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Regulatory Impact Assessments

Volume 404: debated on Thursday 1 May 2003

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What procedures she has in place to audit regulatory impact assessments after implementation of (a) legislation and (b) regulations.[110633]

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

The accuracy of RIAs is currently being considered by the National Audit Office, with the Government's full support. If the hon. Gentleman has an approach that would further improve the assessment without increasing the bureaucracy, the House would be delighted to hear it.

Given that the Government have imposed £20 billion worth of additional regulatory costs on business since they entered office, I hope that the Minister agrees that it is essential that the costs to business of any additional regulations or legislation be accurately assessed. The fact is that business confidence in the current system of RIAs is, rightly or wrongly, low. Does he agree that to increase business confidence in the current system and to improve the quality of policy making, there should be a system of comprehensive post-implementation audit of RIAs, to determine how accurate they are?

The facts do not bear out the hon. Gentleman's statement. He should tell that to the 373,000 businesses that started up last year or the 1.7 million businesses that have started up in the past six years, with the best survival rates for a decade. In referring to the £20 billion figure, he contradicts his own Front Benchers, because that figure includes the cost of the minimum wage, which they now support, and the cost of paid holidays and paid pensions, which people should not have had to wait until the 21st century to get. The facts are plain: we have a robust method of assessing RIAs. What he suggests is a bureaucratic and burdensome further appraisal of RIAs, which we reject.

My hon. Friend will know that the Public Accounts Committee has considered this question. Does he accept that any RIA should take into account the positive impact on profit of measures such as the working families tax credit, which reduces the real cost of wages to business, along with form filling, and legislation that gives £10,000 tax-free profit to partnerships that become incorporated? Does he accept that we should examine the impact of legislation on profit and growth in the round, not simply focus on a bit of red tape?

My hon. Friend is right. It is a vote of confidence in the handling of the economy that so many small and medium-sized enterprises—1.7 million—have started up in this country in the past six years, and so many large companies have expanded, as Honda did when it opened a second plant in Swindon in 2000–01. It is recognised across the economy that the handling of our economic affairs by the Government, the Department of Trade and Industry, and the current Secretary of State in particular, is second to none.

Given that the burden of regulation, whatever the intrinsic merits of some of that regulation, tends to be disproportionately large upon small and medium-sized enterprises, will the Minister undertake, as I previously urged the Secretary of State to undertake, a review of the merits of the Regulatory Flexibility Act 1980 and the Small Businesses Regulatory Enforcement Fairness Act 1996 in the United States, for the simple and compelling reason that that country has a vastly superior record to any other in the generation of new private sector employment?

The hon. Gentleman makes a good point. My right hon. Friend the Secretary of State has looked closely at the United States in the respect that he requests. No one in the House would disagree with him when he asks that regulations and their impact be considered proportionately. I, as the Minister with responsibility for small businesses, accept that while larger companies have lawyers and accountants who can examine regulations in detail, smaller companies cannot afford them. I would rather the larger companies employed people who invented and developed products, not lawyers.