§ 11.45 a.m.
§ The Secretary of State for Employment (Lord Young of Graffham)
My Lords, with the leave of the House, I should like to make a Statement on Government action to relieve business of the burden of unnecessary regulation.
399 "We are publishing today a White Paper Building Businesses—Not Barriers (Cmnd. 9794). It contains a balanced series of new proposals for reducing the administrative and legislative burdens on business as well as a report on the progress made in furthering the proposals made in the last White Paper on this subject Lifting The Burden (Cmnd. 9571).
"The White Paper reflects our firm belief that only by removing barriers to business will enterprise flourish and the essential creation of wealth and jobs follow.
"It presents a balanced programme which recognises that government have a role in providing legal protection for workers, consumers and the general public, as well as protecting the environment and our quality of life. However, it also recognises that unnecessary regulations act as an inhibition to business growth and job creation.
"In this White Paper the Government have maintained these protections while still taking a series of significant steps forward in giving business the freedom to grow.
"There are nearly 80 new proposals in Building Businesses—Not Barriers. First of all, the work of the enterprise and deregulation task force, liaising with deregulation teams in government departments, will ensure that there is a proper analysis of the effects of proposed rules and regulations on businesses.
"We will modernise the use classes order to allow a somewhat wider range of changes in the use of buildings or land to take place without planning permission. We will permit businesses with planning permission for two or more alternative uses to change between these without the need for further planning applications. But I stress that we do not propose to change the law on working from home.
"We will be setting up a major review on VAT and small businesses, considering such issues as accounting for VAT on a cash basis rather than using invoices, and an instalment system for VAT payments. We are introducing a more personal approach by civil servants in their dealings with business so that responsibility will be linked to individual named officials.
"We will be reducing the duplication of visits by government officials. PAYE and national insurance inspectors are now co-ordinating their visits to companies and we are introducing a pilot scheme to co-ordinate visits by Inland Revenue and Customs and Excise officials.
"These are just a small sample of the efforts being made throughout every government department and agency to cut red tape and improve communications. Our proposals are carefully measured. None crosses the fine dividing line between liberty and licence.
"As well as concentrating on reducing domestic burdens the White Paper also reports on progress towards cutting the bureaucracy imposed by EEC regulations and directives. Following an initiative made by the Prime Minister, a task force has been established within the European Commission to 400 scrutinise all future proposals that might affect business so that the costs of compliance can be minimised.
"At the same time as publishing Building Businesses—Not Barriers the Department of Employment has launched a booklet Cutting Red Tape. It summarises the contents of the White Paper in a popular and easy to digest way.
"My Lords, there can be few more urgent tasks than to create the climate for growth of employment. The more people concentrate on running their businesses, free of unnecessary barriers, the better for jobs. And more jobs is indeed our aim—one I am sure shared by all parts of your Lordships' House. This White Paper will help jobs without losing any necessary protections. I commend it to your Lordships' attention."
§ My Lords, that is the Statement.
Lord Bruce of Donington
My Lords, we on this side are most grateful to the noble Lord for having made the Statement this morning. We shall read with great interest the White Paper to which it refers. One part of the noble Lord's Statement gives me, and I think will give the country, some cause for concern. The noble Lord said:The White Paper reflects our firm belief that only by removing barriers to business will enterprise flourish and the essential creation of wealth and jobs follow".For the past seven years we have been told that it is the economic and fiscal policies of the Government that will create jobs. In fact, the noble Lord will recall that it was the Chancellor of the Exchequer, no less, in introducing his Budget last year, who gave that Budget the most attractive and seductive title of "A Budget for Jobs": since when unemployment, even after the gentle massage which the noble Lord applies to the figures from time to time in his inimitable style, has gone up by over 200,000. Not really a very good budget for jobs.
The idea that the public mind can be diverted from what is now becoming its firm belief, that it is in fact the economic and fiscal policies of the Government which are responsible for unemployment—and indeed its growing impact—by what must be regarded as a pale cosmetic in relation to the Government's achievements, to which the noble Lord from time to time refers with such glowing pride, will I think be mistaken.
If he reads the Financial Times today he will find that the Financial Times itself, in giving publicity to the publication today by the National Institute of Economic Research, still puts its finger on the pulse by saying that both interest rates and exchange rates are too high. That is the real thing that is damaging British industry and damaging its prospects.
Nobody on this side of the House would wish there to be unnecessary regulation or unnecessary legislation. Indeed, a good deal of this has accumulated during the past seven years at the instance of the Government themselves, some of it not always very effective, as, for example, the regulations—with which the House is well familiar, and with which I personally have dealt with at this 401 Box—relating to the clothing safety regulations that still remain to be effectively enforced. Nonetheless, it is quite true that if small businesses can have their burden of unnecessary regulation eased and be given a freedom that does not impinge on other people's freedoms, then we for our part would welcome it.
The noble Lord has referred to a number of relaxations of planning regulations, a matter to which we on this side will give our close attention. He has also mentioned what he described as an easing of the VAT position, which he will recall was the principal cause of disquiet among small businesses according to the sample produced in his original paper.
My Lords, what about the Inland Revenue? Is the noble Lord aware that there is much evidence—the existing White Paper and Cutting Red Tape make no mention of it, although they deal with other aspects of Inland Revenue activity—that the existing attitude of the Inland Revenue to small businesses is progressively becoming more and more oppressive? If he will make more detailed inquiries of the accountancy profession (and I have already provided him with some detail) he will know precisely to what I refer.
The fact of the matter is that the Inland Revenue departments and the VAT Customs and Excise authority, following the publication of the Keith Report, have been given toughening-up instructions. Will the noble Lord ensure that these toughening-up instructions, to which I have referred more than once and about which in the case of the Inland Revenue I have provided details to him, are dealt with?
The Statement refers to a major review on VAT and small businesses. This is encouraging. We have had so many reviews now that there must be increased employment in Her Majesty's Stationery Office. We have had White Paper after White Paper on the subject. It is no good for the noble Lord to try to get away with it by saying that all we really have to do to increase jobs is to ease a few regulations here and a few regulations there. The indictment is against the Government on their economic and financial policies. This is where the problem lies. Unless those are altered speedily there will be no decrease in the appalling unemployment figures.
Finally, we note that a more personal approach by civil servants in their dealings with business is anticipated. We trust that that includes members of the Inland Revenue staff and members of the Customs and Excise staff. He will perhaps enlighten the House as to how many small businesses he consulted before he proposed to have visits from both the Inland Revenue and the Customs and Excise at the same time. From my knowledge of small businesses, that is the last thing that small businesses are going to welcome.
We welcome the idea that red tape should be cut. All governments impose a certain amount of it. A tremendous amount of red tape will in fact be created by the eventual passage of the Gas Bill through this House. An enormous amount of red tape was involved as a result of the Telecommunications Bill, and so on. Perhaps in the final analysis the noble Lord might decide to lessen very substantially indeed the volume of legislation and the regulations that flow naturally from it.
402 As I have said, we shall give the noble Lord's White Paper the most careful examination. Many of my noble friends who are involved in the various aspects of it will return to it from time to time. But in the meantime, and with the greatest kindness to the noble Lord, whose geniality is most agreeable to us, we must say that this latest idea is nothing more than a pale cosmetic.
§ 12 noon
§ Baroness Seear
My Lords, we on these Benches also wish to thank the Secretary of State for giving us this Statement this morning. Far be it for me to attempt to imitate the inimitable style of the noble Lord, Lord Bruce; but I would agree with him that the noble Lord the Minister doth protest too much on behalf of small businesses when he claims, as he appears to be claiming, that the development in small businesses and the changes he proposes are going to be a major contribution to an improvement in the employment position.
There are many other matters to which we on these Benches have referred so often that are, in our view, of much greater importance in reducing the number of unemployed. That said, however, we must welcome attempts to get small businesses—which, as we have so often said, are far too small a part of the total economy of this country—moving. To the extent that these burdens on them are holding back this desirable development, then we would give it a welcome. I do not know whether the noble Lord the Secretary of State has today or perhaps yesterday received some papers which I sent him which well illustrate the kind of tangle into which small businesses get in attempting to get off the ground, because of the complexity of regulations and the delay. In so far also as the Civil Service is busy unravelling knots in red tape which it has itself tied up we can only be delighted that this performance is under way; it is long overdue.
The noble Lord says that he wants a more personal approach between civil servants and small businesses. I am not absolutely convinced that the devil you know is always better than the devil you do not know, but there will no doubt be some cases in which personal contact will lead to a considerable improvement in personal relationships and, what is more important, in the speed in which problems arising can be dealt with. It is that which causes a great deal of difficulty to small businesses; the difficulty in getting a straight answer to what they see as a straight question. When one is dealing with people who do not have the support of experts of one kind or another that are available to the large undertakings, simplicity of language and speed in dealing with questions is of paramount importance.
Of course we welcome the simplification of planning regulations. Anybody who has been involved in planning regulations has reason to recognise that they are often a great deal too complex and far too long drawn out in the problems involved in getting a final settlement. However, in my view it is not good enough to assume that all these changes can be made without problems arising in connection with them. The noble Lord said in the Statement that,our proposals are carefully measured".By whom have they been measured and in what way? What criteria are being applied? After all, in removing 403 burdens—as they are seen to be in the eyes of the Secretary of State—he may be removing desirable protections from the point of view of consumers, of the general public and of employees. All these partners in the matter have to be taken into account. In his enthusiasm for small businesses we need to be assured that the Secretary of State is equally aware of the interests of these other groups, and we should like to know that this measurement that has taken place has not been done by people who are already so devoted to the development of small businesses that they brush off on one side these other considerations.
Some of the protective legislation in the past has followed very careful investigation by expert people from the Factory Inspectorate and from health and safety and other areas. To what extent and how much have the experts in the problems arising in protection of employees and the environment come into the consideration and the measurement, as it says here, of the consequences?
With that, I should also like to say that I have only just had this document put into my hand. It is due to be released only at 11 o'clock today. I feel, judging from the Statement we have been given, that there are probably matters in it to which the House would like to give greater attention at a later time. The sweeping away of unnecessary protection is desirable, but we want to be assured that these other interests are taken into account. I should welcome the opportunity of a small debate at a later stage on the proposals which have been put forward.
§ Lord Young of Graffham
My Lords, in the comparatively short time in which I have been in your Lordships' House I have become used to the style and manner of the noble Lord, Lord Bruce of Donington, and I am able to strip away from his style, accept the content and realise from what he says today that he welcomes this White Paper as long as it does not impinge on others. I assure him it does not. I take the main thrust of his remarks as a general welcome to taking away unnecessary regulations. Where, alas! I cannot agree with the noble Lord is in his statement that he thinks this is just something new that we have dreamt up. If the noble Lord and all in your Lordships' House would care to turn to the first annex of the White Paper you will see there a long list of the 80 steps which our last White Paper brought out and what we have done in the meantime. The second chapter covers the next 80 steps on where we are going in the future. I also ask the noble Lord and all in your Lordships' House to read just the first paragraph or two of the White Paper.
If we compare the United States and Europe we are looking at two labour markets of comparable size. Europe has some 250 million and the United States some 220 million. If we look again we find that in the last 10 years Europe has lost 2 million jobs. The United States on the other hand has gained 22 million new jobs. We see the debate in the United States is very much "Where are we going to get the people to fill the jobs between now and the end of the decade?" While in Europe we are all familiar that the debate is the future of work, the importance of leisure and even early retirement. In the United States of America we 404 find that individuals are free; large companies as they get larger become controlled. In Europe we find the exact opposite: we find that bureaucracy controls the individual whereas the multinational is left free.
It is moving in that direction to allow the spirit of enterprise to rise to create and to promote the creation of new jobs that this whole process is directed. And with what success? If we look at this country within the last three years, where 1 million new jobs have come into being, and we compare it with the rest of Europe, which has not followed us as yet (although they are now doing so), we see that we are creating more jobs than any other country in Europe; indeed, at times more than all put together.
Before any Member of your Lordships' House should worry about who should measure these values, may I say that in almost all instances they are the results of detailed consultations. Your Lordships will see that we went out to consult whether the audit on small firms should be taken away or not. The opinion, some 200 representations, was equally divided. We decided that we would maintain the audit on small firms. We are exploring the limits, while complying with the European Community directives, to which we can lighten the burden on the audits to which the small firms are subject.
On planning, we have been out for consultation for the last year on changes in the use classes order—which I should remind all in your Lordships' House came into being in 1947, based on the industrial classifications of the 1870s. The world has moved on. We must look at it now. It will be easier to get high tech. users; it will be easier to change between one class of light industry or perhaps offices. It will allow the promotion of new forms of industry. These are carefully measured. We are moving forward one step at a time.
Although the noble Lord opposite may say that no small firm would like a visit from both the VAT man and the tax man at the same time, I can assure all in your Lordships' House that he would like it even less if they came on succeeding days. What we are trying to do is to ensure that we do not bother small firms or large firms unnecessarily.
This is an essential strand in the economic policy of the nation and this Government. It is essential because what we must do is allow the spirit of enterprise to grow. It is essential because all these matters have an effect on jobs. Indeed, I am reminded that the English Tourist Board only recently said that the relaxation of licensing law which is covered in this matter will allow the creation of 20,000 more jobs to arise. It is those measures that all on this side of the House are determined to proceed with in the interests of the growth of employment.
§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that many of us very much welcome the general approach of the White Paper and indeed of his own Statement? The only reservations that some of us have about them is that we should like to see them go a good deal further. In particular, will my noble friend deal with the point made by the noble Baroness, Lady Seear, about the still restrictive effects of local planning restrictions? Will he deal specifically with what in my 405 own experience is one of the major troubles with them; that is, the slowness of local authority planning procedures—the need, for example, to have to wait for a meeting, possibly once every two months, of a local planning committee for some quite small matter which needs planning permission? Would he consider further the exemption of developments of this kind, in certain areas at any rate, from local planning control?
Secondly, is my noble friend aware that it is with a certain surprise that I find myself in complete agreement with the noble Lord, Lord Bruce of Donington, on one point? It concerns the point which he very well made of the apparent zeal of the Inland Revenue to push and, indeed, to hunt small businesses. There seems to be (and I do not know whether it is on instructions from above) a move to press small businesses for information, and for papers that they probably do not have, about their activities in order to ensure early tax demands. I appreciate the difficulties of dealing with the Inland Revenue, but would my noble friend give an indication that inside the Government someone perhaps may give the Board of Inland Revenue a broad hint that this kind of thing does not help?
§ Lord Young of Graffham
My Lords, I am grateful to my noble friend. The White Paper refers to the fact that the Department of the Environment will be going out within a very short period for formal consultation on the changes which are planned to be made on the use classes orders. These are technical in nature. The noble Lord will also see in the White Paper the Government's determination, over a period of a year or two, to halve the time taken on planning appeals; and that we are vitally concerned that, with safety, we reduce the time taken in order to get essential planning permission through in the interests of the growth of employment.
I am aware of what my noble friend tells me about the alleged attitude of the Inland Revenue. I shall certainly draw that to the attention of my right honourable friend the Chancellor of the Exchequer, whose primary responsibility it is. But we must be careful to distinguish between excessive bureaucracy (which is my concern), the desire for the Revenue to collect their proper taxes and undue zeal. I hope that the first two are correct. The third is something against which we shall have to take care.
§ Lord Graham of Edmonton
My Lords, will the noble Lord the Minister accept that if these changes really do reduce the burdens on small businessmen they will certainly receive a welcome from me? Would he bear in mind that up to now there has been an intolerable burden, often a stupid burden, carried by small businesses, particularly in having to carry out regulations from the DHSS? We want the burdens to be lifted, not shifted from the Government on to small businesses. Can the Minister also say something about how sanguine he might be, at a time when local councils are under great pressures to reduce staff and to reduce costs, that in relaxing planning applications there may be a danger of getting a proliferation of such non-conforming industry types as the use of industrial sewing machines and the carrying on of car sales and repairs in residential areas, which will certainly not be what is wanted by the people who live there?
§ Lord Young of Graffham
My Lords, I am very grateful for the support of the White Paper shown by the noble Lord, Lord Graham of Edmonton. Of course, it is important in the interests of many people that we lighten the burden on individuals. But we must lighten it with safety. As far as the planning changes are concerned, I think that the noble Lord will see that the proposals do not contemplate any of the changes about which he was anxious. Residential property will be kept for residential use; and we have said that there is to be no change in the law regarding the right to work at home. People have a right to work at home so long as they do not change the residential character of their abode and so long as they do not annoy their neighbours.
§ Lord Alport
My Lords, may I ask my noble friend whether there is any estimate of the number of additional jobs which will be provided as a result of the implementation of the proposals in the White Paper?
§ Lord Young of Graffham
My Lords, this is part of a continuing process. Within the White Paper, on the inside cover, my noble friend will find that, for the very first time, the objectives of the Department of Employment are there printed. I have the honour to lead a department which for many years past, I suspect, saw as its primary function either sponsoring trade unions or sponsoring the rights of members of trade unions. What is printed there clearly says that the work of the Department of Employment is to encourage the development of an enterprise economy and to reduce unemployment through more businesses, more self-employment and greater wealth creation, all leading to more jobs. This is part of that process. I should not like anyone in your Lordships' House to think that Government are so all-knowing that they can determine to a fine degree of exactitude the number of jobs created or lost by any decision of Government. Enterprise is not like that; employment is not like that. What Government have to do is get out of the way of the people so that the people can create the jobs.
§ Lord Stoddart of Swindon
My Lords, the noble Lord has evaded his noble friend's question. Indeed, he has not answered the question at all. I should like to ask him the same question in a different way. Exactly what relevance does his Statement have to employment? He boasted earlier that a million jobs had been created. Would he not agree that 90 per cent. of those jobs were part-time, low-paid and mainly for women, and that 250,000 jobs for men (for, if you like, the main breadwinners) have been lost during that period?
Does the noble Lord not realise that over the past fortnight we have had massive redundancies announced? Just to mention a few, in shipbuilding there have been 3,500; in the railways, 5,200; in British Caledonian Airways, 800; in Kodak, 900; and in Boots, 800. How many new jobs will the proposals in this Statement create? I think that the House is entitled to know that. Will the noble Lord say how reducing the health and safety protection for thousands of workers can assist in employment except at the expense of creating more dangerous and less healthy working conditions? Will he also say how 407 taking away the rights of workers in respect of unfair dismissal will help? These matters are all in the White Paper. Will he also say—
§ Lord Stoddart of Swindon
My Lords, this is in order. These are matters which are in the White Paper and about which we are entitled to ask questions. How will the removal of protection from workers in respect of unfair dismissal help unless it is to give more power to employers to sack workers unfairly? I think that these are questions which should be answered, because this Statement and the White Paper are quite irrelevant to the real needs of creating proper jobs and getting rid of 3,250,000 unemployed in this country.
§ Lord Young of Graffham
My Lords, the only irrelevance demonstrated this morning is the irrelevance of those sitting opposite me who insist on looking backwards and who cannot look forwards. The loss of employment in shipbuilding is regrettable. The world is passing on. The demand for ships has disappeared, not only in this country but all over the world; but that is another matter. On railways, of course, it is regrettable that we have had to have a loss of railway jobs this week. Perhaps those opposite would advise the National Union of Railwaymen and ASLEF that if they stopped doing such things as blacking the transfer of some newspapers and prohibiting the transfer of some newspapers by rail they would find that the railways themselves would not lose jobs as a result of more and more freight traffic being transferred from railway to the roads. In looking forward to the creation of the jobs for tomorrow, we have to create the conditions in which those jobs will flourish. It is of no use looking back: we have to look forward. It is of no use wishing the world were as it used to be: what we have to do is prepare it for what it will be tomorrow.
§ Lord Stoddart of Swindon
My Lords, if I may, let me say to the noble Lord that we are not looking backwards. We are looking forward to the day when the number of people unemployed in this country, three and a quarter million, is reduced.
§ Baroness Seear
My Lords, does the noble Lord not agree that the range of questions which has come up in response to the Statement underlines my request that there should be at the proper time a debate on this White Paper?
§ Lord Young of Graffham
My Lords, I am sure that all in your Lordships' House would agree that this has become a little too deregulated.