It is a great pleasure to be back in the North West for one of my first speeches of 2000. Thank you for inviting me to address the Small Business Club and for giving me this very timely opportunity to talk to you about the Government’s new approach to regulatory reform. I say timely because, as with other aspects of modernising government, we are seeking views and looking for alternatives which will make life better for people and businesses. In the course of this morning I will set out for you the steps that we have agreed with the Prime Minister to modernise the way that regulation is developed and delivered. And I look forward to hearing your views about how to get regulation right.

Because we do need regulation. Governments have a duty to ensure that there is necessary and effective protection for citizens. But they cannot hope to eliminate all risk from people’s lives. We do not and cannot live in a risk free society. The important thing is to find the right balance and to regulate wisely. If regulations are to command public confidence they must be seen as necessary, effective and fair. There is a natural tendency for Government to over-regulate and to over-prescribe what needs to be done. There is a particular temptation when under pressure or following a high profile accident to say - "it must never happen again". But if regulation is excessive or poorly informed we can all suffer from the effects of less choice, lower employment and a cumulative burden of red tape. It is therefore vital that we get the approach right: minimising the costs and maximising the benefits of individual proposals, and at the same time tackling the cumulative effect of regulation.

As you know the system of regulatory control we inherited from the previous Administration tended to focus on the costs of regulation to the exclusion of everything else. But concerns about regulation are not just about costs and experience shows that crude attempts to tackle red tape at the end of the process simply don’t work. That is why our focus is on getting new regulatory proposals right and changing existing regulation where it is unnecessary or inefficient.

This is why our first move on taking up office was to move from the narrow focus of the Deregulation initiative to Better Regulation with its goal of establishing best practice at all stages of regulatory activity. We also encouraged Departments to consult more widely about their proposals, to consider alternatives to regulation and to think about the particular problems facing small businesses with our "Small Firms Litmus Test". This move away from mistakenly thinking that the quantity and quality of regulation can be controlled by focusing on costs was the start of a considerable cultural change.

As I said at the beginning, your invitation to me has been particularly timely. Timely, because I can now tell you more about the latest phase of the Government’s approach to regulatory quality and control which Mo Mowlam, Minister for the Cabinet Office announced on 15 November. I believe that today’s meeting reflects increasing interest in being part of how regulation is developed and delivered and I would like to take some time to set out how we plan to "banish the bumpf".

• Looking ahead to make sure that new regulations are necessary, don’t overlap and are as simple and understandable as possible;
• Looking at what is already in place to see if it is really necessary and if it is, can it be made easier to deal with; and
• Asking the basic question each time: is regulation the best way to do it or could a non-statutory way be found?

To achieve this a number of major changes have been made.

First, each government department has appointed a Minister for Regulatory Reform with direct responsibility for addressing the burdens of new and existing regulations. The Ministers for Regulatory Reform have been asked to draw up a programme of action which their department is going to take to cut unnecessary burdens of red tape, administration and form filling.

Secondly, the Prime Minister has established a new Ministerial panel at the heart of Government with the authority to call Ministers to account for their department’s regulatory performance. The Panel for Regulatory Accountability is chaired by the Minister for the Cabinet Office, and includes the Secretary of State for the DTI and the Chief Secretary to the Treasury. It also includes two important voices for business. Lord Haskins, Chair of the Better Regulation Task Force; and David Irwin, the newly appointed Chief Executive of the Small Business Service..

Thirdly, the Cabinet Office Regulatory Impact Unit is producing a forward plan of the Government’s regulatory proposals for the next two to three years. Departments will in future provide the Unit with information on all policy proposals that might impact on business, charities and the voluntary sector. This "Forward Look" will mean that Government can take a strategic view of its regulatory activity, decide priorities and remove the uncertainty for business.

And finally we will be introducing a new Bill to increase the flexibility of the 1994 Deregulation and Contracting Out Act. In the Queen’s speech we announced legislation for the 1999/2000 Session to extend the scope of the deregulation order-making power, making it easier for more burdens to be removed from primary legislation. I am determined that we should use every avenue to remove regulation where it is no longer necessary.

Separately, the Prime Minister has asked the Better Regulation Task Force to play a key role in tackling the cumulative burden of regulation. I am pleased to say that 8 of the Task Force’s 18 members come from or represent small business interests. At the moment the Task Force is conducting an important review into the way regulation impacts on small businesses and how they might be helped. As part of this review the Task Force is systematically looking at the case for exemption of small businesses from some regulations. They will be reporting on their findings in the spring.

All of these steps represent a major tightening of the arrangements for regulatory control which were in place under the last Administration. They will enable Ministers to decide collectively on:

• the overall shape of the regulatory programme;
• how to manage and reduce the cumulative impact of regulation; and
• how to reduce business pressures and uncertainty.

And helping small business to succeed is a top priority. Government does not create wealth. That is your job. And when you are successful you enjoy the just rewards. The Government’s job is to make Britain a country of enterprise; to continually encourage the formation and growth of small businesses; and to examine its own role to ensure that it is feeding not choking sustainable economic growth. I am pleased to say that the last few years have seen a record number of business start-ups – around a million in the last two years.

A healthy, vibrant small business community creates wealth and employment, and generates new ideas and products. That is why we are giving a massive boost to small business support with the establishment of the Small Business Service.

This is not the demise of Business Links or anything else. This is the creation of a powerful new force whose three main tasks will be:

• to act as a voice for small business at the heart of government;
• to simplify and improve the quality of Government support for small businesses; and
• to help small businesses deal with regulation and to ensure that their interests are taken into account in future regulations. David Irwin, as Chief Executive, will have a special duty on behalf of small businesses to scrutinise the proposals that all Government departments are putting forward.

The establishment of the Small Business Service will ensure for the first time that there is a single organisation in Government that is dedicated to the interests of small businesses.

And I have asked the Cabinet Office Regulatory Impact Unit to work alongside the Small Business Service to tackle the pressures facing small businesses. I believe that government must be more realistic about how much time small businesses have to cope with regulation and enforcement duties. Your immediate efforts must be focused on running your businesses and securing work. So I am determined that the Government’s new approach to regulatory control will take account of the pressures and concerns you face. For instance, as a result of negotiation by ourselves and others, changes were made to the Minimum Wage and Working Time regulations to make them more business friendly and the Government dropped the idea of imposing a levy to pay for the new Food Standards Agency. And the process of improvement continues - to simplify regulations and make them easier to understand.

I make no apology for the cost of providing fair wages or decent working conditions. But I am determined that my department will work with the Small Business Service and Departments to do everything possible to reduce the form filling and paperwork facing small businesses. I know that major changes to regulations and forms are disruptive and can be a real headache for small businesses. We are not interested in change for change’s sake. What I want to see is less forms and administration to release businesses to concentrate on their customers rather than red tape.

I am also concerned to ensure sensible and consistent enforcement of regulation. Experience shows that far too often enforcement is treated as the poor relation in developing government regulation. What I want to see is simple regulation, sensibly enforced.

The message that I want to leave with you this morning is that the public mood for fair and effective government is, if anything, growing. Business and the public want to see regulation that is proportionate to need, takes account of research and other evidence and reflects their views. We will be judged by whether we have provided a regulatory environment which achieves the right balance between promoting competitiveness and providing a framework for a fair, healthy and secure society. The task facing us, particularly if we are to promote business and tackle unemployment, is to establish a more responsive and open system of regulatory appraisal and delivery. This is a considerable task – but I believe we have taken another important step towards achieving it. My thanks to the organiser for putting together such an agreeable occasion to speak to you. I look forward to hearing your views on getting regulation right.

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