On a point of order, Mr. Speaker. In the past few days, there has been press speculation that a man has been arrested in connection with the missing body of Captain Robert Nairac, who was taken by the IRA in Northern Ireland. Captain Robert Nairac was my captain.

Should a Minister not come before the House in respect of this issue? This gentleman was on operational duties serving his country, and if there is new news about where his body is, surely a Minister from the Ministry of Defence should be here telling us exactly what happened.

I understand the hon. Gentleman’s deep concern, but it is not a matter for me. Ministers can decide when they will come and make a statement.

I beg to move,

That leave be given to bring in a Bill to provide for parliamentary scrutiny of the Committee on the Grant of Honours, Decorations and Medals.

The committee is commonly known as the HD committee. This powerful, secretive but completely unaccountable committee has caused grave offence to veterans and to what is probably one of the few Muslim countries in the world that wants to honour British servicemen. My Bill would require the Foreign Secretary, under whose jurisdiction the committee falls, to publish an annual report on its work and to lay that report before Parliament. Within four weeks of its publication, there would be a debate in the House on a motion expressing approval for the report. Through that vote, the House could give its view on the committee’s actions during that year.

If the House voted against the motion, a clear warning would be sent to the HD committee, and its chairman could be called before the Foreign Affairs Committee to explain his committee’s actions. If the Bill became law, the decisions of the HD committee would become as open and transparent as they are currently unaccountable and arcane.

At present, the situation regarding the honours and decorations awarded to British service personnel and veterans is completely unacceptable. The HD committee is free to make confusing and even whimsical rulings about which medals can be awarded, accepted or worn, without any obligation to give a clear rationale for its decisions. It does not publish its minutes or its correspondence, and it appears that no one outside the committee has anything but the vaguest idea about how its decision-making process works. In answer to a parliamentary question that I tabled to the Foreign Secretary on 13 March, I was told that the committee normally transacts business by correspondence, and only met three times during 2005 and 2006.

No one in this House would disagree that honouring our servicemen and women is a matter of the greatest importance, yet the decisions on who is entitled to recognition are taken by a body that does not answer to any elected authority whatsoever, seldom meets, and never has to explain or account for its decisions. Surely, in an era of openness and transparent government, it is unacceptable to have a committee that rules on the important matter of decorations and medals which meets on an ad hoc basis and whose discussions are confidential.

The arcane workings of this committee might never have been brought to light but for the disgraceful treatment that it handed out to 35,000 British veterans of the 1955-1966 Malaysian campaign. The HD committee advised Her Majesty the Queen to allow the veterans to accept the Pingat Jasa Malaysia medal, or PJM, from the Malaysian Government, and then advised Her Majesty that our soldiers must not wear it—British veterans who fought in the jungles of Malaysia shamefully treated by mandarins who fight in the jungles of Whitehall. That bizarre ruling has created great offence among British veterans and bafflement on the part of the Malaysian Government. Surely any chance of strengthening our relations with Malaysia—a predominantly Muslim country—should be welcomed at this time.

Colleagues in all parts of the House, veterans organisations, and even Ministers of the Crown, have all made representations to the committee to change its advice, but it has remained obstinate in its refusal to do so. An illustration of the widespread support for veterans wearing the PJM occurred last year when I tabled early-day motion 356. It attracted 176 signatures calling on the committee to change the advice given to Her Majesty the Queen on the wearing of the PJM. The right hon. Member for East Hampshire (Mr. Mates) tabled a similar EDM, and that too attracted a large number of signatures. Both EDMs were met with a wall of silence by the HD committee.

The committee has hidden behind antiquated rules such as the “double medalling rule”, which says that when a British award has already been given for the same service, another one cannot be accepted. Then there is the “five-year rule” preventing the acceptance and wearing of non-British awards for events or service that took place more than five years ago. Both those rules are being used to stop veterans wearing the PJM, but their application is confusing and anything but consistent. In a written statement on 31 January 2006, my hon. Friend the Member for Dudley, South (Ian Pearson), the then Trade Minister, who also served as a Foreign Office Minister, said:

“The Committee on the Grant of Honours, Decorations and Medals...has recommended an exception to two of the long-established rules governing the acceptance and wearing of foreign...awards”.—[Official Report, 31 January 2006; Vol. 422, c. 10WS.]

In other words, the committee put aside the rules to allow the Malaysian veterans to accept the PJM, then imposed the rules to prevent them from wearing it on public occasions.

But there is more. The committee then went on to lift the ban on our veterans wearing the PJM for one week during the 50th anniversary of Malaysia’s independence, which it celebrated last year. Why did it do that? Because as Queen of Australia and New Zealand, Her Majesty the Queen has given permission for the PJM to be worn by the veterans of those two Commonwealth countries, and as a large number of British ex-servicemen were expected to visit Malaysia during the celebrations, it was feared that the prospect of Commonwealth veterans parading wearing their PJM alongside British veterans who were not allowed to wear their PJM would cause embarrassment in the media in Malaysia and in Britain. What a shameful way to treat our brave soldiers.

In December 2007, my hon. Friend the Member for Pontypridd (Dr. Howells), the Minister of State, Foreign and Commonwealth Office, said in response to a debate in Westminster Hall that

“the HD committee has considered the case of the PJM three times, the third time to agree to wearing the medal in Malaysia during the 50th anniversary celebrations.”

He went on:

“Having considered it in such detail, carefully weighing up the arguments for and against… the committee does not plan to reconsider the matter”.—[Official Report, Westminster Hall, 11 December 2007; Vol. 469, c. 43WH.]

My hon. Friend has been very supportive; I know that he gave the news with a heavy heart, and that he is as perplexed as the rest of us by the committee’s decision.

As things stand, a House of Commons elected directly by the people of Britain is powerless to do anything about the committee’s decisions. This House, directly elected by the people of Britain, is unable to scrutinise the decision of a committee of unelected mandarins. I have met and spoken to many veterans of the Malaysian campaign, and their bravery deserves better than the miserable treatment handed out by the HD Committee. It shows more concern for the niceties of precedent and upsetting the status quo than for honouring our veterans. The inability of the House of Commons to debate or scrutinise the HD committee’s decisions is anathema to parliamentary democracy and has no place in the modern world. My Bill would mean that the decisions of the HD committee would at last become subject to rigorous parliamentary scrutiny and debate. It would ensure that the decisions, and the process of how those decisions are made, stand up to examination.

This House is to have the ultimate responsibility of asking servicemen and women to risk their lives for our country in times of war and armed conflict. Surely, then, this House has the right, indeed the duty, to look after their interests and make the HD committee answerable to Parliament for its actions. Some will argue that the issue of medals is sensitive, and should not be brought into the public domain. If they do, I ask them the following question. Every year a report is brought to Parliament on the working of the British intelligence services. If this House can scrutinise the work of Britain’s security services, why can it not scrutinise the work of the HD committee?

There is no excuse for the total unaccountability of the HD committee, and there is no excuse for its behaviour towards our veterans. Its action brings shame on the British nation. It is time to subject its decisions and deliberations to the scrutiny of Parliament and ensure that brave and courageous servicemen, such as the veterans of the Malaysian campaign, can never again be subject to such disgraceful treatment. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Don Touhig, Mr. Adam Ingram, Jim Sheridan, Linda Gilroy, Mr. Michael Mates, Mr. James Gray, Miss Ann Widdecombe, Mr. Michael Ancram, Bob Russell, Pete Wishart, Malcolm Bruce and the Rev. Ian Paisley.

Committee on the Grant of Honours, Decorations and Medals

Mr. Don Touhig accordingly presented a Bill to provide for parliamentary scrutiny of the Committee on the Grant of Honours, Decorations and Medals: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 112].

I beg to move, That the Bill be now read a Second time.

Well-targeted regulation ensures essential rights for consumers and workers. It is a mark of a civilised society. It is necessary to protect our environment, and it is needed to tackle market failures and to establish the simple, clear and consistent rules that businesses and public services need to operate successfully. But too much regulation and poorly targeted interventions can lead to unnecessary costs that could hold back UK businesses, charities and public organisations. That is why the Government have developed an ambitious better regulation agenda that aims to eliminate inappropriate regulatory burdens, wherever they exist. I am pleased to report to the House that that is already bearing fruit.

I am glad to hear that the plan is already bearing fruit. Commissioner Verheugen said that over-regulation was costing the European Union some £600 billion a year. How will the Minister reconcile the Bill with the fact the European Communities Act 1972 applies in any event? Will the Bill override the European Communities Act? Will he apply the simple principle of the supremacy of Parliament to ensure that we achieve regulation in the way that the House wishes, and not necessarily follow the European Union?

The hon. Gentleman asks several questions. The Bill will not change the fundamental relationship between the United Kingdom and the European Union, or the way in which that legal regime operates. He will be glad to know that the United Kingdom has led the way in driving an agenda to cut administrative burdens that are caused by European regulations and laws. As I was about to inform hon. Members, our work in the United Kingdom has already delivered some £800 million of reductions in administrative burdens to business.

I serve on the Joint Committee on Statutory Instruments, which considers everything that is drafted. We have a splendid team of professionals and we correct and improve our regulations. However, we are not allowed to do that for European Union regulation. That cannot be right. There must be a mechanism for overruling that, so that we can improve and clarify EU regulations. I am sure that the Minister wants to do that.

I commend the work of the Joint Committee on Statutory Instruments in improving regulations. I can only repeat what I said in response to the hon. Member for Stone (Mr. Cash). The Government have led the way in ensuring that the process of measuring and targeting administrative burdens for reduction, which we have undertaken for the past couple of years in this country, also happens at European level. We know that we need to do more to ensure that Britain retains and improves on its position as a great country in which to do business and invest. Later this summer, we will consult on a radical new system of regulatory budgets, which will set out the cost of new regulation.

I am grateful to the Minister for giving way again—I appreciate that we have covered the territory previously, but we are considering a specific measure. Under clause 4, the Secretary of State can provide for orders to be made for approximately 200 enactments, some of which are enormously important to running the country. Many emanate from the European Union. Subsection (4) provides that

“The Secretary of State may by order… remove any enactment”

from the list. Given the Minister’s answer to my previous question, how can the Secretary of State do that—inconsistently with the European Communities Act—unless the Government include the specific provision, “Notwithstanding the European Communities Act 1972” to reassert this Parliament’s supremacy?

As I said, the Bill does not alter the fundamental relationship between UK law and European law. We recently debated the European treaty at length, and the Bill to enact it. During those proceedings, the relationship between European law and its jurisdiction and UK domestic law was also debated at length. The Bill does not alter the relationship, to which we signed up when we joined the European Union.

As I said, we will consult on a new system of regulatory budgets, which will set out the cost of new regulation that can be introduced in a given period. We will also introduce a rolling limit on the annually recurring costs of new regulation. More immediately, the Bill will make important legislative changes to the UK system of regulatory enforcement.

Part of the background is Sir Philip Hampton’s report on administrative burdens, inspection and enforcement in 2005. It highlighted the difficulties that can follow from the inflexibility and inconsistency of the existing regulatory system. That is not acceptable, either for business or, indeed, for Government, and the Bill helps to address the issues raised by the report by ensuring a regulatory framework in which we regulate only when necessary, and in clear proportion to the risk, rationalise inspection and enforcement arrangements, and focus enforcement resources on businesses that deliberately or consistently flout their regulatory responsibilities.

The Bill will help to strengthen regulatory compliance, maintain appropriate protections for the public, and reduce regulatory burdens for compliant organisations. Part 1 will create in statutory form an expert body—the local better regulation office— with a remit to improve the way in which Government, regulators, and local authorities work together to enforce regulations. Given the important regulatory role of local authorities, that is an important way of ensuring improvements.

My hon. Friend referred to the local better regulation office as “an expert body”. From where does he expect the experts to be drawn, and how will they be appointed to the office?

In the existing LBRO company, there is expertise in business, for example, and from people with a trading standards background, which is extremely important in this field.

To underline the importance of local government, does my hon. Friend agree that four out of five regulatory inspections are carried out at local authority level? I recently met Graham Russell, the chief executive of the new LBRO, whom I know because he is a former head of trading standards in Staffordshire. He expressed confidence in the organisation’s ability to cut through complexity and establish light-touch risk-basked regulation in future. He said that the benefits of the measure would be fewer burdens on responsible businesses, with resources concentrated on tackling rogue traders.

My hon. Friend puts it extremely well: that is precisely part of the intention behind the LBRO, and we are extremely grateful for the opportunity to draw on trading standards expertise, which is important for this agenda.

The Minister has been extremely generous in giving way. I know that many Members wish to speak in the debate, so I shall keep my intervention brief. Could he not just have made an edict that regulators should concentrate on companies that are rogue traders? He did not need to set an office to do that.

If I go into more detail about the Bill’s provisions and how they will operate, that may help the hon. Gentleman.

Will my hon. Friend give way?

I shall, but then I should like to make progress.

Given what my hon. Friend has just said about the membership of the new LBRO and the importance of drawing on the expertise of trading standards officers, will he give the House an assurance that there will be an opportunity to involve environmental health officers who, along with trading standards officers, play an important role in making sure that public health standards are of the highest calibre?

I can assure my hon. Friend that the LBRO will want to draw on all relevant expertise in its task.

Part 2 establishes a statutory framework to deliver increased certainty and consistency of treatment for businesses that operate across local authority boundaries. By granting these businesses the right to refer a primary authority to inform how that business should be regulated—that is particularly relevant to businesses that operate across a number of local authority areas—part 3 will give regulators access to a suite of more flexible and proportionate civil sanctions to promote better compliance with relevant regulations. That measure has been welcomed by many leading business organisations. Part 4 will bring increased accountability and effectiveness to the way in which regulators work in practice. It is not enough simply to count the number of regulations on the statute book: the way in which regulation works in practice is extremely important for this agenda, and the focus will be on the removal of unnecessary burdens.

The measures will better protect the public, boost business confidence and bring increased clarity and consistency to the work of local authorities and national regulators. Together, they will help build a more open, simpler and coherent regulatory enforcement system which is transparent, professional, and proportionate; which does not criminalise inadvertent or minor breaches of regulatory requirements; and which does what my hon. Friend the Member for Stafford (Mr. Kidney) said, and tackles rogue traders more effectively.

May I set out in a little more detail what the measures do? Part 1 establishes the LBRO. Local authority professionals play a critical role in the enforcement of UK regulation, and those services are rightly proud of the support and advice that they provide to help businesses comply with the law. For example, Cambridgeshire trading standards has built an award-winning partnership with local businesses that continues dramatically to reduce the sale of age-restricted goods such as alcohol to children. Local authority enforcement officers operate within a complex system, with hundreds of local authorities interpreting and enforcing regulations set by Government Departments and regulators.

Part 1 will create a new statutory public corporation—the local better regulation office—to work with all parts of the system to help local authorities carry out their regulatory functions effectively and in line with better regulation principles. We have already established the LBRO as a company, and the Bill will give it statutory form, with the powers and duties that it needs to take its work forward. That includes a power to give guidance to local authorities on better regulation matters, to which those authorities will be required to have regard, as well as a right to advise Ministers and make proposals about the framework that central Government set for the work of local authorities in practice.

The day before yesterday, the Select Committee on Regulatory Reform took evidence from LACORS—Local Authorities Co-ordinators of Regulatory Services—which made the precise point that the LBRO should not just tell people what to do but should provide guidance and assistance, and should offer a mechanism for taking its concerns to the heart of Government Departments. Does such a role and relationship mirror what my hon. Friend hopes will be developed?

It is certainly the case that the LBRO’s functions include advice to central Government as well as to local authorities. It has rightly been argued that the powers that the LBRO will enjoy must be balanced by sufficient safeguards to protect local authority interests. The Bill includes a number of measures to achieve that, particularly in respect of the LBRO’s ability to issue directions to local authorities. That is subject to the strict requirement for consultation and, where more than one local authority is involved, for parliamentary approval.

Part 1 will make a major change to the way in which central and local government can work together on this agenda, and it will deliver real and lasting benefits to organisations, business and consumers. Part 2 deals with the primary authority principle, which is important, as some nationwide firms deal with up to 400 local authorities. The Hampton review highlighted the impact of inconsistencies in the different approaches adopted by local authorities to regulatory compliance and enforcement for businesses whose operations extend across more than one local authority area. Whatever business says about regulations, one thing that it wants is clarity. Conflicting advice and inconsistent enforcement can militate against clarity and increase business uncertainty and risk. For example, a challenge to the way in which a food product is labelled in just one local authority could mean the business concerned having to revise its entire policy throughout the country, with significant costs.

An attempt has been made to deal with that problem through the principle of home and lead authority schemes. That has gone some way towards resolving the issues, but such schemes are still informal and voluntary, and are not always open to those businesses that urgently need them. Part 2 will therefore provide a framework to guarantee more consistent regulatory treatment of businesses that operate across multiple local authority boundaries. The primary authority principle enshrined in the Bill will ensure that where a business and a local authority have committed time and effort to developing a productive advisory relationship, there should be a presumption that advice given to that business will hold good throughout the country, except where there are good reasons for local variation.

My hon. Friend is making an important point about the outcomes of the Hampton review. Is there a parallel in the Bill to address the needs of consumers, where scams are operated that cross boundaries? He mentioned Cambridge, whose city council was incredibly helpful to me when I was pursuing a case that crossed boundaries. However, both the council and Cambridgeshire police authority faced problems because of current law. Does the Bill address that aspect, too?

That aspect is addressed by the consumer law review, which is led by my hon. Friend the Under-Secretary of State. Part of the function of that review is precisely to support the kind of agenda that my hon. Friend mentions.

Will my hon. Friend clarify one point about the primary authority? I am familiar with the way one local authority takes the lead when a business has many outlets throughout the country—usually it is the authority that hosts the head office of the company or the main point of business. Is that the approach being taken or is it likely that businesses will be able to choose their regulator? The latter could give rise to the worry that businesses might choose the softest authority to be the lead.

There would have to be a good reason for a local authority to serve as the primary authority. There is also a mechanism in the Bill for an enforcing authority, as distinct from a primary authority, to appeal to the LBRO, if it thinks that the primary authority has made a mistake or that what might be called a sweetheart deal has been made between the primary authority and the company in question.

I am grateful to the Minister, a fellow midlands MP, for giving way. Although I endorse the sentiment of the Bill, is the fact that the Government have had to bring it before the House not an admission of failure, not least as the CBI has said that £55 billion-worth of regulation has been placed on British business since Labour came to power? In a sense, it is ironic that today we are regulating to deregulate.

The Bill is certainly not an admission of failure. The regulatory reform agenda in the UK is widely admired. The country remains a great place to invest and this year the World Bank’s “Doing Business” survey placed the UK second in the EU and sixth in the world for the best business conditions.

My hon. Friend spoke earlier about continuity, clarity and relationships, which are important. He is right that the Bill is not a failure. However, I have a concern about the protection of employees and the relationship between the ombudsman and the new statutory body. Would that be a joined-up relationship?

I know that my hon. Friend cares deeply about the protection of employees; and, as the Minister responsible for employment relations, so do I. I assure her that we will do nothing in the legislation that militates against proper and decent conditions for employees.

In relation to the question that the hon. Member for The Wrekin (Mark Pritchard) has just asked, when the Regulatory Reform Committee took evidence from the Environment Agency yesterday, I asked which other European countries we could take a lead from, because we are visiting three next week to look into their regulatory reform procedures. One of our key regulators said that, if anything, we were in advance of other countries, as the Minister just indicated.

It is beginning to sound like I could have done with being at yesterday’s sitting of the Regulatory Reform Committee. I certainly endorse the idea that Britain is a leading force in that agenda throughout the world. As we know, success in today’s economy is increasingly driven by better informed customers, empowered employees and enlightened companies that value their reputation across the world. To continue to create jobs and wealth for our country, UK businesses must be able to compete in that environment.

One of the other features that the Hampton report highlighted was businesses’ frequent complaint of being undercut by rogue traders who flout regulatory rules. As a result, the Government asked Professor Richard Macrory to review the regulators’ enforcement regimes. Professor Macrory found that most regulators were over-reliant on the single weapon of criminal prosecution, which he found was a potentially disproportionate response to cases where there is no real wilfulness or intent on behalf of the business concerned and, paradoxically, led to a compliance deficit, whereby breaches of regulation go unpunished because a regulator lacks alternative methods of enforcement.

To address that deficit, part 3 will introduce new civil sanctions the better to target rogue traders and deal more appropriately with well-meaning businesses that find that they have contravened regulations in one form or another. The Bill enables Ministers by order to select options from a range of new civil sanctions. They include: discretionary requirements to allow the regulator to require the business to take steps to put right a situation that has followed from a breach of regulation; and monetary penalties, so that regulators can impose financial sanctions, if appropriate, at various levels.

Clause 71 says that “civil sanction”, for example,

“means a fixed monetary penalty”.

However, I cannot see—perhaps my hon. Friend can guide me—on what scale that would be.

There could be various scales, because there is also the capacity for variable monetary penalties, which is an important part of the regime. In addition, there can be enforcement undertakings that present a fundamental change to the traditional relationship between the regulators and businesses. In certain circumstances, such undertakings would allow the business to volunteer alternative ways of making good the harm arising from the breach in question.

rose—

For the third time, I am happy to give way.

I am extremely grateful to the Minister, as we are talking about an important measure. He is making a logical case, but I have not been able to find out how many fewer prosecutions will occur because of the new regulations. Does he know whether prosecutions will be reduced by, say, a half or 10 per cent.? What research have the Government done in that area?

We have conducted an impact assessment on the savings to business, which I shall come to. There could still be prosecutions for more serious offences, but the number of prosecutions will depend on the number and nature of any offences committed.

Some have suggested that the provisions will oust the jurisdiction of the criminal courts. The provisions in part 3 provide an alternative to criminal prosecution, but prosecution will remain the right course of action for the more serious breaches of regulation. We do not want to criminalise well-meaning businesses unnecessarily, but we of course reserve that option for the more serious and consistent offenders.

On the point about quantifying these issues, in Prime Minister’s Question Time, the Prime Minister indicated his support for the private Member’s Bill promoted by the hon. Member for Ellesmere Port and Neston (Andrew Miller) on agency and temporary workers. Will the Minister take this opportunity to put on record and quantify the cost to British industry of the Prime Minister’s comments today?

We will publish any cost estimates and other information on that in due course. I do not want to get drawn into too long a debate on this issue, but, as in other fields, we have tried to achieve a method of meeting our goal while retaining the flexibility on which the country’s high employment record has been built. That will be our intention going forward.

I was talking about prosecution. It is true that the courts will play an ongoing role with the most serious offenders. It has been suggested that, through the variable menu of enforcement actions, regulators will somehow be acting as judge and jury, with no checks on their powers, but I assure the House that that is not the case. The Bill contains a number of essential safeguards. It makes it clear that a Minister can confer powers on regulators only if the Minister is satisfied that they are capable of exercising those powers in compliance with better regulation principles. Before regulators can impose monetary penalties or discretionary requirements, they must be satisfied beyond reasonable doubt that an offence has been committed. Businesses can make representations and objections before sanctions can be imposed, and, most importantly, there is a right of appeal to an independent and expert tribunal. Furthermore, regulators that misuse their powers could risk the suspension of such powers.

We have worked hard to ensure that the regime of variable sanctions can work appropriately, and we believe that its operation could bring significant savings to business. The Engineering Employers Federation says, on this point:

“EEF supports the principle of alternative penalties for regulatory offences as a mechanism for reducing demands on court time, speeding up the process of enforcement and sanctioning, and reducing the costs associated with this for businesses.”

Notwithstanding that quotation, there is a lot of disquiet within industry that many such fines might be slapped on to businesses. The Minister said that regulators will not act as judge and jury, but then proved that that is exactly what they will be by saying that affected businesses will be able to appeal afterwards. That will not stop the initial effect. The truth is that before going to an expensive and administratively challenging appeal, businesses could be subject to overuse of the regulations. There are concerns.

The hon. Gentleman contradicts himself. He says that regulators will act as judge and jury despite the fact that there will be an appeal to an independent tribunal; the very fact that there is an appeal process shows that that is not the case. This is not the first time that civil sanctions have been used; indeed, I have looked up some precedents. The last time that the hon. Gentleman’s party was in power, Companies House introduced a regime of civil sanctions for the late filing of accounts, and I am pleased to tell him that it increased compliance. There is a precedent, and it was introduced when his party was in power.

On the costs and benefits of the measures, taken together, we estimate that the overall benefits for business could be up to £200 million through better enforcement, lower legal costs and the variety of enforcement actions.

Will my hon. Friend discuss with local authority organisations their ability to use the civil courts and to have representation in them to ensure that they are able to take cases through those procedures rather than just through the criminal courts? I know that they still have concerns about their ability to get an audience in the civil courts and about costs. I do not know the details of those issues, but will he discuss them further with those organisations?

I am always happy to discuss such matters with local authorities.

Part 4 will create a power for Ministers to apply a duty to regulators requiring that they keep their functions under review and do not impose or maintain unnecessary burdens. It is envisaged that the power will be used where the duty will help to promote better regulation and a more accountable approach. Where the duty has been applied to a regulator, the regulator would need to report on the action taken.

I am grateful to the regulators who participated in our informal consultation on this part of the Bill. They emphasised that action to remove burdens must be proportionate, and that the benefits delivered must outweighs the costs. The duty therefore requires the removal of unnecessary burdens where it is practicable and proportionate to do so, and aims to deliver more robust enforcement of regulations. There is no intention to remove the protections that Parliament considers to be necessary, or to bog down regulators in a process of review that has been generated by frivolous complaints. Nor is the duty intended to apply in response to a particular decision by regulators in the competition field—for example, in such a way as to undermine decisions in competition cases. In most cases, a statutory instrument will be needed to apply the duty, which will be subject to the affirmative procedure. We know that that is a strong parliamentary safeguard.

Provisions on this issue were refined in the other place, and the five regulators named in the Bill asked to be included in order to emphasise that the duty in no way compromises their independence. Therefore, this part of the Bill will ensure that the enforcement of regulatory protections supports the best possible framework to enable British business to compete and succeed in today’s global environment.

I draw my marks to a close by paying tribute to the hard work and expertise of those involved in scrutinising the draft Bill. The Bill has been improved as a result of that scrutiny, and the work that has already taken place to get the provisions right, which has involved businesses, the enforcement community and national and local regulators, provides a strong base for future implementation and enforcement.

The Bill contains an ambitious package of measures that will help to boost business competitiveness and productivity in this country. That will help to maintain our position, which the World Bank has stressed, as a great country in which to do business and to invest. It will also help to create a modern, flexible and robust regulatory system that will secure the better protection for citizens that we all want. It will deliver proportionate regulation and will boost certainty and competitiveness for the honest businesses that are creating wealth day in and day out in our country. All those aspects are essential to ensure that we have a dynamic economy.

Will my hon. Friend give way?

I am drawing my remarks to a close, but I have been generous today, so I shall not stop now.

Thank you, Mr. Speaker. My hon. Friend has been very generous, but this is only my second intervention; some folk have been in about 14 times. I will thank you for it, but I will not apologise for it. Could you give an example of some of the mergers of national regulators? Who will be responsible for them? Will it be the new statutory body? Will it be you? Who will it be?

Order. For the record, I will not be giving the hon. Lady any advice, but perhaps the Minister will.

I was thanking you anyway, Mr. Speaker.

My hon. Friend is right to say that there has been a number of mergers of national regulators. We believe that the proposed process will provide greater focus, and we are determined to carry it through. The Bill is concerned not so much with mergers of national regulators as with how they operate and carry out their duties. The four parts of the Bill are designed to improve that operation and to create the right system for the future.

I conclude simply by saying that the Bill will boost certainty and competitiveness, and improve the accountability of regulators, which are essential to our economy and to the quality of life in this country. On that note, I commend the Bill to the House.

Debates and Bills aimed at reducing the country’s regulatory burden are always welcome to the Conservative party. However, we have been here before. Indeed, the Minister for Employment Relations and Postal Affairs and I have personally been here before, when we debated this exact issue at the time of the Government’s last unsuccessful effort at regulatory reform, namely the Legislative and Regulatory Reform Act 2006—just two years ago.

The Minister welcomed that particular piece of legislation, arguing that it gave a power to remove unwanted regulations through legislative reform orders. Those provisions, however, were themselves designed to upgrade the failed regulatory reform orders that the Government had implemented some five years earlier. Looking back, we remember that great things were predicted in regard to slashing red tape in business. On 15 May 2006—almost two years ago to the day—the Minister said that the Bill would provide initiatives on

“reducing the administrative burdens of regulation, consolidating and simplifying legislation to make it easier to understand and work with, and deregulation.”

He continued:

“It will also allow us to reduce administrative burdens, such as by simplifying administrative requirements for business when setting up a business or hiring staff, by ensuring that inspection is risk-based to reduce the burden on those who comply with regulation”.—[Official Report, 15 May 2006; Vol. 446, c. 719.]

Such grand ambitions we had, back then! But did not that sound just a little bit like what the Minister predicted today? He said a moment ago that this Bill would provide lasting benefits to business, and, in his final flourish, that it would boost business competitiveness.

Last time, the practice turned out to be rather different from the theory. By the end of 2007, when the legislation had been in force for nearly a year, the Financial Times reported that the law had yet to cut or even amend a single regulation. An update from the Minister today on the outcome of the existing package of reforms would therefore be appropriate. Perhaps we should not be surprised that, in his opening remarks, he rather interestingly omitted to mention the Government’s record to date. So here we are again. Is this going to be third time lucky? Given the Government’s record of failure on this issue, the Minister will understand my, and business’s, caution.

My hon. Friend is highlighting the fact that we are experiencing a deregulatory “Groundhog Day”, ever to be repeated. This is not a day for party political partisanship, so I do not particularly want to dwell on the failures relating to endless criminal offences, the failure to make our streets safer, or the endless education Bills that have failed to make our schools better. I hope, however, that my hon. Friend will be able to persuade the Minister either to tell us that he will be back in 18 months when this legislation has failed, or at least to admit that he needs to go back to first principles, rather than imposing yet more regulations on top of the regulations that we already have.

If the Government’s future record is going to be anything like their past record, we will indeed be back here in 18 months, unless they are preparing for a general election and do not have time to deal with more regulatory reform. My hon. Friend makes an important point. In its 2001 manifesto, the Labour party pledged to cut red tape. However, the British Chambers of Commerce’s burdens barometer of 2007—presumably things have got worse since then—showed that the total cost of new regulations on business since Labour came to office stood at some £55.56 billion.

As party politics have been introduced into the debate in the previous intervention, and as the hon. Gentleman is so interested in this issue, may I ask him to encourage the Conservative members of the Regulatory Reform Committee—a Committee set up by this House—to attend its meetings? Unfortunately, I have to leave this debate shortly to attend pre-arranged meetings. However, since I have been a member of that Committee, I have attended every meeting. I have seen only one Conservative member there, for a short period of half an hour, at one meeting. Please will he encourage them to turn up to the meetings of that Committee of the House, which was set up to look at this subject?

The hon. Lady has made her point, but if, as a Front Bencher, I were to comment on a Committee of the House, I am sure that people would jump on me from a great height.

We welcome the stated aims of the Bill. It seeks to implement the principles of risk-based and proportionate regulation. Those principles stem from the Hampton and Macrory reviews on regulation, and were generally welcomed by all parties in the House at the time. However, we remain to be convinced that the Bill, as drafted, will totally achieve those aspirations. Indeed, we have many serious reservations about significant parts of the Bill, in relation to its practical operation and its legal effect.

The Bill requires business to take a leap of faith. It proposes that regulators be awarded additional powers to sanction business, in exchange for a promise of a better regulatory environment. We recognise the concern expressed by the CBI that

“in order to be comfortable with the awarding of these new powers to sanction business, employers need confidence that regulators will deliver their side of the bargain.”

Indeed, we are concerned that much of the Bill could put small businesses—which are already buckling under the increased corporation tax and capital gains tax burdens placed on them by the Government—at a significant disadvantage.

The Conservative party is currently working on measures to drive out the “regulate first” culture in Whitehall, which has blossomed under this Government. This issue is very important to us. To that end, my hon. Friend the Member for Rutland and Melton (Alan Duncan), the shadow Secretary of State, has launched an independent taskforce, led by Sir David Arculus, to look into an overhaul of the regulation machine. All aspects, including the use of targets, management and training, and the vital need to address the wider cultural issues—including in the civil service—will be examined in order to make regulation the last resort rather than the first option.

In the meantime, the Conservatives welcome the mood music coming from the Minister about the need to reduce the burden of regulation. To be credible, however, he must put this into the context of the new regulatory proposals announced by the Prime Minister last week. An example is the regulations dealing with agency workers’ rights. They were released to the press yesterday without a ministerial statement being made to the House, and with no indication of their cost to business, which is likely to be huge.

Neither we nor the business community have forgotten the record of this Government to date. Despite their manifesto promise to cut red tape, they have presided over a £65 billion rise in the cost of regulation since being elected, or the equivalent of 40 new regulations every working day. The Federation of Small Businesses has calculated that the average small business now spends some seven hours a week simply complying with Government red tape. Some people argue that this is all the fault of the EU, yet the evidence shows that, all too often, the Government gold-plate EU directives. The British Chambers of Commerce estimates that the UK’s average elaboration ratio—as it calls it—for 100 directives implemented between 1998 and 2002 was 334 per cent. In other words, the Government provided three times the verbiage and potential regulation in relation to EU directives than it needed to.

The result is that the cumulative burden of regulation is now deterring small companies from creating jobs. Over the past few years, we have seen a steady decline in the proportion of small and medium-sized enterprises that are employers. Today, seven out of 10 SMEs employ no one. As the chairman of the Forum of Private Business put it:

“The fact of the matter is that there are no more employers than there were in 1997. This increase in the number of small firms is all about more companies without employees.”

We have heard a lot of talk from Labour before about wanting to cut the regulatory burden on business. In 2001, we saw the introduction of the regulatory reform orders, which, we were told, would transform the process and lead to the scrapping of thousands of regulations. Yet the reality has been somewhat different. In 2005, the Cabinet investigated progress. In four years, Ministers had managed to identify only 63 possible laws that they were willing to tackle. Worse still, of those, they managed to implement only 27. Given that over the same period, there were more than 12,000 new statutory instruments, that was a dreadful indictment of Ministers failing to deliver on their promises.

I am sure that the hon. Gentleman was not seeking to manipulate the figures in a misleading way, but those 28 regulatory reform orders did not affect only 28 regulations. For example, the Regulatory Reform (Fire Service) Order 2005 covered dozens.

With respect, even if we acknowledge that it did—I am sure the hon. Gentleman is right in that respect—it does not change my overall point.

Then, when regulatory reform orders were clearly not working, Ministers introduced the Legislative and Regulatory Reform Act 2006, and I have already shown how ineffective it has been. We need to remember that this was the very Bill in which the Government proposed—and, thankfully, lost—their so-called Henry VIII clause, which would have allowed them to change any law or order without recourse to Parliament. I have to say that was one of the least inspired proposals to emerge from the Minister’s Department.

After all that failure, people are entitled to ask what this third attempt at deregulation will offer the business community and, just as importantly, whether it is going to work. As the Minister explained, there are four main parts to the Bill, which I shall deal with in turn. In doing so, I congratulate my noble Friends on their work in the other place, but I reiterate that we do not feel that we are yet quite there.

As the Minister said, part 1 provides for the establishment of the local better regulation office. Its stated purpose is to promote greater consistency among local authorities and between them and central Government. The first two parts of the Bill stem, as I have said, from the Hampton and Macrory reviews, which established the need first for risk-based and then for proportionate regulation.

We support the general argument in favour of making regulations risk-based. As the Hampton review identified, if regulatory action is required, it is vital that it be drawn up and implemented in a way that relates directly to the risk it seeks to mitigate. All too often, regulations and their enforcers have acted in a way that completely fails to understand the scale of the risk involved and therefore the degree of regulation that is appropriate. That is the sort of calculation that, in practice, most businesses make on a daily basis, but naturally it is all too often missing in the public sector.

One example of the failure to take account of risk was provided by the Chartered Institute of Public Finance and Accountancy to the Hampton review. In 2002-03, local authority trading standard officers inspected 10 per cent. of all traders’ weights, identifying inaccuracies in 6 per cent. of cases. Yet in the same year, they inspected 22 per cent. of all alcohol measures, even though only 2 per cent. were found to be inaccurate. Clearly, in that instance, resources could have been better allocated. The case in point also shows how small businesses—for instance, pubs—can feel the burden disproportionately. That is supported by a survey carried out by the FSB, which found that although two thirds of small businesses want to grow, half see regulation as

“a serious barrier to growth”.

The establishment of the LBRO follows on from the Hampton review and is the Government’s response to the clear need to improve the quality and wide variance of local authority regulatory services. Those include trading standards, environmental health, licensing and fire and rescue services. We have a number of concerns about that.

First, we remain suspicious of the claim that it is realistic to assert that a single, small organisation will be able to deliver a step change in regulatory practice across nearly 500 much larger local authorities in England and Wales. To effect the kind of improvements needed on poor performance, regulators will need a change in the internal management, training and culture of that organisation. How realistic is it that the LBRO could deliver that on its own? We think that that needs to be looked into further. Secondly, why do the Government believe that the answer to the problem of poor regulation locally is to create another super-regulator—a point raised by my hon. Friend the Member for Wellingborough (Mr. Bone) earlier?

The hon. Gentleman cannot have it both ways. We often hear from Conservative Members that so many local authorities are Conservative controlled—a matter of fact, as it happens. Is it not within the hon. Gentleman’s party’s control to determine the degree of light touch to which local authority regulators work? Is there not prima facie evidence that we need some central co-ordination through the proposed LBRO?

Possibly, but the extent to which that is the case needs to be looked at further in Committee. People ask why the Bill introduces a super-regulator to regulate the regulators, which is another issue for careful consideration in Committee.

Thirdly, we are concerned about the precedent that clause 7 represents. As far as I can tell, the Bill would allow for the first time an unaccountable body to have the ability to turn mere guidance into direction—and not just its own guidance, but that of five other regulators, including the Health and Safety Executive, the Environment Agency and the Food Standards Agency. Until now, that power has been in the hands only of a Secretary of State, accountable to this House, and only for exceptional matters. This is a very substantial change, about which we still have significant concerns.

Part 2 is designed to establish “primary authorities” so that businesses operating in more than one local authority area can choose to be regulated by a single authority. We understand the concern of many small businesses or business organisations that the measure could unfairly create two regulatory regimes: one for larger firms and one for smaller firms. Thus, a large store would be able to choose who it would like to regulate it. Given the number of outlets, that would make it a very substantial contract and the chief executive officer of that large store would no doubt wish to work with, say, a pragmatic business-friendly Conservative council offering the most efficient, least bureaucratic regime. So far, so fair. However, where does that leave the local convenience store in a business-unfriendly council area? As a small shop with one outlet, it has no choice. It will have to be regulated by the local regulator, and if it is badly run, it may be at an immediate disadvantage.

Equally, there is considerable potential for consumer confusion and bureaucratic dispute. If a complaint is made against, say, a store in one city, but the same store has chosen to be regulated by a different local authority, to whom do consumers complain and how can they be sure their complaint will be pursued? There are some serious issues to be debated.

Without significant levels of intervention from the LBRO, the system may not work. In order to make certain that there is consistent application of regulatory activities by local authorities, we need seriously to consider the suggestion that the LBRO be given powers to ensure that authorities that do not demonstrate adherence to the Hampton principles are called to account.

So the hon. Gentleman agrees with me that the LBRO should have overarching powers.

No, in that case, I am putting forward a concern of the CBI. It is a valid concern and I am saying that we should look further into it.

When the hon. Gentleman comes on to the detail of how the LBRO will work and, indeed, to deciding whether the Conservative party will support it, will he take into consideration the comments of the British Chambers of Commerce, which said:

“We look forward to working with LBRO to improve the regulatory landscape… We welcome these proposals as a means to take forward the Government’s commitment to ensuring a lighter touch on compliant businesses, but be tougher on rogue traders.”?

I am sure that the Government will bear that in mind in their subsequent negotiations with business.

We also share the concerns voiced by the British Retail Consortium that the powers given to primary authorities to ensure co-ordination of regulatory enforcement have been much weakened since the recommendations of the Hampton review. As the Bill is drafted, local authorities must only “have regard” to an inspection plan agreed on by a business and a primary authority and endorsed by the LBRO. We should fear even more red tape if a primary authority can ignore an inspection plan that has been both costly and time-consuming to draw up.

The decision to allow primary authorities to charge for their services also rings legitimate alarm bells for businesses, which, of course, already pay for enforcement services through their local rates. If they used the primary authorities, could they be subjected to a regime of double taxation? Unless the powers of the primary authorities are bolstered, businesses may see them as just another unnecessary extra expense. We look forward to debating our concerns about this part of the Bill with Ministers, and establishing just how far the Government have thought it through.

Part 3 gives regulators a wide range of powers and sanctions, often involving fines, which can be imposed without recourse to the courts. We do not oppose civil penalties per se, but we feel that we should review the extent to which they should be restricted. As drafted, the Bill specifies no such restriction. Nor are the new powers being granted to a handful of public bodies; they are to be granted to a total of 27 different designated regulators, who will be able to fine in relation to offences arising from more than 140 enactments listed in schedules 6 and 7.

May I apply the same test that I applied to the Minister? I note that the Bill contains no apparent definition of the fixed penalties that could be imposed, but we are working on the presumption that they will be imposed on rogues. Does the hon. Gentleman envisage any limit to the scale?

Let me go back a step and say that I do not necessarily believe that the penalties will be attached to rogues. If there is to be a scale from caution to big caution to small fine to big fine to heavy-duty prosecution—a full scope of response, in other words—I do not think that someone who incurs a low-level fine should necessarily be called a rogue. I think that businesses that incur fines and have no recourse to arguing against them might object to being called rogues as well.

rose—

I shall move on, if I may. The hon. Gentleman has had a good go.

On Third Reading in the other place, Lord Lyell said that in effect the Bill gave the regulators

“the power to be investigator, prosecutor, judge, jury and sentencer”.—[Official Report, House of Lords, 28 April 2008; Vol. 701, c. 26.]

That is a matter of great concern. The combination of wide powers being granted to a large number of unaccountable regulators for a long list of offences could be both disproportionate and unnecessary.

I appreciate the anxiety expressed in the other place by the former Attorney-General about the possibility of regulators’ behaving in the way that the hon. Gentleman has described, but will he acknowledge the existence of an important additional protection? When a business has been investigated and there are concerns about its performance, it can appeal to an independent tribunal. Is that not an important safeguard?

I think that it is important, and I also concede that this measure does not exactly constitute the Henry VIII abolition of Parliament-type clause that we saw in the “Leg and Reg” Bill which became the Legislative and Regulatory Reform Act 2006. However, we still have worries about the extent to which it will be applied. We are also worried about associated constitutional reforms that would give an all-powerful role to unelected bodies.

It is a fact that anyone who has ever run a small business and been faced with a regulatory fine, however wrong that fine is, has not the energy, the time or the money to appeal against it.

That is a good point with which we agree, and which was picked up by the CBI, which has said that there

“should be the opportunity for independent review before a penalty notice is issued.”

The British Retail Consortium regards the sanctions as “unacceptable”, while the Forum of Private Business, in its response to the pre-legislative consultation, attacked the Government for trying to present the measure as a “simplification” and said that it regarded this part of the Bill as a “deal-breaker”. Interestingly, the BRC also condemns the introduction of administrative penalties, believing that they would undermine the risk-based approach to regulation. If enforcement simply means handing out the equivalent of parking fines, how will that encourage better regulatory practice?

What is clear is that this part of the Bill could put small businesses at a significant disadvantage yet again. Whereas medium and larger businesses will be quite able to pursue the tribunal and appeals processes, most small firms will have neither the time nor the wherewithal. Ordinary people such as owners of small shops, farmers and drivers of vehicles are likely to feel compelled just to pay up and get on with trying to run their businesses and earn a living, rather than allowing their time to be taken up with such procedures. If we get these measures wrong, they could be deeply resented by many thousands of small businesses and sole traders across the country.

Part 4 creates a power allowing Ministers to require regulators not to impose or maintain unnecessary regulatory burdens. It would seem to be well intentioned, but I have been made aware of concerns expressed by the National Consumer Council, not least that there is a potential for this explicit and overriding measure to restrain the ability of regulators to protect consumers. We shall seek to explore that further in Committee.

The stated aims of Ministers are welcome, but we have heard all this before, and we remain to be convinced that the Bill will achieve those aims in its current form. We have other fears as well. We heard today of the Government’s announcement of their intentions in relation to the Temporary and Agency Workers (Equal Treatment) Bill, which was the result of what I would describe as a classic “beer and sandwiches in Downing street” operation. I have still not seen the proposals, apart from what the papers have said, and I have since discovered that the same applies to many organisations. Given that the CBI has said that the regulation could cost British industry up to 250,000 jobs, I consider the absence of a ministerial statement and the Minister’s failure to mention the matter during the debate to be cause for grave concern.

rose—

I shall continue, if the Minister will allow me, because this is an important issue. We are talking today about the Government’s attitude to regulation.

It is the wrong context.

No, it is not. We are talking about changing the cultural values of Government, local government and other public bodies in regard to regulation. If those cultural values are to switch to beer and sandwiches at No. 10 Downing street in order to wrap up regulation, I am gravely concerned about how the Bill will deliver anything like what the Government are proposing.

rose—

rose—

I give way to the hon. Member for Ellesmere Port and Neston (Andrew Miller).

The 250,000 figure that the hon. Gentleman cited does not relate to yesterday’s announcement, and is any event based on a speculative view similar to that which was expressed when Labour introduced the minimum wage. The view proved to be false then, and it will be shown to be false now.

As the hon. Gentleman is well aware, the figure relates to his very own private Member’s Bill, on which the Government will presumably base their further reforms.

rose—

I will now give way to the Minister.

I thank the hon. Gentleman for finally giving way. Does he accept that the CBI’s estimate of job losses related to the private Member’s Bill introduced by my hon. Friend, and not to the agreement that it negotiated and to which it signed up yesterday? Does he accept that those are two different things?

The Minister is right in so far as the Government’s beer-and-sandwiches deal is separate from the private Member’s Bill that was pulled today. However, he should tell the full story, and reveal that the CBI described his deal as the “least worst option”. We need to get to the bottom of the extent to which it is the worst option. The House has not been told what will be the impact on British business of his proposed deal with the unions, and he should tell us that at the earliest opportunity. The private Member’s Bill was never about defending workers from exploitation, as the hon. Member for Ellesmere Port and Neston announced at Prime Minister’s questions earlier today. That is covered by existing legislation, and it will also be covered by the Employment Bill, which the Government are separately bringing before the House.

What we have opposed and will continue to oppose is a one-size-fits-all straitjacket of regulations that will destroy the flexibility that is key to the British workplace. Given that more than 90 per cent. of businesses are small and that large sections of the Bill could make things worse for them, we do not believe that the net effect of this Bill will necessarily be good for business. Therefore, although we will not oppose the Bill today, if it becomes clear in Committee that our concerns are justified, we will have no hesitation in voicing our opposition at the appropriate stage.

As I was listening to the previous speeches, I could not help thinking that this is perhaps the first time I have debated something other than post offices with the Minister. Therefore, this must be a moment of light relief from his usual diet of at least six post office Adjournment debates a week.

As the Minister said in his opening remarks, this Bill was born out of the recommendations of two reviews. The Hampton review focused on the need for regulation to be risk-based and proportionate and looked at the scope for reducing regulatory burdens on business, and it identified the need for better co-ordination between regulators and for less duplication.

Of the two reviews, the Macrory review, if fully implemented, will probably have the greater impact on the practice of regulators. It recognised that much current enforcement is not effective in changing the behaviour of businesses and recommended a shift to the use of civil sanctions, including fixed penalty notices, as well as many more innovative ideas such as restorative justice and new criminal sanctions.

Inasmuch as the Bill recommends greater co- ordination between regulators and the use of civil sanctions as a quicker means, in certain circumstances, of changing the behaviour of businesses than lengthy processes through courts, I and my party will support it. We support the premise of the Bill; we are signed up to the intention behind it, and we will support it on Second Reading. However, we still have doubts about whether all the detail in the Bill will result in the changes of behaviour that the Minister hopes for, whether some of the sanctions proposed will increase or decrease the regulatory burdens on business, and whether there is adequate understanding of the role of local authorities in the prescriptions for the regulator. We will want to explore such matters in Committee—some for clarification alone, and some for amendment.

I recognise, however, that the Bill did change during its passage through the other place, which is welcome. The requirement for criminal levels of proof before making civil sanctions is a good step, as is the decision to set out in the Bill a requirement for an appeals procedure, although its full implications need to be further explored in Committee. The agreement that the Minister should satisfy himself that a regulator is essentially Hampton-compliant before it can receive any further penalty powers is also broadly to be welcomed, although I would like to explore in Committee how that Hampton-compliance is to be assessed.

Most welcome, however, was the acceptance of a need for a review of the LBRO’s operation after three years. I hope that this change signals the Government’s conversion to the principle of sunset clauses. For some time the Liberal Democrats have argued that one of the most effective ways of ensuring that we do not increase the regulatory burden on business without clear benefits would be to have a sunset clause on new regulations, whereby each new regulation came back to the House to be approved and we decided whether the regulation needed to be in place now or whether its time had passed.

The key principle of good legislation is that it should be easy to enact. Those being regulated need to understand why they are being implored to behave in one way or another, and they need easily to be able to find out whether they are operating within the law.

The hon. Lady touches on the important issue of burdens and costs of regulation on business. Does she accept that currently the majority of new regulation in the UK comes from Europe? If so, why does her party insist on slavishly following European directives instead of standing up for British business? Her party would also sign up to the euro, which would create restrictions in monetary and fiscal policy.

I do despair of the Conservatives; they manage to get Europe into every possible debate. I am not going to get into a lengthy debate about it now, as I want to talk about the Bill. This is a Second Reading debate and I will deal with the Bill. I will not get drawn into wider discussions, as I suspect that if I were to do so I would be ruled out of order. Mr. Deputy Speaker is already looking at me far from approvingly.

Order. Let me reassure the hon. Lady that other hon. Members might be ruled out of order if we start to steer off course, but she need not worry too much.

Thank you, Mr. Deputy Speaker.

I was making a point about the tension between the need to have legislation that protects consumers and the need to ensure that it does not overburden businesses. I recognise that it is always extremely difficult to strike that balance. Businesses constantly ask for less regulation, but it can be difficult to identify a specific measure that we want to remove. That, I argue, is why we need sunset clauses, which are one of the simplest ways of ensuring that regulations on business are appropriate and proportionate.

Regulations must also be enforced. Consumers, the public and law-abiding businesses must have confidence in the system and know that competitors that flout the law will be dealt with properly and will not gain a commercial advantage. The key to this is speed. The Macrory review identified the fact that enforcement action that is possible only through a lengthy legal route is a blunt instrument for dealing with many minor offences, and, similarly, that its length and complexity is often a disincentive to regulators using their full powers.

I have seen example of that in my own constituency. Neasden goods yard is within a densely populated residential area. A number of companies operate from the site in waste transfer, handling paper and construction materials. Complaints about dust and environmental pollution, and the antisocial behaviour of lorry drivers using the site, go back at least a decade. One operator in particular, Alloyde II, consistently flouted the advice and guidance given to it by inspectors from the council and the Environment Agency and flouted the conditions of its licence. At one stage in 2006, pollution levels from the site far exceeded safety limits on more than 90 days of the year—and that was only part of the way through the year. But the story of enforcement action against the company was a frustrating one for local residents. The council and the Environment Agency for a long time seemed to be incapable of working together to solve the problem, with each offloading the blame on to the other, until eventually a political change in the council administration led to the issue becoming a priority and the council put pressure on the EA to deal with it. Inspectors from both the council and the EA seemed incapable of co-ordinating their action, and the only real route for the EA to follow was a lengthy legal battle to revoke the company’s licence. At each stage, the company appealed, allowing it to continue operating and so continue to cause misery to the people of Neasden and Dudden Hill.

In retrospect, I wonder whether early co-ordination between the council and the EA and a hefty rapid fine might have resolved this issue for residents. It was certainly worth Alloyde’s while to continue to take its chance that regulation would take a long time to come to fruition and close it down, because it was able to make profits in the mean time. It seemed to local residents that money was one of the only things the company understood.

I tell this story because although much of the focus of the debate has been on the need for regulators to work together to minimise unnecessary burdens on business, there is another reason why they need to work together: to ensure that enforcement action is effective against irresponsible businesses who consistently flout the law. In Committee, I shall judge this Bill on the extent to which it will deliver both those things and not just one.

That is not the only issue I want to explore in Committee. The Minister mentioned the potential for variable penalties and I would like to explore the scale of that in Committee. There is a danger with small fixed notices becoming a levy that large businesses are prepared to pay to go on flouting the law. There is also a danger of catching other businesses that, as the hon. Member for Huntingdon (Mr. Djanogly) said, might innocently break the rules. For small businesses, the impact may be disproportionate: a small shop that makes a mistake storing food is not in the same league as a large laboratory tipping biological waste into a local reservoir.

The Minister mentioned the precedents for civil sanctions. The obvious precedent is the Financial Services Authority, which has long since had powers to fine companies that breach market rules. The size of the penalty depends on certain factors, including the track record of the business, its size and the impact on it. We need to explore that further in Committee. It is essential that the focus of the sanctions in the Bill is on changing the behaviour of businesses and not on a tick-box, parking-fine mentality. The Bill must be about protecting consumers, the public and the reputation of business at large, not about meeting targets.

Some other recommendations of the Macrory review that might be worth considering are not mentioned in the Bill—for example, recommendations about the use of restorative justice. Macrory believes that restorative justice models have the potential for good long-term outcomes, both for victims and offenders, have the benefit of being flexible and are focused on reducing the harm caused. That principle is very much in keeping with the Hampton review and the claimed focus of the Bill. Will the Government introduce pilots in this area, as Macrory recommended? Will they commit to doing so? If not, why not?

Other innovative recommendations in Macrory’s review include criminal sanctions such as the use of publicity orders. Macrory cites the case of the Federal Supreme Court, which sentenced the American Caster Corporation for dumping deteriorating drums of solvents by way of a publicity order. The corporation was required to take out an advert in the Los Angeles Times, at a cost to itself, publicising its breach, and the action that it intended to take to remedy the problem. Has the Minister considered using such measures? Does the Bill provide the flexibility to do that? What assessment has he made of that recommendation?

Finally, I come to two further issues that we will want to explore in Committee. We will want to seek reassurances from the Government that the Bill will not be unworkable for local authorities, which are chiefly responsible for implementing it. It is essential that those giving guidance to local authorities understand the practice of such bodies and their limitations. That was very much the focus of a number of Labour Back Benchers’ interventions on the Minister. It is also important that the need to co-ordinate the activities of companies operating in more than one area does not prevent local authorities from setting their own priorities in respect of democratic choice. I share the concerns of the hon. Member for Huntingdon about the power to turn guidance into direction and about how the primary authority system will work in practice. Such matters need clarifying in Committee.

We are also concerned that the detail of stop notices in the Bill will give undue flexibility to regulators to decide whether to pursue action at the expense of business, which, if not guilty, could lose two weeks of business while the regulator decides what action to take. We need to explore further in Committee whether there are more flexible ways of implementing this provision. We recognise that good work has been done on this Bill in the other place to improve it, and we will support the Bill today, but we feel that more can be done to make it a clearer and more effective tool to improve regulatory practice in this country.

I am grateful to be called in this debate, Mr. Deputy Speaker. First, may I apologise to the House for the fact that, unfortunately, because of a prior commitment, I will not be present for the winding-up speeches?

The Government are very much a Johnny-come-lately to deregulation. I have touched on the irony that the Bill creates more regulation and legislation in order supposedly to reduce regulation. By that very fact, and by their previous form in this area, the Government are very much the worst offender and they set the worst possible example to the nation at large and to large, small and medium-sized businesses.

Given that other hon. Members wish to speak, I shall limit my remarks mainly to small businesses and the Bill’s potential impact on them. Small businesses are the lifeblood of the British economy; more than 95 per cent. of businesses in this country are small businesses of 25 or fewer employees. Without such businesses and hard-working small business men and women, the British economy, and the economy in both my constituency and the fine county of Shropshire, would grind to a halt.

Yet, small businesses are increasingly feeling the tightening of the regulatory noose and the big foot of Government trampling over entrepreneurship and innovation. What business men and women tell me—they mostly do so privately—both in my constituency and as I travel in different parts of the country is that they want Bolshoi light touch regulation, rather than the trampling big foot of Government. Regulation is not a bad thing in itself per se; it is not intrinsically wrong and it has an important role to play both in the private and public sectors—for example, in food safety, consumer protection and environmental health. However, many businesses feel that many regulations are unnecessary and burdensome, and they distract business people from their core raison d’être: creating jobs and investing in communities.

Money and profit have been mentioned in this debate, and there is nothing intrinsically wrong with them. If businesses are not profitable, they cannot grow, expand or employ people. If people are not employed, they do not have the disposable income that they need to go on holiday, to look after their families in the way that they want or, in this day and age of high food prices, to put a loaf of bread on the table. We should not confuse the important issues of profit and business, and the other social factors to which hon. Members referred.

It is not just Members of Parliament, either Conservatives or those in other parts of the House, who are aware of the burdens; the Federation of Small Businesses, the CBI, the Institute of Directors, the British Chambers of Commerce all testify to the fact that burdens on, and costs to, businesses are increasing, rather than decreasing. The CBI has said that since 1997, when this Government came to power, £55 billion-worth of new burden on business has been added. That is a huge sum, and clearly many casualties have resulted. Perhaps the Minister might tell us what research has been done with Companies House on the number of businesses—not only those that have gone into receivership, but those that have voluntarily wound up and have closed their companies—that have closed as a result of regulation and red tape.

Although I agree with many of the Bill’s sentiments, I am concerned that, once again, we are having more law, rather than better law. The Minister must answer another question: given that local authorities enforce about 80 per cent. of regulations and licensing procedures, and given that the need for enforcement continues to grow across the spectrum of various regulations, does he feel that those authorities are adequately and appropriately resourced to be given a greater role?

I am a member of the Select Committee on Work and Pensions, which recently reported on benefit simplification and found that there is still too much complexity in the benefits system. That is relevant, because Government need to set the right example—if Departments cannot do so, how can they expect small businesses to do so? The Government need to apply not only a light touch, but a lot more common sense.

I welcome many of the parts of this Bill, and many of the concessions and amendments made in another place. However, as it stands, the Government are not going to note the flaws that my hon. Friend the Member for Huntingdon (Mr. Djanogly) has rightly pointed out, and the Bill will remain a mess. I do not think that we will be able to support it in the way that the Government would want.

The suggestion that this Government will cut red tape and deregulate is as likely as the Prime Minister performing at a comedy club. If the Government are serious about this issue, they will listen to the concerns of my hon. Friend and of small businesses. It would be helpful if we had more Labour Members from a business background, but unfortunately very few are. I declare an interest as a former businessman, and my hon. Friend for a Northamptonshire seat—

Wellingborough.

There are so many good MPs from Northamptonshire that I was confused. As my hon. Friend for Wellingborough (Mr. Bone) rightly said, every burden placed on small businesses carries a cost. That cost is not always necessarily financial—although often it is—because it can be in time, with staff distracted from the key issues of running their business, employing people and investing in communities. I hope that the Government will rethink their position on many aspects of the Bill.

It is a pleasure to follow my hon. Friend the Member for The Wrekin (Mark Pritchard), who made a powerful speech today, as he did yesterday. I need to declare an interest—I refer Members to the register—as I am a director of a small company. I am also a member of the Institute of Chartered Accountants in England and Wales.

I am delighted to speak in this debate because of my personal background. I came to the House of Commons late in my career, mainly because the public kept rejecting me—[Interruption.] That is another issue. However, that allowed me to extend my business career. I started a company and went through all the traumas of growing it. Eventually it became a plc, and we sold it on and I started a new company. So I have some personal knowledge of the problems of regulation in business.