WORLD ECONOMY BREATHES A BIT EASIER, BUT UK ECONOMY STILL THREATENED BY OVER-REGULATION SAYS LUFF
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WORLD ECONOMY BREATHES A BIT EASIER, BUT UK ECONOMY STILL THREATENED BY OVER-REGULATION SAYS LUFF

The relatively successful outcome of the G20 meeting in London has been welcomed by Mid Worcestershire MP Peter Luff, who also chairs the Commons Business and Enterprise Committee, but he has warned that policies being pursued in the UK still threaten our economic prospects.
Speaking at a business breakfast meeting today (Friday) at Whittington, Peter said,

“The G20 meeting has done some good things, but the world and the UK in particular are still in an economic crisis. More needs to be done both here and in Washington to fix the underlying banking problems. Even then, we need to understand that the challenges facing the British economy are huge.

“The IMF says that Britain’s recession will be longer and deeper than any other major economy – and that is because the government encouraged massive borrowing by businesses and households – and then borrowed massively itself. Our debt burden is frighteningly large as a result and it will take years to sort out the mess.

“Our primary emphasis now must be on helping businesses to survive this crisis, saving jobs and generating wealth to pay for all the social services we need and rightly value – but there is no sign the government really understands this. Still credit is not reaching businesses – the government’s schemes to improve credit flows are too small and are being implemented inadequately and too slowly.

“Very sadly, yesterday, under cover of the G20, the government smuggled out a most unwelcome announcement – it is scrapping its pledge to reduce regulatory burdens on businesses and instead simply wants to manage the burden a bit better.

“A written statement made to the Commons yesterday told us that the system of limiting the total cost of regulation imposed by a government department - the so-called “regulatory budget” approach – will be abandoned. It will be replaced by “a programme of better regulation measures tailored to the present exceptional economic circumstances” that massively waters down the drive to reduce costs on business.

“The small and medium sized businesses sector just cannot stand further regulatory burdens – the government should have been redoubling its effort to reduce those burdens. Yet again we see the government failing to understand the reality facing small businesses – and that failure will be paid for in jobs.

“Of course the relative success of the G20 is welcome – but the priority now is to mend the British economy. Instead, the government’s policies will cause more pain and the only result will be more bankruptcies and higher unemployment.”

ENDS

Full text of Statement made yesterday, Thursday 2nd April
Better Regulation
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): My noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform has made the following statement.
The Government have a wide-ranging regulatory reform programme which we began in 2005. Today the Government are setting out next steps to ensure future better regulation.
Given the economic situation, it is important that Government focus on delivering real help for business now. Following the consultation launched last year, the Government have therefore decided not to implement a system of regulatory budgets at this stage. Rather we will undertake a programme of better regulation measures tailored to the present exceptional economic circumstances.
There is clearly a need for new regulation in some areas now—such as climate change, and financial services in response to the current banking crisis. Moreover, delaying measures which businesses have already planned for can be disruptive. But during the recession and recovery we have a particular reason to look very carefully at whether we should delay planned new regulation and avoid introducing new regulation which increases burdens on business except where there is a clear case for action now. For example, the Government have already delayed implementation of legislation on display of tobacco in small shops until 2013, to help this particular retail sector.
To provide greater rigour to this process of review during the present economic downturn and with a view to economic recovery my right hon. Friend the Prime Minister has decided to establish a new better regulation sub committee of the National Economic Council. The new Committee will take on the responsibilities of the panel for regulatory accountability. This Committee will scrutinise planned regulation and proposals for new regulation that will impact on business. The new Committee will take account of the views of business in coming to its conclusions.
The Government will also be working closely with EU partners to further embed the EU better regulation agenda and to ensure the current pressures on business are taken into account when new European regulation is being considered.
From this summer, the Government will also publish a forward regulatory programme. Business will be able to plan better as the programme will include existing and possible future regulatory proposals.
In 2005, we announced that we would cut the administrative burdens of regulation by 25 per cent by May 2010—i.e. £3.4 billion. We have already delivered £1.9 billion and are on track to deliver on our promise. Looking forward, the Government will adopt new simplification targets for 2010-15 which will address all regulatory costs on business.
The Government will also set up a new external Regulatory Policy Committee whose role will be to advise Government on whether they are doing all they can to accurately assess the costs and benefits of regulation. Building on the work of Philip Hampton, this body will also advise Government on whether regulators are appropriately risk based in their work; however, it will not have the power to require changes in the behaviour of independent regulators.


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