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What is holding up Hunts Businesses?

22nd September 2004

We currently live in a thriving local work environment, but that has not always been the case.

We currently live in a thriving local work environment, but that has not always been the case. Take this quote from a 1953 edition of the Hunts Post:

"Hunts needed more industry. Industrial expansion was vital for its prosperity. Ald William Brown, chairman of the county council, said so with considerable emphasis when speaking at the diamond jubilee dinner of the Hunts Football Association. "We are depending too much on agriculture," he said. "What Hunts needs, and particularly the county town, is more industry. Huntingdon, served by two trunk roads, main line railway services, and a fine river has, it seems to me, all the facilities to attract industry. But no one seems able to persuade new undertakings to come to this town."

Now compare that with the following article by Councillor Holley on the next page of the 15 September 2004 edition of the Hunts Post:

"With a population of around 160,000 levels of employment in Huntingdonshire are low - less than 2%. The district also boasts an adaptable and skilled workforce. Employment in Huntingdonshire covers a number of diverse sectors, making the economy robust and healthy. High-tech businesses account for more than 7,500 jobs - almost 16% of all high-tech jobs in the county."

What these articles show, is that much of the strength of the local economy lies in its diversity of business. There are currently a large number of local small businesses which cover a wide range of sectors. Many of these businesses are aided by the strong transport links in the area. The competitive wage levels and rental environment inevitably encourage increased movement of more mature businesses from Cambridge. Along with these incentives you have good schools and GP services, nice homes, and a district council that wants to help business to flourish rather than hold it back.

So what do local businesses see as the type of things that are holding them back? I wanted to know, so last year I conducted a Budget Survey across the constituency. The results were worrying - 57% of businesses that took part revealed that they spend between 3-12 hours a week dealing with government regulations; 82% say they spend more time dealing with red tape now than they did in 1997; 88% felt that Government regulations present a significant handicap to growing and running their businesses; and 96% did not believe the Government when it says it is committed to reducing burdens on businesses.

So what does this all mean in practice? Well, I now have companies telling me that they are considering not employing women because of increases in maternity rights which put considerable strain on their businesses and threaten to put them out of business altogether. There are companies in the area which now decide not to contest unfair dismissal claims. They would rather settle straight away in order to avoid the heavy costs of a tribunal case. One particular company in St Ives received a clean record after a Health & Safety check, but was then told by its insurers that they would not be granted a policy unless they installed sprinklers in their premises. Similarly, in St Neots a company passed its local Health & Safety check but was then told to make expensive changes by the national Health & Safety authority, which effectively checked the same things, but took a different view.

A constituent of mine, who is a businesswoman in Huntingdon, recently told me of a letter she had received from a solicitor. In the letter the solicitor explained that recent legislation introduced by the Government to give employees more rights in relation to parental leave and flexible working meant more bureaucracy and cost for the employer. The solicitor then went on to paint an alarming picture, describing that if my constituent did not follow the new rules she would be in breach of the law and may be taken to a tribunal by her employees. Unsurprisingly, the solicitor concluded his letter by offering his services. As this example shows, not only is greater regulation causing everyday practical problems for our businesses, but we are creating a whole new industry for lawyers and a feeling of being oppressed and victimised for employers.

On a lighter note, I would like to share with you a letter I received recently from a resident of Buckden. This gentleman wrote to Tescos in connection with the accuracy of their food labelling, for products such as crab paste. After receiving confirmation from the Department of Health that under EC regulations, Tescos does not have to be accurate in the labelling of its products, but need only list the percentage content of an ingredient detailed on the label, the gentleman wrote back to Tescos. His words were:

"This is quite astounding as for the past year you have spent a fortune employing Prunella Scales to play a dotty customer running round in your stores like a headless chicken - Sorry, like a 30% mackerel 25% cod 20% chicken - headless chicken, in order to promote an atmosphere of caring, helping, nothings too much trouble, honest to goodness Joes, at your service.

Let me suggest a script for your next advert:
PRUNELLA "Young man I bought this jar of crab paste last week and found that the majority of the contents were mackerel and cod. Has the jar been mislabelled?
TESCO ASSISTANT "No madam, that's just rubbish."
PRUNELLA "I know I've tasted it."
TESCO ASSISTANT "Not the contents madam, the label. You see under EU regulations we only have to put crab in it. It doesn't require us to make it the largest percentage of content. So we can fool you into thinking you are getting something better than you actually are. Del Boy and Rodney do it all the time."
PRUNELLA "I have a suggestion young man. If you change the "B" to a "P" in the word "crab" in crab paste, you could label all the jars of paste the same, knowing it would be 100% accurate and you wouldn't need to list the ingredients at all".
TESCO ASSISTANT (Under his breath) "Silly old trout (Nil % fish)"

I realise that this letter is not concerned specifically with the regulations which hamper businesses, but I feel that it shows how much excessive regulations annoy people. It also provides an example of the increasing number of European regulations which affect our lives.

The Government currently introduces 3,000 regulations a year which has amounted to a total cost to businesses of over £20 billion since 1998 (Chamber of Commerce). Of these regulations 50% of them originated in Europe (Treasury). This means that as a nation we are now subject to 200,000 EU regulations. There have been as many EU directives implemented since 1997, which directly affect businesses, as there have been in the whole of the previous 25 years. There is also an on-going trend by the Government to "gold-plate" regulation flowing from Europe i.e. go beyond the minimum necessary for compliance with the legislation, when the regulations pass into UK law.

Furthermore, there has been a worrying rise in what I would call the "compensation culture". Compensation payments now amount to £13 billion and are rising by 15% a year. (Institute of Actuaries) In fact, between 1997 and 2002 compensation claims rose by 100%. Clearly something needs to be done.

So what will a future Conservative Government do about it?

It is not possible to ignore the influence of Europe - that is where the main changes are needed:

  • We would introduce a new law so that Member States would need to show their capacity to comply with and police EU legislation before they sign up to it.
  • We need to ensure that there is a better pre-legislative review system in place. In this way we can ensure the legislation is justified. We would consult affected businesses and make sure that the starting points for legislation were "do nothing" and "to be left to the Member States."
  • The introduction of a Red Card scheme would be a key development in this area. This would enable national parliaments to scrap EU legislation that 50% or more of EU national parliaments cite as disproportionate.
  • We would also appoint an EU deregulation commissioner - this post is now considered by the Conservative opposition to be so important that it is also now a shadow cabinet position.

Back in the UK we have 3 main proposals for change:

  • We are committed to minimum implementation of EU directives - no goldplating.
  • We would only support EU legislation which came with price tags. Where pre-implementation Regulatory Impact Assessments are inadequate we would propose that assessment also takes place post-implementation. Similarly, it is important to regularly consider whether the benefits of the regulations outweigh the costs. A key means of doing this is the insertion of "sunset clauses" into the implementing legislation, which would force reconsideration after a certain period of time.
  • We would also allow existing gold plating to be scrapped where appropriate. I have played a role in this push for reform through my introduction to Parliament of what has come to be known as the "Djanogly Bill". The Bill is intended to challenge the culture of red tape by giving individuals and businesses affected by legislation, brought in pursuant to European directives, the opportunity to challenge these regulations. This would attack the cultural issue of gold-plating. Currently, during the time that Ministers consider how to abolish or amend a single regulation another 10 will have passed into law. Also, British civil servants look at every angle, cross the "t's" and dot the "i's" when drafting regulations, whereas other European civil servants simply enact EU directives straight into law. It is easy to say that the Europeans should be more like us but it has not been and would not be realistic to say so. Indeed, all too often other EU states are happy to enact the regulations and then turn a blind eye to their implementation.

So how can British businesses be helped? Well, under my Bill, challenges can be raised firstly on the basis that the provision is not required by Community Law, or secondly that the provision goes beyond the minimum requirements for implementation, or that other Member States did not implement it at all or did so in a less burdensome way. If this is the case then an affected business could seek a court declaration to knock out the European regulation concerned.

In my view, There is no point in talking of leaving the EU as UKIP and some others wish. The key point is that about half of our trade is with Europe and would remain so if we left the EU and became detached like Norway or Switzerland. But the benefits would be limited as we would, like those two countries, still have to adopt most of the European Regulations to trade with the EU and we would still have to pay money to the EU. The main difference is that we would, after leaving, have no say in what those regulations contained - so we would have the worst of all worlds. As bad as the regulations can be, they would be much worse were it not for the Conservative MEPs standing up for British interests in Brussels week in - week out. Likewise there is no point in saying that other EU states should become "more British" in their outlook and also in their keenness for enforcement of red tape - this is simply unrealistic.

What we need is to change the culture of the British civil service and MPs - from rushing to the lowest to moving towards the highest common denominator so that they look to minimise not maximise red tape. We need to introduce a new culture of light regulation rather than heavy. This is what my Bill is aimed at doing as people will look to avoid having their new regulations challenged in the Courts.

I am delighted to say that, although the Government spoke my Bill out, my Bill has since been adopted as Conservative policy in this area. So the idea lives on.

This is a big agenda and one that I have been personally involved in. There is nothing inevitable about businesses having to suffer from regulation - it exists because of a lack of prioritisation of the politicians and allowing bureaucrats to just get away with it. Under the next Tory Government that position will change.

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