We now move to the next stage in the Bill—regulatory measures—which is progress of sorts. We had hoped to be there on Monday night, but we are moving forward, so it will go very fast now. It is a great pity that the noble Earl, Lord Lindsay, is not able to be with us today, because I know that this is an area he speaks on, but we have expertise in the Room and I am sure that we will be able to hear from it later on. I am glad that there is a bigger club than just a few of us who are interested in regulation.
Regulations are very important. Some people call them the rules of engagement that define quite a lot of modern life. They range from things such as whether it is possible to adjust the volume of ice cream van musical jingles to the question of how you value complex financial instruments, so they are everywhere. They are pervasive and important. A lot of complete guff—if that is a parliamentary term—is talked about them. No Government will introduce a new regulation believing it is going to make life worse for their citizens, and yet the public perception of regulations is of a relentless, negative story, with faceless bureaucrats—poor chaps—imposing rules in an inflexible and often absurd manner.
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We need to bear in mind that, as we in your Lordships’ House bear witness every day, no regulation is implemented without political oversight and a great deal of scrutiny. We think about, debate and discuss regulations, and try to make sure that they do the job they are intended to do. They help to balance risk in society and provide a framework for a stronger and more productive economy. They protect the vulnerable from harm and uphold the rights of consumers and new businesses, as well as more generally promoting a level playing field for business. Done well, the process of regulation can be a spur to competition and growth; done badly, of course, it can become a stifling burden.
The challenge facing policymakers is that the costs and benefits of regulation are not shared equally across all parts of society. Also, it is often only the direct impacts that are measured by Governments when they design new policies. Indirect impacts, particularly compliance and transaction costs, are often important but are extremely difficult to pin down. The ultimate impacts—GDP growth or, as it is more fashionable to talk about now, well-being—are rarely discussed at all. This imbalance between the costs and benefits of regulation is often felt most keenly by businesses, which in turn seek to pass on a proportion of any higher costs to consumers, leading to a sort of stealth taxation.
My purpose in giving a bit of an introduction which is not directly related to Amendment 48A—which I do wish to move at the end of what I am saying—is that I am a fan of regulation. We have to find a way of using not only this Bill but other Bills and other legislation to try and persuade people that there is good to be found in intelligent legislation. We have all tried in the past, on both sides of your Lordships’ House, to think about how to make good regulations and about regulation in the round—for example through the Better Regulation Task Force. But we do not ever really start by saying that regulation is what matters and that it will be important to how things are done. The laws that we pass are statements of principle; the regulations are the rules of engagement, and we are right to spend as much time on them as we do.
I want to pay credit to the previous, coalition Government for the impact they had on the stock of regulation. Although I will criticise the one-in, one-out—or one-in, two-out—measure in later amendments, it is a good concept. Although it might be trivial to suggest that one in, three out should be the Government’s next target—indeed, we have an amendment on that topic—the noble Baroness will get the point of what I am trying to say. There is no requirement that the stock should remain static. There is every argument to say that proper and intelligent interrogation of the regulatory stock might reduce the burden on people. That said, we do not want to get to a point where we believe that regulation is not necessary—it is necessary and it is good for us.
Having praised the previous Government and admired the ambition of the current Government in coming back again for yet another round of deregulatory measures—even though there is not that much of it this time—I wonder whether we are not missing a
trick. I want to put on record that our approach is not meant to be antagonistic: it is meant, first, to be constructive and about engaging in dialogue about whether or not there are better ways both to create a culture of regulation and, secondly, to make us think harder about what we do when we say something is a regulatory measure and is increasing or decreasing the impact on people. The way we do it currently is not right.
Thirdly—this is a three-legged stool—we need to think harder about some of the impact work that is done. Not everybody has the current impact statement to hand, which is shocking—the Minister just had to reach for it—but for those of us who have spent happy nights skimming through it, the issue is not whether or not the work has been done but that it has become a bit of boiler plate and almost a tick-box exercise. We have all seen it, but some of the propositions that have been made, particularly in relatively small-scale regulations, are pretty trivial. One option is to do nothing and you do not get many marks for imagining that. Another is “the Minister has asked us to research this one, so we might as well do that”. Occasionally, if you are lucky, a straw man is put up, but it is usually not very effective. I wonder whether we cannot do a little more on impact assessments. This may not be the Bill for it and this may not even be the time for it, but I would like to raise that.
I end this opening section by picking up on a couple of fun facts that were drawn to our attention. The Government used to publish a bi-annual statement of new regulations, typically produced in July and December. That has stopped since the general election and I wonder whether the Minister could research why that is the case because it was not a bad idea. However, the independent Regulatory Policy Committee has continued to publish its own reviews of individual departmental impact assessments. To date, there have been 13 assessments. Of those, 10 of the major changes were judged to be increases in the overall cost of regulation, and only three reduced the cost. Just under half were deemed “out of scope” under current government rules, so of the regulations produced they were not even considered by the Government in terms of their in/out scenarios. Of those in scope, the total additional cost to business was about £60 million. By the way, three of the 13 impact assessments, all produced by BIS, were judged not fit for purpose. I am sure that improvement is on the horizon.
The group of amendments including Amendment 48A is really about that old saw, “what you measure gets reported”. In particular, I want to highlight for the benefit of the Committee that—and I had not realised this until I looked into it in more detail—the way that the Government count regulatory burdens is to exclude EU regulations en bloc. In other words, on the one hand we blame the EU, often unfairly, for a huge regulatory burden, but we do not count it when we bring it into scope in the UK. That is pretty clever, and I suspect that it is up to Members of your Lordships’ House to feel a little stupid for not having realised that. All the stuff about how much regulation has been saved has to be considered in the context that quite a lot of that regulation, which had a significant impact on the UK economy, was not counted.
The second point I want to make is that the Regulatory Policy Committee reported recently that,
“nearly half of the approximately 1,000 laws enacted during the previous Parliament”—
under the coalition Government—
“were outside the scope of the Government's One-in, One-out and one-in, Two- out rules. Nearly 70 per cent of these were of EU origin”.
The RPC reported that mutually.
I do not honestly think that businessmen and women would care whether the regulations they have to work to come from this place or across the channel. However, they have an impact on their work and therefore I think that we should fess up and try to get a measure into play in the way that we think about all regulation that impacts on business. That seems to be the issue.
On Amendment 48B, we have a definition of regulatory provision in the Small Business, Enterprise and Employment Act, which works well for primary legislation. But we have not been able to find—perhaps the Minister can respond on this point—a proper system for defining regulations that are secondary in nature, whether they are in or out of scope and how they are measured. That whole package needs to be looked at again. Our amendment suggests that the Government should commission from the Regulatory Policy Committee a full-scale assessment of what is and is not included.
There is room for debate around some of the claims made by the previous Government, which suggested that something like £10.6 billion worth of savings were made during that Parliament because of reductions in red tape and regulation. A close read of the independent Regulatory Policy Committee suggests that that is a great overstatement and that more costs were incurred than were saved. If we are going to get this right, it falls back to a definition, and I ask the noble Baroness to take that thought away. It may not be something that we can do within the Bill, but there is a big job of work to be done. We must think again about how we make regulations, how the impact assessments are done to support them and how we discuss them. I beg to move.