Transposition of European Union Directives Inquiry
Item 2 is, as members can see from the agenda, to take evidence from representatives of the Confederation of British Industry Scotland, the Scottish Food and Drink Federation and the Scottish Trades Union Congress, as part of the committee's inquiry into the transposition of European Union directives. Unfortunately due to illness, Norrie McLean from the Scottish Food and Drink Federation is unable to attend and has sent his apologies. Therefore, the committee will take evidence from Professor Russel Griggs from CBI Scotland and Stephen Boyd from the STUC at the same time rather than in two consecutive sessions. I welcome you both.
We will move straight to questions. The first is a very general question. Do the witnesses think that the transposition process that is currently followed by the Scottish Government is transparent? Does it provide for sufficient scrutiny by the Scottish Parliament?
I do not know whether Professor Griggs or Stephen Boyd will begin on that—both seem to be deferring to one another.
Stephen Boyd (Scottish Trades Union Congress):
I will answer with reference to the transposition of the public sector procurement directive, which is the directive with which we have been most closely involved over the past couple of years. The directive was eventually implemented by the Scottish Parliament in February 2006.
I would not claim that the process was not transparent, given that it included a couple of public consultations, but the main problem was the timing of engagement of stakeholders, which came far too late in the process. In addition, the resources that were available to the then Scottish Executive's procurement directorate, which led on the process, did not really allow for effective consultation of stakeholders.
On the Scottish Parliament's involvement, there was a great deal of uncertainty about how the directive would be handled. At the time, I approached a number of committee conveners because, given the nature of the directive, several committees might have had an interest in it. In the end, we gave evidence to the Finance Committee in January 2006, but before that I had raised the issue with the Enterprise and Culture Committee, the Equal Opportunities Committee and the Subordinate Legislation Committee, all of which I thought might have an interest. There seemed to be a deal of uncertainty about how the directive would be handled and which committee would lead on it.
The Finance Committee, which ended up leading on the transposition, did a very good job. We were allowed to give evidence on the directive—the Scottish Executive was allowed to do likewise—and I think that we made some progress. However, that was very late in the day. When the Finance Committee considered the transposition, it had only one meeting at which it could discuss the issue before the regulations were required by law to be implemented. The committee was not really involved at a stage in the process at which it could make an effective input into the process and suggest changes. The directive was considered far too late in the day.
It is particularly helpful to have a concrete example of how the process played out in the previous parliamentary session.
Professor Russel Griggs (CBI Scotland):
I echo Stephen Boyd in saying that the issue is about consultation and about how far in advance people are involved in the process. That applies to Europe as much as to the Scottish Parliament. Part of the challenge is that the European Commission starts to consider legislation only once it is actually formed rather than when people are just thinking about it. As Stephen Boyd pointed out, by the time such legislation arrives in the Scottish Parliament, we cannot do much about it. The issue is not just transparency but that the Scottish Government and its civil servants are required to go through a more restrictive process than is the case south of the border. I do not really have anything to add to what Stephen Boyd said. The issue is about consultation and about giving people enough time to be involved in legislation.
I know that Russel Griggs is representing the CBI this morning, but he also chairs the Government's better regulation task force. From your experience of chairing the task force, would you say that the general perception these days is that most rules—in particular, those that are irritable to businesses—emanate from the European Union either directly or, in some cases, via Westminster? For example, a couple of years ago the Hansard Society estimated that as much as 60 per cent of the legislation that goes through Westminster is enacted as a result of an EU directive, regulation or whatever.
I guess I could answer that in two ways. I do not know whether most of the legislation that irritates businesses and others comes from the EU because they get irritated by taxation, VAT and all sorts of things that emanate very much from our Government rather than from the EU—
You mean the Government in London.
Indeed.
One thing that irritates businesses is the way in which legislation is transposed at Westminster. Their view, which is also shared by a number of MPs, is that we take far too rigid a view when Europe proposes changes to compliance. We immediately dive straight into legislation rather than consider alternative ways for solving problems. There are always alternatives, which might include altering current legislation, changing guidelines or all sorts of other things.
As the regulatory review group has proceeded, it has come to our notice that section 57(2) of the Scotland Act 1998 puts a greater burden on Scotland in respect of transposition of European legislation than is the case south of the border. Section 57(2) provides that we must comply with European legislation in its literal sense. From speaking to senior civil servants who have been involved in such issues, I know that that has given us less flexibility than Westminster has on how we view such matters. Because Westminster is not under the constraint of being required to comply totally as we are required to do under the Scotland Act, it can be more flexible. I am led to believe that civil servants feel that we have in a number of cases had to do things more stringently than would have been the case if they had been left alone.
Will you give us—I do not necessarily mean this morning—examples?
I will give examples, but not this morning.
There seems to be a slight contradiction between what you said earlier and what you said just now. You seemed to argue that there was a major problem with the way in which directives are transposed, but you said earlier that the real problem is that we do not get involved early enough—before the directives or regulations are made. Which is it, or is it both?
It is both, because it is a process. A lot of European legislation starts with the European Parliament and the European Commission wanting to put legislation in place. My understanding from having attended some meetings in Brussels is that we do not get into formal consultation on European legislation until it is drafted. Rather than helping to formulate the "what?", we do not get involved until the process is into the "how?" stage. As the legislation moves into the UK and then into Scotland, there are similar processes.
It is important that stakeholders be involved in all stages of the process, from Europe to the United Kingdom to Scotland, and that they help to formulate legislation from the beginning right through to the end of the process. It is not a contradiction; it is simply the way that the process goes.
Have you any feeling for the resources that getting involved earlier would require? It strikes me that it would use a substantial amount of manpower, not only at Government level but in all the other stakeholder involvement that would be required.
I am not sure that it would require a great deal of extra resource. I guess that there are more trade associations in Brussels and Europe than anywhere else and most of them get involved in the stakeholder consultation. At the meeting I attended, the view was not that they would need more resource but that, if the industry bodies—and, indeed, the employee bodies—were involved earlier in the process, it would help to form better legislation.
Does Stephen Boyd want to answer those questions?
I will come back on a few points, referring back to Alex Neil's question and Russel Griggs's response. I point out that I am also a member of the regulatory review group that Russel chairs.
The debate about better regulation suffers from a terrible lack of clarity. Since the Scottish Parliament was established, there has been an assumption that it is passing a huge weight of regulation that has a direct impact on business, but the evidence does not bear that out. Alex Neil's point is well made: it is clear that the bulk of the regulation that affects businesses in Scotland emanates from Brussels and London; little of it emanates directly from the institution in which we are sitting.
Russel Griggs was entirely right to talk about the need to consider alternative ways of dealing with European legislation in particular, and the need not to jump directly to legislation, as is the Government's way in the UK. The fact that the UK Government behaves that way is related to the lack of developed and durable social partnerships such as exist in other European states. When Jim Wallace undertook his reporter-led inquiry into EU directives, he visited Ireland and Denmark—two countries that have highly developed durable social partnership mechanisms that allow stakeholders to contribute across the range of public policy early in the policy-making process.
That also links to resources. I think back again to the public sector procurement directive. The STUC's comprehensive input to the consultation on that was a huge drain on its resources. Public procurement was a key issue for us at the time, so we could justify the use of those resources, but we could not do so for each and every EU directive that comes our way.
The social partnerships in most other states encompass a range of formal and informal institutions. For instance, the Netherlands implemented the working time directive by collective sectoral agreement and did so highly effectively in the interests of businesses and workforces. However, they have the Stichting van de Arbeid—the labour foundation—which allows social partners to engage in that process with the support of the resources that such institutions provide. The fact that we do not have such institutions in Scotland is a concern. Russel Griggs will know that we have had some discussions with the regulation review group about the resources that are available to us that allow us to do our job effectively. Off the top of my head, if the group was to become more involved in the transposition of EU directives, that would be another burden, and we would have to look at the size of the secretariat and so on.
We also to have to think about the legal environment in which we work in Scotland. For example, the new pollution prevention and control permits that have been introduced in Scotland for companies that are involved in packaging and waste run to 82 pages, with appendices. The exact same permit for south of the border runs to 32 pages. It could be said that that is Scotland overcooking things, but it is not. It is about the way in which the legal system operates in Scotland. South of the border, the guidelines have legal status, so England can write a much shorter permit that refers to the guidelines because they have legal status. The guidelines do not have legal status in Scotland so they have to be included within the permit.
Stephen Boyd is right to say that the infrastructure for making legislation in Scotland is—I will use the word "literally"—different to those elsewhere, and sometimes that does not help. I am not saying that we should change the Scottish legal system, but it has an impact on the way in which we implement legislation.
We met European Commission civil servants when we visited Brussels earlier this year. They said that the UK sets a good example of transposing European regulations; we are one of the better member states at doing it. That was quite an interesting comment.
How does the CBI view what happens in other countries? When we were taking evidence earlier, the witnesses could not give, or were not prepared to give, evidence about how things are done in other countries that would give us good examples that we could follow up.
Stephen Boyd also mentioned social partnerships and early engagement, and I support that. If we were considering early intervention in the transposition process, is it conceivable that the likes of the CBI, the STUC, the voluntary sector and other stakeholders could sit around the table with civil servants at an early stage and agree a process that would at least allow a level of social dialogue that would influence the process and the outcome? If the outcome did not satisfy those who were around the table, what would happen? That worries me a little bit because the trade union movement might take the view that the working time directive has not been applied as stringently here as it has in other countries, but the CBI might take the view that the working time directive is applied too stringently. I am interested in the panel's views on that.
Your first point is about a level playing field, and any business would have a view on that because it is about competitiveness. There is a strongly held view that regulation now affects individual businesses' competitiveness more and more. If regulations are imposed on businesses in this country that are not imposed elsewhere, and businesses are trading in the same marketplace, that will adversely affect businesses in this country.
Please do not ask me to cite them, but there is no doubt that there are specific pieces of legislation that affect our competitiveness from time to time. Indeed, at the moment, Scotland has a little bit of a positive competitive advantage because the regulation review group has removed a couple of elements from public procurement regulations that makes Scottish companies more competitive than those elsewhere. Regulation does have an impact.
I am told that there is supposed to be someone sitting in Brussels who reviews all the legislation that countries put into place to ensure that there is a level playing field, but I do not find much evidence of that.
I echo Stephen Boyd's comment about stakeholders getting more involved. The earlier we get involved, the better. It is remarkable that, in Scotland, agencies such as the Scottish Environment Protection Agency, for example, which is the main enforcer on environmental issues, do not get involved in the formulation of legislation until it is in place. For reasons I do not understand, the Government does not want to bring those agencies into the consultations early enough. If there is knowledge, we should use it, and the sooner we do it, the better.
It does not surprise me that the European Commission looks favourably on how the UK implements legislation because its imperative is slightly different; it just wants to see the directive implemented in law. How it is implemented and who it benefits in that member state is not the EC's overarching concern.
John Park asked whether it is possible to get stakeholders together around the table. It should be. There are issues for the Government about the amount of resources that it can devote to that type of thing, and it would require extra resources at a time of a tight budget settlement. However, we should all aspire to it.
John Park also asked what would happen if we disagreed. At UK level, if the Trades Union Congress and the CBI got around the table to discuss some of the more contentious employment legislation that has been implemented during the past few years, there would be some disagreement. If that was the case, it would be for the Government to make a decision and lead on it because it must be the Government's decision at the end of the day.
In other countries where the social partnership is more highly developed, we find that when employers and unions get around the table early in the process, they come up with innovative solutions. It happens in other countries, so I see no reason why it should not happen in the UK.
Obviously this part of the inquiry is about the "how?" of the transposition process; Jim Wallace looked at the "what?" and "why?". When the EU makes a directive or regulation, should the Government—in the widest sense of the UK and Scottish Executive or Government, as it now calls itself—be having a wider discussion with stakeholders to consider the options? Are we talking about primary or secondary, UK-wide or devolved legislation? Do we need legislation at all or do we just have to map EU regulations and directives against existing legislation to show that the framework is already in place? Would that be a useful way forward? If so, how could we go about effecting that change so that it would benefit businesses, trade unions and other stakeholders?
The answer all those questions is yes. The regulatory review group is about to say that regulation is about partnership between government, business and employees' organisations. Consultation is also about exactly that; it is about giving up time to be part of a process that takes things forward. There is no point in telling the Government to fix the situation if business is not also prepared to put in the time and effort to be part of the process. I agree with Stephen Boyd that we should be moving towards a new phase in which we all participate. That will demand that we all move to a new way of working, which will mean that members of the Scottish Government and civil servants will probably have to visit businesses and get involved in order to find out the impact of what they do.
We must also be proportionate. Some time ago, a civil servant asked me to look at a new piece of European legislation on the polluter-pays principle. However, the European legislation considered the possibility of Chernobyl happening again and said that if it did, whoever caused it should pay for it. The legislation was aimed at incidents of the scale of Chernobyl, so when it got back to Scotland, a lot of pressure was applied, down to the level of what happens when a fish dies in the River Tweed. I am talking about diminishing the size and scale of the legislation—we have to be careful about how we transpose it.
In moving forward, we are talking about forming a new partnership between the Government, business and the employees' organisations, which will have to work together much more closely. In the end, that is the only way we can use our knowledge to improve the transposition process.
The first stage in the process should be the Government examining the directive and how it can be used to achieve its aims within Scotland.
I am sorry to refer back to the public sector procurement directive all the time, but it is the one with which I am most closely involved. For the STUC, there are two imperatives when it comes to procurement: first, that as many contracts as possible remain within Scotland and secondly, that procurement be used to drive up standards throughout the economy. We saw additional scope in the directive for contracting to take into account employment and social and environmental issues. The imperative for the civil servants who were handling the transposition process at the time was to minimise business burdens, so the directive was implemented minimally. I argue that that was detrimental to business in the long term. If we had considered the social, environmental and employment concerns and tightened up that aspect of the directive, it could only have benefited Scotland-based companies. What was lacking from the process was early consideration by the Government about what could be achieved through the directive. If it had had a wee think about that, it could have had stakeholders in to chat about how we could all have worked together to achieve those aims.
George Mathewson recently gave evidence to the Economy, Energy and Tourism Committee and one of the issues he considered was employment legislation—he thinks that employment legislation is too stringent. I guess that at one end you could have something that is totally for the employee, and at the other you could have something that is totally for the employer. Stephen Boyd is right—the answer is to achieve a balance that both parties are happy about. The current process, which does not involve everybody sitting round the table, has led to some areas of employment legislation that do not show common sense. Previously, if you had an issue with a member of staff, you might have had a quiet word with them, or have gone down the pub and had a drink with them and sorted it out. You cannot do that now—lawyers will tell you not to do it because it infringes the law. That impacts on what business—and the employee—can do. We have to apply some common sense.
What I want to say follows on from what you have both been saying, because you are coming from slightly different perspectives. It is a kind of straight banana question. The complaint that the UK gold-plates regulations keeps coming up. Stephen Boyd's written evidence is fairly clear that the STUC holds an opposite view in respect of the public procurement regulation, and that the gold-plating was stripped off the employee protection aspects of the regulation. Is the UK—or Scotland—guilty of overregulating in order to implement EU legislation in general? Are there any examples of that?
The public sector procurement directive was gold-plated, in that it was implemented differently in Scotland. The two ways in which it was gold-plated were both in the interests of business. I should say that I supported both because they allowed small and medium-sized enterprises additional flexibility to tender for contracts and so on. That is not a problem.
A year ago, I attended in Brussels a hearing on the single market, which included representatives from all member states, all of whom were on about gold-plating. Business organisations in all states struggle to identify clear instances of gold plating. There have been two fairly major inquiries—Lord Davidson at UK level and Jim Wallace's reporter-led inquiry at Scotland level. In the end, neither identified gold-plating as being a real concern.
I go back to my earlier point that what we call gold-plating is perhaps the process that we use in the UK, in which we jump to legislation first rather than consider all the other options we have to hand. I was about to say that it is because of the political process, but I do not think it is. I think that it is just the government process, which has developed over time at Westminster, that is responsible. A lot of that has been transferred up to Holyrood.
However, there is an issue about gold-plating. In fact, in the previous Administration in Scotland, I think it was Ross Finnie who, when he implemented a new agricultural law, said unashamedly that he was going to gold-plate it because he thought that doing so would add benefit. Stephen Boyd may disagree with me, but as long as we know that we are gold-plating something, why we are doing it and whether it will give benefit, at least we can discuss it. If it is just done for the sake of it, it does not stand any discussion.
I want to go back to the point you made about Sir George Mathewson. You said that you think that there is now a lack opportunity to have a quiet word in people's ears. In one of my previous jobs, before I came to the Parliament, I worked at a senior level in human resources. I worked for a fairly big company, but employment legislation was not really on the radar: we had to go through a process and do what we had to do, but that did not stop people managing. I am now an employer and there are things that I have to adhere to, in which I am supported by the Parliament's staff, but that does not stop me managing situations. It is important to get that on the record.
The debate about employment legislation needs to be demystified. We need to identify what pieces of employment legislation are problematic. In questioning individuals and the likes of CBI Scotland, we do not always get clarity on that. Since I was elected in May, I have spoken to businesses throughout the area that I represent and I cannot recall the issue of red tape being raised with me once. People have concerns about the shape of enterprise networks, skills shortages, contracts that they may or may not win and their engagement with the public sector. Those are the predominant issues. Where does employment legislation rate in the priorities of the likes of CBI Scotland?
Employment legislation is just one of a host of things that CBI Scotland has issues around, if I can put it in that way. I can think of three situations in the past four years, in companies that I sit on the boards of, in which legal advice has taken us in a direction in which common sense would not have taken us. It depends on the individual case. I suppose that I will have to be careful how I say this, but having lawyers involved in employment legislation is perhaps not as helpful as it could be, sometimes. That is something that we may have to think about.
Red tape comes up all the time and was cited in the latest survey by the Federation of Small Businesses. However, what Stephen Boyd said is correct; when we ask businesses to be specific about the problem, they find that difficult. That is one of the things that the regulatory review group has been looking at.
Going back to the question that Alex Neil asked some time ago, all we are trying to do is put in place an engine within the Scottish Government. If it runs that engine properly, it will get better regulation out of the other end—better regulation may well mean lighter regulation—and it will find the right balance between what we are trying to achieve and how to achieve it.
Going back to the "how?" point, one of the things that Governments in all places do not do is go back, when legislation comes to fruition, and ask whether what they have got matches what they were trying to do—whether it improves the environment or whether it stops them doing things. All too often, for all sorts of perhaps good reasons, legislation drifts away from where the "what?" is.
Do you have any examples of that?
I have some, from the environmental area, that I will send to you. A number of environmental companies now think that some of the legislation that is being passed to help the environment does not help the environment but impacts negatively on it. I will happily send you some examples of that.
I have a question on regulation. The industry in which I worked has undergone a revolution involving the process, the materials, the equipment and lots and lots of money. My competition was only UK-wide—I did not compete with businesses in other countries—but I am interested in what you said about the possible impact of competition. We implemented the new directives at enormous cost, and we felt frustrated when we met our counterparts abroad who did not implement them at all—they just left them lying because their Governments did not push them. I am talking about health and safety, the protection of workers, releases into the environment and other serious, heavy issues.
Frustration builds up among businesses and workers when directives are not enforced in other countries. Should the Scottish Government and the UK Government focus on the policing of EU directives, first, so that the populations of other countries benefit from them and, secondly, as a matter of fairness?
I am happy to make some observations. I have heard such arguments on many occasions, and I am curious to know which of our competitor nations of the original 15 EU member states have less stringent health and safety and environmental safeguards than we have in the UK. I do not know of any; in fact, the situation is often the other way around, and their safeguards are far more comprehensive.
We need to get back to the debate about creating better regulations. Russel Griggs and I have been discussing the issue for a number of years and have an agreed approach. Interestingly, the approach that he and I favour was pretty much at odds with the manifesto commitments of all the parties, which focused on arbitrary numerical targets. We see that as a diversion that will lead to a huge misallocation of Government resources.
We must get back to creating better regulation through early, effective consultation with stakeholders. That is the mantra, and it trips easily off the tongue, but making it happen is difficult. It is demanding for Government and stakeholders, but it is how we will get better outcomes.
I agree that the issue is perhaps not the type of legislation that exists in other countries but how it is policed and implemented. In France, in the 1990s, when there were wars throughout Europe about the testing of pieces of electrical equipment, they placed a test house about 70 miles away from the nearest point, so people did not do it. There are ways of getting around the legislation.
Stephen Boyd makes the point that, when we start to investigate the matter, it is difficult. As I keep saying, there is supposed to be somebody in Brussels who is policing the regulations to ensure that there is a level playing field throughout Europe. If they are not doing their job properly, the Scottish Government and the UK Government should say something to them.
Like Stephen Boyd, I go to Brussels occasionally. There is a unit in Brussels that is supposed to ensure that, when each European law is translated into the language of a country, it keeps its essence. Unfortunately, all they do is check the English. It is not colloquial language, and a lot of things are lost in translation. A lot more could be done at that stage in the process to ensure that the regulation is policed well and transposed well throughout Europe.
As we have gone through the process, we have come across a number of issues. For example, reading an 82-page permit that is written in very technical language is different from reading a 32-page permit that is written in layman's terms, but that is how our infrastructure allows us to do things. It takes the management of a company a lot more time and effort to read a long technical permit, and that is a competitiveness issue because if they are doing that, they are not doing other things to benefit their business. Such things impact on the amount of work that a business can do in a day.
A lot of in-depth international comparative work has been done on regulation by the Organisation for Economic Co-operation and Development, the World Bank, the World Economic Forum and others. All of that work, without exception, shows that the UK performs very well in terms of the lightness of regulation. That is a worrying conclusion for a trade unionist, in some respects, but it is the conclusion across the board. Seeking to compete on the basis of Scotland's being less regulated than other countries in key areas is not the way in which we want to go, although that does not preclude the continuing discussion about the need to create better, more effective regulation that has to take place.
For the record, I will cite those countries that, in the industry in which I worked, did not enforce the EU directives that existed about nine years ago. They were Spain, Italy and Ireland.
The industry is currently using water in paint in order to protect the environment. Our industry is proud of what we do to protect the environment, and the argument is not to reduce the number of regulations—far from it. More regulation is good news for the environment. The last thing that I would want is for Scotland or the UK to go down the road of cheapskating and reducing regulation. The argument is simply that we want a level playing field with our competitors.
As I explained, I was not affected because we were all regulated equally in the UK and I competed only within the UK, but if I had had to compete with businesses abroad, I would have been cuffed—I would have had no chance. They should be regulated to the same level as I was—that is my argument. I have not heard an answer to that. Should the committee be pushing for our authorities to ensure that the EU regulates properly throughout its jurisdiction? One thing is for sure: because we have SEPA, a body with which I am involved quite a lot, we pay attention and do the job that we are asked to do. Should we be putting a wee bit of muscle in there?
Absolutely. If there is any clear evidence of other member states not honouring their commitments with regard to any EU directive, the STUC will always support the UK Government in fighting the corner of business.
It goes beyond that. It is not just the UK Government that should fight; there are more and more cases in which the Scottish Government should fight as well. We took evidence from a civil servant on a piece of waste management legislation that was coming into force. The argument came down to the definition of waste in Europe, which is set out clearly. Our view was that the definition of waste was wrong and needed to be changed, but we were told that the Department for Environment, Food and Rural Affairs would not fight for that. We thought that if DEFRA would not fight for it, we should, because it has a particular impact on a part of the Scottish agriculture industry. If the EU understood the case for our wanting to change the definition of waste, it would probably accept it. I think that there is a case for our making a lot more stringent noises, if that is the right phrase, about issues that affect us specifically and that we think stronger discussions with Europe could solve
I have just a couple of questions. The STUC's evidence states:
"The UK is ranked 6th out of 175 countries in the World Bank's Ease of Doing Business rankings".
That supports what Stephen Boyd has just said. It continues:
"The OECD recently constructed a composite policy indicator of flexibility"—
which I am sure is not a best seller—
"which ranked the UK the highest among all OECD economies."
Where would Scotland rank in that type of survey? Would we be as high up as the UK?
Are we getting a mixed message about the barriers that regulation creates for economic growth and for companies? You are telling us that the UK is one of the best and most flexible places to do business. There seems to be a bit of a contradiction.
The STUC has been consistent on the issue. Where Russel Griggs and I will probably diverge in our opinions is that I think that the focus on regulation as a key economic development issue in Scotland is wrong. I do not think that it is one of the key barriers to development at all, and we can draw on a lot of evidence to prove that.
To argue that Scotland sits differently from the UK, you would have to identify the layer of regulation that is implemented separately at Scotland level that impacts on business. Four years into my job—despite sitting on many forums such as this one, discussing regulation as a key barrier to development—I have only very occasionally heard actual instances of a specific regulation preventing a company from growing. In fact, I can identify only one. I have sat in parliamentary committees where the representatives of employer organisations have spoken about regulation in general, but whenever they have been pressed to identify specific issues, they have always struggled to do so.
Russel Griggs and I share an aspiration for better regulation—that is genuine and it is shared with many others. Where we diverge is in our views on whether regulation is a key issue that we face. I would far rather that we were all gathered around the table to speak about other issues, such as skills utilisation and innovation.
When Jim Wallace set up our little regulatory review group, he said that one of the things that the Scottish Government does not do well is communicate with people about why it is doing things. A lot of business regulation therefore simply appears over the horizon—another form that people have to fill in simply arrives on their desk one day. That takes us back to the point that Stephen Boyd made. People are not part of the process of putting regulations into place; rather, they are hit at the very last minute.
Businesspeople will always look on regulation and anything that stops people doing business as impeding them. Businesses must have some rules imposed on them, but one should try to make things as simple as possible in attempting to achieve what one needs to achieve in respect of making a socioeconomic impact on how people operate their businesses.
Stephen Boyd is correct. It is difficult to get businesses to be specific when one talks to them, although we are getting better at doing that. However, I return to an issue that I raised earlier. Partnership is important. The Government and business should sit with whoever around the table and discuss matters at a much earlier stage so that people do not get involved only when directives are about to be implemented. By that time, it is far too late. The Government must realise that it is there to legislate on behalf of the population, of which the business population is a key part. Therefore, it must engage with the business population and ensure that what it puts in place has a desirable effect.
When is the regulatory review group due to report? Is its remit wide enough? I have had an issue with Scottish Screen, for example. The level of bureaucracy that is involved in applying for financial assistance from that body is unbelievable compared with that involved in applying for such assistance from its counterparts in Belfast, Dublin and Cardiff. Is your remit wide enough to enable you to consider such issues as well as EU regulations?
We have a very wide remit. We must produce an annual report on how the Scottish Government is performing with respect to better regulation. The first report will be produced in late spring next year. In the interim, we are trying to design a better process, because we all believe that the process is important. We will not get good regulation if the proper process is not in place. As part of that, we must ask which organisations impose regulations—Scottish Screen has just gone on to my list. We will write to SEPA, the Scottish Commission for the Regulation of Care and Scottish Screen, for example, to ask them how they can do business better and who, including the Scottish Government, gets in their road when they want to do business better.
The discussions that we have already had with SEPA have led us to believe that it should have more flexibility, which is interesting. It comes down to giving rewards rather than using sticks. Sometimes SEPA says that it would probably be easier to change hearts and minds if it were allowed to give companies rewards for doing things as opposed to using a stick. However, that would mean that members would have to allocate more money to it. It is interesting that the business model on which SEPA and the care commission are set up encourages them to collect fees and impose licence fees. That model, rather than anything else, is wrong. They would have to be provided with more money to change hearts and minds, but that could be the right approach if it resulted in better regulation.
The short answer to Alex Neil's question is that we have as wide a remit as we want.
I thank Stephen Boyd for the STUC's submission, which is useful and helpful. It answers many questions that we might have had.
I want to ask about the European Commission's target of reducing administrative burdens by 25 per cent. Most of the witnesses who have appeared before the committee have perceived that to be quite a good thing, but it is much more difficult to get people to say how they would reduce administrative burdens, exactly where the 25 per cent cut would come in and how things would be measured. The STUC's submission states that arbitrary targets are
"likely to involve a scandalous waste of a scarce resource".
I am quite attracted to what it says. Will Stephen Boyd say a little bit more about that? Does CBI Scotland also subscribe to that view? Does it have a different view on how we can reduce administrative burdens?
When it comes to regulation, I am not a fan of arbitrary targets. Establishing the baseline involves an awful lot of work. At Westminster, a whole industry has grown up around the better regulation agenda. I think that about 500 civil servants are working on better regulation issues. They are trying to identify, measure and justify cuts in the administrative burden on business. To be frank, they are trying to achieve the impossible.
The only argument for arbitrary targets that stacks up is that they signal the Government's intent. I understand where people are coming from on that. From the FSB's perspective, having a target in place allows it to go back to its members and say, "We've got the Government to recognise that this is an issue. It now has this target." I understand that approach, but I do not support it, because it is not helpful. It works against what we are trying to achieve with better regulation.
Also, there are often instances where business wants new regulation. Douglas Greig will probably laugh if he thinks back to a civil servant who was head of our secretariat, who was fond of pointing out such instances. His remit covered enterprise and industry and he dealt with companies and industry organisations that were looking for new regulations. For example, the Scotch whisky industry wants regulations that allow it to derive a premium from its Scottishness. Arbitrary targets would work against its being able to achieve what it wants quickly.
Arbitrary targets are not helpful. All the party manifestos at the Scottish election included targets for cutting regulation, but I do not think that that is the right way forward.
I will give you my view, which is not the CBI's view. One of the great things about not working for the CBI but just representing it is that I can give you my own view.
If we are to have a baseline to measure from, we need to be sure that it is accurate. My view has always been that we do not have an accurate baseline. A lot of the numbers that have been bandied about are guesstimates. Twenty per cent will be taken off something that is not an accurate number in the first place. The regulatory review group is about to start work on collecting information, over time, that will allow us to put in place a baseline in Scotland.
We keep coming back to poor SEPA, but if the enacting body sits down with a company that says, "In the end, it will cost £3.5 million to implement this," and it can prove it, there has to be a damned good reason for doing it, because that is a lot of money for the company to shell out. We must realise that we need an accurate baseline. My view is that we have become involved in the process of seeking a number rather than standing back and saying, "What's the right way of doing this?" I have a lot of sympathy with what Stephen Boyd said.
One reason why the group does not support the one in, one out policy is that we could remove a little one and put in a huge one. We need to consider the impact of each piece of legislation, which is difficult to do. There has to be an element of pragmatism. Yes, I would like to know how much regulation costs business, but we need to work in such a way that we all have faith in the number that we start with. If we have that, we can perhaps reduce it.
We have been asking witnesses about the use of section 57 of the Scotland Act 1998, under which the UK Government can legislate in areas of devolved competence. With reference to EU directives, is it your view that section 57 is being used appropriately? Have you been consulted in cases where section 57 might be used?
I cannot think of an example. With one of Stephen Boyd's colleagues, I was on the previous Minister for Justice's expert group on corporate homicide. We talked about whether it was a UK exercise or a Scotland-only exercise, but I cannot think of an example of the use of section 57.
As I said, the regulatory review group is investigating whether the wording of section 57(2) makes it more difficult for Scottish civil servants to be more flexible in their interpretation of the implementation of EU legislation in Scotland. Two director generals have said that that is the case, and I can come back to Alex Neil with examples of challenges that they have identified in that regard.
Although it was decided to implement the public sector procurement directive separately in Scotland, civil servants mirrored almost to the word the approach of the Office of Government Commerce in London. We struggle to see the value in doing that. If we are transposing separately, consideration should surely be given to what can be achieved for Scotland, but such consideration seemed to be absent from the discussions on the public sector procurement directive.
At its most recent meeting, the review group received a presentation from representatives of the Convention of Scottish Local Authorities, trading standards officers and a member of the Scottish Government on the implementation of the local better regulation office in Scotland. We concluded that we do not see a reason for the LBRO in Scotland. Although the Regulatory Enforcement and Sanctions Bill will apply throughout the UK, its purpose is to put right a problem that exists in England but not in Scotland. Sometimes, UK-wide legislation does not have the rationale in Scotland that it has in England. The rationale for the LBRO is sound in England, but it does not apply to Scotland, and we cannot see why we would want to add another layer of bureaucracy and—more important—change the relationship between local trading standards officers and companies in Scotland. My point has nothing to do with section 57; it is about UK legislation that is not needed in Scotland.
When legislation is implemented on a UK basis, is there as much consultation as there would be if there was to be separate, Scottish transposition? Would it be useful if the Scottish Government set out criteria to determine cases in which the use of section 57 would be appropriate?
We are getting better at becoming involved in critical issues, because good people work with us to ensure that that happens, although we do not do much more than scratch the surface. Much small UK-wide legislation comes through, but we get involved only in bigger issues, such as the LBRO.
Criteria on the use of section 57 probably would be useful.
If major employment legislation was to be transposed on a UK basis, the TUC would lead on the issue at UK level and we might contribute separately. There is usually an opportunity to contribute at some stage, although it might not come early enough in the process. The experience of stakeholders at UK level is comparable to the experience of stakeholders in Scotland. Sometimes, good practice has been followed and we have been involved at an early stage in the process; at other times, there has been little or late involvement. Guidance would not be unhelpful.
John Park said that companies do not complain about regulations that they think are bad, which takes us back to the point that Alex Neil made. Many companies do not realise that—if we consider the enterprise networks in Scotland—business support, skills and many tools that companies use are totally different in different parts of the UK. It is not just England versus Scotland; it is England versus Scotland versus Wales versus Northern Ireland. Given the amount of bureaucracy—if I can call it that—that each country has to go through to satisfy requirements north and south of the border, many companies in Scotland do not realise that they are able to apply for or are getting less or more support than are the companies with which they compete south of the border. I illustrate my comments with a simple example: England is still spending a lot of money on training people at work, whereas Scotland spends very little money on that, which reflects the different directions of Government policy during the past year. I guess that businesses do not realise that.
For the record, I draw the committee's attention to my declaration in the register of members' interests. I have been talking a lot about regulation, and changes to the system might have an impact on my business. I should make that clear.
Thank you. I thank Stephen Boyd and Russel Griggs for their helpful evidence.