Deregulating to support business

Speech by the Rt Hon Chris Grayling MP.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Chris Grayling MP

I think it’s very appropriate to have a BIS (Department for Business, Innovation & Skills) speaker and a DWP speaker side by side because what we are trying to do is join up Government in a way that has often not happened.

John Hayes, the Skills Minister and I work enormously closely together, Mark Prisk the Small Business Minister and I work very closely together.

We have a shared objective, from their point of view to get business growing and developing, from my point of view to get business growing and developing and creating jobs.

Since I am the person who does the monthly unemployment figures for the Government you will understand that I am much happier when business is doing well than doing badly.

The truth is when faced with uncertain markets many businesses understandably go in to “survival mode” - just doing the bare minimum to weather the storm.

But often it is those businesses which seek to do more than just survive that manage the best.

Those companies that continue to improve and experiment and innovate are often best placed to take advantage of those opportunities that do come along.

So, what I think is great about this event today is that by coming together to share best practice, to learn from each other on behalf of your members to continue to improve despite, or maybe in response to, the difficult economic climate.

I hope you will do your bit in helping that process of growth and improvement happen.

But we are, facing some challenging economic times.

We are not part of the Eurozone but we are feeling the chill winds of the crisis in the Eurozone.

We are not immune, though we are not members.

It reminds us how closely global markets are entwined and how important it is to secure growth and maintain a stable UK economy.

That is why first and foremost we remain focused upon reducing the deficit, but also alongside that work we will do everything we can to stimulate the economy, and provide support to get people into employment.

The main challenge we face continues to be that one of growth.

One of the most important lessons the economic events of the last few years has taught us is that growth has to be based upon innovation and enterprise.

Without that we cannot build the wealth we need for the future.

That process has to be led by the private sector.

So what we have to do is support the private sector to do what it does best, innovate, to create jobs and ultimately increase wealth.

We’ve made a start.

The headline rate of corporation tax is coming down to the lowest level among the major economies.

We’re targeting financial support towards manufacturing, infrastructure investment, and research and development through the regional growth fund.

We’ve revived and modernised enterprise zones to encourage new investment in parts of those parts of the country where the private sector is too weak.

We are making real practical changes that are reducing the burden on business and stimulating the economy.

We have set ourselves a challenge.

To reduce the overall burden of regulation rather than increase it.

For new regulations we have a one in, one out policy.

And we are scrutinising existing regulations with the aim of reducing and simplifying as much as we possibly can.

The Red Tape Challenge, which asks people to report bad regulation, has already looked at 400 regulations in retail and hospitality - over half of those will be simplified or scrapped all together.

Now my bit encompasses one of the most high profile areas of regulation, health and safety, and I am absolutely committed to the challenge of reducing regulation in this area.

I think good health and safety is vital to good business. It is not something you can ignore.

In a world where so much depends on brand and reputation, serious injuries and worse in the workplace can do huge damage to a company’s reputation.

Britain has the best record in Europe on real health and safety. Something I don’t think our European partners always realise. It’s a record we should be proud of and should aim to retain.

But we also have one of the worst records in Europe for pointless health and safety red tape. That’s a record we should aim to lose as quickly as possible.

Last year Lord Young recommended a series of changes that will ease the burden on business - ranging from simplified guidelines for retailers to a new system of accreditation for health and safety consultants that will outlaw cowboy advisers. I absolutely echo the previous point about seeking advice, we do want to make sure though, where we can, that the advice provided is quality advice and not provided by people with no qualifications.

We are also changing the justice system to deter trivial legal cases.

We’ve already implemented most of Lord Young’s recommendations that apply to business.

Many more changes are going to be coming through in new legislation in the next session of Parliament so that we can put into practice the recommendations he made to us.

But we are not stopping there.

Later this month Professor Ragnar Lofstedt, who is head of risk management at Kings College London, is going to make a further set of recommendations to us aimed particularly at the regulatory regime as it affects business.

What we want to do is to reduce the risk of trivial legal action, we want to create a more consistent system for businesses - so you aren’t told one thing in one town and another thing in another.

It is going to be, I think, a comprehensive set of recommendations. My aim is to press ahead with changes as quickly as possible.

We are also doing something a little different because when Professor Lofstedt publishes his report here, he and I will then head off to Brussels where we are going to do a presentation of his recommendations to the European Parliament with a view to starting the debate that is going to take place in the EU over the next few years about the future of health and safety legislation.

What we want to do is rein back to a position where health and safety is based on science and not assumption, where risk is dealt with where it is genuine but we don’t end up imposing unnecessary and costly regulations on business.

There is no point protecting someone when that job disappears and goes to another part of the world

Good health and safety is important. Unnecessary red tape that costs jobs absolutely must not happen, especially in the current climate.

My philosophy on health and safety is very simple.

We should be tough on employers who risk death or serious injury. But we should leave the rest to get on with their work with as little interference as possible.

My aim is to build our regulatory system so it does just that.

It is all about reducing the cost to business, whilst continuing to keep people safe and supporting good practice.

Ultimately we need a deregulation agenda that delivers growth and means jobs.

You mentioned briefly the pensions issue. One of the things I want to say is that we have worked hard to find a better balance with the introduction of the new system of pensions in 2012.

It is right and proper we should ensure that we do not have people entering retirement with no provision at all for their income after they have retired, dependent entirely upon the state and basically means tested pensions.

At the same time we have recognised some of the pressures that change puts on small business and we have modified and developed the proposals so they are a more realistic package and a better balance between the need to get people to provide for their retirement and the need to reflect the pressures on small business.

The second big challenge that we face that is covered by my responsibilities is over that whole issue of employment and the natural desire on all of our parts to keep unemployment as low as possible.

We have to ensure that as we deliver growth we have a strong, skilled, enthusiastic work force ready to take up jobs as they become available.

Getting the unemployed back to work cannot be a philanthropic exercise for business.

It has got to be something which is a win-win situation.

We have businesses which are growing and are still expanding and recruiting people, we have got to make sure that the people who are there for them to recruit are ready and motivated and willing to enter the workplace and get the job done.

And there’s a role for your members in helping us in our strategy to deliver that situation.

We want to make sure that the skills people have are relevant to the jobs you need them to do.

We want to work with Trade Associations and your members to deliver relevant training and experience.

In particular, with young people facing big challenges to help them to take a step into the workplace but in a way that is helpful to business and is not a burden on small business.

We recently launched a number of sector-based work academies across England.

The new academies offer a combination of training, short training modules, work experience and a guaranteed job interview for up to 50,000 people over the next two years.

Sector-based work academies will respond to local labour market demand, focusing on industries where jobs are available such as construction, contact centres, hospitality, logistics, and retail.

We are asking employers to support sector-based work academies by offering work experience placements and, where appropriate, guaranteed job interviews to participants.

We’ve also extended the amount of time young people claiming benefits can fill a work experience placement without it affecting their benefits. It is now eight weeks - it was previously less than a month.

We had this daft situation that somebody who found a good work experience placement whilst on benefits couldn’t do it.

What that means is young people can get a proper shot at showing what they are capable of doing in a working environment and employers have a real opportunity to see what they can do.

So, part one of that strategy to try to ensure we get the unemployed back in to work, but we do it in a way that is helpful to your members, is to create a situation where there’s almost a test period for those young people.

What we know is that if young people do a period of work experience, either in combination with a training module through sector based work academies, or through our work experience scheme which simply places people for up to eight weeks in a work experience placement, we know they have a greater propensity to get a job at the end of it.

But what we also know is that eight weeks is a period which gives a potential employer an opportunity to really look at someone and say are they the right person for my organisation.

So if we can deliver, through Jobcentre Plus, a short list of three or four people to fill a work experience opportunity, your members can pick one, give them that trial period. It’s a win-win because even if the job isn’t there that young person is getting the experience and if the job is there it makes the recruitment a whole lot easier and cheaper.

I think also it breaks down the barriers that sometimes exists for young people where there is a reluctance to take on someone with no experience but when you have tried them and got a sense of what they can do there’s a greater willingness to take them on.

And then of course, taking them on we have created a large number of new apprenticeships so there is a real opportunity for young people who have been through that process of work experience or a combination of work experience and training and then to move on with employers into a long term apprenticeship.

Alongside that for the longer term unemployed is the Work Programme.

The Work Programme offers a further great opportunity for small business. It is all about helping the long term unemployed into work. It is not about dealing with a group of people who are feckless and don’t want to work. If you sit down and talk in groups with those who are now on the Work Programme they are motivated people whose lives have gone wrong, who want to get back into work.

What we have done is, we have put together, what we believe the biggest welfare to work programme this country has ever seen.

Almost certainly the biggest payment by results scheme in the world.

It’s designed to make a lasting difference to those long term unemployed.

The way it works is this, effectively: teams of specialist organisations all over the country providing personalised back to work support at their own expense.

They are only paid when they succeed, not just in getting someone back to work, but in helping them stay there for as long as 26 months

It’s still early days, but what we are finding is that more and more employers are turning to the Work Programme to recruit new staff.  

The reality is recruitment is a grind, especially if you are a small business.

You have to spend the money on advertising.

Sometimes you get too many CVs, sometimes you get none at all.

You’ve got the slog of sifting them, and hoping you’ve picked the right one.

What the Work Programme does is offers small and medium size business that service for free.

The providers will sift the potential candidates that they are working with, hundreds of people, potentially thousands, and pick out a small number who are potentially right for your business.

They will deliver that small selection to you to choose from.

And when you take someone on, Work Programme providers will want to work with you and the recruit, to make sure they can stay at work - so if there are problems there is someone at the end of the phone line with the expertise to come in and help sort those problems out.

I think, for many small businesses that’s a much better way to recruit.

We think there is an opportunity to encourage your members up and down the country to get to know your local Work Programme providers, we can provide all the contacts for you, build ties, build relationships with people who will get to know the businesses well and will be able to help short cut, delivering a fast track, simple recruitment process which will save time and money and deliver the right people for the organisation, that I hope is a  real added value dimension to what we are doing for small businesses.

Ladies and gentlemen, the challenge we face is very clear, it is all about growth, through enterprise.

And we have a real commitment, within the DWP, with BIS, within the Treasury right across Government to making sure we help you grow your businesses and deliver what we need in terms of economic and employment growth.

We can restore economic stability, create jobs, build up our position as a leading world economy.

We all have work to do to get there, trade associations, employers, Government, working together.

I think today’s Best Practice Exchange demonstrates a keenness to develop, to learn from each other, to innovate and grow.

I think UK business has been stifled for too long. But some of the things I have talked about today are all about how we are now working hard to remove the collar of red tape that holds back businesses, that costs money that makes us less competitive.

Ultimately we all have a part to play in delivering that change. It is a complicated jigsaw puzzle; a number of different pieces need to put into this jigsaw if we are going to deliver what must become a real enterprise focused environment in the UK.

But my commitment to you is that all of us in Government, officials, politicians alike, recognise the need for this to happen, recognise that the success of your members is crucial to all of our success for the future.

We are determined to build that jigsaw as quickly as possible to create an environment were working together can see sustainable growth, in employment and economic activity and to see your businesses and your members go from success to success.

Thank you.

Published 3 November 2011