Deregulation isn’t dead – It’s just been sleeping
The title and topic for the BCC debate with the TUC – ‘Is deregulation dead?’ – would have received a very different answer at the beginning of 2010. Whilst deregulation was never ‘dead’ during the Labour Government’s 13 years, it was certainly sleeping. Our Burdens Barometer, which uses the Government’s own figures, shows that since 1998, business has been faced with £88.8bn of costs related to new regulation. The language during this period was more about better regulation than less regulation. The new Coalition Government has made it clear in their first 100 days that deregulation is very much alive and well, and will be a central theme of the new administration’s policies.
We understand from the early comments of Ministers that reviews will take place of the Employment Tribunal System, future regulation and the stock of regulation, and that there will also be a ‘commonsense review’ into Health and Safety regulation led by Lord Young. All these announcements were strongly welcomed by BCC and the business community. Now the question for us is what, how and when deregulation should occur in order to support business growth and job creation at a critical time for the economy, without undermining the important basic rights of employees. Our joint debate with the TUC is an important part of this process.
So what are the key areas where BCC will be calling for de-regulation?
Firstly, the £11bn private sector bill for costs related to new employment legislation passed by the last Government and due to commence between now and 2014 must be reduced. This could be done by scrapping some regulations, such as the right to request time off to train for companies with less than 250 staff; postponing costly bills such as the Equality Bill which has a one off cost to business of £189m; and reviewing burdensome implementation measures, such as the gold-plated UK transposition of the Agency Workers Directive.
Secondly, the burdensome stock of employment legislation, which acts as a disincentive to job creation, must be repealed or simplified. In our report Employment Regulation: up to the job? we made a number of proposals including creating a statutory dismissal procedure, redefining gross misconduct, and creating a distinct employment category for interns. Taking on a first or new employee must be made simpler and less risky for small businesses – this is essential for economic recovery and future growth.
Thirdly, the Employment Tribunal System must be reformed to make it quicker and cheaper for employers to deal with vexatious claims and to make it easier for individuals with a genuine grievance to access justice. Our proposals include a fast-track system for low value claims, compulsory advice for all claimants who have not chosen to seek external legal advice, and restrictions on Employment Tribunal reporting. Too many businesses settle claims out of court, even when they have done nothing wrong, because the costs of going to Employment Tribunal and defeating the claimant still exceed the cost of a settlement. This issue must be addressed.
Finally, the Young Review into Health and Safety legislation must investigate the extra costs of employing remote and home workers that result from burdensome regulation. It is imperative that employers feel able to offer remote and home working in order to tackle unemployment, and underemployment. These roles often particularly benefit those with caring commitments or disabilities, allowing them to take a job and contribute to the economy in a way they may not be able to do otherwise.
The previous Government’s Better Regulation rhetoric must not be forgotten. Any new regulations must be planned, proportionate and properly costed using the Impact Assessment procedure. It is in the interests of both businesses and employees that the impact of regulations, both costs and benefits, is properly explored before they are enacted.
When I visit Chambers of Commerce and their business members across the UK, employment regulation is constantly mentioned as a major barrier to growth. I hope that this debate will put regulation in its rightful context. Currently, those who advocate even more regulation miss the fact that the vast majority of UK businesses are SMEs – 93% have less than 20 employees – and that they are disproportionately affected by new and existing burdens. These businesses in particular need the right environment to grow to create jobs, reduce the deficit and propel our economy forward, in the face of growing competition from other nations.
DEBATE: Read a TUC response to this post.
You can read a response from the TUC here, and come to the debate itself by registering online at isderegulationdead.org.uk.