside, David	Francois, Mark
Burt, Alistair	Gale, Roger (N Thanet)
Butterfill, Sir John	Garnier, Edward
Cash, William	Gibb, Nick (Bognor Regis)
Chapman, Sir Sydney (Chipping Barnet)	Gillan, Mrs Cheryl
	Goodman, Paul
Chope, Christopher	Gray, James (N Wilts)

Grayling, Chris	Paterson, Owen
Green, Damian (Ashford)	Pickles, Eric
Greenway, John	Portillo, rh Michael
Grieve, Dominic	Prisk, Mark (Hertford)
Gummer, rh John	Redwood, rh John
Hague, rh William	Robathan, Andrew
Hammond, Philip	Robertson, Hugh (Faversham & M-Kent)
Hawkins, Nick
Hayes, John (S Holland)	Robertson, Laurence (Tewk'b'ry)
Hendry, Charles	Roe, Dame Marion
Hermon, Lady	Shepherd, Richard
Hoban, Mark (Fareham)	Simmonds, Mark
Hogg, rh Douglas	Smyth, Rev. Martin (Belfast S)
Jack, rh Michael	Soames Nicholas
Jenkin, Bernard	Spicer, Sir Michael
Johnson, Boris (Henley)	Spink, Bob (Castle Point)
Kirkbride, Miss Julie	Spring, Richard
Knight, rh Greg (E Yorkshire)	Steen, Anthony
Laing, Mrs Eleanor	Swayne, Desmond
Leigh, Edward	Syms, Robert
Letwin, rh Oliver	Tapsell, Sir Peter
Lewis, Dr. Julian (New Forest E)	Taylor, Ian (Esher)
Liddell-Grainger, Ian	Taylor, Sir Teddy
Lidington, David	Tredinnick, David
Lilley, rh Peter	Trend, Michael
Loughton, Tim	Turner, Andrew (Isle of Wight)
Luff, Peter (M-Worcs)	Viggers, Peter
McIntosh, Miss Anne	Waterson, Nigel
Mackay, rh Andrew	Watkinson, Angela
McLoughlin, Patrick	Whittingdale, John
Maude, rh Francis	Widdecombe, rh Miss Ann
Mawhinney, rh Sir Brian	Wilshire David
Mitchell, Andrew (Sutton Coldfield)	Winterton, Ann (Congleton)
	Winterton, Sir Nicholas
Murrison, Dr. Andrew	(Macclesfield)
Norman, Archie	Yeo, Tim (S Suffolk)
Osborne, George (Tatton)
Ottaway, Richard	Tellers for the Ayes:
Page, Richard	Mr. John Randall and
Paice, James	Mr. David Ruffley

NOES
Adams, Irene (Paisley N)	Breed, Colin
Ainger, Nick	Brennan Kevin
Ainsworth, Bob (Cov'try NE)	Brooke, Mrs Annette L.
Alexander, Douglas	Brown, rh Nicholas (Newcastle E Wallsend)
Allan, Richard
Allen, Graham	Brown. Russell (Dumfries)
Anderson, rh Donald (Swansea E)	Browne, Desmond
Anderson, Janet (Rossendale & Darwen)	Bruce, Malcolm
	Bryant, Chris
Armstrong, rh Ms Hilary	Buck, Ms Karen
Atherton, Ms Candy	Burgon, Colin
Atkins, Charlotte	Burnham, Andy
Austin, John	Burstow, Paul
Bailey, Adrian	Byers, rh Stephen
Baird, Vera	Cable, Dr. Vincent
Baker, Norman	Caborn, rh Richard
Barnes, Harry	Cairns. David
Barron, rh Kevin	Campbell, Alan (Tynermouth)
Beard, Nigel	Campbell, rh Sir Menzies (NE Fife)
Beckett, rh Margaret
Begg, Miss Anne	Campbell, Ronnie (Blyth V)
Benn, rh Hilary	Caplin, Ivor
Bennett, Andrew	Casale, Roger
Benton, Joe (Bootle)	Caton, Martin
Best, Harold	Cawsey, Ian (Brigg)
Betts, Clive	Chidgey, David
Blackman, Liz	Clark, Dr Lynda (Edinburgh Pentlands)
Blears, Ms Hazel
Blizzard, Bob	Clark, Paul (Gillingham)
Blunkett, rh David	Clarke, rh Charles (Norwich S)
Bradley, rh Keith (Withington)	Clarke, rh Tom (Coatbridge & Chryston)
Bradley, Peter (The Wrekin)
Bradshaw, Ben	Clarke, Tony (Northampton S)
Brake, Tom (Carshalton)	Clelland, David

Clwyd, Ann (Cynon V)	Hughes, Beverley (Stretford & Urmston)
Coaker, Vernon
Coffey, Ms Ann	Hughes, Kevin (Doncaster N)
Connarty, Michael	Hughes, Simon (Southwark N)
Cook, Frank (Stockton N)	Hurst, Alan (Braintree)
Cook, rh Robin (Livingston)	Hutton, rh John
Cooper, Yvette	Illsley, Eric
Cotter, Brian	Ingram, rh Adam
Crausby, David	Jackson, Helen (Hillsborough)
Cruddas, Jon	Jamieson, David
Cryer, Ann (Keighley)	Jenkins, Brian
Cunningham, rh Dr. Jack	Johnson, Alan (Hull W)
(Copeland)	Johnson, Miss Melanie (Welwyn Hatfield)
Cunningham, Jim (Coventry S)
Cunningham, Tony (Workington)	Jones, Helen (Warrington N)
Davey, Edward (Kingston)	Jones, Jon Owen (Cardiff C)
Davidson, Ian	Jones, Kevan (N Durham)
Davies, rh Denzil (Llanelli)	Jones, Lynne (Selly Oak)
Davies, Geraint (Croydon C)	Jones, Martyn (Clwyd S)
Dean, Mrs Janet	Kaufman, rh Sir Gerald
Denham, rh John	Keeble, Ms Sally
Dhanda, Parmjit	Keen, Alan (Feltham)
Dobbin, Jim (Heywood)	Keen, Ann (Brentford)
Dobson, rh Frank	Kelly, Ruth (Bolton W)
Donohoe, Brian H.	Kennedy, Jane (Wavertree)
Doran, Frank	Khabra, Piara S.
Dowd, Jim (Lewisham W)	Kidney, David
Drown, Ms Julia	Kilfoyle, Peter
Dunwoody, Mrs Gwyneth	King, Ms Oona (Bethnal Green & Bow)
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)	Ladyman, Dr. Stephen
Edwards, Huw	Lammy, David
Ellman, Mrs Louise	Laws, David (Yeovil)
Ennis, Jeff (Barnsley E)	Lepper, David
Etherington, Bill	Leslie, Christopher
Ewing, Annabelle	Levitt, Tom (High Peak)
Fitzsimons, Mrs Lorna	Lewis, Ivan (Bury S)
Foster, Don (Bath)	Lewis, Terry (Worsley)
Foulkes, rh George	Lloyd, Tony (Manchester C)
Francis, Dr. Hywel	Llwyd, Elfyn
George, rh Bruce (Walsall S)	Love, Andrew
Gerrard, Neil	Luke, lain (Dundee E)
Gibson, Dr. Ian	McAvoy, Thomas
Gidley, Sandra	McDonagh, Siobhain
Gilroy, Linda	MacDonald, Calum
Goggins, Paul	McDonnell, John
Griffiths, Nigel (Edinburgh S)	MacDougall, John
Griffiths, Win (Bridgend)	McGuire, Mrs Anne
Grogan, John	Mclsaac, Shona
Hain, rh Peter	McKenna, Rosemary
Hall, Mike (Weaver Vale)	McNamara, Kevin
Hall, Patrick (Bedford)	McNulty, Tony
Hancock, Mike	MacShane, Denis
Hanson, David	Mactaggart, Fiona
Harris, Tom (Glasgow Cathcart)	McWalter, Tony
Harvey, Nick	McWilliam, John
Havard, Dai (Merthyr Tydfil & Rhymney)	Mahon, Mrs Alice
	Mann, John (Bassetlaw)
Healey, John	Marsden, Gordon (Blackpool S)
Heath, David	Marshall, David (Glasgow Shettleston)
Hendrick, Mark
Hepburn, Stephen	Marshall-Andrews, Robert
Hesford, Stephen	Martlew, Eric
Hewitt, rh Ms Patricia	Meacher, rh Michael
Heyes, David	Meale, Alan (Mansfield)
Hinchliffe, David	Merron, Gillian
Hoey, Kate (Vauxhall)	Michael, rh Alun
Holmes, Paul	Milburn, rh Alan
Hood, Jimmy (Clydesdale)	Miller, Andrew
Hoon, rh Geoffrey	Moffatt, Laura
Hope, Phil (Corby)	Mole, Chris
Hopkins, Kelvin	Moonie, Dr. Lewis
Howarth, rh Alan (Newport E)	Moore, Michael
Howarth, George (Knowsley N & Sefton E)	Morley, Julie
	Morley, Elliot
	Mountford, Kali

Mudie, George	Smith, rh Chris (Islington S & Finsbury)
Mullin, Chris
Munn, Ms Meg	Smith, Geraldine (Morecambe & Lunesdale)
Murphy, Jim (Eastwood)
Naysmith, Dr. Doug	Smith, Jacqui (Redditch)
Norris, Dan (Wansdyke)	Smith, John (Glamorgan)
O'Brien, Bill (Normanton)	Smith, Llew (Blaenau Gwent)
O'Brien, Mike (N Warks)	Soley, Clive
Olner, Bill	Southworth, Helen
Organ, Diana	Spellar, rh John
Osborne, Sandra (Ayr)	Squire, Rachel
Owen, Albert	Stevenson, George
Pearson, Ian	Stewart, Ian (Eccles)
Picking, Anne	Stoate, Dr. Howard
Pickthall, Colin	Strang, rh Dr. Gavin
Pike, Peter (Burnley)	Straw, rh Jack
Plaskitt, James	Stringer, Graham
Pollard, Kerry	Stuart, Ms Gisela
Pond, Chris (Gravesham)	Stunell, Andrew
Pope, Greg (Hyndburn)	Sutcliffe, Gerry
Pound, Stephen	Tami, Mark (Alyn)
Prentice, Ms Bridget (Lewisham E)	Taylor, David (NW Leis)
	Taylor, Matthew (Truro)
Prentice, Gordon (Pendle)	Thomas, Gareth (Clwyd W)
Primarolo, rh Dawn	Thomas, Gareth (Harrow W)
Prosser, Gwyn	Thomas, Simon (Ceredigion)
Pugh, Dr. John	Thurso, John
Purchase, Ken	Timms, Stephen
Purnell, James	Touhig, Don (IsIwyn)
Quin, rh Joyce	Trickett, Jon
Quinn, Lawrie	Turner, Dr. Desmond (Brighton Kemptown)
Rammell, Bill
Rapson, Syd (Portsmouth N)	Turner, Neil (Wigan)
Raynsford, rh Nick	Twigg, Derek (Halton)
Reed, Andy (Loughborough)	Twigg, Stephen (Enfield)
Rendel, David	Tyler, Paul (N Cornwall)
Robertson, Angus (Moray)	Tynan, Bill (Hamilton S)
Roche, Mrs Barbara	Vaz, Keith (Leicester E)
Rooney, Terry	Vis, Dr. Rudi
Ross, Ernie (Dundee W)	Ward, Claire
Roy, Frank (Motherwell)	Watts, David
Ruane, Chris	Webb, Steve (Northavon)
Ruddock, Joan	White, Brian
Russell, Bob (Colchester)	Whitehead, Dr. Alan
Russell, Ms Christine (City of Chester)	Wicks, Malcolm
	Williams, rh Alan (Swansea W)
Ryan, Joan (Enfield N)	Williams, Hywel (Caernarfon)
Salmond, Alex	Williams, Roger (Brecon)
Salter, Martin	Willis, Phil
Sanders, Adrian	Winnick, David
Sarwar, Mohammad	Wishart, Pete
Sedgemore, Brian	Wood, Mike (Batley)
Shaw, Jonathan	Woodward, Shaun
Sheerman, Barry	Worthington, Tony
Sheridan, Jim	Wright, David (Telford)
Short, rh Clare	Wright, Tony (Cannock)
Simpson, Alan (Nottingham S)	Wyatt, Derek
Singh, Marsha	Younger-Ross, Richard
Skinner, Dennis	Tellers for the Noes:
Smith, Angela (Basildon)	Margaret Moran and
	Jim Fitzpatrick

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 261, Noes 153.

Division No. 211]	[7:16 pm
AYES
Ainger, Nick	Anderson, Janet (Rossendale & Darwen)
Ainsworth, Bob (Cov'try NE)
Alexander, Douglas	Armstrong, rh Ms Hilary
Allen, Graham	Atherton, Ms Candy
Anderson, rh Donald (Swansea E)	Atkins, Charlotte

Austin, John	Gerrard, Neil
Bailey, Adrian	Gibson, Dr. Ian
Baird, Vera	Gilroy, Linda
Barnes, Harry	Goggins, Paul
Barron, rh Kevin	Griffiths, Nigel (Edinburgh S)
Beard, Nigel	Griffiths, Win (Bridgend)
Beckett, rh Margaret	Grogan, John
Begg, Miss Anne	Hain, rh Peter
Benn, rh Hilary	Hall, Mike (Weaver Vale)
Benton, Joe (Bootle)	Hall, Patrick (Bedford)
Best, Harold	Hanson, David
Betts, Clive	Harris, Tom (Glasgow Cathcart)
Blackman, Liz	Havard, Dai (Merthyr Tydfil & Rhymney)
Blears, Ms Hazel
Blizzard, Bob	Healey, John
Bradley, rh Keith (Withington)	Hendrick, Mark
Bradley, Peter (The Wrekin)	Hepburn, Stephen
Bradshaw, Ben	Hesford, Stephen
Brennan, Kevin	Hewitt, rh Ms Patricia
Brown, rh Nicholas (Newcastle E Wallsend)	Heyes, David
	Hinchliffe, David
Brown, Russell (Dumfries)	Hood, Jimmy (Clydesdale)
Browne, Desmond	Hoon, rh Geoffrey
Bryant, Chris	Hope, Phil (Corby)
Burgon, Colin	Hopkins, Kelvin
Burnham, Andy	Howarth, rh Alan (Newport E)
Byers, rh Stephen	Howarth, George (Knowsley N & Sefton E)
Cable, Dr. Vincent
Cairns, David	Hughes, Kevin (Doncaster N)
Campbell, Alan (Tynemouth)	Hurst, Alan (Braintree)
Campbell, Ronnie (Blyth V)	Illsley, Eric
Caplin, Ivor	Ingram, rh Adam
Casale, Roger	Jackson, Helen (Hillsborough)
Caton, Martin	Jamieson, David
Cawsey, Ian (Brigg)	Jenkins, Brian
Clark, Paul (Gillingham)	Johnson, Miss Melanie (Welwyn Hatfield)
Clarke, rh Charles (Norwich S)
Clarke, rh Tom (Coatbridge & chryston)	Jones, Jon Owen (Cardiff C)
	Jones, Kevan (N Durham)
Clarke, Tony (Northampton S)	Jones, Lynne (Selly Oak)
Clelland, David	Jones, Martyn (Clwyd S)
Clwyd, Ann (Cynon V)	Kaufman, rh Sir Gerald
Coaker, Vernon	Keeble, Ms Sally
Coffey, Ms Ann	Keen, Alan (Feltham)
Connarty, Michael	Keen, Ann (Brentford)
Cook, Frank (Stockton N)	Kennedy, Jane (Wavertree)
Cook, rh Robin (Livingston)	Khabra, Piara S.
Cooper, Yvette	Kidney, David
Cousins, Jim	Kilfoyle, Peter
Crausby, David	King, Ms Oona (Bethnal Green & Bow)
Cruddas, Jon
Cryer, Ann (Keighley)	Ladyman, Dr. Stephen
Cunningham, Jim (Coventry S)	Lammy, David
Cunningham, Tony (Workington)	Lepper, David
Davidson, Ian	Leslie, Christopher
Davies, rh Denzil (Llanelli)	Levitt, Tom (High Peak)
Davies, Geraint (Croydon C)	Lewis, Ivan (Bury S)
Dean, Mrs Janet	Lewis, Terry (Worsley)
Denham, rh John	Lloyd, Tony (Manchester C)
Dhanda, Parmjit	Love, Andrew
Dobson, rh Frank	Luke, lain (Dundee E)
Donohoe, Brian H.	McAvoy, Thomas
Doran, Frank	McDonagh, Siobhain
Dowd, Jim (Lewisham W)	MacDonald, Calum
Drown, Ms Julia	McDonnell, John
Eagle, Angela (Wallasey)	MacDougall, John
Eagle, Maria (L'pool Garston)	McGuire, Mrs Anne
Edwards, Huw	Mclsaac, Shona
Ellman, Mrs Louise	McKenna, Rosemary
Ennis, Jeff (Barnsley E)	McNamara, Kevin
Etherington, Bill	McNulty, Tony
Fitzsimons, Mrs Lorna	Mactaggart, Fiona
Flint, Caroline	McWalter, Tony
Foulkes, rh George	McWilliam, John
Francis, Dr. Hywel	Mahon, Mrs Alice
George, rh Bruce (Walsall S)	Mann, John (Bassetlaw)

Marsden, Gordon (Blackpool S)	Sedgemore, Brian
Marshall, David (Glasgow Shettleton)	Shaw, Jonathan
	Sheerman, Barry
Marshall-Andrews, Robert	Sheridan, Jim
Martlew, Eric	Simpson, Alan (Nottingham S)
Meacher, rh Michael	Singh, Marsha
Meale, Alan (Mansfield)	Skinner Dennis
Merron, Gillian	Smith, Angela (Basildon)
Michael, rh Alun	Smith, rh Chris (Islington S & Finsbury)
Miller, Andrew
Moffatt, Laura	Smith, Geraldine (Morecambe & Lunesdale)
Mole, Chris
Moonie, Dr. Lewis	Smith, Jacqui (Redditch)
Morgan, Julie	Smith. John (Glamorgan)
Morley, Elliot	Smith, Llew (Blaenau Gwent)
Mountford, Kali	Soley, Clive
Mudie, George	Southworth, Helen
Mullin, Chris	Spellar, rh John
Munn, Ms Meg	Squire, Rachel
Murphy, Jim (Eastwood)	Stewart Ian (Eccles)
Naysmith, Dr. Doug	Stoate, Dr. Howard
Norris, Dan (Wansdyke)	Strang, rh Dr. Gavin
O'Brien, Mike (N Warks)	Straw, rh Jack
Olner, Bill	Stuart. Ms Gisela
Osborne, Sandra (Ayr)	Sutcliffe, Gerry
Owen, Albert	Tami, Mark (Alyn)
Pearson, Ian	Taylor, rh Ann (Dewsbury)
Picking, Anne	Taylor, David (NW Leis)
Pickthall, Colin	Thomas Gareth (Clwyd W)
Pike, Peter (Burnley)	Thomas Gareth (Harrow W)
Plaskitt, James	Timms, Stephen
Pollard, Kerry	Touhig, Don (Islwyn)
Pond, Chris (Gravesham)	Trickett, Jon
Pope, Greg (Hyndburn)	Turner, Dr. Desmond (Brighton Kemptown)
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)	Turner, Neil (Wigan)
	Twigg, Derek (Halton)
Prentice, Gordon (Pendle)	Twigg, Stephen (Enfield)
Primarolo, rh Dawn	Tynan. Bill (Hamilton S)
Prosser, Gwyn	Vaz, Keith (Leicester E)
Purchase, Ken	Vis, Dr. Rudi
Purnell, James	Ward, Claire
Quin, rh Joyce	Watts, David
Quinn, Lawrie	White, Brian
Rammell, Bill	Whitehead, Dr. Alan
Rapson, Syd (Portsmouth N)	Wicks, Malcolm
Raynsford, rh Nick	Williams, rh Alan (Swansea W)
Reed, Andy (Loughborough)	Winnick, David
Roche, Mrs Barbara	Wood, Mike (Batley)
Rooney, Terry	Woodward, Shaun
Ross, Ernie (Dundee W)	Worthington, Tony
Roy, Frank (Motherwell)	Wright, David (Telford)
Ruane, Chris	Wright, Tony (Cannock)
Ruddock, Joan	Wyatt, Derek
Russell, Ms Christine (City of Chester)
	Tellers for the Ayes:
Ryan, Joan (Enfield N)	Jim Fitzpatrick and
Salter, Martin	Margaret Moran

NOES
Allan, Richard	Breed, Colin
Amess, David	Brooke, Mrs Annette L.
Arbuthnot, rh James	Browning, Mrs Angela
Atkinson, David (Bour'mth E)	Bruce, Malcolm
Baker, Norman	Burns, Simon
Baron, John (Billericay)	Burnside, David
Beggs, Roy (E Antrim)	Burstow, Paul
Bellingham, Henry	Burt, Alistair
Beresford, Sir Paul	Butterfill Sir John
Blunt, Crispin	Campbell, rh Sir Menzies (NE Fife)
Bottomley, Peter (Worthing W)
Bottomley, rh Virginia (SW Surrey)	Cash, William
	Chapman, Sir Sydney (Chipping Barnet)
Brady, Graham
Brake, Tom (Carshalton)	Chidgey David
Brazier, Julian	Chope, Christopher

Clappison, James	Maude, rh Francis
Clifton-Brown, Geoffrey	Mawhinney, rh Sir Brian
Collins, Tim	Mitchell, Andrew (Sutton Coldfield)
Conway, Derek
Cormack, Sir Patrick	Moss, Malcolm
Cotter, Brian	Murrison, Dr. Andrew
Cran, James (Beverley)	Norman, Archie
Curry, rh David	Osborne, George (Tatton)
Davey, Edward (Kingston)	Ottaway, Richard
Davies, Quentin (Grantham & Stamford)	Page, Richard
	Paice, James
Davis, rh David (Haltemprice & Howden)	Paterson, Owen
	Pickles, Eric
Djanogly, Jonathan	Portillo, rh Michael
Dorrell, rh Stephen	Prisk, Mark (Hertford)
Ewing, Annabelle	Pugh, Dr. John
Fallon, Michael	Redwood, rh John
Field, Mark (Cities of London & Westminster)	Rendel, David
	Robathan, Andrew
Flight, Howard	Robertson, Angus (Moray)
Forth, rh Eric	Robertson, Hugh (Faversham & M-Kent)
Foster, Don (Bath)
Francois, Mark	Robertson, Laurence (Tewk'b'ry)
Gale, Roger (N Thanet)	Roe, Dame Marion
Gibb, Nick (Bognor Regis)	Russell, Bob (Colchester)
Gidley, Sandra	Salmond, Alex
Gillen, Mrs Cheryl	Sanders, Adrian
Goodman, Paul	Shepherd, Richard
Gray, James (N Wilts)	Simmonds, Mark
Grayling, Chris	Soames, Nicholas
Green, Damian (Ashford)	Spicer, Sir Michael
Greenway, John	Spink, Bob (Castle Point)
Grieve, Dominic	Spring, Richard
Gummer, rh John	Steen, Anthony
Hague, rh William	Stunell, Andrew
Hammond, Philip	Swayne, Desmond
Hancock, Mike	Swire, Hugo (E Devon)
Harvey, Nick	Syms, Robert
Hawkins, Nick	Tapsell, Sir Peter
Hayes, John (S Holland)	Taylor, Ian (Esher)
Heath, David	Taylor, Sir Teddy
Hendry, Charles	Thomas, Simon (Ceredigion)
Hermon, Lady	Thurso, John
Hoban, Mark (Fareham)	Trend, Michael
Hogg, rh Douglas	Turner, Andrew (Isle of Wight)
Holmes, Paul	Tyler, Paul (N Cornwall)
Hughes, Simon (Southwark N)	Viggers, Peter
Jack, rh Michael	Waterson, Nigel
Jenkin, Bernard	Watkinson, Angela
Johnson, Boris (Henley)	Whittingdale, John
Key, Robert (Salisbury)	Widdecombe, rh Miss Ann
Kirkbride, Miss Julie	Wiggin, Bill
Knight, rh Greg (E Yorkshire)	Williams, Hywel (Caernarfon)
Laing, Mrs Eleanor	Williams, Roger (Brecon)
Laws, David (Yeovil)	Willis, Phil
Leigh, Edward	Wilshire, David
Letwin, rh Oliver	Winterton, Ann (Congleton)
Lewis, Dr. Julian (New Forest E)	Winterton, Sir Nicholas
Liddell-Grainger, Ian	(Macclesfield)
Lidington, David	Wishart, Pete
Lilley, rh Peter	Yeo, Tim (S Suffolk)
Llwyd, Elfyn	Young, rh Sir George
Loughton, Tim	Younger-Ross, Richard
Luff, Peter (M-Worcs)
McIntosh, Miss Anne	Tellers for the Noes:
Mackay, rh Andrew	Mr. David Ruffley and
McLoughlin, Patrick	Mr. John Randall

Question accordingly agreed to.

MADAM DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the Government's commitment to better regulation and enterprise, which has contributed to the UK becoming one of the best locations in the world in which to start and run a business; welcomes the recent independent endorsements of the UK's light touch regulatory environment; applauds the deregulatory initiatives brought forward since 1997 which have contributed to a significant decline in the total number of regulations imposing a cost on British business; rejects outright the allegations claiming that the regulatory burden on business now exceeds £30 billion; supports measures taken to improve the regulatory environment for smaller businesses such as the removal of statutory audit requirements for small and medium-sized enterprises and the introduction of two specific commencement dates for employment regulations; congratulates the Government on signing up to the new European Constitution which promotes competitiveness and flexibility and which will ensure that national governments have new powers to scrutinise EU regulatory proposals; notes with concern proposals put forward by the Opposition which would damage Britain's relationship with Europe to the detriment of British business by withdrawing the UK from the world's largest common market; recognises the Government's constructive stance on the Agency Workers and Working Time Directives where it has maintained a position that promotes both fairness and flexibility; and calls on the Opposition to examine its own European policies which are consistently flouted by its own MEPs and Party members.