Examination of Witnesses (Questions 280-291)|
TUESDAY 5 MARCH 2002
280. That was going to be my next question in
terms of the fact that you mentioned the Working Time Directive.
If you are going to pass that information on to us I think that
would be quite useful. I did highlight one little anomaly in relation
to your evidence on EU based directives and the impact on manufacturing.
That was summed up in relation to your comments on productivity
and the impact of high technology capital equipment where you
put a paragraph which says, "Ironically, it may be that in
Europe they are forced to invest in high technology and automation
as a way to cope with reduced working and high social costs."
It does seem to conflict somewhat with the points you made about
the regulatory burden. Could that be put down again to differences
in culture and in approach where certain countries in mainland
Europe, faced with European directives, have taken a completely
different line and because of their different culture invested
and got around things in a different way?
(Mr Legg) Yes. As Peter has mentioned, there is a
fairly clear line of those more southerly nations in the EU who
tend not to apply these regulations so clearly and those that
do. Germany is one country where the working regulations are applied
and were applied even before there was a European regulation.
In fact, they were the instigators, one could cynically say, because
they were suffering and perhaps they thought they could make the
rest of us suffer as well. I think there was an element of that.
We were particularly referring there to investment in Germany
and investment in Scandinavia where they do suffer more from shorter
working hours imposed by stronger unions, in the case of Germany,
and in Scandinavia it is more because of their appetite for leisure
time. They just do not want to work long hours. They have a different
attitude and culture altogether. Really that statement referred
to the specific area of the EU rather than a generalisation.
281. But nevertheless a different approach to
cater for certain problems that exist within the EU?
(Mr Legg) Yes.
282. In the BPF evidence you express the view
that the Deregulation Task Force has been a failure. You are not
equivocating on that subject so if it was a failure what would
you do instead and how would you judge it to be a success?
(Mr Davis) The Better Regulation Task Force we do
not see any demonstrable results from its work over quite a few
years. I am sure you are probably going to take evidence from
them as well. What we would like to see is a Cabinet Minister-led
grouping with small and large businessmen joining that Cabinet
Minister and sitting on a board to review retrospectively legislation
which is complex and which causes industry a lot of difficulties
which could be simplified, but also to examine new legislation
like the kind I have mentioned previously which is on the horizon
and to examine that and ensure that there is a minimum burden
on industry, but of course ensuring that the provisions of the
legislation are achieved and ensuring that there is a minimum
burden on industry. We also put in our submission that we feel
there should be an annual target set. This is difficult to quantify
perhaps and that is up to Government to decide how that is quantified,
but there should be a quantifiable annual target for such a grouping
as well. Patricia Hewitt has of course announced that there will
be a small business regulation drive. I do not think there are
any details as far as I am aware as yet on this. This is going
to be incorporated in the DTI review. From what we know about
this we just do not think it goes far enough. We think there needs
to be a more fundamental root and branch examination of up and
coming legislation and also existing legislation.
283. That does sound suspiciously like a description
of what the Better Regulation Task Force (or perhaps more particularly
when it was the Deregulation Task Force) thought it was doing,
but in practice it came up with a range of measures which industry
regarded as being rather at the margin of regulatory impact overall.
In practice most of the large changes in regulation over recent
years have been in substantial employment measures. Are you looking
for any specific reduction in regulation?
(Mr Davis) We are certainly looking for a reduction
in regulation. The problem with the task force is that it has
not had the teeth to drive things through. I have had some conversations
with Lord Haskins on this subject which I will not divulge but
I think there have been problems for the task force, to be frank
about it, and they may wish to tell you about that themselves.
That is not for me to mention to you. There is a need for a drive.
There is plenty of evidence of what it should look at and we would
certainly be willing to furnish examples of what it should look
at, but we need to have the confidence that this is a substantive
drive by Government.
284. Have you had a chance to look at the Regulatory
Action Plan published two or three weeks ago?
(Mr Davis) No, I have not seen that.
285. Would you perhaps have a chance to look
at that and tell us what you think about it? There are a large
number of measures, only a limited number of which are in the
DTI field so it might be useful to focus on those and see whether
even the cumulative effect of those proposals on DTI would have
any significant benefit to industry or whether it is another case
of piling up a very large number of small changes and hope that
people will think it amounts to something.
(Mr Davis) We will certainly look at that, Chairman.
It is of course not just the DTI. This spans across other Government
departments as well and all other government departments have
regulations impacting on the industry, so it is more than just
286. DEFRA in that context has rather more to
offer than the DTI so it might be right to include that as well.
(Mr Legg) Can I just mention on that subject that
the burden of regulation falls particularly heavily on SMEs and
if you can imagine the management in a company of, say 30, 40,
50 or even 100 people, it is enormously problematic to keep up
to date with all the level of regulations that are coming forward.
The mountain of paperwork that hits people's desks is phenomenal.
At the same time in some cases they are trying to formulate strategies
either to expand or even just to survive. I give you one example,
and I am not fully familiar with this, but my understanding is
that there are regulations coming in whereby we have to have consultation
with employees possibly through workers' councils for companies
that are under 50 people. I am not sure about the size of the
company and maybe we can check that. Generally in small companies
there is a good relationship between management and workforce
and these sorts of things go on in an ad hoc way rather than having
to have the formal structure and go through that routine. That
is the sort of burden that small companies find a problem.
287. Do you think that the applicability of
regulations should be varied according to the size of the company?
(Mr Legg) Certainly. For under 100 people I think
the burden of regulation is very heavy indeed.
(Mr Davis) Our good allies the Chemical Industries
Association, who tend to be in larger companies, in their submission
noted a figure which certainly sounds comparable to what I have
heard in our industry, that in their size of companies the senior
management regulation in all its aspects takes up about 12 per
cent of senior management time. Mike I am sure would agree that
in smaller companies it is a lot more than that.
288. Just before we finish we would like to
get your views on one area. It is the other side of th coin from
regulation. When the Government is trying to help youand
we all know the joke about that onewe have the Regional
Development Agency, Small Business Service, Manufacturing Advisory
Service, etc, etc. Other witnesses have argued that perhaps this
could be better integrated. What is your general view? I am not
asking for a thesis on this. What is your general view on Business
Support Services? You represent a plethora of organisations across
th the country, different types of regional development agencies
and the like. What is your view of the weft and warp of this patchwork
that we have?
(Mr Legg) It is a big subject, Chairman. I think it
is an enormous problem, the whole variety of Government support
and aid that is available to companies in particular, similar
to what I have said just now. There is a huge amount of paperwork
that comes through, for instance, from the DTI with all sorts
of initiatives which are well-meaning, well-founded, which the
majority of managers would say, "If only. I would like to
but I cannot because I have not got the time" and all the
rest of it. I do think the whole thing needs to be culled, made
a lot simpler and a lot more direct. It is difficult to draw examples
straightaway, but maybe Peter has something to add.
(Mr Davis) I do agree very much with what Mike has
said, which is why the DTI review is very welcome in specifically
looking at the support given to industry and trying to make sense
of it all. An illustration of this is that we asked some months
ago, because of an increasing number of inquiries from member
companies and non-member companies about where different types
of support could be found from funds, either from Britain or from
European funds, and we asked for their help in constructing a
web site because the level of phone calls was becoming rather
considerable and we thought a web site with some basic guidance
and where to get more information would be rather helpful. They
said to us, "Yes, we will certainly help you but it has got
to be after we have had a major review. It is such a mess. We
need to have this cull as part of the DTI review, sort it all
out and then we will come back to you and certainly we will help
with the web site so that firms can get basic guidance on where
to go, what the schemes cover and so on." I think it is confusing.
It is all very well meant but it is confusing. There are a lot
of overlapping schemes which we are aware of and the fact that,
as I mentioned earlier, with this survey, 71 per cent of plastics
firms have never received a government grant or other funding
is because they find it a rather impenetrable maze which hopefully
will soon be sorted out.
289. But was not the establishment of Business
Links was intended to create a one-stop shop and a route of entry
into all these sources of advice?
(Mr Legg) I think they were but they have failed in
doing that. A lot of the DTI schemes, as was said before, are
very well intentioned with good ideas and they work very well
for the larger companies, but I think when it comes back to the
smaller companies the initiatives fall on stony ground. If you
take, for example, the bench marking initiative, I think it is
absolutely excellent but the take-up of it was relatively small.
It has been badly marketed perhaps amongst SMEs. There are a lot
of other initiatives. People I talk to on a day to day basis just
do not know where or what is available.
290. Talking of initiatives, presumably you
went to the manufacturing summit in December?
(Mr Legg) Unfortunately we were not invited. We could
Mr Lansley: Is that one of the reasons why it
did not appear in your memorandum?
291. You have been invited here to a hearing
and we are very grateful for the information you have given. You
have undertaken, Mr Davis, to furnish us with some more information.
One thing that we are concerned about is inward investment. Perhaps
you could give us a note on that as well with some specifics.
We are a bit thin on the evidence there but if you could give
us some additional information on that it would be extremely helpful.
Thank you very much for your time, gentlemen. It has taken rather
longer than we had intended but it was extremely useful.
(Mr Legg) Thank you very much indeed
for the opportunity.
6 Note by witness: As requested we have looked
at the recently published Regulatory Action Plan and in so doing
have established from our members that they are unaware of its
existence. Initially we examined the 25 regulations that were
within the DTI field, and would comment that the cumulative effect
of approximately 50% would be of benefit to SMEs. However the
document also highlighted the fact that some 60 of the 167 regulations
in section one dealing with business, charities and the voluntary
sector could affect business and that the additional 35 regulations
were in the field of Departments such as DEFRA, DfES, DTLR, HM
C&E and HSE. We have noted the appointment at the end of the
month of Mr D Arculus to replace Lord Haskins as head of the Better
Regulation Task Force and hope that he will raise the awareness
of what Government is both seeking to do and what is being achieved
regarding regulations. Perhaps more importantly we trust he will
strive to ensure that the impact of regulations on the competitiveness
of manufacturing and SMEs in particular is properly assessed before
they are introduced. Back