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Mr. John Greenway (Ryedale) (Con):
As the Home Secretary knows, the Council of Europe Migration Committee, on which I am happy to serve, is looking at these issues in considerable detail. I warmly welcome what he has saidthese are some of the most challenging issues for the Government, and it represents a great step forward that we have all-party consensus on these proposals. I particularly agree with the comments of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). Sadly, there is a great deal of evidence of abuse of migrant workers, not only irregular migrants but those who are here legally. Will the Home Secretary give the House an assurance that, across
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Government, those abuses will not be tolerated, and that these people will be given the welcome that they deserve?
Mr. Clarke: First, may I pay my respects to the work that the hon. Gentleman has done in this field? I strongly agree that achieving cross-party consensus on this matter is the best way to proceed, and I am grateful for what he said on that. I can absolutely give him the assurance that he seeks. I had a press briefing earlier today with the TUC and the CBI, both of which are utterly committed, with the Government, to maintaining precisely the civilised standards of employment that are a requirement that should operate for everyone in this country. I acknowledge, as I did to my hon. Friend the Member for Crewe and Nantwich (Mrs Dunwoody), the fact that there remains a great deal of work to be done in this area. However, we are all committed to moving in the same direction.
Gwyn Prosser (Dover) (Lab): I want to add my welcome to the new proposals, not least because they will enable us to crack down on the abuse of the immigration system in this country, just as past and present measures have enabled us to crack down on the abuse of our asylum system. The new proposals will involve the reintroduction of embarkation controls, which the Tories abandoned in 1994. How does my right hon. Friend propose to reintroduce embarkation measures in busy ferry ports such as Dover without interrupting the essential flow of traffic and people?
Mr. Clarke: There are two things to say about this. The first is that one of the effects of the scheme will be that it will be much easier to make applications internationally, so that many people seeking to enter the country who might previously have arrived at Dover will not need to go anywhere near it, because they will already know where they stand, the decision having been properly made in the country from which they come. The second, more substantive, answer to my hon. Friend's question is that our e-borders proposals, which we have already published, and the development of biometric documentation will enable us to address these questions at ports such as Dover much more effectively.
Given the recognition of specific problems in Scotland and the comments published by CBI Scotland, would it not make more sense for the Scottish shortage occupation list to be developed fully by the Scottish Parliament? Will the Home Secretary consider that during the passage of any legislation?
If the hon. Gentleman is suggesting, as I think he is, that we should change the law to devolve migration issues to Scotland, I am afraid that I cannot agree. We believe, I think rightly, that this is a UK-wide issue. I am glad to say, however, that we are working closely with our colleagues in the Scottish Executive. We consider its fresh talent initiative to be a positive contribution that sits within the frame of the document.
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However, I think that it would be a grave mistake to establish key labour-market issues simply on a Scotland-England, or indeed a Scotland-England-Wales, basis. It should be done on a UK basis, and we will ensure that that continues.
Dr. Phyllis Starkey (Milton Keynes, South-West) (Lab): I share many of the concerns raised by my hon. Friend the Member for Leicester, East (Keith Vaz), among others, about the effect of the scheme on south Asian restaurants. The Home Secretary seems to be suggesting that the problem will be solved by the provision of more training, but Milton Keynes has a dynamic local economy in which plenty of other jobs are available, providing much more attractive hours and conditions than those in the catering trade. I fear that if the supply of labour from the sub-continent is not allowed to continue many restaurants in my city will close, to the detriment of those in my constituency, including me, who enjoy them as part of a range of restaurants there. Will my right hon. Friend assure me that he will keep the matter under review and will be able to act quickly if the fears raised by my hon. Friend and others prove to be justified?
Mr. Clarke: I can certainly give that assurance. As I said in answer to my hon. Friend the Member for Leicester, East (Keith Vaz), we will indeed keep the matter under close review. As I have said, however, what we want in all our productive industryincluding the service industry, which involves cateringare high skills, high wages and high productivity. That is what we should seek to achieve, in those sectors as well as others. Individual businesses and shops that keep going on a basis of low skills, low productivity and low pay do not represent the future of this country in the most effective way. That is why I have returned consistently to a central theme of the points-based system, namely, the skills basis for assessment of skills shortages.
That said, I accept my hon. Friend's point completely. We certainly do not want to cause serious damage to a very important sector of the country's economy and society. That is why we will keep the matter under close review.
Mark Pritchard (The Wrekin) (Con): Given the new responsibilities that the policy will place on Her Majesty's diplomatic service, will the Home Secretary be having words with his colleagues in the Foreign Office to stop the closure of British diplomatic missions and embassies across the world?
Mr. Clarke: We have worked extremely closely with our colleagues in the Foreign Office, and I have discussed the issue with my right hon. Friend the Foreign Secretary on a number of occasions. The main agency, UKvisas, is a Foreign Office agency, but works closely with the Home Office in providing a service throughout the world.
I was in some north African countries last week, discussing precisely this question. It is possible to outsource some of the work in certain circumstances. It is also possible, by means of the distance approaches established by the points-based system, for many applications to be made online in a very direct way. My answer to the hon. Gentleman's question is yeswe will continue to work closely with the Foreign Office to ensure that the service is available as widely as possible.
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Small business makes an immense contribution to the economy. Small enterprisesthose with fewer than 50 employeesmake up over 99 per cent. of all businesses and half all employment. As the economy moves toward higher, value-added activity, the share of it taken by small firms will only grow, so the weight of regulation now pressing on small businesses and hindering their wealth creation is an issue for us all. The Better Regulation Commission has estimated that the total cost of regulation facing the economy is now some £150 billion. The Hampton review found that national regulators alone send out 2.6 million forms a year.
Inevitably, this burden falls disproportionately on small businesses. Large companies are able to employ people to deal with regulation; small businesses simply do not have that option. Academics from the London School of Economics have found that regulatory costs per employee are five times higher for small firms than for larger ones, that small employers spend five times as many hours per employee dealing with regulation, and that they spend almost 5 per cent. of their annual turnover on compliance. Equally, the Federation of Small Businesses has shown that the administration of pay-as-you-earn costs a business with fewer than five employees £288 per employee per year, yet for a firm with 5,000 employees, the cost is just £5 per employee. The Government's Carter review concluded that
Other regulations of particular concern to small businesses include the quarterly VAT return, the very frequent inquiry forms from Government Departments and the Office for National Statistics, and the new employment regulations, of which there have been 17 since 1997. The growing weight of regulation strongly suggests that the deregulation efforts of successive Governments have not been sufficient. Over the last two decades, the Enterprise and Deregulation Unit has been replaced by the Better Regulation Task Force, which, in turn, has been replaced by the Better Regulation Commission, but still the red tape has grown. The Regulatory Reform Act 2001 has had less than half the predicted impact; the total cost of regulation has increased by 50 per cent. in less than nine years. The Legislative and Regulatory Reform Bill now before the House does not actually refer to deregulation. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) tabled an amendment to it proposing
My Bill would confront the problem of regulation in three ways. First, it would give Ministers a duty to consider alternatives to, and exemptions from, existing regulations affecting small and medium-sized firms, and a power
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to create those exemptions. Secondly, because the impact of regulation on microbusinessesthose with nine employees or fewer and an average annual turnover of just £130,000is particularly disproportionate, the Bill would create a presumption that microbusinesses are exempted from any future regulation. That would protect over 4 million businesses from future regulation. Thirdly, in respect of all future regulations the Bill would impose a statutory requirement to carry out a regulatory impact assessmentsurprisingly, that is not a current requirementand to consider alternatives to regulation in doing so.
Many precedents already exist in terms of exempting small businesses from legislation. There are small business exemptions of one kind or another relating to tax and VAT returns, statutory audit requirements, trade union and employee representation, stakeholder pensions and Sunday opening hours. Other developed countries have also adopted the practice of exempting small businesses from regulation. Last year, France deregulated firms with fewer than 20 employees in order to encourage higher youth employment. In Italy and Germany, there are small business exemptions relating to statutory audit requirements, and trade union and employee representation. There are also numerous examples of small business exemptions in many states of the United States of America.
This idea would be popular with businesses themselves. Last year, a Federation of Small Businesses survey found that 80 per cent. of small businesses support regulatory exemptions for the sector. The federation is in favour of the principle of exempting small businesses from regulation wherever possible, and it is particularly supportive of the idea of placing a duty on Ministers to consider alternatives to regulation. However, it is not just commercial enterprises that would benefit. Small charities, which often rely on voluntary help, find coping with regulation particularly difficult. My right hon. Friend the Member for Witney (Mr. Cameron) has proposed social enterprise zones with lower regulation, in order to assist in the development of the voluntary bodies that can play such an important part in delivering support to our most deprived communities.
The Bill is a balanced measure that would not automatically abolish existing regulations for small and medium-sized businesses such as those affecting the rights of disabled people in the workplace, or, indeed, other employment rights. It would simply give Ministers a duty to consider alternatives to regulation, and suitable exemptions. They would then have a power to create such exemptions, subject to proper parliamentary approval. Similarly, in relation to microbusinesses, Ministers and Parliament would still be able to override the presumption of exemption from regulation if they so wished.
The idea of exploring alternatives to regulation is simply to ask whether its benign objectives could be achieved by other means. For example, we should be anxious to maintain strong standards of health and safety, but we should be ready to examine whether they could be achieved through insurance mechanisms for the smallest firms, where the risk to employees is low.
It might be argued that the Bill would create a disincentive for businesses to expand. The Better Regulation Commission considered that question and
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concluded that there was little evidence to support it. I believe that we should be looking to reduce the regulatory burden on all businesses, but the disproportionate impact on small businesses justifies special measures to help them.
If we are going to be serious about lifting the regulatory burden, a new settlement is needed, creating a presumption of deregulation for the smallest businesses, placing the burden of proof on the regulator, while maintaining proper parliamentary scrutiny of the process. That is the purpose of this Bill.
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