Regulatory Enforcement and Sanctions Bill [HL]

My Lords, I am concerned about the impact of the Bill on small businesses. I have not spoken about them for some years because I have been engaged in other matters of one kind or another. However, I have been a strong supporter of small businesses for all my political life and before it—before even the Bolton committee report was written. I also struggled with improving and diminishing regulations as a Minister in several guises. Small businesses are essential to the functioning of the economy, both new small businesses which grow into great ones, as some do—we have plenty of examples of that in this House—and those continuing businesses which will always remain small, but which have found their niche. Small businesses give freedom for the proprietors and choice for their customers—after all, if they are not liked by the customers, they fail and that is that. The bane of the life of any small business is regulations. We all know that regulations are necessary and important for the protection of the public and consumers—that case has been made today—but it is the total amount of regulations and regulators and their complexity that cause the problems. I do not take the extreme view of regulators that the noble Baroness just expressed, but the number and complexity of regulations create great difficulties for small firms. Regulation for large firms takes up the time of specialists. They may be accountants like me; they may be health and safety or human resources specialists and so on—it is another overhead that the large business has to carry. For small firms, however, regulations take up the time of the boss, who after all is the dynamo of the business. We used to have a deregulation taskforce, but the Government turned it into a Better Regulation Task Force. Their priority changed from trying to reduce the total burden of regulations to trying to make them easier to live with. Better regulation is highly desirable, but it is second best to deregulation. For that reason, I welcome Part 4. I realise that it is a late addition. Like the noble Baroness, I wondered whether it had been made by the noble Lord, Lord Jones. It is potentially the most important part of the Bill, and I shall as a result look carefully at the efforts of the noble Lord, Lord Borrie, and the noble Baroness, Lady Young, to modify it should they set about that process. The Minister knows the effect of undue regulation on business. As has already been pointed out, he used to argue about it in his previous guise as the bosses’ nark and before he became a member of a bossy Government instead. The Labour Party, too, knows that people worry about overregulation, which is why it has made promises in its manifestos over the years—as we all have. But then each year we have many more regulations than cancelled regulations, and far more elaborate ones. We have new regulations at about the rate of 14 every working day. The British Chambers of Commerce has an excellent ““burdens barometer””, which estimated the cost of regulations to business as more than £55 billion since 1997. I believe that that was the figure to which my noble friend just referred. With that background, what does the Bill seek to achieve? More importantly, what will be the unintended consequences of this legislation, which are often more powerful than the intended consequences? Its primary purpose is to help regulators to regulate and to help to help central government regulators to regulate local government in their regulatory functions. That is what it does. Part 2 in particular is intended to make it easier for big businesses to comply with local authority regulations by letting them choose which local authority will regulate all their premises. That has already been discussed this afternoon. I am not sure how this will work out in practice. A large chain of centrally owned sandwich bars—and I read in the Bill that they must be centrally owned; I do not think that the provision will apply to franchises, which a lot of those operations are, as they are individual businesses rather than centrally owned—may have hundreds of outlets in the UK. Presumably it will sit down in headquarters and work out which local authority it regards as the easiest to work with and then try to get that local authority established as its primary authority. Then all its sandwich bars all over the country will be regulated in effect by that one authority, which may be in a distant part of the country. I do not think that the LBRO will want to designate only London authorities; it will designate them to ensure a neat pattern all over the country. On the other hand, a local sandwich bar with only one or two outlets will have no such choice. Its regulator, by definition regarded as more difficult to deal with by the big boys, will be in sole charge. Similarly, local independent convenience shops will not have the advantages of the new small shops that the supermarkets are setting up in various places. The Federation of Small Businesses has made those points. There is also the position of the citizen. I agree with those who have said that we must always think of the consumers in these matters. Many high streets and industrial estates will before long have a variety of different local authority regulators covering the same aspects of the various businesses along the high street or in the estate, particularly as each high street now contains a similar menu to some degree of national chain shops. The citizen may complain to the town hall about something or other, and the town hall will reply that it regulates only the locally owned shops and that is what it is responsible for. The nationals are regulated by other authorities over the country, miles away—authorities for which the citizen did not vote. The local authority will say that of course it is tougher, which is why the national chains have avoided it, and that it may argue with the primary authority but the primary authority can overrule the local authority and stop it enforcing regulations on national chains. However, the local authority will say that it can enforce the regulations on the small businesses and it will jolly well do so, to prove that it is a tough authority on the side of consumers. But as far as the branches of the national chains are concerned, the Pontius Pilate district council will wash its hands of responsibility. Meanwhile, the distant authority will collect more money and hire more regulators. I am concerned that, in practice, these clauses could work against small business of all kinds. I want to see how we can protect them. Part 3 contains the enforcement power to fine businesses in private rather than in public in the courts—the parking-fine approach to regulation—and other ways of giving regulators more teeth. These, too, are in danger of hitting small businesses harder. For example, larger businesses will have greater opportunity when fined, for example, to appeal to the new tribunals, looking up the precedents and studying the annual reports about burdens, whereas small businesses are much less likely to be able to reach for their lawyers and advisers. I therefore believe that, in practice, appeals will come much more often and effectively from the larger companies. The noble Viscount, Lord Colville of Culross, gave an example of the delays in enforcement that might occur in cases involving a chain of outlets. By contrast, as I read the provision, enforcement of the Bill’s provisions on a small local business could, subject to the appeal provisions in the procedure set out by the noble Viscount, bite much more quickly or almost immediately. As the Bill proceeds through Committee and its later stages my purpose will be to try to mitigate the biases which I have detected against small businesses. I think that these businesses deserve our protection and our thought.