Examination of Witnesses (Questions 40
MONDAY 26 NOVEMBER 2001
CB AND MR
40. Was it your own hamburger stall or were
you just employed to sell hamburgers?
(Mr Andrews) It was a franchise. A number of my colleagues
do, however, have direct experience of working in small businesses.
We are taking some pains to recruit people to the team who have
that sort of background and experience. We are certainly hoping
to undertake some exchanges of staff with some of the representative
organisations. We are hoping to recruit a retired local authority
chief executive to work on our local enforcement work.
41. Obviously there are lots of economists and
cost benefit analysts and all this sort of people, but the issue
is to understand what it means to someone who might be an entrepreneur,
providing jobs and producing products to be overwhelmed with form
filling when they could be doing something else.
(Mr Andrews) May I tell you what we do do to try to
inculcate that kind of understanding? Every member of my team
has to spend a certain amount of time each year working with a
42. A hamburger stall?
(Mr Andrews) No, we have expanded a little since then.
We do cover some pretty small outlets as well. We have tried to
visit local Chambers of Commerce particularly to meet the members
there and to throw the agenda open, to discuss issues.
43. What about secondments into these little
businesses in the Chambers so people can work with them?
(Mr Andrews) I have had one member of my team working
with a small business this year. That is something we shall expand.
44. On the cost benefit analysis of the working
families tax credit, would you evaluate both the cost to the business
of the form filling and the like alongside the benefit to the
business of lower wage costs? Obviously the working families tax
credit has allowed labour market access for more people who would
otherwise not have been able to get a job. Are you able to make
those evaluations or does that not come into the equation?
(Mavis McDonald) We would expect our colleagues in
the Inland Revenue to make that distinction between the policy
implementing the working families tax credit and the precise requirements
they imposed in terms of the information they needed, for example
to collect the tax.
45. My experience in talking to small business
is that they jump up and down and they say the working families
tax credit is awful and they have to fill in more forms. Then
I point out that the fact is that if they did not have the working
families tax credit their wage costs would be higher, their profit
would be lower and they look at me aghast and realise I am right.
Is that assessment done?
(Mavis McDonald) That kind of assessment is implicit
in the RIA process and the distinction we were discussing earlier
about the costs of introducing a new policy that go with that
policy and the actual costs of implementing the policy. It is
the kind of area where we have several examples of where the RIA
consultation has been successful in reducing some of those administrative
46. May I ask a before and after the event type
of question? Tomorrow we have the pre-budget report and I do not
know how detailed that is going to be. The way politics work in
Britain is that things are suddenly announced. Would you have
had any impact in terms of giving any advice beforehand of regulatory
impact on possible considerations on the pre-budget report or
is it the case that you engage after the announcement, trying
to keep down the regulatory impact of some ideas?
(Mavis McDonald) We would expect to engage where relevant
after the announcement.
47. Is there a problem here that things could
be announced and then you could come along and say the regulatory
impact is overwhelming and things are pulled back? Are there any
examples of that?
(Mavis McDonald) There are precedents about the way
budget matters are approached and there is no exception to that
kind of precedent for regulatory impact assessment. In some of
the areas which are covered obviously there are ongoing discussions
beforehand. With ideas like an aggregates tax for example, there
was a lot of discussion before a decision was taken. There may
be areas where there has been quite a lot of tension.
48. In terms of Government efficiency and value
for money and all these things which should be considered, it
seems to me that the expertise you have at your disposal could
be engaged before some massive announcement is made rather than
having to unravel it and fall back a few steps. Is what you have
just said about aggregates an example of where you are looking
perhaps at the regulatory impact on different options in a pre-budget
or budget report which would then be put at the disposal of the
Treasury? Or is it just my imagination?
(Mavis McDonald) That is an example of a proposal
I happen to know about from a previous post, where Ministers had
made it known publicly that this was something they wished to
look at and they wished to understand the impact on industry of
going down that route against the broader benefits to the environment
of imposing the tax. We and the Treasury and Industry in that
case, did quite a lot of work before Treasury Ministers took a
decision on the way in which they wanted to proceed.
49. Then Mr Gardiner pressed you on whether
there had been any examples of a proposal being pulled and you
said no. Is a regulatory impact assessment a requirement now?
(Mavis McDonald) Yes, there is a formal requirement
on Ministers to meet the requirements in there right up to the
signing off of a formal statement as legislation comes to the
50. How do you think departments look at you?
I imagine myself as the Department of Health or whatever, a department,
and you come along and say you are going to do a regulatory impact
assessment. Do they take up these offers of urging a consultation
with SMEs and thinking of alternatives to regulation? Are there
any examples of anyone doing things like this? Does anyone take
any notice in departments?
(Mavis McDonald) Yes, there are examples. We do work
quite closely with internal units within departments. We are meeting
them all the time. That is the forum within which we exchange
what is working well and what is not working well. The Small Business
Service would be involved with us on that kind of exchange if
we had particular difficulties.
51. Are there any examples of where someone
is thinking of a regulation, they want to do something, they have
an objective, they think of a regulation and then because of this
new culture they think of an alternative? Are there any examples
of someone thinking of an alternative to regulation?
(Mr Andrews) The problem with answering that sort
of question is that a lot of the discussion is inherently confidential
and behind the scenes. Often we are involved at a very early stage
and we can indeed head off unwelcome proposals and we have done
52. Can you think of any? It need not be Government,
it could just be some civil servant thinking of an idea and somebody
says "Why don't we do it like this?".
(Mr Andrews) The public do of course. We have intervened
on the various proposals on parental leave where we have published
our response. You can read it. We opposed the automatic right
to return. We have opposed the automatic right to flexible working.
You can trace through the interventions the Small Business Service
have made, but we have only made those interventions because we
have undertaken really quite detailed consultations, a series
of focus groups, and we have reflected the view of small business.
We are not ourselves taking a separate policy line, but we are
able to reflect back the practical views of small business. We
have certainly done that in a range of areas. I have a member
of the Inland Revenue staff working on my team for example. She
has run joint focus groups with the Inland Revenue and small business
on a range of issues. The Inland Revenue listen very carefully
to some of the outcomes there.
53. May I ask you specifically about small construction
business? Without being disparaging about anybody, a lot of people
in the construction business are good at construction, they are
not naturally accountants or anything like this. The more regulation
and form filling and this sort of thing, the more they are likely
to be driven into black market and illegal operations. Would you
(Mr Andrews) I do not accept that proposition as it
stands, because I have no evidence for it. I would accept the
importance of providing sensible guidance in a form which is usable
and user friendly for a particular industry.
54. When we had your colleagues from the Inland
Revenue along and I put to them that they should be going around
looking at building sites and whether specific work was being
done and checking their trading accounts and all the rest of it.
I do not know whether they did it, but it is clear that everybody
has examples of builders going round fiddling and all this sort
of stuff. It may be the case, to be fair, that they are avoiding
this bureaucratic nightmare. Are there opportunities where you
could give more support to small businesses in the building trade?
(Mr Andrews) Yes, I am quite sure there are. The Inland
Revenue introduced a regime for the construction industry last
year and we are looking very carefully at that to see whether
it is working effectively and to see whether there are any lessons
we can draw about how it can be improved?
55. We hear about sunset clauses and all this
sort of thing. Is there a real push to try to reduce the net amount
of regulation, both minimising new and trying to strip out old
and obsolete and unnecessary, and to consolidate regulation and
streamline? Are you leading the way on that?
(Mavis McDonald) May I deal with your last point first?
56. The builders?
(Mavis McDonald) No, on stripping out regulation.
We are actively working with departments asking them to look at
the areas where they can use the new powers in the Act to strip
out existing legislation.
57. Do you have any success stories?
(Mavis McDonald) We have asked departments to give
us their plans by the end of the year. It looks as though there
are significant opportunities including some which would consolidate
on legislation. There are many fire regulations for example where
we might pull a lot of deregulation together. We already have
a reasonable programme going forward through the House Deregulation
Committee, but we would expect to have the capacity to increase
that as we get into the new year.
58. Can you say to this Committee now that you
anticipate that at least there will be a slowdown in the net amount
of regulation, namely combining a smaller increase and some of
them being stripped out? Would you see that as a personal target
and ambition of yours or is that unrealistic?
(Mavis McDonald) No, for the reasons I explained earlier
the role of the Regulatory Impact Unit is to look at balance and
proportionality. It is not to second guess Secretaries of State
and what they think are relevant policy changes in their various
areas. There are good reasons for regulation in some cases as
well as poor reasons.
59. May I start by continuing on this question
of significant opportunities for stripping out regulation? I am
sure village shopkeepers will be delighted to hear that. It says
on page 16, paragraph 1.6, that the average village shopkeeper
estimates he spends three to five days per month dealing with
government administration. Do you find that figure unacceptably
(Mavis McDonald) It sounds very high. I do not have
detailed information on what was behind that figure.