Deregulation Bill

Public Bill Committee, 20 March 2014.

Christopher Chope (Conservative, Christchurch)

Before we start, may I tell the Committee that, due to a printing error, a number of amendments and new clauses tabled on Monday and Tuesday this week did not appear on the amendment paper until today. The provisions concerned are amendments 28 and 29, new clauses 16 and 17 and Government new clause 18. Those provisions were circulated to Members by e-mail yesterday and are on today’s amendment paper. Today, I intend to select those amendments that were tabled in accordance with the notice period for today’s sitting: amendments 28 and 29. We will not reach the new clauses until next week anyway.

Clause 61 - Exercise of regulatory functions: economic growth

Toby Perkins (Labour, Chesterfield)

I beg to move amendment 27, in clause 61, page 40, line 34, leave out from ‘function’ to end of line 41 and insert— ‘must publish an annual report which—

‘(a) makes an assessment of the extent to which they have taken into account the specific needs of small and medium sized enterprises in the exercise of that function, and

(b) sets out complaints received relating to the exercise to of their functions and/or their engagement with their duties.’.

Christopher Chope (Conservative, Christchurch)

With this it will be convenient to discuss clause stand part.

Toby Perkins (Labour, Chesterfield)

It is a pleasure to serve under your chairmanship again, Mr Chope.

On the face of it, there is much to support about the thought process behind clause 61. The clause was intended to be about better regulation and recognising that sometimes the way a regulator performs its duty should be done, in any sensible operation of the regulation, in the best interests of the industry, and, of course, in the British national interest. Certainly, feedback we received during some of the evidence sessions showed that people recognise there is an important requirement on regulators to try to have sensible, supportive relationships with the organisations they regulate. However, we are concerned that the outcomes of the Bill that the Government hope for could be undermined by unintended consequences of the clause. We are worried about how workable the provision will be and how the powers will be used.

The clause is in a deregulation Bill, but it is not, in any way, deregulatory. In evidence to the Joint Committee that first considered the Bill, the Local Government Association—currently chaired by the eminent Conservative local government legend, we might say, or, certainly, the very well-respected Conservative local government figure, Sir Merrick Cockell—summed up the central issue with the clause by saying that there is an irony in a deregulation Bill introducing a new duty where one is not needed. That strikes to the heart of some of our concerns. The evidence session was very interesting indeed, because, from the business community’s perspective, there was a real sense that this is something good regulators should be doing. Good regulators should understand that they are there to promote the best interests of the industry. They should support that industry and support the organisations they regulate to comply with regulations. All that is entirely sensible.

However, the evidence sessions also exposed the open questions that remain as to how the growth duty would be applied and what its implications are. The hon. Member for North West Leicestershire, who is not in his place, raised one such point when we talked about the nuclear industry and the nuclear regulator. In the context of the growth duty, he said:

“Given the sensitivities of the nuclear industry, is it not more likely that the nuclear regulator will realise that the biggest threat to the growth of the nuclear industry is any breach of safety whatever, and that the duty could have the reverse effect? As we have seen around the world, when there has been a breach of safety in the nuclear industry, it curtails that growth completely.”––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 80, Q210.]

That is an interesting question. He is saying that this newly imposed growth duty might persuade the nuclear regulator to think, “Let’s start getting tough on nuclear safety, because it could be bad for growth if a nuclear power station blows up.” Whereas, previously, the regulator’s core responsibility was safety, it will now say, “Let’s really start getting safe, because we’re going to have growth problems if this nuclear power station blows up.” That is an interesting thought process, and not one that I agree with, but it exposes the open way in which the clause is drafted. The clause could mean a whole variety of different things depending on who is reading it.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

My hon. Friend is making excellent points. He may be coming to this, but while the nuclear regulator knows about nuclear safety, it will know less about economic growth. Is it not more likely to misinterpret a growth duty than a safety duty?

Toby Perkins (Labour, Chesterfield)

That is an interesting point. That is one of those issues where we will find out how the clause operates when it comes into effect.

One thing that undermines the clause is the potential for it to lead to a huge raft of litigation. One thing that came across powerfully in the evidence of Alexander Ehmann, the deputy director of policy and public affairs at the Institute of Directors, was the question over what happens once the duty exists. What happens if a business being regulated in relation to food safety or drinking water, or being regulated by the Driving Standards Agency, thinks, “Hang on a second, I do not think the things my regulator is putting in place are reasonable in terms of its responsibility towards the growth duty”? Mr Ehmann supported the principle of the growth duty, but he said:

“I suppose there is a possibility that things could escalate in the sense that unsatisfactory fulfilment of the growth duty, from the view of the business community, could well be an area of disagreement between the regulator and the regulated businesses and could be used as a challenge perhaps right up to judicial review.”––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 75, Q197.]

Regulators have responsibility for safety, and the hon. Member for North West Leicestershire thinks the growth duty will strengthen that responsibility. However, the Institute of Directors says that a company that thinks its regulator is not taking enough care to promote the growth duty might say, “We’re putting a halt to this regulatory process. You might think our food standards aren’t up to scratch, but we can put the boot back on the other foot. We can start prosecuting you now, Mr Regulator, because we don’t think you are recognising your growth responsibility.” We therefore have, from two people who support the growth duty, two entirely different and contradictory understandings of how it will work. That is troubling.

If we look at the list of non-economic regulators that will fall within the scope of the growth duty, we see a huge number of authorities and inspectorates that have a clear primary responsibility for safety: the DSA, the Environment Agency, the Food Standards Agency, the Fish Health Inspectorate, the Maritime and Coastguard Agency, the Sports Grounds Safety Authority—I could go on and on. We understand their role on safety.

During the evidence session, some of the people who supported this move said, “We respect that these regulators will have a safety function and that will be their prime function, but maybe they could start considering how often and at what time they do inspections. That would be how to demonstrate their growth duty.” However, what that means exactly is so open—for example, how would the Animal Health and Veterinary Laboratories Agency satisfy the growth duty? One person might think that that is an entirely satisfactory way of applying the duty, but their competitor might say, “This is totally unreasonable. It’s really restricting our growth.”

We might start finding that the organisations with the greatest power, the greatest lobbying power and the ability to bring legal proceedings, will be those that are able to say to the regulators, “I’m going to bring you to heel now. Things have changed around here. You’d better start supporting how we’re growing or else we’ll be off to court.” Other organisations—either with a less aggressive approach to the legislation or without the same resources—might be much more compliant and supportive of how the regulator works. Those bigger organisations that take an aggressive approach could end up having a competitive advantage over smaller ones because, through this power, they are able to change how they are regulated. It will not be a level playing field. Those bigger companies will be able to say to regulators, “We’ve got this growth duty. Different people think it means different things. We don’t think you’re complying with your responsibility in terms of growth and we’re going to pursue this all the way to judicial review.”

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Is it not the case that a number of these regulators are relatively small organisations for which the cost and risk of legal proceedings would be extremely onerous? The growth that this provision might, therefore, support would be in legal fees and the legal market rather than economic growth per se.

Toby Perkins (Labour, Chesterfield)

Precisely, and that is one of my worries. Often relatively small organisations regulate mammoth corporations, so the power balance between a regulator and the big businesses they regulate is delicate. We do not want regulators to be obtrusive or unnecessarily inconsiderate to their businesses’ needs. Of course they should work with the businesses they regulate to ensure those businesses comply.

We propose that if that regulatory relationship—that power base—changes too much, there should be a report so that we can ask each regulator to give us some evidence of what they are doing. They would be held to account for the ways that they are supporting growth, particularly in small and medium-sized businesses. However, if we go from that to a statutory requirement enforceable in a court of law through judicial review, a major company can go to its regulator and say, “There are going to be some changes around here. The way you regulate us is going to change because we now have this growth duty and the resources to test this all the way in a court of law. Have you, Mr Food Standards Agency?”—or whatever regulator it might be.

I think the Government have all the best intentions and want better regulation. They want regulators to meet their duties in a way that supports the industry in, first, complying and, secondly, thriving. We all want that, but in attempting to achieve those laudable aims, let us not do something that actually undermines the whole regulatory function.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

My hon. Friend is being generous in giving way. On the point about the impact that litigation could have on economic growth, the Committee may know that I worked for Ofcom before joining Parliament. The auction of 4G spectrum was delayed by at least two years by litigation, or the threat of it, from major communications operators. That certainly reduced growth in the communications market.

Toby Perkins (Labour, Chesterfield)

That is an incredibly important point, but it is just a glimpse of what could happen. We have a very openly worded function, which different people think means entirely different things. Rather than the legal methods or threats that were open to the companies in the case my hon. Friend referred to, we have a much broader duty to be mindful of growth, which, as we have heard, can be pursued to judicial review if companies are not happy.

Think about all contracts that there are. We need to get some of them processed and operating. If powerful organisations want to hold those processes up the whole time because it is in their commercial interests to do so, they could use the growth duty to do that. We have the brand-new Groceries Code Adjudicator, which is a pretty small organisation, but which is responsible for regulating some of the most powerful companies in Britain and, arguably, in the world. It regulates the companies that control the food that the majority of us rely on.

There are valid questions about the way that the supermarkets operate, and I support the Government in bringing forward the Groceries Code Adjudicator. However, in the last 10 to 15 years, we have seen a huge change in our grocery market, with huge numbers of small grocery stores closing down and the convenience store sector really feeling under siege. We have Tesco, Sainsbury’s, Asda and Morrisons not operating a monopoly—obviously, there is the choice between the four—but making it difficult for small companies to compete.

In that industry, we are potentially heading towards huge growth, particularly of Tesco, in the community sector. I met Tesco to discuss the fact that it now has nine stores in Chesterfield and is looking to buy up a couple more pubs and turn them into stores. I said, “We’ve got nine Tesco stores in Chesterfield. Don’t you think we maybe have enough?” They said, “No, not nearly enough.” They were quite open about it. They said, “Our growth is in every community in the country. That is where we see ourselves.” Tesco’s growth is not going to be in lots of huge new supermarkets but in every minor district precinct. A small Tesco local store will go up in every area.

What is happening is that a small number of companies are growing ever more important in terms of the distribution of food—which ultimately keeps us all alive. That might be absolutely fine, but we have never had a debate about it.

John Cryer (Labour, Leyton and Wanstead)

Would my hon. Friend bear in mind that there are large companies that are giving way to very, very large companies? Kraft took over Cadbury about five or six years ago and created, from one very large company, a super-large company. Kraft is an enormous company and it has not just national domination, but world domination.

Toby Perkins (Labour, Chesterfield)

Absolutely. I suspected I was testing your patience, Mr Chope, but if I were to pursue my hon. Friend’s argument much further, the debate would really get distant from the amendment and the clause. However, it is an important point.

The point I was looking to develop in the context of the clause was that we have not had a debate about the fact that a small number of organisations have become increasingly and incredibly powerful. It means consumers have quite limited choice. In addition, the options on where to sell produce are shrinking tremendously for the farming industry. We might be entirely comfortable with that, but we need, on occasion, to stop and think about it.

In that context, these changes are incredibly important for the Groceries Code Adjudicator. Why was the adjudicator set up? What was the Government thinking when they came forward with the proposals on the adjudicator? It is a fledgling regulatory body that is supposed to be regulating incredibly powerful and massive corporates. The scope of the growth duty poses questions in that context.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

My hon. Friend is making a critical point with regard to the growth duty. Supporting an organisation that has perhaps 40% or 50% of the market will result in far more growth than supporting a small organisation that has a very small percentage of the market. The proposal is necessarily going to increase support for large organisations if growth is measured purely by incremental financial growth.

Toby Perkins (Labour, Chesterfield)

My hon. Friend has made an incredibly important point. Clause 61 poses that question. Subsection (1) says:

“A person exercising a regulatory function to which this section applies must, in the exercise of the function, have regard to the desirability of promoting economic growth.”

That is a very broadly based and unspecific description. In my hon. Friend’s example, a business might say, “What you as a regulator are doing will constrain our growth. We have huge growth potential. The proposal is going to support the growth of a company with far less growth potential. Does the level playing field still exist? Your responsibility as a regulator is to be mindful of the desirability of growth, and we have more growth potential without this. Effectively, in your regulatory function, you should be more mindful of our growth potential than the growth potential of some of our competitors.”

David Rutley (Conservative, Macclesfield)

Has the Groceries Code Adjudicator complained about the duty?

Toby Perkins (Labour, Chesterfield)

That is an interesting point. A number of organisations made representations, and many regulators are quangos that find it difficult to criticise Government policy. To say that one arm of Government is not criticising the rest of the Government is not a particularly powerful point. A number of representations were made in the Joint Committee and in our evidence sessions on the reservations of some organisations.

David Rutley (Conservative, Macclesfield)

The hon. Gentleman makes that point, but he fails to talk about whether the adjudicator has complained. To my knowledge, the adjudicator has not complained. He makes his argument about the supermarkets—I declare that I used to work for a supermarket—but surely the adjudicator will have greater powers under the clause because if she believes supermarket practices are anti-growth, it is further grist to her mill.

Toby Perkins (Labour, Chesterfield)

It all depends on what we mean by growth.

David Rutley (Conservative, Macclesfield)

I mean growth.

Toby Perkins (Labour, Chesterfield)

Well, precisely. We recently had an interesting Budget debate about what kind of growth and what kind of recovery we are having. Because the clause is so openly drafted, it is open to interpretation. The hon. Gentleman seems to be saying that now the regulator has the growth duty, it is empowered. I do not see that as the outcome at all.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Having worked for a regulator for six years, I can tell the hon. Member for Macclesfield that it is not the regulator’s function to complain about the duly elected Government of the day. I am sure that, like regulators in general, the adjudicator would not complain about Government policy.

Toby Perkins (Labour, Chesterfield)

Absolutely. My hon. Friend brings a useful perspective.

We strongly feel that if the clause is passed as currently drafted, the overall regulatory responsibility would be undermined and the regulatory burden on the regulator would be increased. The Bill was marketed as a Bill to deregulate on behalf of businesses, but much of it is about deregulating on behalf of the Government. That is not necessarily a bad thing if it means that resources go further, but the clause will not achieve that; it will create an additional regulatory requirement.

David Rutley (Conservative, Macclesfield)

It is interesting that the Joint Committee said that if the duty is

“thoughtfully applied by regulators, it could lead to less burdensome regulation for some businesses in the future.”

That is a good thing.

Toby Perkins (Labour, Chesterfield)

It would be a good thing if that is what happens, but it is an assertion, not a piece of evidence. I would be interested to see the examples that back up that assertion. Where are the examples to demonstrate that if we give an additional responsibility to a regulator that can be challenged all the way up to judicial review by sometimes incredibly powerful companies, it will somehow reduce the regulatory burden on the regulator? If the hon. Gentleman is saying that it might reduce the burden on businesses, it could potentially be true; it all depends on how the duty is operated.

In his advice, Mr Ehmann said:

“My observation is that time will ultimately tell with this duty”.––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 75, Q197.]

It may or may not. How the duty will be operated is very unclear. Of course, it is bound to be unclear as the organisations covered range from the Animal Health and Veterinary Laboratories Agency to the British Hallmarking Council, the Driving Standards Agency, the Fish Health Inspectorate, the Food Standards Agency, the Forestry Commission and the Environment Agency. When regulators have such broad, differing responsibilities and regulate such different industries and organisations, it will be difficult to draft a clause that can be specific on outcomes.

I suspect that there would be some positive outcomes and some potentially negative outcomes, and for a huge number of regulators the principle would already be core to their functions and make no difference whatsoever. Our responsibility when scrutinising legislation is not just to ask whether such a measure will be helpful in some cases and ignore those where it would not be, or to say whether we broadly support what the Government are trying to do, which we do, but to ask what the potential pitfalls could be.

Look at the Dangerous Dogs Act. No one thought it would be good to have more dangerous dogs, but that legislation was rushed through and ended up being viewed as one of the worst pieces of legislation ever passed. We have a responsibility in the Bill Committee and in this place to scrutinise, so when measures are unclear and people do not entirely understand what is meant, we should ask questions.

David Rutley (Conservative, Macclesfield)

The hon. Gentleman makes many points about the challenges he perceives, but there are plenty of opportunities, too. If the regulators that he listed take the time to think about this new duty and that causes them to drop parts of their enforcement regulations that they perceive now to be out of date, that will save them time and reduce the burden on businesses. Surely that is a good thing.

Toby Perkins (Labour, Chesterfield)

If that happened, yes that would be good, but where is the evidence to suggest that that will happen? Our amendment would ensure that regulators had to think about what they were doing to support the growth of small and medium-sized businesses, because they would have to produce a report. We are not talking about creating a lawyers’ playground where there would be a rush to court every time someone was not happy with their regulator, but regulators would have to come to this place annually and provide an annual report that says, “This is what we are doing to support growth in small businesses.”

The amendment would place on the regulator the emphasis and responsibility to be mindful of good regulatory principles, and they would be required to demonstrate that. It would not, however, change that balance of power between regulators and the regulated too greatly or lead to a situation where businesses could constantly resort to judicial review. Even if the clause did not lead to a raft of court cases, the amendment would ensure that threat would not exist. Regulators such as the Drinking Water Inspectorate would otherwise have to think not just, “How do we regulate this?” but “How does this comply with the growth duty and in which way might we be open to legal challenge?” That is a valid question to raise and we will shortly hear the Minister’s response.

We are concerned that the clause will damage the regulatory relationship, but we are also concerned that it has been put into a deregulation Bill when it is clearly not deregulatory. It is an additional piece of regulation.

David Rutley (Conservative, Macclesfield)

It could be.

Toby Perkins (Labour, Chesterfield)

The hon. Gentleman says from a sedentary position that it could be deregulatory. For some businesses on some occasions, and if applied in the right way, it might end up being helpful, but the Government should focus more on trying to ensure that regulators are always mindful of good regulatory practice and principles, just as the majority of them are most of the time. It would be far better to manage the relationship between the regulators and regulated in the context of the Government having an eye on whether those regulators are delivering the functions for which they were set up than to say, “Well, we have got this open duty which could mean lots of different things and we don’t quite know what it is. It might end up being deregulatory, but it might not.” That does not seem like a good way to make policy.

As things stand, the Government want to add to the regulators’ burden by giving them wide and sweeping but ill-defined duties to promote economic growth. This ultimately means imposing new responsibilities and burdens, not taking them away. I said at the start—and will continue to say—that we support what the Government are trying to achieve: we think they are trying to achieve good regulatory practice, but we do not think this is the right route to delivering it.

Because the duty is so vague, regulators will have to take considerable time thinking about the organisations that they regulate and how that relationship will have to change in the context of all their new responsibilities. They will have to put work into thinking about which practices they need to change or abandon. Good regulators should be thinking along those lines all the time anyway, but introducing legal responsibilities and the potential threat of going to court if they do not comply means that they will have to put emphasis and resource into this.

If we then start to see regulatory organisations falling behind on their core functions—because all the time they are having to look again at their processes to comply with the growth duty—people will ask why. This will be particularly the case in the event of a safety lapse. The regulators will say, “You as legislators put an additional responsibility on us, which took us away from our core function and that is where we are spending our resources.” Given this Government’s approach to regulators more generally—quangos and other organisations—whose resources have been cut back substantially, will they have the capacity to think about their new function? If regulators spend more time on this function and fall behind on their regulatory work—undermining the principle of what they are actually there for, while at the same time thinking about a powerful organisation pursuing them in the courts—it will pose financial questions that we do not have the answers to. This will potentially undermine what the regulators are there for in the first place.

David Rutley (Conservative, Macclesfield)

The hon. Gentleman complains about the extra work that this provision may create, but surely having to produce a report every year would create even more work?

Toby Perkins (Labour, Chesterfield)

That is a remarkable assertion. The hon. Gentleman is comparing that with having every regulated relationship potentially open to legal challenge, with myriad unknown consequences. I appreciate that, to an extent, I am over-egging the pudding, and I do not expect every regulator to get into that in every case—of course they will not—but it is our responsibility in scrutinising the legislation to say what might happen. It does not stand up to scrutiny to say that putting together an annual report showing the steps taken to comply with the principles of what this clause was intended to achieve in the first place would be more onerous than the open-ended challenge that regulators might face.

We all want regulators—we want to stress that strongly in this debate. We all want regulators to act sensibly and apply their duties responsibly and in the best interests of their industry. If there is a good reason for regulators not to carry out an inspection of shops on the last Saturday before Christmas, or of restaurants leading up to busy periods, it would be sensible for them to consider that function. That is one of the potential positive outcomes of this legislation. However, even in that kind of example, there might be a situation where the Food Standards Agency says, “Well, actually, we think their busiest times might be a very good time to inspect them, because that might be when food standards slip.” There are reasons why that might be the case.

We want a situation where regulators responsibly use that function. I have to say that in my role as shadow small business Minister there have been occasions when people have come to me and said, “The way we are being regulated isn’t sensible.” They have highlighted interpretation of health and safety legislation that seems very different to how I would anticipate that that legislation should be interpreted. However, we are creating a responsibility that is very open to interpretation to try to deal with the fact that the existing regulations are sometimes interpreted wrongly. I just do not see how the helpful intention behind what the Government are attempting to do will result in what they want.

The issue with a general duty to promote growth is that almost any action that a regulator has to take could be argued to have impinged upon growth, so it all becomes about balance—was a request reasonable or not? Most importantly, what is the legal response or legal threat on behalf of businesses to that request? Almost any action that a regulator takes could be open to challenge. That is significant, particularly in the context of the power relationship.

The clause has two particular drawbacks. First, as I have said, it could hugely increase the number of legal challenges against regulators, using up both their time and resources to defend actions that they were previously able to take with confidence in fulfilment of their duties. Secondly, as the Equality and Diversity Forum told the Joint Committee, the duty could have “a chilling effect” on regulators, discouraging them from taking action that would be in the public interest, as they may be fearful of

“having to prove on each occasion that action was “needed” rather than simply appropriate and justified”.

That is what people are telling us in our role here as scrutineers of this legislation. They are saying that it could change what the regulatory function is all about and the way that regulation is carried out.

Much of the regulation of these organisations is about prevention rather than cure, and the difficulty with prevention is that it is difficult to prove categorically that preventive action was actually “needed”—to meet the Government’s test—until it is too late. Among the organisations concerned, the duty will not apply, for example, to project licensing decisions of the Animals in Science Regulation Unit, which are exempt. I would be interested to hear from the Minister—I am sure he will tell us—the reason for that exemption. There is also an exemption for the economic and regulatory functions of the CAA. There are cases where the Government have decided to make certain regulators exempt.

Let us consider this responsibility in relation to the Drinking Water Inspectorate, the FSA or the Environment Agency. The Environment Agency has been under huge pressure recently with all the flooding—we think of all those who have been critical of it in recent weeks and months. We all have tremendous sympathy for those who have been flooded, whose lives have been changed and whose business have been turned upside down, and so on. They might say, “Hang on a second. What about your growth duty? You failed your growth duty because my business has been flooded and we’re going to be out of pocket for months.” As the legislation is drafted currently, that would be a reasonable point.

We should also bear in mind what the hon. Member for North West Leicestershire said: “Well, they’re going to be mindful that any problems that are caused could hamper growth, so they’re not going to let those problems happen.” The Environment Agency would not have stopped more floods if they had had a growth duty. Now, with all the pressure that the Environment Agency is under, attempting to carry out its responsibilities with hugely diminished resources, there is the potential for legal threats every time something goes wrong. The evidence from the Equality and Diversity Forum about the “chilling effect” on regulators who have a core function is really important, and we should give it a great deal of consideration.

Interestingly, in the 2010 Liberal Democrat manifesto—they say a week is a long time in politics, but that certainly feels like a long time ago—priority was given to strengthening regulation in several areas to protect the public. The Liberal Democrats were going to increase regulation on CCTV; there was also mention of the supermarket regulator, regulating private bus services, increasing building regulation for environment reasons and regulating airbrushing in adverts to protect teenage girls. The Liberal Democrats wanted to increase regulation in a variety of ways, but now we are presented with an openly-worded growth duty instead of the things they appeared to be about then—trying to stick up for ordinary people and protect them. The Liberal Democrats are jeopardising what they were about by hamstringing regulators with a new burden.

The proposal does not sound to me like a priority of the Liberal Democrat party. Perhaps after 2015 we shall be given a list—I am looking forward to all the books that will come out then—that explains: “This is what we said, and this is what they said.” It will be interesting to see how the Liberal Democrats unscramble the omelette. They should be careful; a short clause has been set out with the intention of achieving something helpful, but they should ask themselves what the implications would be in practice.

There is no need for primary legislation to promote a new duty on regulators. The Government are really saying that regulators should heed best practice and consider business needs in their actions. Of course they should do that; who could disagree? The Government will provide plenty of advice. Perhaps they have identified some failings of regulators—the Minister may give us a list—in relation to growth, to explain why the clause is necessary. It would be interesting to scrutinise that evidence.

My response would be that Government should examine their relationship with the regulators. If the regulators carry out their functions in ways that damage industry and economic growth, the Government should speak to them. They should provide them with the guidance that would lead them to stop, instead of saying, “We cannot, as a Government, legislate or police the issue, so we will let the one with the biggest wallet do it. We will create a general, broad duty, and it will be your responsibility, Mr Regulator, to defend yourself in the event of being pursued by a major corporation. If you cannot defend yourself, you will lose in court, and if you can, it will cost you a fortune to get there.” The Government are trying to set out a sensible duty, but they will in fact muddy the waters of the regulatory relationship.

In 2007, the previous Labour Government introduced the regulators’ compliance code, setting out clear best practice for regulators so that they do not impose too heavy a burden on business and so that they work to promote growth and opportunity. The present Government recently updated that with a new code that we supported. It is slimmed down; once again there is less detail. We understood what they were trying to do, but what the Labour Government demonstrated back in 2007 by introducing the regulators’ compliance code, which has turned into the new regulators’ code, was their commitment to ensuring that regulators always complied with best practice, so that they did not impose too heavy a burden on businesses.

The House of Commons Library, a respected source, estimates that the collective actions taken by the previous Government to reduce the burdens on business—of which the regulators’ code is a worthwhile example, although by no means the full story—saved businesses £3 billion in reduced costs every year. To put that in context, the entire Deregulation Bill sets out to achieve less than 1% of that. That is the difference between this Bill and the kinds of step taken by the previous Government, who absolutely realised that regulators should responsibly dispose of their duties, but also that Government had a responsibility to ensure the balance in that relationship. Let us think of the energy industry and how it operates at the moment. Labour says that how the regulator operates is not in the best interests of consumers, and wants to ensure that empowered regulators work in consumers’ best interests and those of the industry and economic growth.

A policy review initiated by this Government in 2013 found that most regulators were sticking to the guidelines. There were concerns that delivery was inconsistent in some sectors—there was certainly feedback from the Federation of Small Businesses, for example, that regulators sometimes interpreted even this fairly beefy code differently from how the Government intended. If there is any lesson to be learned from that, surely it is that we should be careful and clear about what we in this place are arguing for when we send information to the regulators.

It is surprising that a Conservative-led Government have considered a problem and decided that the first port of call is to write a new law that will be unclear. I know that the legal profession and the Conservative party have had close links historically. Maybe there has been some lobbying of that kind; I do not know. We may find out as time goes on.

Oliver Heald (Conservative, North East Hertfordshire)

I am sure that the Society of Labour Lawyers would be pretty horrified by what the hon. Gentleman has just said. Would he not agree that there is a proud legal tradition in both the main parties—and indeed in the Liberal Democrats?

Toby Perkins (Labour, Chesterfield)

I absolutely would agree; I was simply musing on where this might have come from. Perhaps the hon. and learned Gentleman protests a little too much. I was making only a small point, but it appears that I might have struck a chord.

Without changing primary legislation, the Government have launched a new regulators’ code based on six principles, which is important in the context of the new clause. I am sure Members are aware of our debate in a Delegated Legislation Committee the other week, but in case it passed any of them by, they might want to be aware that the Government’s six principles in the code are:

“i) Regulators should carry out their activities in a way that supports those they regulate to comply and grow.”

That is already there in the code, which continues:

“ii) Regulators should provide simple and straightforward ways to communicate with those they regulate.

iii) Regulators should base their regulatory activities on risk.”

It is legitimate to ask what is meant by “risk”. If the Government are talking about risk to life and limb, that is an important principle for regulatory function, but regulators are there not just to prevent people from being killed, but to ensure fair play across the market. We have seen the distortion of markets many times over the years when that has not operated. When we asked the Minister in the statutory instrument debate exactly what was meant by “risk”, it was clear that the Government were thinking of risk to life and limb. The Government misunderstand what businesses expect from regulators and Government regulation. As someone who ran his own small business, I know that no one who goes into business does so because they want to spend more time with their paperwork or enjoy bureaucracy. All of us who have set up our own business complain there is too much regulation. Of course we do; it is one of those things—a bit like farmers complaining about the weather. We complain that regulation is never quite right, but it is important to note that what businesses think about when they complain about regulation and what the Government take action on are two very different things.

The fourth principle is:

“Regulators should share information about compliance and risk”.

The fifth is:

“Regulators should ensure clear information, guidance and advice is available to help those they regulate meet their responsibilities to comply”.

The sixth states:

“Regulators should ensure that their approach to their regulatory activities is transparent”.

The regulatory code, which we support, sets out the principles that this legislation looks to put into statute, but we have demonstrated powerfully that there are all sorts of unintended consequences that could distort that relationship between regulators and the regulated.

We should have more focus on the regulators’ code and on ensuring that the Government have an eye on the relationship between these regulatory bodies and the organisations that they regulate. If problems have developed within these regulators—I am sure that they have, because otherwise the Government would not have brought this measure forward—let us talk about what those problems are and what the Government are doing to take action, rather than creating an open duty and saying that it is basically up to the courts to decide whether they have complied.

We have heard, powerfully, that two people who support this legislation believe that it means two totally different things. Given that the Government have only just brought forward the new regulators’ code, they seem to lack faith that they will be able to make it do what it is set out to do. As the first principle states:

“Regulators should carry out their activities in a way that supports those they regulate to comply and grow”,

I do not understand why the Government feel that there is a need for an additional piece of primary legislation. When it comes to things such as late payments or the regulation of pub companies, the Government have bent over backwards to support a voluntary, self-regulatory code, yet here we have a brand-new Government code, but they say, “No, we do not think that is the main way of doing it; we think we should put it in primary legislation”.

It is incredibly important that the Government take a moment to think through the evidence received by the Joint Committee and what we heard in this Committee’s evidence sessions. Our proposal would ensure that regulators had to be minded—not with the threat of legal action hanging over their heads—to act responsibility and thoughtfully, and to understand that they would have to answer to Government for how they carried out their duties, which is exactly what they should be doing. It would put in place a much more sensible managerial tool for how regulatory bodies operate. If the problem that the Minister is setting out to try to solve exists, we have a function that supports the ability to demonstrate that. Certain regulators have important responsibilities that protect the very safety of our country, and any distraction from those might be hazardous. Nuclear safety inspectors and the Drinking Water Inspectorate are two examples. Is it right that any other duty should be imposed on regulators by central Government when the stakes are so high?

Amendment 27 is cautious and proportionate. It would prioritise small and medium-sized businesses that do not have the loudest voices and are not always able to employ powerful lobbyists and get themselves on to “Newsnight” every time they are unhappy. It would ensure not only that they were protected, but that good regulatory practice and principle was at the heart of the clause, rather than our having a well-meaning clause with uncertain results and outcomes.

It is important that the Government listen to what we have said and support the small businesses that we all recognise are the lifeblood of our economy. They are often under the greatest pressure due to the regulatory burden. The provision of a reporting mechanism would achieve what I believe the Minister wants to achieve, but would not undermine the key relationship between regulators and the regulated. I commend the amendment to the Committee.

David Rutley (Conservative, Macclesfield)

The hon. Gentleman said at one point that he might have over-egged the pudding. After an hour, I am not sure there is much pudding left. Government Members have become used to the short, pithy, whipping-up and entertaining speeches by the hon. Member for Derby North. Perhaps lessons can be learned from that, as such speeches take much less time and help to move forward our proceedings.

Chris Williamson (Labour, Derby North)

The hon. Gentleman is being unfair to my hon. Friend the Member for Chesterfield. I cannot believe that my hon. Friend was speaking for 60 minutes because he was so eloquent and interesting that the time whizzed by. I thought he spoke for only five minutes, and I was disappointed when he sat down—I wanted more.

David Rutley (Conservative, Macclesfield)

Sometimes less is more, but let us come back to what the clause actually says.

Toby Perkins (Labour, Chesterfield)

May I make a pithy intervention? Time might have whizzed by for my hon. Friend the Member for Derby North, but it certainly felt like a full hour to me.

David Rutley (Conservative, Macclesfield)

Well, there we have it.

Let us remind ourselves that clause 61 refers to having regard

“to the desirability of promoting economic growth”.

That complements existing duties; it does not subtract from them. Let us not forget that the non-economic regulators to which the hon. Member for Chesterfield referred—there is a long list—account for £2 billion of the Government’s budget and 25,000 employees. Their influence and power are significant. The clause simply encourages them to consider the importance of economic growth in their activities, which is not an unreasonable thing to do. When we heard evidence from the Federation of Small Businesses and the British Chambers of Commerce, they were supportive of the clause and thought it would be a good thing.

The hon. Gentleman speaks sincerely about small businesses, having worked in that sector himself and done well, so let us not over-egg the pudding or whip it out of existence, but think about what the clause is actually an attempt to do. As we have said before, it could be deregulatory. It could cause—I hope it will—regulators to have a spring clean of their regulations, thus reducing the burden on small businesses. That is surely why the FSB was so keen to support it.

The Opposition talk about the importance of better regulation and smart regulation, but that is the talk of the European Commission—heaven help us. Look at the amount of regulation it puts to us in this country. In case the hon. Gentleman has not noticed, there is rising concern among the British public about the weight of regulation that comes from Europe, and that is something that we need to address. It should not be simply about smarter or better regulation; there needs to be further talk about deregulation and less regulation, which is what the Bill and the Government want.

I hope that Opposition Members come to recognise that this is an important Bill. We need to show our support for small businesses, not through another box-ticking exercise with an annual report, but by putting the duty into legislation so that non-economic regulators see its importance. I hope that hon. Members have the courage to back the clause and that hon. Member for Chesterfield does not press his amendment to a Division because further action will be achieved through the clause, but not with the kind of backward-thinking, box-ticking exercise that was all too prevalent under the previous Government.

Chris Williamson (Labour, Derby North)

It is a great pleasure to serve under your chairmanship, Mr Chope. I support the amendment tabled by my hon. Friend the Member for Chesterfield, which is eminently sensible and would preserve the sense of what the Government are trying to achieve without putting unnecessary burdens on business and, indeed, regulatory bodies. The Government are desperate, the economy is flat-lining and the growth upon which they are—

James Duddridge (Conservative, Rochford and Southend East)

Thanks to rule changes, we are allowed to use Twitter and electronic devices. Is the hon. Gentleman as up to date as I am with the welcome news that Barratt has today announced 3,000 new jobs as a result of the Budget decision to extend Help to Buy?

Chris Williamson (Labour, Derby North)

It is marvellous news that people are getting employment in the construction industry. As a former bricklayer—I have mentioned that before—among my many other occupations, I am delighted about that, because obviously the construction sector is labour intensive and will contribute to growth. However, it is important that the construction industry is regulated properly by the Health and Safety Executive for the health and safety of the 3,000 workers who will secure employment with Barratt. Having worked on a building site in the 1970s, I know from personal experience how hazardous and dangerous such sites can be. I had an industrial accident owing to there being no safety rails on scaffolding. I could have died as a consequence, but was fortunate that I was not too seriously injured. It is a hazardous industry, so it is important that it is properly regulated.

Perhaps the economy is not flat-lining at the moment, but it was for most of this Parliament. We are now seeing some flimsy growth, although I will mention my concerns about that in a moment.

John Cryer (Labour, Leyton and Wanstead)

Despite the words of the hon. Member for Rochford and Southend East, the reality is that the number of construction workers who are out of work is still into six figures—well over 100,000—and we have the lowest number of home starts since the 1920s. Despite a period of devaluation, we are not increasing exports.

Chris Williamson (Labour, Derby North)

My hon. Friend’s important point reminds me to come back to another aspect of the intervention made by the hon. Member for Rochford and Southend East. He talked about Help to Buy, but I am worried about that because unless there is a significant uplift in house building—we are not seeing it—without an increase in supply, the availability of credit will result in a house price bubble. We are beginning to see that in various parts of the country already.

John Hemming (Liberal Democrat, Birmingham, Yardley)

To bring the hon. Gentleman back to the details of the amendment, is he arguing that regulatory action should be taken when it is not needed?

Chris Williamson (Labour, Derby North)

I will come to that in a moment. If the hon. Gentleman will bear with me, I shall deal with that point when I get to it.

With the obligation that they seek to incorporate into the Bill, the Government are trying to give the impression that they are doing something, when in reality they are doing little. The growth at the moment is built on sand. If I may, Mr Chope—if it is okay for an atheist—I will regale the Committee with a biblical quotation, from Matthew:

“Everyone then who hears these words of mine and does them will be like a wise man who built his house on the rock. And the rain fell, and the floods came, and the winds blew and beat on that house, but it did not fall, because it had been founded on the rock. And everyone who hears these words of mine and does not do them will be like a foolish man who built his house on the sand. And the rain fell, and the floods came, and the winds blew and beat against that house, and it fell, and great was the fall of it.”

Frankly, that sums up the approach the Government have taken since they came to office.

The hon. Member for Rochford and Southend East let the cat out of the bag with his reference to Help to Buy, which is fuelling a large part of the growth. Growth is obviously welcome to see, but we are not seeing manufacturing growth or exports, as my hon. Friend the Member for Leyton and Wanstead pointed out, and the Bill will not deliver them. The clause will make matters worse. When we look at the record, it is clear that deregulation does not work. [Interruption.] I see the hon. Member for Croydon Central scoffing and smiling, as if I am talking gibberish and nonsense, so let us look at the statistics. In the 1960s, growth for the decade was 38.3%; in the 1970s, it was 28.2%. That was the period when regulation was at its height.

Oliver Heald (Conservative, North East Hertfordshire)

Labour years.

Chris Williamson (Labour, Derby North)

Great Labour years, punctuated, unfortunately, by one or two periods of Conservative Government. Those Conservatives were nevertheless one nation Tories—before the advent of the new right and Margaret Thatcher—who subscribed to appropriate regulation. In the 1980s, growth was 30.5% and in the 1990s it was 36.8%. It never matched the 1960s.

Gavin Barwell (Conservative, Croydon Central)

Better than the 1970s though.

Chris Williamson (Labour, Derby North)

The point I am making is that growth in the 1980s, when deregulation came in, was broadly the same as it was in the 1970s. For all that deregulation is trumped up to be by Government Members, it does not work. It is not a substitute for proper growth.

Christopher Chope (Conservative, Christchurch)

Order. The clause is about regulatory functions; it is not about deregulation. I hope the hon. Gentleman will address his remarks to the substance of the clause.

Chris Williamson (Labour, Derby North)

I am grateful for your guidance, Mr Chope. I want to come to the specific point my hon. Friend the Member for Chesterfield mentioned—he spoke for 60 minutes, but it felt like five because I was so enraptured by his oratory—sustainable economic growth. “Sustainable” is what it says in the next amendment. Do we not want sustainable economic growth? I am fearful. A lot of commentators make the point that what we are seeing is not sustainable economic growth.

David Rutley (Conservative, Macclesfield)

Is the hon. Gentleman saying that when economic growth was founded on the rock of socialism, under the previous Labour Government, we saw benefits as a result?

Chris Williamson (Labour, Derby North)

We did see benefits, certainly; we absolutely saw real benefits. We saw circumstances where an ordinary working-class person like me, an apprentice bricklayer, could buy a house at 19 years of age—a brand-new three-bedroom house. How many apprentice bricklayers could do that in this day and age? We need the kind of sustainable economic growth from which everybody can benefit, not just those at the top.

Toby Perkins (Labour, Chesterfield)

If I may, I will return the compliment to my hon. Friend and say that I am enjoying his contribution immensely. Is not the truth that we saw 11 years of stable economic growth—the longest period of stable economic growth we had ever had—undermined by a failure in the regulatory function, caused largely by the deregulation of the City under the previous Conservative Government, but not altered under our Government?

Chris Williamson (Labour, Derby North)

My hon. Friend puts his finger absolutely on the point. If one thinks back to the deregulation—[ Interruption. ] The hon. Member for Croydon Central is laughing and scoffing; I do not know whether he has been enjoying the Opposition contributions. The truth is—and he cannot deny it—that the problem with the financial crash can be pinpointed back to the deregulation in the 1980s. If the regulatory body at the time had wanted to impose proper regulation to prevent that crash from happening and this legislation had been on the statute book, it would potentially have been unable to do so, particularly as we are only talking about economic growth and not sustainable economic growth, as my hon. Friend’s amendment says, so there would be a real problem.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I should just point out that we are talking about amendment 27, which would delete the words

“regulatory action is taken only when it is needed”.

In other words, the argument for the amendment is that you can have regulatory action whether or not it is needed. That was the question that I asked you earlier, but you have not yet answered it.

Christopher Chope (Conservative, Christchurch)

Order. I hope the hon. Gentleman is going to address his remarks to the Chair.

John Hemming (Liberal Democrat, Birmingham, Yardley)

My apologies.

Chris Williamson (Labour, Derby North)

Thank you, Mr Chope. If I have not already made the point, I will come to that later in my speech. If the hon. Member for Birmingham, Yardley will bear with me and have a little patience, I will deal with the point to which he refers. What we are seeing, as a result of there not being sustainable economic growth, is the obscene increase in extreme wage inequality in our country. As a consequence of the deregulatory way in which Governments have addressed the regulatory function over the years, between 1979 and 2007 we saw, according to the Centre for Economic Performance, the top decile increase their share of income by 14 percentage points, from 28.4% to 42.6%. The top percentile accounted for two thirds of these gains, seeing their share rise from 5.9% to 15.4%. If we are talking about economic growth, surely we want the fruits of that growth to be shared by everybody, as it was in the 1960s and 1970s, unlike today.

It is appropriate that the amendment standing in the name of my hon. Friend the Member for Chesterfield talks about sustainable economic growth. That is absolutely apposite and the right way to go. We are seeing the result of this extreme inequality in wages. I will again quote the Centre for Economic Performance, which points out that the median pay of a FTSE 100 CEO is now about 116 times that of the median worker, compared with a ratio of 11 in the 1980s. Where are we going, Mr Chope? This is ridiculous. It is all very well having economic growth, but if it is focused only on a tiny percentage of the population, that is not really benefitting people. It is certainly not benefitting the ordinary working people whom I represent.

Toby Perkins (Labour, Chesterfield)

I agree entirely with my hon. Friend. Does he also agree that the second part of our amendment—which would require regulators to set out any complaints they received—means that we would get proper information where there were problems with a regulator, but that where there was not a problem, we would not create one?

Chris Williamson (Labour, Derby North)

My hon. Friend is absolutely right, and that seems a far more sensible approach to take. It is essential that we have appropriate information on which to base policy decisions that can facilitate and assist business and ensure that we create sustainable economic growth.

As I understand it, the clause will cover 50-odd regulators. One of my other concerns—my hon. Friend has touched on this—is that it puts the regulators in a slightly awkward situation. I do not think they will quite know what their role, function or priority is. Given the approach of certain Government Members, I fear that profit will be put before safety. In days gone by, when regulation was less tight, profit was clearly put before safety—there is no doubt about that. The regulations were tightened up as a consequence of the dreadful health and safety conditions on building sites—including those on which I worked, for example.

When I was a young apprentice bricklayer and I was topping out a house, I used to ask, “Can we not have a safety rail on the scaffolding?” I used to be told, “What do you want a safety rail for? You won’t be up there long enough. Just get up there and do it.” I used to teeter on the scaffolding with two oil drums, a few breezeblocks and a single batten that was used to do the topping out to the apex. It was ridiculous; I had no hard hat, no safety boots and no proper safety wear. Unless it is very clear what the function of regulators is, there might be a tendency to put profit before safety.

My hon. Friend the Member for Chesterfield quoted EDF—as I have—which said the growth duty will have a “chilling effect”. EDF went on to say that a requirement

“to prove on each occasion that action was ‘needed’ rather than…simply appropriate and justified”

will create difficulties. On the issue of putting profit before safety and distracting regulators from their primary role, I worry that the clause will diminish the quality of regulation and potentially create more bureaucracy with no tangible benefits. Indeed, the Local Government Association said it would do precisely that.

My other concern is that the clause will be a lawyers’ charter. The Solicitor-General is not in his place, but earlier my hon. Friend the Member for Chesterfield challenged him on whether there had been any lobbying by the legal profession about this clause. It is likely to lead to numerous judicial reviews, because the wording that my hon. Friend seeks to remove would leave it open to interpretation. He identified at least two different interpretations, and I think there could be several more. Clause 61(2)(b) states:

“any action taken is proportionate.”

What does “proportionate” mean? It is a shame that the Solicitor-General is not here, because he is legally qualified and he might be able to—[Interruption.] The Solicitor-General is back; he might be able to help me. Perhaps I should explain to him that I was making the point that the clause as drafted will be a lawyer’s charter, and we will potentially have judicial reviews coming out of our ears. Clause 61(2)(b) states:

“any action taken is proportionate,”

but what does “proportionate” mean?

John Hemming (Liberal Democrat, Birmingham, Yardley)

The answer to the hon. Gentleman’s question is that it means “not disproportionate”. Why would he want regulators to take disproportionate actions?

Chris Williamson (Labour, Derby North)

Excuse me, but where does the amendment say “disproportionate”? We are not calling for disproportionate action. Putting that phrase on the face of the Bill would make it a lawyers’ charter, because “proportionate” can mean a multitude of different things.

Then, of course, clause 61(2)(a) says:

“regulatory action is taken only when it is needed”.

How do we know when it is needed? If regulatory action is taken and a company—especially a bigger company, with a lot of resources at its disposal—is unhappy with it and feels that the regulator is being unduly burdensome, it is almost bound to challenge that action by saying, “We don’t think what you’re doing is needed. How can you justify it? It’s not reasonable. It’s not needed and it’s not proportionate.”

This will end up in the law courts. Indeed, I thought this was supposed to be a deregulatory Bill, yet it seems to me that a lot of time will end up being wasted in the courts. As I understand it, the Gambling Commission has said that the clause fosters litigation instead of collaboration, so I am not the only one making this point. There are interested parties outside this place that are reinforcing the point I am making. They say that the clause will foster litigation instead of collaboration.

I do not understand why the Government are resisting the reasonable amendment that my hon. Friend the Member for Chesterfield has tabled to delete those highly questionable paragraphs that are open to interpretation and insert the aim for sustainable economic growth, which is absolutely worth incorporating, because we want to ensure that economic growth is sustainable and we do not want to end up creating a lawyers’ charter. As I say, I am not the only one who is making that point. I made the point to both the Solicitor-General and the hon. Member for Birmingham, Yardley, and neither could advise me what is meant by “proportionate” and “needed”. I ask again, and perhaps the Solicitor-General would be willing to offer an interpretation.

Toby Perkins (Labour, Chesterfield)

I am sure I do not need to tell my hon. Friend, but for the sake of the hon. Member for Birmingham, Yardley, let me say that just because there were words in the original drafting that were sensible, that does not mean that by deleting them we are against all that. We could not leave individual phrases hanging there, in some sort of wilderness. He should not take it that we are in favour of disproportionate regulation.

Chris Williamson (Labour, Derby North)

Precisely. As things stand, I do not think the regulatory bodies operate in a disproportionate way. They provide fantastic safeguards for workers and consumers. Are we saying that we want to allow consumers to be poisoned? Are we saying that it is okay for building workers to be subject to undue and unreasonable risk on a building site? Surely even the most right wing among the Government Members—[ Interruption ]—even the smiling hon. Member for Croydon Central—would not argue with that, would they? He is not nodding or shaking his head. Maybe he would argue with that; I do not know.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I am sorry to interrupt my hon. Friend while he is in full flight, but it is important to note that regulators already have duties of proportionality. Indeed, there is a duty of proportionality in Government action generally. As for this question of using the word “proportionate” or not, I am very surprised by it, and I am grateful that he has raised this issue.

Chris Williamson (Labour, Derby North)

That is a very interesting intervention, and that is another reason why this clause—or this part of it—is superfluous and why Government Members ought to support the amendment.

Government officials have said that they are absolutely sure that the deregulatory basis of this Bill will benefit business. However, the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), said that the initial impact assessment said that this provision was not

“a major part of our reduction on the burdens of business”

and that

“it won’t solve the problem of growth but will make a difference perhaps at the margin.”

That is a Business Minister saying that it is hardly going to make any difference at all—it will make a difference “perhaps at the margin.” There we go: the cat is out of the bag. It will only make a difference “perhaps at the margin.”

Christopher Chope (Conservative, Christchurch)

I remind the Committee that with this we are discussing clause stand part.

Chris Williamson (Labour, Derby North)

Thank you for calling me to deliver the second half of my speech, Mr Chope. I know Government Members have been thoroughly enjoying it.

I was about to go on to point out that no less than the Confederation of British Industry has said that the clause is unlikely to be relevant. There we have it. The Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), has said it will make only a possible difference and that will be “perhaps at the margin”, and the CBI says that it is unlikely to be relevant, yet the Government are seemingly prepared to go to the wire about it. Or perhaps not—let us wait and see how they respond to the sensible amendment tabled by my hon. Friend the Member for Chesterfield.

If we look specifically at that amendment, my hon. Friend is asking merely for a requirement that a person exercising a regulatory function under the Bill publish a report that

“makes an assessment of the extent to which they have taken into account the specific needs of small and medium sized enterprises in the exercise of that function”.

Who could argue with that? Anybody? I cannot see why anybody would wish to reject such an eminently sensible proposition. Surely it is right and proper for regulatory bodies to take account of any impact on small and medium-sized enterprises in the exercise of their functions.

As we know—indeed, we hear it often from Government Members, a number of whom have experience in small and medium-sized enterprises in this country—SMEs are the backbone of the economy. They often say that, and I do not disagree. Why would the Government not want to ensure that regulatory bodies prepare a report on the impact that the fulfilment of their functions has on SMEs?

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Gentleman is asking rhetorically what is wrong with the Labour amendment. What is wrong with it is that it deletes the rest of the clause. The Opposition are therefore arguing for unnecessary and disproportionate regulation.

Chris Williamson (Labour, Derby North)

I do not think that is fair at all. The hon. Gentleman is being extremely unfair and perhaps, dare I say it, even deliberately obtuse. I have already made the point that we do not want to see a lawyers’ charter. Is he a lawyer? Does he have shares in a law firm? Is there a law company that he represents that will benefit from this lawyers’ charter that the Government want to introduce?

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Gentleman has asked a rhetorical question about whether I am or ever have been a lawyer. I am not and never have been, and I do not earn any money from the law.

Chris Williamson (Labour, Derby North)

I therefore do not understand why the hon. Gentleman wants to be so benevolent to law firms. The clause is clearly going to be a lawyers’ charter.

John Hemming (Liberal Democrat, Birmingham, Yardley)

My motivation for opposing the ludicrously badly drafted amendment tabled by the Opposition is that I do not think we should have unnecessary and disproportionate regulation—or even unnecessary or disproportionate regulation.

Chris Williamson (Labour, Derby North)

Nobody is arguing for disproportionate regulation.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Gentleman is very kind with his time. The amendment deletes the requirement for regulation to be proportionate and also the requirement that regulation be needed.

Chris Williamson (Labour, Derby North)

That is a moot point. It is not really the nub of the issue, it seems to me.

Andrew Bridgen (Conservative, North West Leicestershire)

Is the hon. Gentleman maintaining that he supports disproportionate and unneeded regulation?

Chris Williamson (Labour, Derby North)

No, no, no—the hon. Gentleman is being as obtuse as the hon. Member for Birmingham, Yardley. If the hon. Member for North West Leicestershire had been in his place this morning, he would have heard me make the point that it is difficult to explain or clarify precisely what is meant by the clause that the Government want to foist on the country. It will be open to interpretation and will lead to a lawyers’ charter. My fear is that we will see companies bogged down in the law courts.

Toby Perkins (Labour, Chesterfield)

I know that we are all keen to get on, but we are wasting time on this. We propose to delete the second paragraph because it refers to the first paragraph. Once we proposed the changes to the first paragraph, it no longer made sense for the second to remain. That does not mean by definition, however, that we want regulatory action to be taken only in a disproportionate way. That is total nonsense and it is a waste of time to carry on debating that. We have made that point, so let us carry on with the debate.

Chris Williamson (Labour, Derby North)

I am grateful to my hon. Friend. If Government Members are to purse that point, it is incumbent on them to point to any examples in which regulators are acting in a disproportionate way, but I do not think that any evidence suggests that.

When we look at Labour’s record on regulation, we see that it is unparalleled and has been extremely beneficial. I think my hon. Friend the Member for Chesterfield said that Labour introduced the Better Regulation Commission. Our programmes simplified regulation and delivered £3 billion of savings. Let us take a look at some of the regulatory bodies that fall within the scope of the proposals and what the potential impact might be. I will not list them all because there are far too many, but a few leap out and strike me as curious. First, English Heritage. I do not know whether the hon. Member for North West Leicestershire is suggesting that English Heritage should argue to knock down our wonderful stately homes and heritage—the family silver—and perhaps build some housing estates. What could the clause possibly mean for that organisation?

Andrew Bridgen (Conservative, North West Leicestershire)

Will the hon. Gentleman give way?

Chris Williamson (Labour, Derby North)

Let me just develop the point. Again, this comes down to interpretation, and that could create some difficulties. The Gangmasters Licensing Authority would also fall within the legislation’s purview. We all remember the rogue gangmasters whose actions led to the deaths of the Chinese cockle pickers in Morecambe bay. Do we seriously suggest that we want to return to a time when cockle pickers are not subject to the protection that that authority affords them? Should we be less concerned about cockle pickers’ health and safety and more interested in the profits of the unscrupulous companies who run some such operations?

Then there is the Human Tissue Authority. I find it difficult to think how it falls within the purview of the legislation. We have heard about desperate people in other parts of the world selling their organs, but surely the Government are not arguing that it should take that into account to promote economic growth.

I made the point at the outset that the Government are desperate, because they cannot get the economy to grow properly—the growth is built on sand. We had the reading from the book of Matthew from the Bible that talked about ensuring that houses are built on rock, not on sand, because otherwise they will get washed away. That is my fear about the growth that the Government are trumpeting, which is not built on exports or manufacturing; in fact, manufacturing output is decreasing.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

My hon. Friend might not have heard that, from a sedentary position, the Parliamentary Secretary, Office of the Leader of the House of Commons, commented that human tissue and organs would involve growth not in this country but in other countries. Does anything in the clause require the economic growth promoted to be in the UK? I cannot see the UK mentioned in the clause.

Chris Williamson (Labour, Derby North)

It will be interesting to hear how the Minister responds to that point. To give a few more, if I may, we have the Medicines and Healthcare products Regulatory Agency. In some terrible tragedies inadequate regulation has led to dreadful circumstances for families and individuals. For that agency, surely the overriding obligation must be the welfare of the recipients of health care products and medicines. Economic growth ought not to be, it seems to me anyway, at the forefront of its mind. One fears that the pharmaceutical giants might feel that the Medicines and Healthcare products Regulatory Agency has been unreasonably overburdensome and so challenge an attempt to provide proper regulation and safeguards for the general public, and then that might get mired in the law courts. That comes back to the point that I made about a lawyers’ charter, and who knows? The pharmaceutical giants might prevail against the Medicines and Healthcare products Regulatory Agency, which could have devastating consequences further down the line.

One that I am absolutely flabbergasted by is the National Counter Terrorism Security Office; how on earth will the National Counter Terrorism Security Office contribute in this regard? Perhaps it is just me being thick. Being a humble, working class ex-bricklayer, perhaps I just do not understand it. I have not been to a public school like many of the Members on the Government Benches. Maybe they can enlighten me—I am a straightforward kind of guy—but it does not seem to be appropriate that we are asking the National Counter Terrorism Security Office to have this issue at the forefront of their duties.

The final one that I want to mention—there are many others, and my hon. Friend the Member for Chesterfield referred to one or two—is the Office for Fair Access. One wonders what the Government are thinking of by bringing that within the purview of this legislative change. I know that there are many blood sports fanatics on the Government Benches, and that they absolutely love to go round maiming, shooting and killing furry and feathered animals in our country. Perhaps the Office for Fair Access feels that it should restrict access to decent people who want to enjoy the countryside and enjoy our wildlife, instead giving preference to those with interests in blood sports, who like to blast animals out of the sky. We know that they import 40 million or 50 million pheasants every year. Maybe they want to import 100 million so that they can blast them out of the sky and sell some shooting days to merchant bankers from the City of London. That is great. Let us really see a big boom in the blood sports industry in our country to promote economic growth.

It is absolute nonsense in the end, is it not? It really is. Why on earth would the Government be resistant to a report on the impact on small and medium-sized enterprises and to setting out any complaints? Perhaps we could set out the complaints about the overburdensome role of the Office for Fair Access from these bloodsporting outfits. We could get it out. Let us have it out in the open. A lot of lobbying goes on behind the scenes—as we know, from the Hunting legislation that they are looking to bring in by the back door. Let us get it out in the open. Let us see what those complaints are.

I thought that Government Members supported transparency. It seems to me that if they cannot support my hon. Friend’s very reasonable amendment, we can draw our own conclusions. They are not interested in transparency. They are interested in vested interests only and not the interests of the general public and wider population who have to work for a living and who do not just make a living out of unearned income.

Andrew Bridgen (Conservative, North West Leicestershire)

Surely economic growth is in everybody’s interests. The hon. Gentleman must have heard the phrase, “A rising tide lifts all boats”, as we are seeing now with the economy.

Chris Williamson (Labour, Derby North)

If only that were true. Of course, economic growth is important, but we have to ensure that we get the right kind of economic growth. If the hon. Gentleman had been in his place this morning, he would have heard me deal with that point.

Toby Perkins (Labour, Chesterfield)

The hon. Member for North West Leicestershire would indeed, and if he had been at the Labour party conference last September, he would have heard the leader of the Labour party note that they used to say a rising tide lifts all boats, but now it only lifts the yachts.

Chris Williamson (Labour, Derby North)

That is a very good point indeed, and I am grateful to my hon. Friend for reminding me of that very apposite quotation from my right hon. Friend the Member for Doncaster—I am not sure which part of Doncaster his seat is in.

Toby Perkins (Labour, Chesterfield)

North.

Chris Williamson (Labour, Derby North)

The next Prime Minister, anyway, to save any confusion.

It is clear: the hon. Member for North West Leicestershire made the point about economic growth, which we all want—it is important, joking aside. The only thing is that the sort of economic growth that we want is growth that benefits everyone, not only the few at the top. If the hon. Gentleman had been in his place, he would have heard me quote from the Centre for Economic Performance:

“Between 1979 and 2007, the top decile increased their share of total income by 14 percentage points, from 28.4% to 42.6%. The top percentile accounted for fully two-thirds of these gains, seeing their share rise from 5.9% to 15.4%.”

The fact is that in the 1960s and ’70s, the percentage of national income that was enjoyed by ordinary workers—in other words, earned income, by people who do a decent day’s work for a decent day’s pay—was increasing as a percentage, while the amount enjoyed through unearned income was diminishing. That has gone in the opposite direction since.

Gavin Barwell (Croydon Central) (Con) indicated dissent.

Chris Williamson (Labour, Derby North)

It is no good the hon. Gentleman shaking his head; that is the absolute fact. He needs to look at the research from the Centre for Economic Performance and in many other learned documents, which will prove the point that I am making.

Andrew Bridgen (Conservative, North West Leicestershire)

Is the hon. Gentleman aware of something that I need to point out? Under this Government, from 2010, the top 1% of earners in the country have gone from paying 26% of all income tax to paying 28% of all income tax.

Chris Williamson (Labour, Derby North)

Indeed, and so they should. We also know that people earning £1 million a year are getting a whopping £42,000 tax cut. How can that be justified?

Toby Perkins (Labour, Chesterfield)

The hon. Member for North West Leicestershire has just exposed absolutely what is happening in this economy. Of course the richest are paying more in income tax, in spite of the rate coming down; it is because they are getting incredibly wealthier. Of course the top 1% are paying more—because they are doing fantastically well, while those at the bottom are struggling massively and not paying so much tax. He is suggesting that we should be pleased with that.

Chris Williamson (Labour, Derby North)

That is absolutely right and, again, it brings into sharp relief the nonsense of the Government resisting the sensible amendment tabled by my hon. Friend.

There is not much more that I can say. The eloquent contribution that we heard this morning from my hon. Friend the Member for Chesterfield set out the case incredibly well. His argument was unanswerable, and I hope that, in my own humble way, I have reinforced his point. I look forward to the Government Members agreeing with this sensible amendment. If they will not, they should at least give some sort of cogent argument, which the wider general public can understand, why it is wrong that regulatory bodies should report on the impact of their activities on SMEs and why we should not know whether SMEs have complained about those bodies fulfilling their duties. With that, I conclude my remarks.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I am pleased to serve under your chairmanship, Mr Chope.

We have finally worked out that we are discussing amendment 27. The Opposition have shown their inability to draft clauses and amendments properly, because we have a simple and straightforward clause 61, which states that the duties of regulators should be performed such that

“regulatory action is taken only when it is needed, and…any action taken is proportionate.”

In drafting their amendment, the Opposition managed to delete that obvious statement. It cannot be that difficult to understand that it is important that regulatory action does not occur when it is not needed.

Chris Williamson (Labour, Derby North)

I did challenge the Solicitor-General, but he failed to deliver the goods, so can the hon. Member for Birmingham, Yardley define “proportionate”?

John Hemming (Liberal Democrat, Birmingham, Yardley)

Obviously, using a sledgehammer to crack a nut is not proportionate.

Chris Williamson (Labour, Derby North)

I am not asking the hon. Gentleman to say what is not proportionate; I am asking him to say what is proportionate.

John Hemming (Liberal Democrat, Birmingham, Yardley)

We can define what is proportionate by virtue of the fact that it is not disproportionate. The hon. Member for Newcastle upon Tyne Central said, and rightly so, that within the Human Rights Act, for instance, there are requirements for actions taken by a public authority—

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I thank the hon. Gentleman for giving way. Defining “proportionate” by what is not proportionate is the definition of a circular argument.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I must admit that I am scientifically trained, having a degree in atomic theoretical and nuclear physics—the Minister also has a degree in physics—and if we have a set of cases, whatever they may be, and define them either as proportionate or disproportionate, by defining those that are disproportionate we can identify those that are proportionate.

Toby Perkins (Labour, Chesterfield)

I will try one more time. Clause 61(1) states:

“A person exercising a regulatory function to which this section applies must, in the exercise of the function, have regard to the desirability of promoting economic growth.”

The amendment would delete the words

“have regard to the desirability of promoting economic growth.”

After that has been deleted, there is no point in subsection (2), which is why we want to delete it as well.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I could quite readily sit down and draft an amendment in about 30 seconds that would leave in the bit about regulatory action being needed and being proportionate.

David Rutley (Conservative, Macclesfield)

The Opposition now have me even more confused. I thought that I heard the hon. Member for Chesterfield say a few minutes ago that he had no problem with the rest of it and just wanted to include his box-ticking exercise by requiring reports. What is the problem now?

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the hon. Gentleman for that. The difficulty is that the Opposition are just not very good—[ Laughter ]—at drafting amendments. They are not very good and they are not very good at drafting—[ Interruption. ]

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I will not be provoked, Mr Chope; I rise to try to explain to the hon. Gentleman, with his qualification in nuclear physics, that if we no longer ask regulators to have a duty to consider growth, it makes no sense to ask them to exercise that particular duty, which no longer exists, in a proportionate way. They must continue to exercise their other duties in a proportionate way.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the hon. Lady for her irrelevant point. Subsection (2) indicates that the regulatory function should be performed in a particular way. That is what is being driven. The key is that things should not be disproportionate.

Chris Williamson (Labour, Derby North)

I am grateful to the hon. Gentleman for giving way. He is being generous with his time, as I was. Will he illuminate the Committee with examples of where regulatory bodies have been disproportionate in fulfilling their duties?

John Hemming (Liberal Democrat, Birmingham, Yardley)

I will give an example of what I consider to be disproportionate. We have an individual named Hyosun. He is a PhD student in the UK —[ Interruption. ] Sorry, Hyosun is a lady; I am not very good at South Korean names. The gentleman is called Jeong Hugh and he is the PhD student living in the UK. They were arrested last night in Pembrokeshire while trying to get out of the country with their baby. No court orders were in place. I consider that to be disproportionate action by the regulators. It may result in an international incident, but it is a good example of disproportionate action.

John Cryer (Labour, Leyton and Wanstead)

That is not a particularly relevant example. The hon. Gentleman is presumably talking about police action, which is irrelevant to the Bill and to the amendment.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I was asked to give an example of something that was disproportionate. It happened to be something that I found—[ Interruption. ] It is a disproportionate act. I am coming back to the point about the Human Rights Act, which deals with the interpretation and enforcement of the European convention on human rights. On those points, proportionality is a key component, but only when the articles concerned are engaged. As for regulatory action, those articles may not be engaged and therefore that general duty would not apply. It essentially comes down to the point that we should be ensuring that regulators do not do unnecessary things. They must also do things in a proportionate manner, rather than using a sledgehammer to crack a nut. I could find other examples, but that was the one I found at lunchtime—

Toby Perkins (Labour, Chesterfield)

The hon. Gentleman could do us a favour by returning to the regulators in the Bill. If I leave the cap off the toothpaste, my wife acts in what I would consider to be a disproportionate way, but she will not be regulated by the Bill. Will he give us an example within the context of the Bill?

John Hemming (Liberal Democrat, Birmingham, Yardley)

I was asked by the hon. Member for Derby North to give an indication of something disproportionate, so I thought I would pick something that was.

Chris Williamson (Labour, Derby North)

The point is, as my hon. Friend the Member for Chesterfield pointed out so eloquently and humorously, the example was irrelevant. [ Interruption. ] The hon. Member for Croydon Central is burying his head in his hands. It would be helpful if the hon. Member for Birmingham, Yardley could give an example of a regulatory body that would be covered by the provisions we are discussing and that has acted disproportionately. We do not need examples like that of the wife of my hon. Friend the Member for Chesterfield acting disproportionately because he has left the cap off the toothpaste.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The difficulty is that of course I do not have specific examples—[Hon. Members: “Ah!”] I personally do not have specific examples of the regulatory bodies in the Bill acting in a disproportionate manner.

Andrew Bridgen (Conservative, North West Leicestershire)

I will try to help my hon. Friend. As a qualified transport manager, I have a lot of links with the UK transport industry. The people I know are regulated by the Vehicle and Operator Services Agency, which inspects vehicles on a regular basis, and maintain probably the highest levels of vehicle standards for HGVs in the whole country.

A couple of years ago we had a very hard winter and a lot of the motorways were closed. There was basically a suspension of rules on drivers’ hours because vehicles were stranded all over the country. The transportation of essential food and medicines was being disrupted tremendously, yet VOSA was still at the side of the road carrying out spot checks on vehicles that were already running six, seven, eight, nine, 10, 12 or 24 hours late. There were considerable complaints from the industry that, given the extreme weather and road conditions, randomly pulling lorries off the road and delaying them for two or three hours for mandatory inspections was disproportionate. I supported that position.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank my hon. Friend for that.

Chris Williamson (Labour, Derby North)

That scenario would be covered by paragraph (b) of the amendment. Presumably the affected companies could complain, and paragraph (b) would require the regulatory body—VOSA in this case—to set out

“complaints received relating to the exercise of their functions and/or their engagement with their duties.”

Specific action could then be taken on an abuse, or an overzealous enforcement of a particular duty. Talk about using a sledgehammer to crack a nut! New legislation really would be using a sledgehammer to crack the nut described by the hon. Member for North West Leicestershire.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Gentleman misses the point. The requirement for proportionality would have an effect at the time that the decision and regulatory action were taken. It would not make it necessary for an annual report to be published perhaps 18 months later, or for such a report to contain information that would probably be available under freedom of information rules anyway, or for people to talk at length about whether something should be changed even later on.

Chris Williamson rose—

The Parliamentary Secretary, Office of the Leader of the House of Commons (Tom Brake) rose—

John Hemming (Liberal Democrat, Birmingham, Yardley)

I will give way to my right hon. Friend first.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I thank my hon. Friend for giving way. I thought it might be helpful to give him an example of disproportionate action on the part of the Food Standards Agency. The rigid application of the hazard analysis and critical control points system caused food Ministers to complain that food hygiene officers tended to favour that more burdensome and complicated system over more manageable, smaller-scale risk assessment processes. The Government view is that a growth duty would address such issues.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank my right hon. Friend for that helpful example. The examples I know of disproportionate action tend to be in the arena of child protection and family courts, because that is what people come to complain about to me. I therefore find out what is going on there. My hon. Friends have given very good examples of disproportionate actions.

Chris Williamson (Labour, Derby North)

I do not think that they have, actually. It would be a matter for interpretation. The hon. Gentleman seems to think that the example cited by the hon. Member for North West Leicestershire would simply not happen were the clause to be added to the Bill unamended. There is no evidence whatever for that. If that type of enforcement was conducted, the only place it could end up is with the law courts saying that they had acted disproportionately. Surely it would be better to agree the sensible amendment tabled by my hon. Friend the Member for Chesterfield, so that that could be reported. We should get that complaint on the record so that action can be taken, rather than leaving it to the law courts.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the hon. Gentleman for giving a substantial argument as to why we should have no laws. If we had no laws, nothing would end up in the courts and there would not be a legal profession. I tend to disagree with him. I think it is sensible to have laws and it is normally the case that people try to follow the law. If the clause was in place, the regulator would be inclined to follow the law in making changes.

I accept that the processes of judicial review could be involved in ensuring that public authorities follow the law, and that involves legal cost. Normally, the Opposition want to defend judicial review and say that the Government are opposed to it. On this occasion, the Opposition are arguing that we should not have judicial review or this legislative change. [Interruption.] Interestingly, the hon. Member for Derby North argues from a sedentary position that the clause is not needed. Our argument is that—we have good evidence and have cited two examples —it is needed, but that regulatory action that is not needed should not happen.

Andrew Bridgen (Conservative, North West Leicestershire)

I would hope that, as a result of the clause, in circumstances of extreme weather conditions with roads shut and freight transport being disrupted across large swathes of the country, VOSA might think, bearing in mind economic growth, that it would not wish to delay freight transport any further by having random checks, pulling whole swathes of lorries arbitrarily off the road in those conditions.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I agree with my hon. Friend. The clause moves away from the jobsworth mentality, where people enforce rules just because they can and not because there is a public interest in doing so. The clause is a proportionate and necessary act.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I am sorry to disappoint the hon. Member for North West Leicestershire, but it is far less likely that the clause will have the impact he hopes, because of VOSA’s understanding of the nature of growth. All organisations, however, know how to make a report, and if they had to make a report on complaints, that would concentrate their minds on avoiding them.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the hon. Lady for that, but this is about whether something is needed and is proportionate. There is considerable jurisprudence on what is and what is not proportionate. We have given two very good examples of why the clause’s approach is sensible.

Karl Turner (Labour, Kingston upon Hull East)

I am grateful to the hon. Gentleman for giving way. Does he not accept that whether something is proportionate is entirely for the court to decide when interpreting the legislation? The court decides what is proportionate, and that is always different, in my experience.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the hon. Gentleman for that point. The phrase, “Using a sledgehammer to crack a nut” has been in existence for a long time, and it normally indicates something that is disproportionate. I do not think there is a difficulty with the general understanding of what is and what is not proportionate. [ Interruption. ]

Christopher Chope (Conservative, Christchurch)

I call John Cryer.

John Cryer (Labour, Leyton and Wanstead)

I am sorry about the delay in standing up, Mr Chope; I was losing the will to live while listening to the hon. Member for Birmingham, Yardley. It is an honour to serve under your chairmanship. I am sorry that I was slightly late for the start of this morning’s debate, but I was delayed by the tributes to Tony Benn in the main Chamber. I dragged myself away to the excitement of the Deregulation Bill Committee.

James Duddridge (Conservative, Rochford and Southend East)

Very sensible.

John Cryer (Labour, Leyton and Wanstead)

Indeed. I start by quoting the Local Government Association, which said in a submission some time ago that

“there is an irony that a deregulation Bill should introduce a new duty where one is not needed”.

That sums up the Opposition’s position on the clause.

My hon. Friends have pointed to various examples that are causing us concern. One that occurs to me is the Health and Safety Executive, which has been facing cuts for many years. It now has fewer inspectors and fewer resources and its remit has been changed, so it is able to cover less ground. The Health and Safety Executive’s inspectors will be more nervous about inspecting construction firms, mines, quarries and agricultural firms if they must fulfil a growth duty in addition to all their other duties. Small scaffolding companies or kitchen fitting companies, for example, are unlikely to take the HSE to judicial review, but big construction firms such as Balfour Beatty, McAlpine, Laing O'Rourke—I am not saying they do this—have the financial muscle to do so. That is likely to happen if an inspection is controversial—if, for instance, HSE wishes to stop work on a site because it is not safe. There are examples of when there have been critical arguments about work being stopped on a building site for that reason.

Another example is Her Majesty’s Revenue and Customs, which has a reputation for doing deals with large companies and letting them off large amounts of tax. But suppose it grew a backbone—I know that is difficult to imagine—and decided to take on Vodafone or Starbucks. In the past, HMRC has done extremely controversial deals with those companies and let them off billions of pounds in tax. Will Vodafone, Starbucks or any other company be able to say to HMRC, “You have not done this before, and you are impeding our growth. Therefore, we are going to take action against you”? On that subject, HMRC has seen a steep drop in employer compliance inspections, which check on things such as how people are employed and how much tax is being paid.

Another example is the water industry. The press have concentrated on the profits and the lack of investment in the energy industry, but the water industry’s behaviour makes the energy industry look like Mother Theresa. [Interruption.] Does a Government Member want to intervene? No? I thought there might be an intervention. The water industry has paid out £40 billion in dividends to its shareholders and some of its executives now earn in excess of £1 million a year, yet investment has been falling since 2007. It has failed to address the leaks—one of the most controversial aspects of the industry—and charges have been increasing well ahead of inflation virtually since privatisation. If Ofwat grew a backbone, which it has not done so far, and intervened by saying that the industry could not introduce ahead-of-inflation rises, under the clause could the water companies say, “We are going to take you to judicial review because you are interfering with economic growth in this industry”?

My final example is the Gangmasters Licensing Authority—[Interruption]—which is on the list the hon. Member for Croydon Central is looking at. However, the list is not exhaustive, which is why I talked about the water industry. The GLA, like the HSE, is the kind of organisation that will say to employers, “You cannot do that because it’s dangerous.” Everybody in the room will remember that the GLA was created after a number of Chinese cockle pickers were killed in Morecambe bay. If the GLA had been around at that time, or if the HSE had been involved in that case, it is possible that those people’s lives might have been spared. The Labour Government created the GLA as a direct result of that disaster.

The Transport and General Workers Union—an organisation I always like to mention—conducted a campaign in the years leading up to the Morecombe bay disaster to create the Gangmasters Licensing Authority. The disaster in Morecombe bay convinced the Labour Government to create that body. There had already been meetings, rallies and so on, but it was the disaster that convinced the Labour Government.

Like the HSE, the GLA is losing funds and inspectors, and is having its remit changed slightly, so it will become less effective. In my view it will be increasingly nervous about intervening with certain gangmasters in the agricultural and food processing industry if there is the potential for a court case hanging over it because someone can say that by intervening in their business the GLA is interfering with economic growth.

My final point is that the clause will create a lawyers’ charter. There is no definition of proportionate in the clause, so we do not know what its effects will be. The law of unintended consequences has been referred to again and again during the debate. An awful lot of lawyers will do very well out of the clause. I have nothing against lawyers making a decent living.

Karl Turner (Labour, Kingston upon Hull East)

Hear, hear.

John Cryer (Labour, Leyton and Wanstead)

I see my hon. Friend nodding in agreement. However, I object to manufacturing unnecessary cases.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I must admit I had expected the Committee to struggle to spend today debating the growth duty. How wrong could I be? I had the impression that the speech by the hon. Member for Chesterfield was on a loop, but in his defence I did not find where the join in it was. I suppose it was extended by his helpful interventions setting out that in his household it is he who is the regulator of whether his wife applies the cap to the toothpaste tube.

The hon. Gentleman started his comments by expressing support for the clause—that was a brief section at the beginning of his speech.

Toby Perkins (Labour, Chesterfield)

Will the Minister give way?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

If I must.

Toby Perkins (Labour, Chesterfield)

It appears that the excitement of the debate has slightly got the better of the Minister. Just to clarify, we entirely understand what the Government were trying to achieve and support their aims, but we do not think the clause will deliver those aims.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I thank the hon. Gentleman for that clarification. I will respond to that point and many others made by him and other hon. Members as we proceed.

I also welcome the fact that the hon. Gentleman highlighted a couple of areas of regulation that were set out in the Liberal Democrat manifesto and have been delivered, such as the groceries code adjudicator and regulation of CCTV. One interesting part of the Opposition’s position is that with this amendment they would get rid of the growth duty, and they have deployed various arguments such as that there is no definition, that it is vague and that its impact is uncertain; but their next amendment talks of introducing a “sustainable” growth duty. Presumably all of the comments about the duty being vague and hard to define are points they will make in relation to their own amendment shortly.

Chi Onwurah rose—

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I give way to the hon. Lady so that she can do exactly that.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Our amendment 28 would double the definition of and guidance as to what a growth duty involves, by adding that it should be sustainable. It is not the case at all that that would make it more vague; in fact, it would make it more precise.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

We will come on to that when we discuss the hon. Lady’s amendment, but I think she will find it hard to argue that adding “sustainable” does not in fact make the duty much more complex.

I turn now to the various points made in the debate. The hon. Member for Chesterfield asked whether the duty is really deregulatory. Clearly, the Government’s view is that it is. In considering how best to promote economic growth it is likely that regulators will carry out their regulatory activities in a way that is less burdensome for businesses. That is what deregulation is about. The clause will mean that the burden of regulation on business productivity will be kept to a minimum and that regulators will be proportionate in their decision making. That is the impact the clause will have on businesses. It is something that businesses will welcome, and is clearly a deregulatory measure.

A number of Members, including the hon. Member for Chesterfield, suggested that the duty would lead to expensive litigation. A duty in primary legislation creates a means by which a business can challenge a regulator that has not had regard to growth in its decision making. The challenge can take three forms. I would argue that businesses will use not the last resort, which is judicial review, but the other options open to them—the regulator’s internal appeals mechanisms, or the challenging of the enforcement decision at court.

Yes, in the last resort, perhaps a business will use judicial review, if the regulator has failed to apply the duty, or applied it in a way that is clearly unreasonable, but we recognise that judicial review can be a lengthy and resource-intensive way for businesses to challenge regulators’ decisions. Our view is that because of the cost associated with it, very few businesses are likely to go down that route when they can instead rely on the regulator’s internal appeals mechanisms. It would be difficult for a business to be successful at judicial review. The courts are generally unwilling to substitute their views for those of regulators unless the decision was blatantly unreasonable. I cannot believe that regulators will take decisions that are blatantly unreasonable.

The hon. Gentleman asked whether the duty would not frustrate the regulatory system if a business can overturn regulators’ decisions. If a regulator has had regard to growth and can justify its decision, a business cannot expect to challenge the decision successfully. He expressed the rather bizarre worry—I do not think that it was his—that the Office for Nuclear Regulation would stop the development of nuclear power stations because it was worried that if the stations exploded, that would lead to less growth. I do not know whether he was putting that forward as a sensible point for consideration; it is certainly the most bizarre scenario set out this afternoon.

It is worth dwelling on the point, because clearly the hon. Gentleman has concerns about it. The growth duty is broad, but it is accompanied by guidance that provides a steer and sets out ways in which regulators can have regard to growth without undermining protections—I repeat “without undermining protections”. Those ways include keeping the burden on business productivity to a minimum. In response to the growth duty, regulators such as the Office for Nuclear Regulation might seek to streamline application processes and minimise data requirements to keep transactional and administrative costs to a minimum.

Regulators might also have regard to growth by being proportionate in their decision making—a point that we dwelt on at some length. That means ensuring that interactions with business are necessary, and proportionate to the risks posed by non-compliance and the ability of the business to incorporate change. For example, when considering measures to remedy non-compliance, the ONR might consider the range of enforcement actions at its disposal, such as advisory or warning letters, remediation, or stop notices, and select the option that is most proportionate, balancing the risk and impact on the sector with the economic impact on the business in question. The hon. Gentleman had a concern about the definition of “proportionate”, and I have just given him one.

Chris Williamson (Labour, Derby North)

Will the Minister respond to the CBI, which believes that for certain regulators, a growth duty is

“unlikely to be relevant or helpful”?

If the CBI thinks that, what is the point of the duty? How would he answer its criticism?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I will come to various comments that organisations have made about what we propose, but the Government’s position is that the growth duty will not undermine the ONR’s role in ensuring nuclear safety; clearly, we would not want that to happen.

The issue of the Groceries Code Adjudicator was raised. The hon. Member for Chesterfield may be aware that from April, it is anticipated that the GCA will be subject to the regulators code, which will publish details of the GCA’s performance against its service standards. The GCA was happy to sign up to those requirements, which balance its statutory functions against better regulation requirements. We consulted it on applying the duty to it, and no concerns were raised.

There is also the question of how the duty will be enforced. The Government do not propose that the growth duty imposes additional reporting and monitoring requirements on regulators. However, the draft guidance we have published states that regulators should be transparent about how they are complying with the growth duty. The Government will monitor the implementation of the growth duty through existing reporting mechanisms such as annual reports, published policies and service standards in the first instance. We have, of course, published an impact assessment alongside the Bill, which sets out a preliminary assessment of some of the anticipated economic benefits of the growth duty.

The Opposition say that the duty will have a minor effect, but the impact assessment says that the benefit to business will be of the order of £90 million a year—not an insubstantial benefit.

Toby Perkins (Labour, Chesterfield)

The Minister must realise that the assessment of £90 million of benefit to business is just a guess. No one knows exactly how the duty will change people’s behaviour. Will he be clear about the origin of the figure of £90 million? It cannot be based on any sort of evidence.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

It is an intermediate figure, based on a lower to higher range of what could be saved through this process. Detailed work has gone into that—it is not a case of, “Think of a figure and type it into the spreadsheet.” I am sure that the hon. Gentleman would not accuse those who complete the impact assessment of proceeding in that way.

Chris Williamson (Labour, Derby North)

The Minister did not really respond to the CBI’s criticisms. Will he now respond to the comments by the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks, who said that the duty would

“not solve the problem of growth but will make a difference perhaps at the margin”?

That is hardly a ringing endorsement.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

Personally, I think that if it has the effect that the impact assessment suggests it will—£90 million of benefit a year to business—it will be a prize worth having, and I am surprised the hon. Gentleman thinks that it would be insubstantial or inconsequential.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Does the Minister agree that the reporting requirement in the amendment might have the same impact in terms of the £90 million figure that he has cited?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I am not quite sure how the hon. Lady thinks that simply having a reporting requirement would magically produce £90 million of savings for business—

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Given the lack of transparency about the methodology used to calculate the figure of £90 million, I only suggest that it is possible that the same figure could be reached for the amendment that we have tabled.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I am disappointed that the hon. Lady appears to be making a generalisation about all impact assessments. Is she suggesting that the detail and methodology of all of them should be challenged?

Chi Onwurah (Labour, Newcastle upon Tyne Central)

As someone who has written impact assessments for Ofcom, I think that the methodology should always be challenged. It should always be open and transparent, and we should always be able to see how the conclusions are reached.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

We are getting closer to the truth. It would seem that when the hon. Lady was completing impact assessments for Ofcom, the analysis and methodology that went into them was not quite what it should have been—

Chi Onwurah indicated dissent.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

The hon. Lady shakes her head.

The growth duty is not designed to create significant costs for regulators. They must have regard to economic growth as one factor to take into account in the exercise of the functions they are already carrying out. There may be some costs associated with training, for instance, but those are identified in the impact assessment.

I have already highlighted the fact that the impact assessment shows that the duty could deliver a net benefit in the order of some £90 million for businesses each year in the form of reduced administrative burdens, inspection costs, duplication of information and inspections, and reliance on external contractors. The hon. Member for Chesterfield suggested that the duty was vague, but the duty makes it clear that regulators should consider economic growth. The draft guidance, which has been published, sets out the principles for how regulators may have regard to growth as appropriate in the circumstances, including reducing burdens, proportionate decisions, understanding and helping businesses to comply.

There were a couple of specific questions about the Civil Aviation Authority, its economic functions and why those were different. They are different because there are usually concerns about market failure of a natural monopoly. There are bodies that undertake both economic and non-economic regulatory functions, the CAA being one. The Government’s approach is to carve out the economic functions, and that is the approach that we have taken with the regulators’ code. It should be remembered that the list of regulators in scope is simply an indicative list, and that the functions in scope will be specified in an order subject to the affirmative procedure and therefore subject to a full debate at a later stage.

Toby Perkins (Labour, Chesterfield)

I thank the Minister for coming back on the CAA. Given what he has just said about the carve-out of financial functions, will he take us through what that means for the Treasury and HMRC, which is in there but does not seem to have a carve-out? Will he explain how that carve-out will work with HMRC?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

We have set out clearly the principle that the measure applies to non-economic regulators; economic regulators will not be covered by what the Government have proposed. If there are functions within an economic regulator that touch on non-economic matters, those could be included.

Toby Perkins (Labour, Chesterfield)

I am grateful as far as the Minister has gone, but will he be a bit more specific? HMRC is listed, so it is not exempted. What are the functions that are non-economic that HMRC will now be expected to pursue?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I thank the hon. Gentleman for his intervention. I hope to be able to respond to his point shortly.

The hon. Gentleman also raised the Animals in Science Regulation Unit exemption. We propose an exemption in relation to the unit’s project licensing decisions because the animal research industry said that it did not want the measure to apply there. The industry said that it would be sufficient to include all the unit’s other regulatory functions, so we are responding to the request of the regulator.

The hon. Gentleman also asked why the growth duty is needed when we already have the regulators’ code. The code is a code of practice for good regulatory delivery that enables regulators to assist those they are regulating. The provisions in the code that relate to growth, however, are fairly light touch. The requirements of the code rank below regulators’ other statutory duties because the code has a broad application, so we felt that there was a need for the growth duty.

On HMRC, the matters covered are the national minimum wage and money laundering regulations, not tax, as has been assumed. I was asked who has requested the growth duty. Those that have done so include the Food Standards Agency—I referred earlier to an example it put forward—and the Health and Safety Executive. During discussions about the focus on enforcement reviews, the HSE said that a growth duty would ensure that all regulatory staff gave due regard to growth. Natural England during those discussions, such as those on coastal developments, said that it would find a growth duty helpful, as it considers its mandate and duties too narrow to allow it to provide assistance to industry. I hope that I have dealt with all the questions asked by the hon. Member for Chesterfield but, if I have not, I am sure that he will come back to me shortly.

The hon. Member for Newcastle upon Tyne Central made a point about whether the duty will help only large businesses. Clearly that is not the Government’s view; the duty will help small businesses as well, which is why, as she will be aware, the Federation of Small Businesses supports it. The FSB said in evidence:

“For us it is about the culture change and making sure that regulators…think about this as part of their everyday decision-making process at a macro level and a micro level, so you know how they do their policy, but also the way in which they do implementation. There are loads of good examples of ways in which they can do that and ways in which the FSB could advise them on what we think would help in terms of training and so on. We hope that that would be the outcome.”––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 75, Q197.]

The federation therefore took a very supportive position.

My hon. Friend the Member for Macclesfield made a pithy, refreshing speech. We were on the subject of puddings at the time, and perhaps, in pudding terms, his speech was a sorbet, compared with the more stodgy, suety contribution from the hon. Member for Chesterfield.

The hon. Member for Derby North started his speech by saying that the economy was flatlining, but then had to do a U-turn in the middle of his contribution. He referred to the construction industry, and it is worth putting on record that construction output is up 3.4% this year compared with last year.

Chris Williamson (Labour, Derby North)

I must set the Minister straight. I did not really do a U-turn—a U-turn is when one goes back on what was previously said. It was a clarification. I acknowledged that, throughout most of the Parliament, the economy has been flatlining. There is now modest growth, but the economy is still below its position pre-crash, and I am fearful that that growth is built on sand. I cited a biblical quotation to reinforce my point.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I thank the hon. Gentleman for that clarification. He went on to ask a rhetorical question in his speech about whether people thought he was talking gibberish. I do not know whether he has seen on YouTube the young Finnish woman who can speak gibberish in many languages, but he might want to make contact with her because I think that they have something in common. He spent some time reminiscing about his days as a bricklayer and referred to a number of hypothetical situations that were the creation of his rather frenzied and frantic mind. I do not know whether that is as a result of him inhaling too much cement on the building site when he was a bricklayer, but clearly something has had an effect on him.

The hon. Gentleman made two points to which I should respond, however. He asked about the regulation of the Health and Safety Executive under the growth duty and what impact that would have. As I stated, the duty does not cut across regulatory protections. The Government have worked closely with the HSE to develop the guidance and it is clear that the regulation does not remove any safety requirements. The duty adds a factor to take into account in the delivery of safety and protection, and we would expect the regulator to ensure that the appropriate priority was given to issues such as health and safety. He also said that the growth duty will cause confusion. It has clearly confused him, but I do not think it has confused Government Members.

Chris Williamson (Labour, Derby North)

The difference between me and the Minister is that I represent ordinary people. As I said, I come from a humble background, and if something is confusing me, it is likely to be confusing people outside the House. Our duty is to speak to people outside this place, not to occupy the Westminster bubble and convince our colleagues in that bubble.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

If we took the hon. Gentleman’s comments at face value, Government Members might be offended by his suggestion that we do not represent ordinary people as well.

In relation to the growth duty causing confusion, regulators and businesses called for guidance during the consultation. We published draft guidance alongside the Bill to provide detail about how the growth duty is intended to operate and to inform parliamentary debate. The draft guidance was developed through engagement and consultation with regulators and businesses. For instance, clause 63 requires the Government to consult those who will be subject to the duty about the draft guidance. In line with that requirement, we have continued to gather feedback on the guidance throughout the Bill process. When the Bill is enacted, the guidance will be subject to the affirmative procedure before it comes into force, and it will help to ensure that regulators have a consistent approach.

Mark Hammond, the chief executive of the Equality and Human Rights Commission, said:

“We have certainly looked at the guidance in detail, and we are grateful for the clarification of intent which comes through in the guidance fairly clearly. What is intended is to add to, not subtract from, the role of regulators.”––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 21, Q180.]

That is the Government’s position. We will not subtract from the regulators’ role and we expect them to continue to prioritise things as they see fit.

The hon. Member for Derby North referred to the risk of judicial review and quoted the Gambling Commission. The Government asked regulators to provide evidence of existing statutory duties leading to unmeritorious challenges, but we have not seen evidence of a significant risk. Businesses told us that they were unlikely to mount judicial reviews except in extreme circumstances. As we all know, judicial reviews are very costly.

I want to put on record a helpful explanation of proportionality, which was the subject of a major exchange with my hon. Friend the Member for Birmingham, Yardley, who entertained us with his laser-like focus, which all physics graduates acquire, on the Opposition’s inability to draft the simplest of amendments and provide explanatory notes. We would appreciate it if the Opposition joined in the spirit of things. I hesitate to suggest that they did not provide explanatory notes for their amendments because they did not know what they were intended to do. I shall not go there, but I thank my hon. Friend for highlighting the weaknesses in what the Opposition put forward.

In the draft guidance, we set out that we expect regulators to be

“proportionate in their decision making”.

They must ensure

“that interactions with businesses are necessary and proportionate to the risks posed by non-compliance and ability of the business to incorporate change.”

That applies to the provision of advice, guidance and enforcement action. I hope it is clear that proportionality means that regulatory action should be taken only when it is needed.

Karl Turner (Labour, Kingston upon Hull East)

Does the Minister accept that it is for the court to decide whether something is proportionate and that that should be determined on the facts of the case?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

Clearly that is true for matters that end up in court. However, as I said earlier, most businesses will rely on the regulators’ internal processes. Very few businesses want to go down a route that ends in court. We do not have evidence that unmeritorious claims have been made against the existing statutory requirements that are placed on regulators.

The hon. Member for Derby North asked whether the CBI supports the proposal. It said in its consultation response that it is not opposed to it. It said:

“A regulator’s primary duty of protection is not incompatible with the aim”

of reducing burdens and considering the economic impact of their actions, and that the measure will

“ensure that regulators strike a balance between these two with the aim of preventing sub-optimal regulatory decisions…that hamper economic growth.”

I hope the hon. Gentleman would agree that the CBI was much more positive about the Government’s proposals than he indicated.

The hon. Member for Leyton and Wanstead opened his contribution by saying that he was losing the will to live. I am sorry that the speeches of the hon. Member for Chesterfield have that effect on him, but we share his pain in that respect. He touched on the issue of judicial review, to which I have already given a response, and the definition of what is or is not proportionate.

I am afraid that all I have done so far is to respond to hon. Members, so I want now to put on record some more general points about the clause. Non-economic regulators are industry-facing and are, with their combined annual budget of around £2 billion for regulatory activity, a considerable resource that can and should be brought to bear in support of growth. However, the Government’s post-implementation review of the regulators’ compliance code found that regulators had a tendency to regard the promotion of economic growth as subsidiary to their statutory duties. The duty in the clause rectifies that by giving those exercising regulatory functions a statutory duty to have regard to the desirability of promoting economic growth when exercising those functions. The effect of the duty will therefore be to enable regulators to exercise their functions in a way that promotes growth.

The Government recognise that regulators have a primary purpose to protect, whether that is the environment, the health and safety of employees or road users. The economic growth duty complements those existing duties to protect and will not override or cut across powers of protection. Instead the duty will require regulators to consider how they can best carry out their protection functions in a way that will promote growth. They can do that in a number of ways, depending on the circumstances in question.

The clause makes it clear that regulators can promote growth by taking only that regulatory action that is needed and ensuring that any action that is taken is proportionate. That will lead to less burdensome regulation for business in the future. Regulators might also choose to promote growth in other ways, such as by producing guidance to help businesses to comply.

We have chosen not to define growth further in the Bill so as to give regulators wide discretion to take into account short and long-term growth, depending on what is appropriate. Similarly, they will have the discretion to have regard to the growth of an individual business or growth across the sector as they deem relevant. The duty does not mean that regulators should turn a blind eye to non-compliance. Instead, it requires them to consider how they can ensure compliance in a way that best promotes growth.

As the Committee heard in our evidence sessions on 25 February, there is broad support for the growth duty among business groups. They are keen for regulators to understand the business environment better and to consider the economic impact of their actions as they carry out their regulatory activities. The growth duty will play a key role in creating a business environment, of which the non-economic regulators are a part, that is as conducive as possible to supporting the economic recovery. The duty was welcomed by the Joint Committee on the draft Deregulation Bill.

I will now say a few words about the amendment—we are nearly there, Mr Chope. It would remove the duty for regulators to have regard to economic growth and replace it with a reporting requirement on the non-economic regulators. The Government do not believe that such a requirement would be beneficial, as a reporting duty would simply not have the same effect as the growth duty.

The Government are bringing forward the growth duty as regulators have felt unable to consider economic consequences in the absence of a statutory requirement to do so. The duty will make it clear that one of the objectives of regulation is economic growth. It will enable regulators to exercise their functions in a way that promotes growth. The focus on growth will lead to less burdensome regulation for business, including SMEs.

A requirement on regulators to report annually on how they have considered the needs of SMEs will not engender the change that the growth duty is designed to deliver. The duty puts it beyond doubt that economic growth is a factor for regulators to take into account when they make decisions. At the moment, regulators are not obliged to think about the economic consequences of their actions beyond the requirement to do so in the regulators’ code, which is not binding on their operational decision making. As a result, undue burdens remain, as is shown in the focus on enforcement reviews. Regulators themselves have cited the lack of a statutory duty to consider growth as a barrier to them doing so.

A reporting requirement alone would not make it clear that economic growth is a clear and explicit objective that regulators should consider as they carry out their functions. As the Committee heard in evidence on 25 February, there is broad support for the growth duty among business groups, many of whom represent small and medium-sized businesses. They are keen for regulators better to understand the business environment and to consider the economic impact of their actions as they carry out their regulatory activities.

We have set out in the draft guidance some of the practical ways in which a regulator can promote economic growth, but it might be helpful if I cite a few examples to show that the growth duty goes further than the requirements suggested by the amendment. The guidance provides that regulators can have regard to growth: by keeping the burden of regulation on business productivity to a minimum, such as by streamlining data requirements or co-ordinating inspection activity; by being proportionate in their decision making—that has been stated a couple of times—such as by ensuring that interactions with businesses are necessary and proportionate to the risk posed and the cost incurred by business; and by understanding the business environment and tailoring regulatory activities accordingly, such as by providing tailored compliance advice to businesses to assist them as they enter new markets, or at start-up.

Finally, the guidance sets out the expectation that regulators should be transparent through existing reporting mechanisms about how they implement the growth duty. That is a proportionate approach. Taken together, the duty and the guidance, including the transparency requirement, are a comprehensive enabling package, which is something that a simple reporting requirement alone is not.

The amendment specifically raises the issue of small and medium-sized businesses. I hope that we can all agree that the Government need to do all they can to help and encourage those firms to grow. We cannot afford to hold back small businesses with unnecessary rules and regulations, which is why the Government have introduced various measures, such as the accountability for regulator impact scheme and the small and micro-business assessment, which speak directly to those types of businesses. The growth duty is a further measure that should be seen as part of this broader better regulation package. The non-economic regulators interact with a huge number of businesses from a wide variety of sectors, all of whom will benefit from the changes that the growth duty will stimulate. I therefore urge the hon. Member for Chesterfield to withdraw his amendment.

Toby Perkins (Labour, Chesterfield)

Our debate has been in some ways helpful, although I was slightly disappointed by the tone of the Minister’s response. I do not know why he felt the need to be quite so condescending, especially towards my hon. Friend the Member for Derby North. We are well used to Liberal Democrats playing the man and not the ball. It is why some of us particularly enjoy beating them. My hon. Friend is a notable example, as he had the rare honour of beating someone who came third in a two-horse race.

Notwithstanding the tone of what the Minister said, the content of his speech was important, so I shall respond to some of his points. He spoke about the response of the Federation of Small Businesses. First, the FSB said that the growth duty was deregulatory for business, if it worked. We all accept that if the clause delivers what the Minister intends, it will be helpful to business, but we lack evidence that that will be the only outcome. While some regulators will perform their duties in a more helpful way—that is to be welcomed—our amendment would achieve the benefits that the Minister wants without some of the downsides. In its evidence to the Committee, the FSB said:

“We recognise that some regulators may need to be out of the growth duty. If there is a clear reason for that, we will understand”.––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 77, Q201.]

That is precisely our point. We want to understand how the growth duty will operate while examining whether there is a better way of do things.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

If the hon. Gentleman has doubts about whether the growth duty will deliver what the Government intend—we do not have any doubts about that—why does he think that publishing a report will have any effect?

Toby Perkins (Labour, Chesterfield)

Precisely what it would do is ensure that the Government have another tool at their disposal to influence the way that regulators carry out their functions. It would enable the Government to hold regulators to account for precisely what they are attempting to deliver, but without going down the route of encountering many of the problems that I have highlighted—for the benefit of the Committee, I will not repeat them—about the way that the relationship between regulators and the regulated might alter as a result of this change. As the Minister said, judicial review is there and is a possibility.

I am not saying in this contribution—nor was I in my previous contribution—that we will see a huge raft of judicial reviews and that judicial review will be the usual outcome of this change. I am saying that the Minister is opening up the possibility that that will happen. He also opens up the possibility that the relationship between the regulator and the regulated will change, because the regulator will know that judicial review is a potential outcome. That is what I am saying.

The Minister says, “Well, hang on, there is an internal appeals mechanism and that will probably get more of these cases.” Of course, it will get more cases, but we could have had an internal appeals mechanism on the basis of the regulatory code anyway. The fact that in many of these cases there will be some positive outcomes and some cases that go to the internal appeals mechanism does not in any way undermine our central point.

The Minister referred to the comment that I read out about the Office for Nuclear Regulation; he described it as bizarre. I confess that I agree with him; it was an odd contribution. However, I was simply reflecting that it was a contribution made to the Committee. It was actually made by the hon. Member for North West Leicestershire—that was where it came from. My point was that two different people had two very different interpretations of what exactly the ONR was going to do.

The Minister made a key point. It was really illuminating —to some extent, it was the moment when the scales fell from my eyes. It was when he said that the impact assessment showed that this change was likely to generate £90 million worth of growth. It is very clear from the way that the Bill is drafted that it is impossible to know whether the amount of growth that is generated will be twice that sum, or nothing. Any figure is literally a guess. If the figures that the Government are citing about what the Bill will achieve are on as arbitrary a basis as this figure of £90 million that the Minister claims will be delivered to British businesses as a result of the measure, that really calls into question the entire basis of the Bill. All these different regulators are performing all these different functions in a variety of different ways, some of which will have many methods of potentially delivering growth; they may be delivering some of them anyway. There are other regulators to whom it is very difficult to see what difference the Bill is going to make. The Government lump all that together and say, “Yeah, yeah, we’ll call it £90 million.” I have had quotes for my windows to be cleaned that were made on a more scientific basis than that. It really calls into question the basis on which we are being asked to support all these measures.

The Minister was kind enough to respond to my question about HMRC. He will interrupt me if I am misquoting him, but I believe that he said that it will not be the economic functions but things such as the national minimum wage for which there will be a growth duty. The Government already have an appalling record on pursuing national minimum wage cases and now they are specifically saying, “Think about the growth duty when it comes to enforcing the national minimum wage.” There are two different ways that we could look at that. We could say, “Actually, paying the national minimum wage is good for growth, because people have more money in their pockets, and they’re more likely to be more confident and they will go out and spend.” That is the way that I would look at it. I suspect that this Government, on the basis of everything else I have heard from them, will look at it in the opposite way.

What does that tell us about what the Government now want to happen? They already have an appalling record, and suddenly the Chancellor appears to have found the minimum wage in recent weeks and has tried to talk it up a little bit. Actually, under the radar, they are going to HMRC and saying, “Think about your growth duty when it comes to enforcing the national minimum wage.” That is interesting.

HMRC has to consider the impact of growth when they investigate money laundering. What message does that send? We heard yesterday, at some length, the Chancellor trying to talk the talk when it came to tax evasion and suchlike, but in fact the Government are actually saying to HMRC, “When it comes to money laundering, think before you do anything. Think about growth. Think about the impact of your investigations into money laundering on growth.” That is quite revealing about the Government’s mindset.

The hon. Member for Birmingham, Yardley built an entire army of straw men in order to try to dismiss them. His entire contribution seemed to be based on claiming that we had said something that we had not—something ludicrous—and then explaining why that ludicrous thing was ludicrous. It really did not take us forward at all, but he said something that was worthy of a response. He felt—to an extent he is right—that the measure might have an impact on regulators who have a jobsworth mentality and enforce their regulatory function in a restrictive way. As I said previously, there will be some positive outcomes from the regulation, but the hon. Gentleman might be right.

The question—and the reason we ended up with our amendment—is about how we can try to deliver the principles that the hon. Gentleman outlined, without going down the route of judicial reviews or queering the pitch between the regulators and the regulated.

My hon. Friend the Member for Newcastle upon Tyne Central posed a question to which the Minister did not get a chance to respond: there is no mention of whether the intended growth is purely UK based, or whether any growth would be relevant. Perhaps the Minister will respond to that point in this debate or the next.

My hon. Friend the Member for Leyton and Wanstead made an important point about the remit of regulators changing owing to the growth duty. It brought to mind the contribution from Wendy Hewitt, the acting legal director at the Equality and Human Rights Commission. At the evidence session, she said:

“certain human rights are not subject to and cannot be dictated to by economic circumstances, such as the right to life, the freedom from inhumane and degrading treatment, and not to be subject to forced labour. There are human rights that we do have to promote and encourage public authorities to comply with. In that sense, it would be intrinsically incompatible for us at that point to pay due regard to economic growth.”––[Official Report, Deregulation Public Bill Committee, 25 February 2014; c. 67, Q175.]

In that session, my hon. Friend the Member for Newcastle upon Tyne Central made the point that it could be argued that forced labour was good for growth, but clearly it would be against other rules, and a regulator said they would be confused by what was expected in terms of their functions if the legislation was enacted.

I enjoyed tremendously the contribution of my hon. Friend the Member for Derby North. He brought the Bible to us, which is never a bad thing. His contribution was incredibly important and wide ranging. Some of the issues he raised spoke to very much the same concerns as the comment from Wendy Hewitt.

We will press our amendment to a vote. I hope the Minister thinks carefully about what we are attempting to do, which is to be helpful. We recognise that there is a requirement for regulation, and we recognise the desire in the Government to ensure that we have the best regulatory principles in place and that we strengthen regulatory activity so that regulated companies are supported, but in a way that does not alter the regulatory relationship. We are trying to be helpful; the Minister should recognise that and support us. We have the regulators’ code, which we have supported the Government in changing. We have a record there to be proud of. We want to be helpful on regulation, but we do not want the positive impacts that the Minister is setting out to be undermined by the negative ones that we have exposed today. I commend our amendment to the Committee.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I beg to move amendment 28, in clause 61, page 40, line 35, after ‘promoting’, insert ‘sustainable’.

Christopher Chope (Conservative, Christchurch)

With this it will be convenient to discuss amendment 29, in clause 61, page 40, line 38, after ‘promotion of’, insert ‘sustainable’.

Toby Perkins (Labour, Chesterfield)

On a point of order, Mr Chope. I hope that you can clarify something for me: should we have had a vote on clause stand part just now?

Christopher Chope (Conservative, Christchurch)

No. I can assure you that we do not decide on clause stand part until we have discussed all aspects of the clause, and we are now discussing two amendments to it.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Thank you, Mr Chope, for your clarification. I rise to speak to the two amendments, which are in my name and those of my hon. Friends the Members for Chesterfield and for Dunfermline and West Fife. The amendments are about growth; the Government, having inherited a growing economy, presided over three years of stagnation and an unprecedented cost-of-living crisis.

David Rutley (Conservative, Macclesfield)

Will the hon. Lady say whether the growth that was inherited was built on rock or sand?

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I thank the hon. Gentleman for his intervention. The longest period of growth since the world war was built on rock. The new schools and hospitals, and the investment in my constituency, demonstrate that.

David Rutley (Conservative, Macclesfield)

And the deficit?

Chi Onwurah (Labour, Newcastle upon Tyne Central)

It is unfortunate that the roulette-playing, casino financial system undermined much of that growth. Remember that the financial crisis started in the housing market in the USA; that undermined the good growth that happened under Labour.

To return to our amendments, working people are now on average £1,600 a year worse off. Most working people are not feeling the effects of any recovery at all. Even the beer and bingo that the Tories are generously allowing the “hard-working people” to have more of is not enough to disguise the fact that in 44 of the 45 months of David Cameron’s premiership, wages have not kept pace with inflation. I hope that the Solicitor-General will remind his party that it is not for the Government to patronise the people of Britain by telling them what activities they can or should enjoy. It is for Government to ensure that people have a better standard of living and more money in their pocket; they can then choose how to enjoy themselves. I notice that the millionaires at the top—

Christopher Chope (Conservative, Christchurch)

Order. I have been waiting with anticipation for the hon. Lady to use the word “sustainable” because this is a narrow debate about two amendments that try to introduce it into the clause. I therefore hope that she will concentrate her remarks on that.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I thank you for that direction, Mr Chope. My remarks are exactly concerned with sustainability because the disparity in the experience of growth is not sustainable. When there is a system whereby a small proportion at the top feels the benefits of growth and the many do not, Labour Members would argue strongly that such growth is unsustainable. I want to highlight that distinction. There seems to be one rule for the rich and another for the poor, and that is not a sustainable state of affairs. In the real world, people on middle and low incomes still do not feel the benefits of the return to growth.

An independent forecast today showed that people will still be worse off at next year’s election than they were in 2010. Is that the kind of growth that the duty is intended to promote? The growth duty was conceived during the long period of stagnation that followed the coalition’s entry into government. Ministers were desperate and that was their solution, but has the Minister truly considered what sort of growth the clause intends to create?

James Duddridge (Conservative, Rochford and Southend East)

I served on the Joint Committee and we discussed sustainability in great detail. We rejected the word specifically because it is so difficult to define. At no stage was I aware of a definition of sustainability that was in any way similar to the hon. Lady’s. People were mainly considering environmental issues, but the word was rejected because, without clarification, it is ambiguous.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I thank the hon. Gentleman for that helpful intervention. I am well aware that the Joint Committee discussed sustainability. Indeed, I have it in my notes that witnesses, including the Federation of Small Businesses, suggested that the duty for economic growth should include the notion of sustainable economic growth. The Royal Society for the Protection of Birds thought it would be more reasonable for the duty to specify the promotion of sustainable development. The TUC, the Equality and Human Rights Commission—

James Duddridge (Conservative, Rochford and Southend East)

The hon. Lady will correct me if I am wrong, but I think that was the initial evidence that those organisations gave as opposed to subsequent evidence. We inquired of similar people, and I think that the FSB was an example of an organisation that had advocated the use of the word “sustainable” but, having heard about our discussions, felt that it should be removed.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Many organisations advocated using the word “sustainable”. There were some difficulties in defining it, but I would argue that they are no greater than those in defining growth, which I will consider.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

The hon. Lady is trying not just to define growth, which she said was difficult, but sustainable growth. Surely that is more complex than simply defining growth.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I am sure that the Minister agrees that adjectives can clarify the objective of a noun. “Sustainable growth” makes the type of growth clearer. I will give examples of the way in which using “sustainable” makes the objective of the clause more likely to be achieved, and makes it much clearer to regulators what we, as legislators, expect them to do.

It is important to recognise that we have a duty to provide clarity to regulators. As I have said, I spent six years working for the regulator Ofcom. Members may be surprised to learn that during that time I had the Communications Act 2003 on my desk for easy access at every moment. I went a fair way to knowing chunks of the Act by heart, which one might think was good training for a Bill Committee. Using the guidance in that legislation to influence our everyday activities was an important part of our work. I urge the Committee to think carefully about giving guidance in the legislation rather than having this broad duty to support growth.

The Minister spoke earlier of the assessment that the benefit to businesses would be £90 million, but how will he define whether the clause has been a success? Does he even know what exactly we are trying to achieve? What is his notion of economic growth? Has he considered how the proposal will be evaluated—something we have debated at length today already?

Christopher Chope (Conservative, Christchurch)

Order. I hesitate to interrupt the hon. Lady but her amendments deal with adding the one word “sustainable”. I hope that we will hear what she thinks that will add, in terms of its definition and how sustainable growth is different from growth without the adjective in front of it. If she could address her remarks to that issue, it may help us focus meaningfully on the amendment.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Thank you for that direction, Mr Chope. I am seeking to understand what the Minister means by “economic growth” so that the Committee can better understand the impact of adding the word “sustainable”.

For example, Ofcom oversaw a huge growth in the communications markets from 2004 to 2010. Ofcom was a light-touch regulator that sought to deliver a functioning market and then get out of the way. In the discussions about how best to support growth in the telecommunications market, there were some who argued that enabling the incumbent, BT, to have an effective monopoly over next-generation access would ensure the speedy implementation of that technology, with greater investment and therefore greater growth in broadband and broadband-based markets. As you can imagine, Mr Chope, that was a question that needed significant analysis, because supporting growth in the markets was clearly one of Ofcom’s duties. At the same time, we needed to understand what kind of growth that would be and whether it would be sustainable. Over time, we concluded that concentrating growth in the hands of one primary player rather than supporting a more competitive market, would lead to growth that would not be sustainable because, in the longer term, one player would not seek to grow the market but to take profits out of the market as it existed.

That was a complex argument about the kind of growth that was best for the people of the United Kingdom in one specific market, the telecommunications market, with which obviously I am particularly familiar and Ofcom is particularly concerned. It is an important market, which supports the digital economy. There was a complex debate about whether it was better to go for short-term growth through a one-player market, or to ensure a range of players in the market, giving rise to longer-term growth which would be more sustainable. The Government, by not supporting competition in next-generation access, seem to have decided to go with shorter-term growth. At that time and in those circumstances, Ofcom decided to support longer-term growth.

My concern, as someone who worked for Ofcom, was that there was a large group of lawyers, a large group of economists and—in my view, as an engineer—quite a small group of engineers. I felt that there should be more, and I suppose I still do.

James Duddridge (Conservative, Rochford and Southend East)

Perhaps saying an “unsustainable” number of engineers would bring the hon. Lady into order, although I cannot possibly say that she is out of order, because Mr Chope would have alerted her. That might help her to stray back in the right direction.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I thank the hon. Gentleman for his intervention, but my point is—he need not anticipate me in the matter—that the number of economists it took to identify what the right kind of growth was took significant economic understanding and training to do so. My question to the Minister is, what economic understanding does he therefore feel is necessary to define the right kind of growth? Would not adding “sustainable” make it clearer that the kind of growth that I assume he is looking for—I am happy for him to intervene if not—is long term and not short term? But he does not want to intervene. Given that there are distinctions between different types of growth, as I hope the Minister acknowledges, does he not consider that adding “sustainable”, which is what we intend with our amendment, clarifies the kind of growth that regulators should be aiming to promote?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I am rather hoping that in the course of the hon. Lady’s contribution she will explain to Government Members what her definition of sustainable growth is, because that is the purpose of her amendment.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I thank the Minister for his intervention. My remarks are indeed aimed at illustrating what sustainable growth is. I have already given one illustration: growth that lasts over the longer term is more sustainable by its very nature—that is clearly sustainable growth—but short-term growth is not sustainable, because it is short term. Short-term growth is not sustainable growth. That is one clear example.

James Duddridge (Conservative, Rochford and Southend East)

Again, the Joint Committee considered this. The proposition that we looked at was not whether it should be short or long term, because long-term sustainable growth is clearly preferable to short-term non-sustainable growth. However, short-term growth that is discrete—for example, 1,000 new jobs in a certain sector that will last two years before moving to China or to another sector, or another sector taking over—is good growth. That would be non-sustainable growth by the definitions that we are all using, but it is still good growth.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

The hon. Gentleman makes a good point, but why should those jobs move to China or somewhere else? Should not the regulator or whoever else is concerned be focused on ensuring that the jobs stay in this country and are sustainable?

Chris Williamson (Labour, Derby North)

The hon. Member for Rochford and Southend East has let the cat out of the bag about this Government’s position on standing up for British workers and British interests. His definition of good growth is to export jobs to China. Should we not be trying to bring jobs back from China? That was what the Prime Minister said the Government were going to do, but the hon. Member for Rochford and Southend East has let the cat out of the bag. I despair.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

My hon. Friend makes an excellent point that speaks somewhat about this Government’s lack of vision. We should not only be protecting jobs here from going abroad, but also bringing jobs back here from abroad for sustainable growth in this country.

James Duddridge (Conservative, Rochford and Southend East)

One of the examples that we discussed in detail is when jobs went elsewhere. The other is when jobs simply did not exist because there was no longer demand for a specific product, whether a food type or type of car, as opposed to demand being supplied from elsewhere. Notwithstanding the points about retaining jobs, there was an underlying issue of positive short-term, unsustainable growth in a sector that may no longer exist or in one that we might predict will no longer exist.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

I think I understand what the hon. Gentleman is trying to say, but workers in short-term jobs in a sector that will not exist for much longer should be given the right training and support so that they get the right skills and can contribute towards sustainable growth. There is always a way of making growth more sustainable, which is what the amendment seeks to ensure is the clause’s focus.

The rest of the debate is in Hansard.