Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. When will that be implemented by?
  (Mavis McDonald) I do not know because it will partly depend on individual departments' speed of getting that up. I think the buildup over the last year since the work was done on the report has been quite significant.

  81. Finally a question about enforcing arrangements. The report refers to the Gaming Board as an example of how the RIA provides an opportunity to look at the whole method of regulation and whether it can be done differently and the fact that big public quoted companies are involved in gaming means that there is a reputational interest and therefore they have had their own compliance departments put more resource into that. How widespread is that phenomenon and how often does it lead to a complete re-think on how regulation is done?
  (Mavis McDonald) We do suggest to departments in the guidance that they look at methods of compliance and the effectiveness of enforcement and the NAO report says this is an area again where we might think more between us about giving better guidance and better examples of how you might do this. There are quite a few cases where departments have retreated from full regulation because they thought the cost of enforcement on the impact they were trying to achieve was going to be disproportionate and one or two examples are given in the report; rules in relation to butchers' shops and so on is one. We do have examples of the kind of combination of the two things coming together to change the approach adopted, including not going down the regulatory route at all.

  82. A question about the overall burden of regulation. Where do you think we shall be at the end of this Parliament in terms of the overall level of regulation, the overall regulatory burden compared with where we are now? Will it be lighter or heavier?
  (Mavis McDonald) I am sorry, I am sure I am beginning to sound repetitive, but we do not measure the cumulative burden in that sense. Ministers take the view that the role of the RIU on advising them is about getting the balance right. Given that we are working with a shifting scene, there is no target end result. What it is quite important to do is to establish the kind of approach adopted in the RIA for all new policy development of proportionality, of proper discussion earlier so that people really understand the impacts of what they are doing and providing the simplest way and then helping people after the event to understand what is involved in implementation. Things have happened already. The SBS now ask for 12 weeks before anything comes into effect, so there is time for them to help get people geared up and ready when implementation comes into effect. Those are the areas in which we can improve the climate without necessarily being able to give you a direct answer to your question about the total burden.

  Chairman: We cannot really ask you on that; we have to focus on the RIAs specifically. You have done your best to answer that question.

Mr Davidson

  83. My experience is slightly different from some of my colleagues. I would tend to take the view that were it not for regulation and legislation quite a number of businesses in this country would have small boys climbing chimneys. Does that seem a fair point to you?
  (Mavis McDonald) The principles of appropriate regulation which were set out by the Better Regulation Task Force certainly include protection of vulnerable groups and the health and safety of the general public. That is where questions about the right balance of the kind of regulation you need certainly are brought into play.

  84. We seem to feel that small businesses are always greatly put upon, but there are quite a few small businesses in my areas which have certainly been in the habit of selling out-of-date foods to relatively poor constituents of mine and indeed have watered the beer. It was very, very unwise in a number of pubs ever to drink the dark rum, because that was what all the slops went into. I take a slightly different view from some of my colleagues. Since we are recounting personal stories, one of my early jobs used to be in a bakery where, when the vans came back to the bakery with the unsold pies, my job was to break open the pies, take the meat out and throw it into the meat which was being prepared for the next day's pies. Theoretically there were pieces of pie which had been there since the opening of the bakery. I presume we look to people like yourselves to save us from that. To what extent is it true that small businesses are never going to be happy anyway, so we should not actually bother trying to satisfy them? They are people who are unreasonable, they are like the weather: it is something about which we get complaints but what is the point?
  (Mr Andrews) The very strong message the Small Business Service receives from the small businesses we talk to across the country in a whole variety of different sectors is that by and large they are perfectly content with regulation that broadly meets the principles that the Better Regulation Task Force have set. They want the regulation to be transparent, they want to know what it is they actually have to comply with, so that when they are throwing the meat pies into next day's meat pies, at least they know they are breaking the law, which is very important. They need to feel that there is some accountability for the process, that actually someone is responsible for managing the regulation properly, someone is responsible for the overall regime. That is an important point that small businesses respect. There is a very important point about proportionality and a lot of the discussion we have had has been about balancing the costs and benefits. Where you have perhaps some particularly sensitive industrial sector, by and large they would accept that there is need for a very specific carefully focused regulation. Small businesses generally, certainly reputable small businesses, want to feel that regulation is applied consistently, that it is applied in a sensible way across the board. To answer your very particular point, which I well understand, they want to feel that it is targeted on the people who are trying to evade the system, trying to break the rules. One of the themes I have tried to pursue is the importance of enforcement. What we would argue from the small business point of view is that it is very important that the local enforcement efforts are targeted on those companies who are deliberately seeking to evade regulation. Where companies make honest mistakes that should be recognised.

  85. Great. I understand that. That is a very fair point, particularly the last one. May I just mention that it is a peculiar combination that we have in front of us: a man who used to sell hamburgers and a woman called McDonald. I wonder how much planning went into that attendance here today. May I turn to the question of the EU from which at least 40 per cent of our regulation comes? To what extent in assessing how this should be implemented here, do you take into account the fact that there are differential patterns of implementation elsewhere within the EU?
  (Mavis McDonald) As normal, when we are negotiating a European directive, and it is a UK negotiation, then we would expect to know where all parts of the UK stood and what the variations of the regimes were and that they would be part of the teams which were engaged in either the working parties working at official level or whatever negotiation was going on.

  86. No, this is not the question of negotiation about what should be in the directive. It is a question of once you are actually implementing it. I have had frequent complaints from businesses in my constituency that we adopt all the EU regulations to the letter and a lot of their competitors abroad do not bother at all and why are people doing this so unfairly. You can see the point there, can you not? If Spanish, Italian, Greek competitors are breaking all sorts of regulations which are costing them, why should they abide by them. Is that something you take into account?
  (Mavis McDonald) It is something which individual departments who know their markets take into account certainly. In my experience where companies have reported back that they have found completely different or unfair implementation of directives abroad then we have followed it up with the Commission, but it is quite a tricky one to get on the agenda.

  87. So the remedy you would see there is that you pursue it through the Commission which in turn then has to pursue it with the relevant country, which of course is pretty meaningless because if they have not been doing it before, they are not likely to change. Do you not consider in these circumstances providing for a level playing field by loosening your grip?
  (Mavis McDonald) If it is a directive which is in the process of being developed then we would hope that those comparisons would be part of the context within which the UK was formulating its position. Once a directive is in operation, then we have procedures here which make it a law here, so we would expect that once we had the legal framework in place in the UK, then we would have systems which expected people to abide by that legal framework. We do have some examples, which have not to my knowledge particularly come through the RIA management route where complaints have led to the Commission taking up with other member governments the way in which they do carry out the implementation, but it is a difficult process to work through.

  88. That is a very cumbersome exercise, is it not?
  (Mavis McDonald) Yes.

  89. Therefore British business is entitled to be unhappy about rigorous enforcement of EU regulations which are seen as optional by other jurisdictions.
  (Mavis McDonald) I mentioned earlier the transposition conference we had had. That is part of a general discussion we have been trying to have to promote the kind of approach to balance and lightness of touch in following through our own detailed implementation which we have adopted for RIAs more generally.

  90. Is that a long way of saying basically that in these circumstances you are prepared to have a slightly lighter touch and you recognise that everybody else is ignoring it?
  (Mavis McDonald) We would view our role as encouraging our colleagues here who are dealing with Europe, when thinking about the way in which they are negotiating directives and then thinking about the implementation, to adopt the kind of approach and principles that we are adopting for RIAs here in our own legislation.

  91. That is as far as I am going to get on that one. May I clarify whether or not you believe that there is a lower hurdle in the EU for the implementation of regulations? You have stressed to us the extent to which it is really quite a difficult and intricate business and you assess things very carefully. I have the impression from many of my colleagues in my constituency that they feel the EU rushes out regulations without proper study more than we do perhaps in this country. Is that your impression?
  (Mavis McDonald) I have to confess my own experience is limited to certain areas of EU activity so I cannot answer across the board. It partly depends on the nature of the relationships you have with the particular part of the Commission which is responsible for developing policies. In some areas it is easier to get alongside and work collectively to develop it than it is in others.

  92. That does not answer the point I was making. I was really asking whether or not you think in general there is a lower hurdle in the EU than there is here.
  (Mavis McDonald) I am not sure I really understand your question.


  93. It is actually a pretty fair question. If you do not want to answer it, just say so, but it is a pretty fair and clear question.
  (Mavis McDonald) I am being genuine here. I do not quite understand what you mean by lower hurdle. If you mean: do I think the kinds of regulations which come out of the EU are easier for people to leap over than the kind of hurdles which come out —

Mr Davidson

  94. No, almost the converse in a sense. The hurdle we have here before we introduce regulation will be higher and they are more likely to rush out regulation in the EU willy-nilly.
  (Mavis McDonald) My own experience suggests it varies depending on which part of the Commission you are dealing with. In some areas that is true and in some it is not.
  (Mr Andrews) It is important and we can do a lot more particularly for small companies to push information through to the European Commission about the particular issues they are dealing with and the small firm interest in those issues. That is very important and we need to do that. We have set up, and the Small Business Service is part funding, a little representative office in Brussels to try to coordinate the work of the various small business representative organisations in Brussels which lobby the Commission and other Member States on these issues. There is quite a lot we can do.

  95. May I turn to the particular example which is mentioned in the report about the minimum wage and the process by which you decided not to put information about the minimum wage on pay slips and the vested interests which are involved in that. It does strike me that all of the negotiations you undertake are all very much with those who have a vested interest in minimising the effectiveness of these regulations, the lightness of touch and all the rest of it and that there is no countervaling influence on your consideration from representatives of the poor, the underpaid, those who are most likely to be exploited, those who represent those who work in the caring industry. I have had a number of constituency cases where people have been told the national wage does not apply to them. They have gone along and believed that for a while, in circumstances where something like, to choose one example, the printing of information about the minimum wage on a wage slip would have overcome that difficulty. Clearly the interests of these poor people have been disregarded. How do you strike that balance between the vested interest which would seem to me to have captured you and the countervaling interest of Government policy?
  (Mr Andrews) We have not been captured by vested interests but I would make one observation which is that it is very important, whether it is the Small Business Service or any department, that we make very clear to small business, indeed any business, what is required of them. I certainly think we are doing a lot to make very clear to people running small businesses what it is they are expected to do under the law. That perhaps is a partial answer to your concern.
  (Mavis McDonald) The national minimum wage was something about which there was a great deal of consultation. It is possible to help departments make sure that they access the groups you are talking about in the course of the consultation to get that kind of response back in as well. I do not know enough about the detailed ways in which DTI works through this but at some point there is a judgement for Ministers on where they think the balance lies in response to the consultation.

  96. Up to a point. Here is an example where deregulation or assessment has let down a particularly vulnerable group. You clearly have been thereabouts arguing the case on behalf of what is seen to be your constituency; you are there representing the views of small businesses in these matters. In this whole process no countervaling argument is being put unless it is the Ministers themselves who originated the policy, but they will have so many other balls in the air, that the system is therefore rigged against those people who are in greatest need and do not have anyone to speak for them.
  (Mavis McDonald) The regulatory impact unit's view is not just to see that the small business views are represented. The small business views are clearly fed into the process in order to make sure that they are heard. The kind of commentary the regulatory impact unit will want to make back to a department about how they are proposing to handle their RIA would be about the range and extent of the consultation they are having with all the interested groups.

Mr Rendel

  97. May I start right at the beginning and ask you whether you can tell us in your own words the purpose of a regulatory impact assessment?
  (Mavis McDonald) The purpose of the regulatory impact assessment is to make sure that as a new policy is developed which might lead to more regulation, the full impact of that regulation is thought through, the alternatives to achieving the desired benefits of the policy change are assessed in relation to regulation or other types of approach to rollout and that the widest possible consultation and engagement with those who will be affected by the proposed change takes place before final decisions are taken which may well have additional costs on some of the people who will be affected by the change. It is about balance and proportionality.

  98. Going back to something Mr Gibb asked earlier about whether the costs to society are taken into account, you would say, would you, as I understand your original response, that yes, that is one of the things which would get taken into account but a number of other things as well such as cost to businesses and so on.
  (Mavis McDonald) Yes.

  99. Going on from there, it seems to me that a lot of regulations I have come across in the House result from something happening, some disaster taking place. There was a case, was there not, a while back where some canoeists got drowned and we immediately started wondering what we could do to make sure adventure holiday companies were better regulated so that this did not happen again? How in that sort of situation, if you are proposing new regulations, would you cost the effect on people's lives?
  (Mavis McDonald) Even in tragic circumstances like that where people want to make a change, you can still have a wide discussion about the real impact of what you are proposing to do and whether it is the best way of targeting on the precise change you are proposing to effect and whether you are proportionate or not. Indeed in that particular one, people are re-visiting whether or not the requirements were too heavy for the impact which was sought. Even if you are attaching the highest value to life, it does not mean that we cannot do a proper assessment of the way in which you want to effect the change to protect life.

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