Bill Esterson
MP for Sefton Central · Labour · United Kingdom
“As the Prime Minister said on Tuesday, our energy supply and our energy security are not a question of having either oil and gas, or renewables; they are about both. It is a great pity that proper process was not followed in 2022 or 2023. [ Interruption.”
“I warmly welcome my right hon. Friend’s commitment to continuing Britain’s global leadership on climate action, including by going to COP31. I also welcome his focus on breathing space for people and businesses, but, as he said, it will take a lot more than that to deliver the growth and reindustrialisation that he is so committed to.”
“Last week the Committee heard from Claire Dykta, the director of strategy and policy at NESO, who told us: “Operational decisions are taken by authorised, trained personnel only.” Her comments were confirmed by Alastair Martin, the chief strategy officer at Flexitricity, who, in the same session, said: “I do not think the idea that the he…”
“As the Minister has just said, new nuclear is essential for energy security. It is also essential as an alternative career for workers in oil and gas.”
“Paul and Susan Robinson each worked for the Health and Safety Executive for more than 40 years. They have not been able to plan for their retirement since finishing work last year; they have been living off their savings and the small loan that they have had. They are typical of the dozens of constituents who have contacted me.”
“Hudson primary school in my constituency does a brilliant job. It is a family hub, it specialises in support for children with SEND and autism, and it has a nursery, but its building, which is 80 years old, suffers from a high water table that brings damp, mould and structural problems for the building—as does occasional flooding.”
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“The Regulatory Policy Committee seems to be pointing at something slightly different. For some reason, the 10 increases in the overall cost of regulation that the Committee found were not reflected in Government statements on regulatory savings. Why that happened is an interesting question. It also emerged that many Government regulations—just under half—were considered to be out of scope by the Government. Therefore, when the Minister no doubt gives the figure of £10 billion in a few minutes’ time, one must wonder what the true figure might be. The regulations increased the costs to business, but they are important for Government and I agree that they should be important. However, they were not reflected in the Government’s in-scope or out-of-scope scenarios.”
“However, they have an impact on their work and therefore I think that we should fess up and try to get a measure into play in the way that we think about all regulation that impacts on business.” —[ Official Report, House of Lords, 28 October 2015; Vol. 765, c. GC229.] I have heard the argument before that the point of the assessment is to focus on what we can control and change. That is important, but it is not a reason not to include such regulations because it gives a false impression of the cost of regulation and entirely misses the point. After all, the same EU regulations are applied differently in different EU member states. Perhaps there is an opportunity to learn from how other EU states apply regulations, if they are able to do so in a way that has a lower cost to business and a smaller impact on business than we currently find.”
“Nearly 70% of these were of EU origin.” If regulations have an impact on small businesses, it is important that they are considered within the scope of the business impact target. Otherwise, businesses will not be able to trust what it is being told, which is the point that I was making a moment ago. It seems a false distinction to rule such regulations out. The origin of the regulations is different and the route when trying to make them work better for the business community or seeking to remove them would be different, but does the perspective of small businesses differ when a regulation comes from the EU? I do not think so. As Lord Stevenson said in Grand Committee, “I do not honestly think that businessmen and women would care whether the regulations they have to work to come from this place or across the channel.”
“When the Government report, they should be up front with businesses about who is responsible for the regulations. The reality is that business is interested in the overall impact of regulations, not where they come from. Ultimately, the issue is about the overall cost, not the cost of some regulations and not others, that really affects the business environment and businesses’ ability to operate as effectively as possible. Amendment 61 would require the Government’s business impact target to cover the impact of EU regulations or regulatory provisions made by statutory instruments subject to the affirmative procedure. The Regulatory Policy Committee reported that “nearly half of the approximately 1,000 laws enacted during the previous parliament were outside the scope of the Government’s… One-in, Two-out rules.”
“I could not possibly repeat what my hon. Friend just said, but their ears will prick up and they will become interested. One or two of them will no doubt want to jump up and say something about the European Union. The Government have an interest— [ Interruption. ] Government Members are being very well behaved today, which is remarkable. The Government have an interest in ensuring that they are seen to be reducing the regulatory burden, but when that is not the case, the Government cannot simply stop reporting it—for just under half the regulations—or shift the goalposts to make the situation look better than it is. The Lords had a full debate on the matter and when those points were made there really was no response to say that that was not what had happened.”
“The Minister’s support for staying in a reformed European Union is no surprise; I have heard her say that before. I completely agree, but I mentioned making the most of European Union regulations and learning from what goes on in other countries so that we can benefit from them and so that they do not become onerous or a cost to business. Does she take that point on board? What more does she think she and her fellow Ministers should be doing to ensure that regulations from the European Union are not onerous and can be more beneficial? Can we learn from the way other countries apply them?”
“The point that the Regulatory Policy Committee was making was that by not including just under half of regulations, the Government are not counting them and are not showing that the gold-plating the Minister speaks of is not still happening. It leaves the sense that the Government are embarrassed by the fact that they have not done more to remove what she described as gold-plating or to learn from how some of our friends in the European Union have managed to apply EU regulations in a more cost-effective way, or done enough to reduce the cost of regulation from the European Union. That is why we agree with the Regulatory Policy Committee that such things should be within scope.”
“It is really important to say that we agree on not having unnecessary regulations; I take on board the Minister’s point about that. I gently say to her, however, that small businesses are extremely concerned about some recently proposed additional regulation, not least the introduction of quarterly filing or additional reporting of tax information and the feared potential implications for extra bureaucracy. We have discussed that issue elsewhere. I do not know whether you would welcome a discussion on that now, Sir David, but such proposals cause concern. The Minister needs to be aware that there is a sense the Government need to think a few things through more carefully.”
“They do the job of highlighting the concern and the challenge. She has highlighted the long-term environmental and economic benefits of ensuring that we measure and evaluate regulation—the immediate impact and apparent negative effects, but also the longer-term, beneficial effects. In many cases, what may appear to have a financial cost in the short term has a much greater financial and environmental benefit in the long term. I am therefore pleased that my hon. Friend has tabled the amendments and I am happy to support them.”
“There is grave concern at the way zero-hours contracts are used in that business for people whose only or main employment is with that business. That does not just make life very difficult and precarious for the individual; the competitors of Sports Direct or similar businesses where the zero-hours culture is a concern face pressures that are unacceptable, unfair and damaging both to business and to the wider economy. There are many examples of how regulation can be a force for good. It can be a way of improving the wider environment and economy. It can help business, even though at first glance it may appear not to do so. As we seek to create a fairer society and a fairer and more successful economy, these matters are very important and we rightly have the opportunity to debate them. My hon. Friend was right to table the amendments.”
“When the minimum wage legislation came in during the early part of the Labour Government, there was criticism that the regulations would produce a big cost to business and to the economy; that they would cost jobs. That turned out to be scaremongering and untrue. There was in fact a benefit, not just to the workers who saw big increases in pay and protection of their terms and conditions, but to the wider economy. People were in a position to spend more money in the economy, which had benefits for business and the wider economy. There was also a benefit in the protections that were given to those businesses that had always been good employers and paid decent wages. The same, of course, is true today when we debate the challenge of the exploitative use of zero-hours contracts. Sports Direct is an employer that is often cited.”
“The short-term, balance-sheet effects of regulation are not enough. Whether a regulation, an action or a change in the rules has an effect on a business or an economy in a matter of weeks, months or a year or so is very different from its longer-term impact, whether on the economy or, indeed, the environment. We should be trying to achieve the level playing field that has been a central theme of our deliberations on the Bill so far, and that level playing field should apply to business, consumers and the wider public. The costs of regulation to business can be apparently significant, but savings can be made elsewhere. My hon. Friend the Member for Wakefield has given many examples of exactly that, but I will give a few others as well.”
“Welcome back, Ms Buck. This is the first time that my hon. Friend the Member for Wakefield has spoken in the Committee since her success yesterday and I add my congratulations on her appointment as the new Chair of the Select Committee on Environmental Audit. As my hon. Friend has said, the Labour party is pro-business, but we are not pro-business as usual and it is important that we challenge unacceptable business practice and exploitative practice. We support good regulation but at the same time we must ensure that unhelpful or damaging regulations are addressed. My hon. Friend cited excellent examples of good regulations that show how such reporting should be done. She also explained that we must take a longer-term view when we consider the environment or other aspects of life.”
“I beg to move amendment 65, in clause 15, page 13, line 16, at end insert— “(iii) of the measures adopted by the relevant regulator to make regulations which have an impact on small businesses more comprehensible, and (ii) of the measures taken to promote awareness of regulations which affect small businesses;” This amendment would create a new obligation on Regulators to provide an assessment on how they are simplifying their regulations and ensuring that they report on their efforts to extend awareness of regulations.”
“Now is not the time to get into a wider debate about money laundering, Ms Buck.”
“It applies the same principles of simplicity and effective communication that we are trying to achieve for small businesses through amendments 65 and 67 to regulations on money laundering. On the publication of its report, “Don’t Look, Won’t Find” in 2015, Transparency International’s senior advocacy manager, Rachel Davies, said that current anti-money laundering rules represented a “shambolic system”. [ Interruption. ] I am getting some agreement. As well as coming under fire in the report for lobbying on behalf of the same firms that they regulate, the majority of the 22 regulators publish no information about the fines that they issue. The Government’s first national risk assessment of money laundering found that banks and other financial institutions were at “high risk” of exposure to corrupt funds.”
“The Bill is a prime opportunity to take a significant step towards improving the situation, to place a duty on regulators to simplify and explain, and to share this with the small business commissioner so that the commissioner in turn can use their position to raise awareness and understanding among the small business community. The Minister for Policing, Crime and Criminal Justice said on money laundering in response to a written question from my hon. Friend the Member for Bishop Auckland (Helen Goodman): “The Government is committed to ensuring that the UK has a robust anti-money laundering regime.” I am not entirely sure that the rhetoric matches the reality of the situation, but new clause 19 seeks to ensure that the anti-money laundering regime is at least comprehensible and transparent to small businesses.”
“We are all in a hurry to conclude, I am sure. Amendments 65 and 67 deal with the simplicity and accessibility of regulations, specifically placing a duty on regulators to simplify their regulations and ensure that they report on their efforts to extend awareness of them to small businesses. This is a task to be shared by the regulators and the small business commissioner. Regulations get a bad press. The perception of red tape from faceless bureaucrats is pervasive and that is the fault of Governments, of all kinds; they failed to communicate the reasons for regulations, what they did and how they supported businesses.”
“It is an approach that more accurately reflects the complexities of the small business landscape and an approach that ends the strange idea that regulations can somehow be considered in isolation—that they can exist in a vacuum outside the wider economy.”
“Indeed, much recent debate in the Treasury and Department for Business, Innovation and Skills circles has been about how to improve the UK’s productivity. When we consider productivity and not just cost, we radically change the nature of impact assessments. Instead of monitoring what goes in—that is, the immediate financial impact on small companies—we monitor what comes out: the impact of the regulation on how businesses operate, how they grow and whether they can take on more staff, and, ultimately, the impact on GDP. Adding productivity takes the blunt instrument of the assessments as they stand and adds a far more nuanced approach.”
“A regulation that plays to a small business in Manchester or London might make life harder for a rural start-up, or it might have a disproportionate impact on a small business that exports to the EU, and so on. Current assessments disproportionately measure the direct impacts of new policies. Indirect impacts are harder to quantify, but that does not mean that we should pretend they do not exist. Longer-term impacts are even harder to measure, because the impacts spiral out from the business itself to include the knock-on impact on the wider economy, but that is exactly why it is important to factor them in. Amendment 66 adds that magic ingredient, productivity, into the mix for consideration during assessment.”
“I acknowledged at the time that, although important for the sake of transparency about the impact of regulations, focusing solely on umbrella financial costs to small businesses was something of a blunt instrument. Amendment 66 therefore goes a step further. Our intention is to address the challenge that policy makers face in assessing the broader impact of regulations on the economy and, indeed, society more broadly. The burden and benefits of regulation are rarely distributed equitably. The point is that simply talking in terms of the overall financial burden on businesses and couching one-in, two-out or other savings targets in those terms overlooks the different circumstances of the more than 5 million small businesses in the UK. What benefits one may burden another.”
“I am glad I got that right. However, it is patently clear that the UK must face up to a serious problem, which includes the way in which anti-money laundering rules are regulated. New clause 19 seeks to ensure that small businesses are supported as much as possible in complying with anti-money laundering rules. For the vast majority of small businesses, anti-money laundering rules are another bewildering set of regulations. While the UK is facing up to these problems, the least we can do in this legislation is to make it as straightforward as possible for small businesses to understand and comply with those regulations. Let me turn to amendment 66. When we discussed amendment 62, we called for a nominal and monetary tally of regulations to be included in the Government’s business impact target.”
“All that will happen is that less money will be spent at the smaller independent retailers if the larger ones can benefit. That is therefore a good example of the need to consider the wider consequences and shows that the amendments have particular resonance, given the Minister’s proposals for later in our deliberations.”
“Many, if not most, small independent retailers particularly benefit from having some kind of competitive advantage one day a week, and they are extremely worried about the negative impact of a change in the regulation of Sunday trading, as are workers who will have to work more on Sundays; as are families, who will be affected; and as are faith groups and others, who see the special nature of Sunday being affected. It is a good example of some of the much wider impacts of a change in regulation, which go way beyond the immediate financial impact on businesses. Clearly, some larger firms plan to gain by cornering yet more of a share of the retail market by trading longer on Sundays, but I cannot see the argument for the idea that there is more to spend just because it is spent on a different day.”
“I certainly take the Minister’s assurances on money laundering; perhaps this is something that we will revisit on Report in more detail, but certainly over time we will do so. I agree that it is a far from straightforward matter to resolve. I will just give another example of the effect of a new regulation when it is brought in and requires an assessment. Of course, that is the new schedule to the Bill on Sunday trading. Sunday trading will have an impact on businesses large and small. Some large businesses want it; some are less keen on it.”
“We have been given more time on Report, unless the Minister is giving us another day in Committee, and he tables such a proposal when we come back next Monday week. That would be unusual because we have to finish, according to what has been passed in Parliament, two weeks today at five o’clock.”
“Indeed. Honesty from the Minister—I like that. I would have more sympathy with the Minister for Housing and Planning if the proposals had been made a little earlier than the evening before the Committee started, but there we are.”
“It is regrettable that the proposal was not introduced in the Lords, as the measure is a Lords Bill, and earlier so that people were aware of it before Second Reading, and that we did not have longer to look at the new schedule than last Monday, on the evening before it was tabled.”
“My hon. Friend is absolutely right and I thank her for reiterating the point. Amendment 65 seeks to ensure that there is an assessment of whether there is a simplification. Several amendments have emphasised the need to consider properly and report the impact of changes in regulations. The strength of feeling, particularly about Sunday trading and changing the rules in the way in which the Government propose in the new schedule, shows the need to take great care. The change is considerable and it will have a profound effect throughout the country, and between the regions and the nations of the United Kingdom.”
“I am as much in the dark as my hon. Friend the Member for Newcastle upon Tyne North on this matter, as I am on so much that the Government do. Perhaps the reasons will emerge when we debate—”
“The Minister is in fine form today—when we get to that point, eventually, in two weeks’ time. That question can sit and await answer from the relevant Minister when we deal with the new schedule. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 15 ordered to stand part of the Bill. Clauses 16 to 18 ordered to stand part of the Bill. Clause 19 Extending the primary authority scheme under RESA 2008”
“The assurance the Minister gave about the Welsh Government’s request was certainly what we needed. It is a shame that Ministers do not accept requests from us in here when we try to amend things, but we live in hope.”
“If the Government wanted to help businesses, they would not have completely shut down the long-term dividends to the economy of many of the discontinued schemes that were already beginning to deliver, including the ability of local authorities to help through economic development, which is disappearing due to the scale of cuts. The change has been made for the sake of scraping together the short-term cuts that the Chancellor wants to achieve his political aims, which has not helped local businesses or local economies.”
“The Government converted Innovate UK grants into loans and took up to 58% of the budgets from the very local authorities that the clause tries to help businesses work with—the 58% is from Liverpool, my neighbouring authority. The Government give a fair impression of wanting to make life easier for businesses with the extension of the primary authorities scheme, but although we support the scheme we are acutely aware that it pales into insignificance in the face of the sheer scale of the withdrawal of support for small businesses in recent years.”
“The primary authority scheme will help small businesses to access affordable regulatory compliance, but on every other front they face an onslaught and a whittling away of the Government support they need to get started and contribute to the local economy. Let me give some examples. The Government axed the Business Growth Service, the Manufacturing Advisory Service and the growth accelerator programme. The growth accelerator programme alone assisted more than 18,000 businesses. A great deal of the £100 million in finance that it helped small and medium-sized enterprises to raise went into helping local businesses in their very earliest stages.”
“It finds a balance between business and regulators, works with businesses to ensure compliance is as easy and affordable as possible, and offers councils the flexibility to account for local circumstances where there are discrepancies between their use of regulations and that of neighbouring councils. We broadly agree with the extension of the primary authority scheme set out in clause 19, but I do not want the Minister to think that she enjoys our unqualified support. A helping hand to small businesses in the spirit of pragmatism and flexibility is good, but let us not take it out of context. In fact, we must bear in mind the context throughout our debates, particularly when we discuss the small business commissioner. The entire Bill is an example of the Government giving with one hand and taking away more with the other.”
“The primary authority scheme improves levels of compliance with regulations at a local level by providing small business with information about regulations and reducing the financial burden of compliance with them. It is an excellent model; it extends a friendly hand to businesses and regulators. It was created in response to problems caused by inconsistencies in regulatory interpretation between different local authorities, which led to a real challenge for businesses operating across a number of local authorities’ areas. The primary authority scheme overcame that challenge and confusion and gave businesses greater confidence to expand beyond the boundaries of their local authority. When the primary authority scheme was created, the OECD said that it was a “potentially far-reaching innovation”. It is regulation done well.”
“The clause will extend the primary authority scheme, which was introduced by the Labour Government in 2009. It provides greater regulatory consistency and certainty to businesses that operate in local authority areas by creating a statutory partnership between multi-site businesses and a primary authority. The primary authority acts as a co-ordinator of other local authority enforcement activity in relation to that business. The initial roll-out of the primary authority scheme saw a good uptake and support from business, professional bodies and local authorities. It is a splendid example of regulation working well in practice and benefiting business, the wider community and the wider economy, thanks to the previous Labour Government—we can all agree with that.”
“I beg to move amendment 38, in clause 1, page 1, line 11, at end insert— ‘(c) to consider complaints from small businesses relating to their access to finance, and, where the Commissioner considers it appropriate, to make recommendations to the Secretary of State about measures that should be taken to improve small businesses’ access to finance.’ This amendment would extend the remit of the Commissioner to receive complaints about the access of small businesses to finance, and would enable the Commissioner to make recommendations to the Secretary of State about measures to improve small businesses’ access to finance.”
“For example, a firm in my constituency, Jenkins, showed me the shelf full of files of cash retentions from contracts it has been involved in—some of them reaching back two or three years or more, some five, six or even 10 years.”
“So much of the problem is not about whether the money is there or not, but about making sure that the Government do the right thing in making SME funding available. The Public Accounts Committee report in 2013 made many of the same points: SMEs do not know what is available to them, or their appeal rights, and the Government are not doing enough to link them to finance options. Let me move on to cash retentions. Cash retentions in the construction industry are a particular problem of late payment covered by this group of amendments. They have been particularly problematic over many years, particularly for smaller firms in the supply chain.”
“The small business commissioner could provide two things, if we are considering the scope of the office, both of which sit logically with the signposting and advocating approach that the Government want the office to take. They both also offer a shift from a person who reacts to complaints to one who actively supports SMEs and helps them to grow. The first thing it could provide is an accessible signposting service that offers clear advice to SMEs about the finance options available to them and helps them to capitalise on alternative funding, similar to that offered by the Small Business Administration in the United States. The other provision is also similar to what is offered by the US system. It would give the interests of small businesses on the issue of access to finance a real voice before Government.”
“As a result, small businesses need support to increase their knowledge of other finance options and prevent banks from always being the default choice. That should ultimately improve the supply of cash flow to viable small businesses who need additional working capital to aid growth, fill a cash gap or take advantage of a market opportunity. How can we improve access to finance for small businesses? There is clearly a significant demand for easier access to finance for small businesses. To date, the market has been dominated by banks, whose products are often not adequately tailored to the specific requirements of small businesses. Particularly problematic are short-term cash flow needs, which demand a level of control and flexibility around speed of access and repayment timeframes that simply is not available from traditional lenders.”
“In the current market, most SMEs will only approach larger banks when seeking finance, even though the process can be time consuming and the rejection rate is about 50%. Those small businesses have the potential to drive growth and employment in the UK but are hampered by not only a lack of finance but a lack of confidence in trying to access the working capital they need—more than half think that traditional lenders are not interested in lending to them, and they may well be right, given the feedback that I have received. Although a large number of alternative finance providers are willing to lend, and might also have more suitable product solutions, small business owners often are not even aware of their existence.”
“While this is clearly an example of entrepreneurialism on one level, I suggest it says more about the difficulties in navigating the Government’s funding processes. A small business commissioner would be in a very strong position to represent the interests of small businesses, especially start-ups, when it comes to championing their interests on access to finance, whether from Government or elsewhere. Traditional lending is not doing the job that it needs to do. Alternative finance is a major opportunity and the small business commissioner should be a part of that. Research undertaken by Everline and the Centre for Economics and Business Research towards the end of last year found that although small businesses have big growth plans for 2015, they are unable to carry them out due to a lack of finance and talent with the right skills.”
“A start-up company director found access to government funding so incomprehensible she gave up searching—a young entrepreneur with a tech start-up in the north-west, a prime example of the sort of start-up the Government have said repeatedly that they want to help to get off the ground. When she ran her postcode on the Government site she was presented with several hundred schemes for Wales and Scotland. When she entered her details for updates on suitable funding schemes she could bid for, she received a call from a company that wanted several hundred pounds upfront, not to help her put together bids, but to navigate the Government website on her company’s behalf, and email her with a list of schemes she could bid for. Many companies exist to charge start-ups for understanding the Government funding scheme for them.”
“129-130.] Challenger banks have made good progress—Metro Bank and Aldermore, and Santander, if it can be regarded as a challenger bank, are changing the landscape. Peer-to-peer lending has taken off and is providing an interesting opportunity for many small firms. The changes are welcome and most hon. Members would accept that the traditional high street banks have not done the job of providing good sources of finance, to smaller businesses in particular, over many years. Having alternative sources of finance stepping in is welcome. We need to know what is happening, and this is where the opportunity for the small business commissioner comes in. We need to know whether what is happening or what is changing is adequate. Lord Mitchell gave the example of a start-up company from Merseyside, similar to the one I quoted earlier.”
“If the Government are serious about ensuring growth, why does the Bill not put in place measures to facilitate an expansion of scale-ups to power employment and economic growth?” —[ Official Report , 2 February 2016; Vol. 605, cc. 837-838.] Lord Mitchell, using his vast experience in business, spoke on the matter during deliberations in the Lords and discussed the problems in various Government schemes, saying that there had been good growth in non-Government schemes, but not so much in Government initiatives. He said that the market for alternative finance had grown, but “largely as a result of the paralysis of the high street banks” —[ Official Report, House of Lords, 3 March 2015; Vol. 760, cc.”
“If the commissioner is to offer a signposting service, although that is not what is needed on late payments, it would certainly suit the question of access to finance, particularly when it comes to the opportunities of peer-to-peer lending and Government contracts, because SMEs cannot navigate the system and do not know what is available to them. As the Chair of the Business, Innovation and Skills Committee told us on Second Reading last week: “The problem of access to finance remains a pertinent issue for firms, which is why the Select Committee has launched an inquiry into it. If the Bill’s purpose is to make the UK the best place in Europe to grow a business, why does it not tackle access to finance?”