I will restrict my comments to the regulatory aspects of the Bill.
The Government were left a regulatory nightmare by the Labour Government. The last Government introduced six regulations a day, the CBI estimates that employment law alone has cost British business £100 billion since 1998, and 107 of the 152 employment regulations on the statute book were added under the Labour Government. Better regulation attempts came and went under Labour. Regulation tsars reporting to the Prime Minister were placed at the top table for about 10 minutes and then quickly dropped. In the good years, Labour not only lost control of our budgets, but added piles upon piles of new rules and red tape on British business and the public sector.
Regulation has a vital role to play in a market economy, but it also imposes costs that can stifle innovation, present barriers to market entrants and deter economic activity, as we have heard in numerous examples tonight. I do not understand the evidence given by the shadow Secretary of State. A recent MORI poll for Capital One’s report, “The ties that bind?”, confirmed that regulation tops the list of issues facing very small businesses, with 64% of micro-businesses believing that the regulatory burdens that they face are far too high.
The Government have done a lot on this issue: they have set up the independent advisory committee on regulatory reform; they are publishing quarterly regulatory statements; there has been the red tape challenge, which is now part of the Bill; there is the ongoing employment law review; and the one-in, one-out process is firmly under way and is holding each Department to account.
The Government have done much more serious work on regulation over the past two years than Labour did in 13. This Bill is part of that good work.
Since 2010, the Government have introduced a number of measures to simplify the employment environment, raising the qualifying period for unfair dismissal from one year to two, reducing the risk of vexatious tribunal claims, and introducing fees for those wishing to pursue a tribunal claim. As we have heard, being taken to a tribunal is one of the biggest fears of our smallest employers. The main change—introducing mandatory pre-claim conciliation—will help. Indeed, the Forum of Private Business has already said that 70% of its members believe that more conciliation is a positive step in avoiding cases escalating. Such an approach is also good value for money—ACAS has had a 75% success rate in the discretionary conciliation cases it has dealt with—and will save businesses the cost of defending themselves, which comes to £4,000 on average.
However, I have a few observations. If we are to give ACAS this further power, does it have the resources for it? That issue came up in the consultation. Also, do we need to restrict mediation to ACAS? Can we not include private and other providers to help in mediation? I would be interested to hear the Minister’s comments about that. ACAS also has to secure permission from the employee to contact the employer during the conciliation process. We need to give the mediator absolute access to both the employee and the employer, so that it can properly conduct the mediation process. We also need to ensure that the mediation process is as informal as possible, so that the employer does not have to get tooled up with expensive lawyers, which is an issue that the Federation of Small Businesses has raised. I am concerned about the proposals for fines because, as the CBI has argued, tribunals are a form of grievance resolution, not a criminal court. If we are going to have fines, there needs to be some sort of exemption based on company size.
However, let me get back to the positives. The change to unfair dismissal compensation is a good move. It will mean that companies of different sizes should be able to get different awards, which is much fairer for the very smallest businesses in our country. On unfair dismissal, I pay tribute to the Minister, because with these compromise statements he has got the key to exactly what businesses want. I think they will be known as “Lamb statements”, because they will make business much easier for our smallest employees and will make compromise agreements—which have previously been accessible only to very well-off companies—accessible to our smallest firms.
Let me turn to regulation more generally. There have already been some good moves, which I outlined earlier. The sunset clauses in the Bill, the relaxation of inspections, the red tape challenge and the primary authority changes are all good moves too. However, I urge the Government to be a bit more ambitious. May I urge Ministers to look at the one-in, one-out rule sector by sector, and segment of law by segment of law? Can we include European directives as soon as possible? Can we also take a hard look at the infrastructure of our regulatory reform? If we look at what the Americans are doing with OIRA—the office of information and regulatory affairs—we see the disparate construction of our different deregulatory bodies, with the Better Regulation Executive in BIS, the local regulatory offices and various other
groups. We should be trying to bring things together, as the Americans are doing, so that we can make a serious attempt at reducing regulation in future.
A lot has been done, but we need even more ambition. I urge Ministers at all times to listen to the voice of business, particularly those not represented by business organisations, which at the moment are crying out for the freedom just to get on with their jobs.
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