Getting government off your back: our commitment to cutting red tape
Sajid Javid tells British businesses about the next stage of the government’s deregulation agenda.
Good morning everyone.
Let me start by saying it’s a real pleasure to be here.
Over the past year I’ve spoken at least half a dozen local Chamber of Commerce events, everywhere from Westminster to Birmingham to Durham.
At this rate I’m not quite going to make it round all 52 chambers before the next election!
But I know that with a membership of 100,000 companies employing almost 5 million people, there’s no better way to take the pulse of British industry than to talk to the BCC.
As far as I’m concerned, you really are the voice of business in this country.
Now the name of this session is ‘New Dawn or Back to the Future’.
So in that spirit let’s hop into our DeLorean, get up to 88 miles per hour and travel back in time to 1978!
I’m a 9-year-old schoolboy in Bristol, with a full head of thick, dark hair.
A short walk from here, in Downing Street, Prime Minister James Callaghan is, just about, clinging on to power.
One of his administration’s final acts is to throw more than £50 million of taxpayers’ money at the creation of an American carmaker. The DeLorean Motor Company. In return for the government covering half of the company’s start-up costs, DMC bases itself in Northern Ireland.
But construction of its factory is plagued by delays.
The cars themselves quickly win a reputation for being poorly made, overpriced and unreliable.
Fewer than 10,000 are ever built.
And after just 4 years the company goes bankrupt – taking a thousand jobs and a vast pile of taxpayers’ money with it.
In the end, DeLorean provided the world with 2 things.
The basis of Doc and Marty’s fictional time machine.
And an all-too-real case study of what government involvement in business should not look like.
You see, nobody knows business like business.
And politicians who use taxpayers’ money to try and pick winners or take over private companies almost inevitably end up with egg on their face.
That’s why my approach to industry is very different to many of my predecessors.
I’m not singling out one industry or sector or company and trying to force it to be a success.
I’m working to create the conditions in which all businesses can thrive.
Now before I say more about that, let me address an important issue.
Because the media silence on this issue has been deafening, but you may have heard there’s a referendum coming up on the European Union!
Later this year we’re going to have a referendum, and we’ve all had to think hard about the decision we’re going to have to make.
I, personally, have no time for ever-closer political union.
But I accept the UK does well from being part of a 500-million strong single market.
I see the benefits of the many trade agreements that have been negotiated by Brussels in the 4 decades since we joined.
And I recognise that it could take many years to replicate that position following a British withdrawal.
Since the Single Market was launched it has added more than £200 billion a year to the EU economy in today’s prices.
However, regardless of whether we vote to stay or go, one thing is clear.
In 2016 we can’t afford to only trade with the close and the familiar.
The world is too big, the international marketplace is too diverse to simply stick with our neighbours on the continent or our Anglophone allies in North America.
But on this incredibly important issue, my mind is made up.
It’s about head v heart and I thought with my head: for businesses, jobs and growth, remaining in the EU is the best answer.
Now at the start of this year, John Longworth had a very simple request for government.
He wanted to see deeds, not words.
Action, not reviews.
Decisions, not dithering.
Well, John, I like to think that’s exactly what we’ve been doing!
We’ve already delivered the lowest rate of corporation tax in the G7, set the investment allowance at its highest ever permanent level, and lifted thousands of people out of employer National Insurance contributions.
And in the previous Parliament we gained a unique distinction.
We became the first government in recent history to reduce overall levels of regulation.
Between 2010 and 2015 we cut £10 billion of red tape.
The World Economic Forum says the UK has the lowest burden of regulation in the G7.
And the proportion of businesses saying government regulation is a barrier to success fell from 62 per cent in 2009 to 51 per cent in 2014.
But that’s still too high.
So today I can tell you that we’re going to reduce the regulatory burden still further.
Under the Small Business, Enterprise and Employment Act, all governments are required to publish and report on their performance against a business impact target (BIT).
That’s the value of deregulation they hope to achieve, and how they plan to measure it.
This morning, we’re publishing a BIT of £10 billion.
That’s right – we want to cut the cost of regulation by another £10 billion.
It’s an ambitious target not just because of its size, but also because of its scope.
For the first time ever, the BIT doesn’t just cover the impact of legislation.
It also includes the way statutory regulators enforce existing rules.
Rather than being allowed to hide behind red tape, they’re going to have to look at the cost to business of the way they work.
We’re also introducing a new rule for government departments.
In the last Parliament we introduced a policy called ‘One in, two out’.
It meant that every time a new regulation that cost money to comply with was introduced, the government had to remove or modify existing rules with double the cost to business.
For every 1 pound of regulatory burden we created, 2 pounds worth had to be removed.
Today I can announce that we’re upgrading that to ‘One in, three out.
If departments want to bring in new regulatory costs for things that weren’t in our manifesto, they will be expected to find savings worth 3 times as much.
This won’t be easy to achieve.
But it will certainly focus the minds of policymakers.
It’s very easy for a Whitehall bureaucrat to come up with an idea that looks great on paper and, with the stroke of a pen, place a huge extra burden on businesses.
But if that same civil servant has to also find ways to remove 3 times as much red tape, they’ll think twice before putting new regulations in place.
We’re also bringing departments, regulators and businesses together for a rolling programme of Cutting Red Tape reviews.
And you’ll be pleased to hear that they’re not just languishing on the dusty shelves of Whitehall.
They’re being used to implement real change.
So John, while we have brought you reviews, we have also brought you action!
For example, the waste review found that delays and unnecessary burdens associated with the environmental permit system cost legitimate businesses millions of pounds a year.
By the end of this month, the Department for the Environment, Food and Rural Affairs will publish revised guidance that makes the whole process a lot less burdensome.
The energy review revealed that existing rules led to some businesses being charged for both generating and storing energy.
That cost one company alone, for example, £10 million extra a year.
Following the review, the Department of Energy and Climate Change is now consulting on whether to update the regulations, a move that could benefit consumers, businesses and the environment.
And the adult social care review found that care homes in England have to deal with inspections by local authorities, clinical commissioning groups, the Care Quality Commission, their local fire service, the Health and Safety Executive, and independent organisations like Healthwatch.
Over the course of a year that’s 1 inspection every 8 weeks! And they often involve the same people being asked the same questions.
As a result, the Department for Health and the Department for Communities and Local Government are putting in place a new action plan.
It will make co-ordination between all those bodies the norm rather than a novelty.
Finally, I am today launching a root and branch review of the way local authorities regulate businesses.
For many businesses, especially smaller ones, your local council is the arm of government you have the most contact with. And it can also be the source of a huge amount of troublesome red tape, much of it built up over many years without being properly reviewed and updated.
The review’s findings will be shared right across government, going to all relevant departments and regulators.
And its aim is to agree a set of reforms, covering both legislation and enforcement, that will reduce unnecessary costs and burdens on business.
It all comes down to my fundamental view that government should stand behind business rather than in your way.
That regulation should provide necessary protection for consumers, for employers, for employees, without making it harder for you to make a living.
I grew up above the family business. I spent most of my adult life working in business. I know just how hard it is to make a business work.
And how that task gets infinitely harder when you have to deal with petty, pointless bureaucracy.
That’s why I’m different to many previous Business Secretaries. Because I trust you to get on with what you do so well. I don’t believe that you need someone from the government peering over your shoulder all the time.
I know that the vast, vast majority of British businesses are run by responsible, hardworking men and women who know their jobs much better than I do.
You deserve a regulatory regime that’s fit for business and fit for the future. And with me, that’s exactly what you’re going to get.