My Lords, I support the amendments in the name of my noble friend Lord Sharpe, to which the noble Viscount, Lord Trenchard, and I have added our names. They would ensure that in the Bill we have a statutory procedure for assessing the impact on the economy in general on consumers and the choices they have to make, and on the producers.
The Bill poses potential costs for producers, which are likely to have an impact on the economy of which they form part. Even though the general scope, as set out in Clause 1, seems sensible and reasonable and appears to reflect consumer protection arrangements which have proven their worth over decades, there is in this very slim Bill less clarity as to what the precise requirement may be, or where precisely liability for transgression lies. It is something of a leap in the dark. Lawyers will be needed to work out who exactly may be covered by the provisions, sanctions and punishments, given that the Bill will touch on many features of production and marketing, and many sorts of person will be involved in the process.
The question really is, if I am an entrepreneur or a small business innovator, do I risk my small pot of savings and those chipped in by my family to get the idea from the drawing board—possibly in the garage—off the ground, into the retail outlet and into use? Sir Hermann Hauser, the technologist and entrepreneur who set up Acorn in Cambridge, did that in the 1970s. He once told me that when you start a business like his—and most start in the garage—they do not have any money, and with what they have, they want reasonable certainty that the law will stay the same, that it will do what it says on the tin, that they can buy the stock they need for the component parts, they can use their judgment within reason about whether a product is safe, and they can take a risk. They have good arrangements for risk assessment, and our law also has pretty good arrangements, as well as for consumer protection. But if—and this is the danger of the Bill—there are open-ended powers, and there is the possibility for a regulation-mad Government to make constant changes, and if, as I have spoken about before, so I will not come back to it, EU law, which is based on the precautionary principle, is mirrored or otherwise imposed, we will be causing greater uncertainty and there will be a greater possibility of costs and of lost stock, because it goes out of date. Such people will also not have time to develop their product properly, bring it to market and make a profit. They may go bankrupt, thanks to a raft of new provisions and new uncertainties.
These three amendments—Amendment 103, on consumer choice and an impact assessment; Amendment 104, on an impact assessment on the whole economy; and Amendment 104B, on an impact assessment on SMEs to be laid before both Houses of Parliament within six months—will help us find out exactly what the impact of these rules are, even if we do not know what they will be when we set out on this road. Successful businesses—small, medium and big—and the consumers who buy their products and services, both in this country and overseas, are the beating heart of our economic life. If businesses are to flourish, the rules need to be clear from the start. Compliance needs to be affordable and the rules must encourage innovation, entrepreneurship and risk-taking.
Most businesses in this country are small—there are 5.51 million of them, as we have heard—with zero to 49 employees. There are only 40,000 businesses that count as medium-sized, with 50 to 250 employees. These small and medium-sized businesses provide most of the employment of people, but the vast majority of them—3.1 million—are sole traders. November’s House of Commons analysis, which is the most up-to-date analysis that I have found, gives the figures, with SMEs accounting for 99% of the business population, providing 60% of UK employment and 48% of business turnover. As the noble Baroness, Lady Brinton, pointed out, they are far less able to bear the costs of the regulatory steamroller that may face us. This is one of the big problems that we hear about all the time from small producers and entrepreneurs: the costs of compliance and of dealing with the uncertainties this brings in. Even the bigger businesses, which provide 40% of the jobs and almost half the turnover, also have to pay—I was told by an NHS trust—almost 18% of their overheads.
Whether or not this Bill directly affects the product market—it does—or the service market, we are a service economy. This is a product regulation Bill, but most services use products. Let us take the hospitality trade: it needs to buy products to ply its trade and make money. Cabbies need to buy cars. Every single service—except financial services, perhaps, which is indirectly affected—will be affected by this Bill. It will have a very big impact on the whole economy. If we price risk-taking and innovation out of the product market, on top of the costs of employment—including through higher tax and higher employees’ NICs—UK small businesses will shrink or close. Jobs will be lost. We shall go the way the French went, with their high- tax protectionist model and a centralised structure in which the small challenger is driven out of the game—and with it, the hope of keeping a competitive economy open to new entrants. That is what has happened in France in the post-war years and is now cast in stone by the EU model, with ever bigger national, transnational or multinational corporations having a monopoly and driving up prices for the consumer while driving choices down.
I fear that this is an alien model to our market economy of competitive small businesses that can have a go without fear or favour under the protection of good law. We cannot afford to lose jobs or businesses and raise prices. Our productivity in GDP per hour is already lower than that of our most similar G7 neighbours, France and Germany. I am sorry that this figure is in dollars, although I am sure that noble Lords are very dollar literate: they earn $92 and $95 respectively per hour, while we earn only $79 per hour. If the Government want higher productivity and higher growth, they need simpler and clearer rule books; I must add that that will not happen by mimicking Brussels’ notorious system, whether it is an imported version or a home-based mirror image of what goes on over there.
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To conclude, your Lordships will have seen the recent debate prompted by Donald Trump’s economic advisor, Stephen Moore. He stated in a bold fashion that the UK will have to decide whether its future law lies with freedom or the more socialist direction of the
EU, as the recent tax-raising Budget implied. I am no fan of any measure under any Government of any complexion that gives the Secretary of State powers to make laws arbitrarily by statutory instrument over our goods economy. I am concerned about the uncertainty that this poses for our businesses—most of which are small—in terms of jobs, employment and costs. I am even more concerned at the blank cheque that it gives the Secretary of State arbitrarily to import EU law, which is notorious for its attempt to drive out all risk under a very different legal approach to that of the UK, as it is based on the code-based precautionary principle. It drives out challenges and small businesses to the detriment of jobs, costs and consumer choice.
However, the dangers that this Bill seem to pose to our economy are nothing compared to what will happen if we do not require under law an active regular assessment of the impact on the wider economy, businesses and the SMEs that make up most of the UK’s business sector—as well as our customers, without whom businesses cease to exist. For these reasons, I hope that the Government will accept the amendments.