§ 3.6 p.m.
§ Lord Boardman rose to call attention to the obstacles imposed by legislative and administrative action which inhibit the creation of wealth and opportunities for employment; and to move for Papers.
§ The noble Lord said: My Lords, I must first say to your Lordships how much I look forward to the maiden speech we shall shortly be hearing from my noble friend Lord Vinson, who I know will bring to this debate and to future debates much wisdom and experience.
§ I do not propose to take any of the time available to me in praising the achievements of the Government, although I hope my noble friend will take those praises as read or spoken. Perhaps I could encapsulate them by saying that I think the Government have transformed for the better the attitude of the vast majority of people in this country, and have inspired a new dynamism. They have also eased the burden of some of the bureaucracy, form-filling and the like, but there remains a tremendous amount still to do. Some of these elements are very important, and some—indeed, most of the major ones—are under review by the Government at present, so I will touch upon them hut briefly.
§ The wages councils are now undergoing review, and in my view they have added significantly to the level of unemployment. The Employment Protection Act has probably done more to prevent the creation of new jobs than any other single measure on the statute book. I recall that some 10 years ago the noble Lord, Lord Lever (Mr. Harold Lever as he was then), was the Minister responsible for the introduction and supervision of that measure. I led a delegation from the Association of British Chambers of Commerce to see him, and we spelt out very clearly how many jobs we were not prepared to provide or would have been able to provide but for that measure. Here we are, 10 years later, slightly reformed and changed, but this Act still greatly interferes with the provision of new jobs. It enables a sacked employee to bring a quite frivolous claim before a tribunal where the sacked employee has nothing to lose but the employer has to spend a great deal of time and resources. It is time we looked again, and seriously, at major reforms and improvement to those measures. Surely it is better to have a job without 702 any assurance of long-term employment than it is to have no job at all.
§ Then we have youth employment where a combination of Government regulation and trade union restrictions has, I believe, played a major part in preventing the young from acquiring the skills and experience which would give them long, proper and useful jobs. I ask my noble friend to look at the position in Germany with which I am sure he is familiar, and to contrast what happens in Germany; on youth employment with what happens here. I recall, too, the occasion some years ago in this House when the noble Lord, Lord Scanlon, was speaking in a debate on youth employment and how, much to my surprise, he made such wise remarks and criticisms of the apprenticeship scheme and of the lack of an adequate differential between the young learner, and the mature and experienced ones. They were wise remarks which I hope will commend themselves to his successors in the trade union movement.
§ If I touch on the question of rates—and I have no intention of developing now a subject which I am sure will occupy this House for many hours in the future—I would draw attention to the very severe penalties that are imposed upon industry and commerce which add to the problem of jobs and the creation of wealth because of the way in which industry and commerce are having to foot the bill for local authorities to pander all too often to the non-ratepaying electorate. I hope that in the review which is now taking place the Government will heed the advice from many of the commercial and business organisations which urge that the industrial and commercial rate, whatever form the levy may take, should be divorced from that which falls upon the domestic sector.
§ We had an excellent report produced last week, I think, on the burdens on business. I welcome that report. It displays a number of problems which industry is facing at the moment. I think that in that report we may be looking only at the tip of the iceberg because there is a great deal of legislative and administrative burdens which this comparatively short report cannot touch. Indeed, on the basis of the report alone, the Financial Times last week gave an estimate that those restrictions, regulations and so on had cost this country something between (I think it was) 700,000 and 1¼ million jobs in the last five years.
§ I know that my noble friend is studying the experience of the United States of America. There they have been trying to tackle the bureaucracy and regulations which they have felt were frustrating their business; and they have been doing so with some considerable success. Indeed, the impact of their review of existing regulations in the first year was to make a saving of some 8 billion dollars in compliance costs. As noble Lords will be aware, they have created some 30 million new jobs, mostly in businesses, in the last few years.
§ To start a new business here with only one employee, you have to look at 99 (so I am told) separate regulations and comply with a large number of them. They include safety, health, heating, fire, and so on. They are all no doubt quite admirable and they are all no doubt designed to cover all contingencies, but they lack any flexibility. Surely the right way to approach such matters is to define the objective—what 703 it is that we are trying to regulate and control—and then to leave it with individual firms to find a way to meet it. For example, fire regulations occupy volumes. Surely the real thing, the only thing that we are concerned with, is that the occupier or employer, whoever it may be, should ensure that the premises are safe against fire. Leave him then to discharge that duty in the most effective way, taking account of his own circumstances and of course to the ultimate satisfaction of the inspectors.
§ May I give some examples—and I am sure that noble Lords could quote a legion of them—of some of the nonsense which arises at the present time? To remove one asbestos tile in order to get at a telephone cable, you have to give 28 days' prior notice. Think of the poor chap with his one telephone trying to start a business and having to wait 28 days before he can get that telephone operating again. I know of a case which was reported to me last weekend of a young man who was a very keen cook who decided that he would set up to bake Christmas cakes, something in which he had great skill. Towards the end of last year he baked a lot of Christmas cakes in his kitchen. He sold them very successfully and, with a lot of satisfied customers, was making a good living. Then the health inspector arrived. The health inspector said: "You must tile your kitchen"—which was perfectly hygienic—"from floor to ceiling". Really, this is a nonsense. I wonder how many of your Lordships have kitchens tiled from floor to ceiling—and we are really quite a healthy bunch, I think.
§ I am just trying to pick a few examples at random, but let us take the case of farriers, sometimes better known as blacksmiths. In order that a young man can become a farrier, apart from apprenticeship and all the other things he has first to have CSE levels, at grade 3 or better, in English literature, mathematics and arithmetic. My own horses certainly understand best the language that does not appear in any CSE examination; and I think that the noble Lord, Lord Paget, who I am happy to see is intervening later, will find that his own horses react in the same way. Surely the test of these things in the case of a farrier is: "Can he shoe horses safely and well?"—not all this other nonsense.
§ Then we return to compliance costs. To comply with many of these Government regulations is a vastly expensive operation. The Government monitor very carefully the Government's own expenditure. The Public Accounts Committee sits and looks at a lot of it, and Bills that come before this House have to say how many additional people will be employed and what the cost will be. But no one is concerned with what it is going to cost the poor devil who is going to have to comply with the regulations. This is an important element of it. I could move on to licensing and permitted hours and all that sort of thing, but I am sure that all noble Lords will know of many instances there where there are complete nonsenses and where the controls were imposed in conditions which are certainly no longer relevant.
§ Then we have a mass of legislation, much of it defective, much of it ambiguous and much of it no longer relevant. When departments agree (as all too often they do) that the law should be changed if it does not make any sense, they also go on to say, "We regret 704 that we have no parliamentary time to deal with it". We do not even have now the noble and learned Lord, Lord Denning, who used sometimes to inject a little commonsense into some of those Bills, for he is no longer on the bench. I should like to give one example, in which I declare an interest as chairman of a bank, because it does affect it. It is an example which perhaps illustrates the kind of problems that must arise in a great deal of legislation. I refer in this case to the Consumer Credit Act 1974. A lot of the regulations are coming into effect on 19th May. The Department of Trade and Industry agrees that the Act is defective in many respects. It agrees that much of it is ambiguous and says that it will be necessary to have a test case before one can see what it means and whether it means what it was intended to mean. It agrees also that parts of the Act and its regulations could well have an effect opposite to that which was intended.
§ These are not small points which arise. These are points which affect many millions of pounds of investment and masses of jobs. They cover things like multiple agreements, connected credit liability, cancellation notices, EFT/PoS (Electric Funds Transfer/Point of Sale), a project which is going to require the investment of many millions of pounds if it is to be developed. But it is inhibited at the moment because of uncertainties in the Act which there is no parliamentary time to amend. There is franchising, which is providing a growing appeal and opportunity for the young to start their businesses and to get their businesses off the ground. That is faced with difficulties because of uncertainties in the Act. Even the Small Firms Loan Guarantee Scheme is faced with similar problems.
§ These are technical matters, and I do not ask my noble friend to comment on them in any way. However, I do suggest that they should be looked at, and if my noble friend looks at them, with his great experience in these matters he will see the possible adverse impact that this uncertainty and these defects could have on investment and unemployment—and all because there is no parliamentary time to amend or clarify them.
§ There are in addition a mass of similar Acts which are no doubt equally bad. I have a proposal to put forward on this. I should like consideration to be given to the setting up of a standing select committee of both Houses to which these sorts of nonsenses could be referred—nonsenses about which such an all-party committee would no doubt say, "We quite agree that is a nonsense".
§ Then I would suggest that we should have each year a miscellaneous provisions reform Bill to give effect to the recommendations of that select committee. As the recommendations will be coming from an all-party committee which we hope will cure the nonsenses, they should not take up a great deal of parliamentary time. But would it not be a glorious "slum clearance" or "spring cleaning" if once a year we were able to pass a miscellaneous provisions reform Bill to get rid of all the nonsenses that have been referred to that select committee during the year? I would therefore ask my noble friend if he would give thought to that. I am delighted that my noble friend Lord Young is chairing the committee which is tackling these problems and I 705 have no doubt that, with his great experience, we shall receive some sensible answers and some speedy action.
§ The Government have done much to get rid of some of these obstacles but there are a great many of them and they have accumulated over the years. If we are to develop that dynamism to which I referred earlier and which I believe is coming through, and if we could create the wealth and the jobs that we are all seeking, these obstacles must be removed. My Lords, I beg to move for Papers.
§ 3.22 p.m.
Lord Bruce of DoningtonMy Lords, the House will be grateful to the noble Lord for having moved this particular Motion. In his opening remarks he described himself as a fervent supporter of the policies that have been pursued by Her Majesty's Government, and I must immediately say to him that only his considerable sense of public duty could have impelled him to put an item on the Order Paper which is so embarrassing to the party which he supports.
The noble Lord has referred in very general terms to some of the restrictions that he says are a burden on British industry. He has voiced many general propositions, and if I may say so with the utmost respect he has voiced a good number of generalities which amount to little more than ingrown prejudices. However, he has been rescued, fortunately, by none other than the Government themselves. They have produced a booklet, to which the noble Lord referred, called Burdens on Business, which comprises a survey in very precise terms involving the sampling of a representative series of small firms, from which it is possible for the House to arrive at some assessment as to the real impact of the burdens of which he complains.
I am well aware of the feature that appeared in the Financial Times of Wednesday, 10th April, which reviewed this particular document and which indicated, on the basis of the figures given in Appendix 3 on page 45 of the booklet, that the net loss to British employment and the net addition to the unemployed people that we have at the present time amounted to no fewer than one and a quarter million. They modified it at a later stage, being a little more conservative, and said that 770,000 or thereabouts had been added to the unemployment total by reason of various restrictions with which I shall deal presently and which are discussed in the report itself.
May I immediately say this. If it be true (and there are some reservations that I have to make about it, as the noble Lord will gather) then this is a massive indictment of Her Majesty's Government. Throughout the five years during their time in office they have said "there is no alternative"—remember TINA, my Lords?—and they have denied that the Government could do anything about the level of unemployment. In fact, as recently as in the publication of Cmnd. 9474, Employment: The Challenge for the Nation, everybody else but the Government is blamed for the continued existence of unemployment.
However, if this report is true and if the argument put forward by the noble Lord can be sustained, it means that the Government have been pretending to the country for the past five years or more that we had 706 to have tax incentives to release the energy and enthusiasm of executives, we had to become more and more competitive, and we had to do A, B, C and so on, including cutting public expenditure. It means that all the time the solution to at least a large proportion of our unemployment was under their noses because the Government have been in office and the legislation has been there throughout their period of office, and the administrative steps, to which the Motion refers, have been in existence all that time.
If what the noble Lord has said is true, the Government stand indicted for not having taken effective action to reduce unemployment by a minimum of 770,000. The argument they have put to the House is that there is no alternative and there are no quick solutions: yet according to this report and the calculations derived from it, a quick solution—or at any rate a very substantial part of it—has been under their noses all the time. What more massive indictment of inefficiency, short-sightedness and slovenliness in government can be attributed to them than that? Either they did not know the facts or they were too lazy to find them out, and they were protesting to the country that there was no easy solution to the problem and that it all rested on us—lower wages should be taken and so on—when all the time there were these regulations and these administrative steps to hand.
That is the logic of the argument, but of course it is not quite so simple as that. If your Lordships will turn to page 31 of the document that was provided to the Department of Trade and Industry, you will find a summary of the results obtained from the sample interviews that were undertaken. I must say that the investigation was carried out in rather a droll fashion. The statistics provided throughout are of two kinds: first, there are the unprompted responses; and, secondly, there are the prompted responses. Oddly enough, on being prompted the responses are rather higher than those which were originally unprompted. It is almost as though the interviewers went around with a list in order to find out what was the reaction of small businesses and asked, "What are your principal complaints about? What burdens do you think you are bearing at the moment which are inhibiting you in employing more people or which have caused you to employ fewer people than you otherwise would have done?"
For example, in the case of employment protection only 5 per cent. of those interviewed made any mention at all of it until they were prompted and asked, "Are you quite sure that employment protection has not affected you?", when the percentage immediately went up. If your Lordships look down page 31 at the shaded columns, which are the unprompted responses of the firms to the various questions that affected them, you will find that with the exception of value added tax, which exceeds all the rest combined in the unprompted responses, the percentages were comparatively small.
For example, the complaints about sick pay are negligible, complaints about PAYE are insignificant; health and safety produced very few complaints —under 21/2 per cent.—and there were very few complaints at all about the environment. Apparently, nobody complained about fire regulations without 707 prompting, and 1 per cent. of those interviewed said that consumer law was a burden to them; and company law likewise. For NIC the figure is 1½ per cent.; for minimum wages it is 2 per cent.; for restrictive trade practices 1 per cent., for antidiscrimination nil, and for data protection nil. The greater part of the complaints related to VAT and it is that to which I now turn.
Everybody knows that the completion of VAT returns, the compilation of the documents and the staff time that is necessary for the compilation are very extensive indeed. But I am bound to point out that VAT was introduced by the party opposite in 1972 and they have had a very long time, since they were elected in 1979, to reform the procedures. But have they? They have done nothing of the kind. Even after the publication of this report, only today, in spite of all the complaints about the complications of VAT, they have issued a Finance Bill which contains no fewer than 28 pages of variations to the VAT law and regulations.
I do not know whether the noble Lord opposite who is in charge of these operations has any friendly contact with the Treasury. I do not know what are his relations with the Chancellor of the Exchequer. But surely, if the gravamen of the complaints, which is confirmed by the survey, is that the VAT regulations and the whole method of collection of VAT are a grievous burden to industry, it appears a very odd reaction to devote 28 pages of the Finance Bill to putting even more stringent requirements upon small businesses, on the very people that the noble Lord, Lord Boardman, said—and I agree with him—are being hammered by Government restrictions.
On the basis that the burdens of VAT account for one-half of the total complaints that were made to the researchers without prompting—and this is borne out by the sample—then, quite clearly on a pari passu basis the VAT regulations are responsible at minimum for 350,000 or more unemployed at the present time, without mentioning any other effects. I shall not read the press comment this morning about these 28 pages but it can be found in The Times, Perhaps the noble Lord will have access to The Times before he makes his reply, and will tell us exactly what are his responses to the arguments. However, I can tell him that, although The Times is now a Conservative Party news sheet, it takes him very severely to task.
The remainder of the complaints involve regulations or laws which have as their purpose either the protection of workers' rights or the protection of the public on environmental and safety grounds. I do not know how far the noble Lord will wish to change these but my noble friend Lord Stoddart will deal with them in the course of his reply to the debate. However, it is noteworthy that, whatever may be the effect on small businesses, the CBI for one does not really think that it will be very considerable.
The arguments which the noble Lord, Lord Boardman, has put forward today are based on the supposition that the removal of burdens, as he has described them, and as they are defined at page 5 of the report, will contribute significantly to reducing unemployment in this country. In its latest report, the CBI casts a slight doubt on that. But I have to quote the CBI because, from the Government's point of 708 view, it is untainted by any deep or abiding association with the Labour Party.
This is what the CBI says:
Smaller firms have a significant role to play in creating new jobs but, given the size of the unemployment problem, they cannot provide any quick solution even though they are particularly important to job creation in hard-hit regional areas.That does not sound to me as a particularly enthusiastic response. How, then, in view of the opening remarks of the noble Lord, Lord Boardman, and of the contents of the report that has been published under Government auspices, is one to regard the true significance of the burdens that have been referred to? Surely it must be said that they are mere propaganda, that all the threats that are being made about the reduction of workers' rights, and so on, are calculated only to have a psychological impact on the workforce at this time. If that be so, then may I venture to draw your Lordships' attention to the fact that this may be a very dangerous thing to do.Of course, unemployment is an emotive subject. I am well aware of the political and party uses to which it can be put. Nevertheless, it is a real problem for those who are afflicted, outside anything that may be said in this House, where most of us are far more comfortably situated and have a greater opportunity for personal serenity. But the CBI, your Lordships may feel, have got the position right. Perhaps I may refer to the foreword to the latest CBI publication, where they say this:
We must accept that if the system"—that is, the system of free enterprise—cannot find ways of ending the blight of unemployment in this country and allow for the development of deprived peoples here and overseas, then its validity is in question. The second principle is a belief that continued decline in the UK cannot be merely a comfortable reversion to some supposedly happier and more rural `golden' age. For most people not born into power and wealth, such an age never existed. It is more likely continued decline would mean social upheaval, increased bitterness, decay in all change and even a move back towards the violence of earlier societies.I hope that those words of the CBI will burn into the minds of those people to whom they are addressed and that they will take very great heed of them. I say this not wishing to be offensive but with rather a lighter air than the situation demands.The Motion referred to administrative and legislative steps. I have dealt, I hope adequately, with those set out in Burdens on Business but I have some constructive suggestions to make which are of far greater significance than the paraphernalia of propaganda on such thin evidence as appears here. The first suggestion of administrative action I have to make is that the Government should pay their bills properly and quickly to the small contractors who do business with them. That would be a very great help to start with. Secondly, the Government should permit the release of capital funds held by local authorities as a result of the sale of council houses and allow those sums to be invested forthwith in the building and construction industry. That is what they should do.
The administrative action by which they have been deprived of that opportuity is one of the biggest inhibitions to the growth of employment and the reduction of unemployment in the construction industry at this time. Remember, my Lords, that the construction industry is an assembly process. It uses 709 the products of a 100 different trades, many of them small firms and businesses, and the injection—the quite legitimate injection—of funds which are in any case completely outside this theoretical and lunatic concept of the public sector borrowing requirement would in fact mean much more employment and a reduction of unemployment in the building industry.
The third administrative restriction which the Government should remove, aside from all these ridiculous trivia that are discussed in this report, is the quite arbitrary financial limits imposed upon public industries—the financial restrictions put upon them which prevent them from carrying out the full capital programmes which they have projected ahead. Remember, my Lords, that the expenditure of these public authorities is with British private business—with engineering firms and trades of all kinds. An injection of funds under the control of these various public bodies would do more to relieve unemployment than these matters that have been suggested in this report.
I have no doubt that the Government will pay no heed to this. They will seek to shelter behind this miserable document. I hope that when they take it to bed and read it, on the assumption that they have not done so already, they will take with them also the Finance Bill, published today, with its 28 pages of new regulations which will confront British business from now on.
§ Lord Harmar-NichollsMy Lords, before the noble Lord sits down, may I ask him this? While he has made clear that on party political grounds he does not like the present Government, does he think that the inhibitions, the difficulties and the regulations which inhibit business doing its job today should be reduced or not'? Will he make that clear?
Lord Bruce of DoningtonMy Lords, for my part I do not seek to decry and have not sought to decry any legislation or any administrative act that is useful and serves its purpose and is not superfluous to the purposes for which it is devised. Remember, my Lords, that the regulations and the legislation which are referred to in this report and to which the noble Lord has already referred went through both Houses of Parliament. Are we to assume that Parliament approved regulations and approved restrictions for the good of society—the good of society still matters to some of us; the good of the whole society—which were in themselves completely unnecessary at the time?
§ Lord Harmar-NichollsMy Lords, the noble Lord does not want to reduce them, then?