This Tory government has embarked with great fanfare on a drive to reduce the burden of regulation on business. The Enterprise Bill, on whose bill committee I am sitting, is the vehicle for their latest hotchpotch of supposedly business-friendly changes. These include localising the decision of whether to extend Sunday trading hours down to local authorities and to privatise the Green Investment Bank. The bill also proposes a little-noticed change, forcing regulators to have regard to the growth duty and to report on the impact of their regulation on business and for regulators to be covered by the Business Impact Target, for the first time. I am concerned by this, and tabled amendments to change these proposals in Committee.
As someone who spent seven years at Cranfield School of Management, working with fast-growth companies and MBAs starting businesses, I am passionately pro-business. So is the Labour party: we know business is essential to our society. We want to see businesses start up, thrive, succeed, employ people, innovate, and pay their taxes. Labour is pro-growth – and we are also pro-good regulation. We know that good regulation – say increasing taxes on waste to landfill, or setting carbon budgets – can actually create the conditions for new businesses to enter the market, and for established companies to invest for the long term.
Good regulation is, above all, about protecting the public interest. Good regulation, be it from the EU, or our own government, protects the citizen from powerful interests, be they of the state or private sector. Good regulation protects us all- patients, the old, those with disabilities, our built environment, our natural environment, the health and safety of road and rail users and workers, our air and water.
As it stands, the enterprise bill would impose a duty on regulators to have regard to growth, which could potentially conflict with or be put above the public interest. This could have damaging consequences for the public whose interests are – and should continue to be – the regulators’ priority.
I am particularly concerned about the government applying the growth duty to the Office of Rail and Road (ORR), Ofcom, Ofwat and Ofgem. In government, Labour excluded the regulators from the duty for a reason: so that they could put the public interest first.
In my time as Shadow Secretary of State for Transport, I worked with the ORR. Its statutory duty is to protect the health and safety of workers and the travelling public, to manage demand and supply for rail paths between freight operators and passenger operators, and to protect the needs of disabled travellers and ensure they have access to the railway.
With this new growth duty, there could be conflicts of interest. Passenger rail travel has doubled over the past 20 years, and the rail regulator must decide which companies get new train services and when Network Rail gets access for the engineering works that keep the trains running safely. Tensions inevitably arise between the interests of the train operators who run passenger services and would like to run more services, make more money and contribute to growth and the public interest for the railways to be safe. It is in the public interest for the ORR to ensure that trains are not too close together, to maintain a safe distance, and to ensure that maintenance is completed before the track fails as it did at Hatfield, leading to a crash which killed four people and injured 100. It must also ensure that there is the right number of safety operatives on engineering works on the track to avoid deaths at work, which sadly occur far too often.
Extending the duty to report the performance of rail regulation on growth to the ORR, could end up putting pressure on the regulator to make decisions in the interests of growth that are inimical to the public interest, the protection of public safety, the protection of the health and safety of the workers on the railway, and of course the protection of disabled travellers, whose additional needs in terms of boarding and getting off trains may hold up the smooth operation of the service for a couple of minutes. I have heard anecdotal evidence from disabled people in Wakefield being told by train staff, “You are holding up the train. We are going to miss our slot. You are going to make us late, and we will lose money as result.” Those pressures already exist, and adding a financial and growth pressure to the regulator could lead to perverse outcomes.
Then there is Ofwat, which is responsible for making sure that water companies clean up the beaches, protect the rivers and maintain the reservoirs to deliver a clean water supply. The water companies might make more money if they invested less in maintaining their asset base, but what happens if they skimp on maintenance and a reservoir fails and floods a village, a motorway or an electricity station below it?
When regulated industries fail, the public pays the price, sometimes with their lives.
People want to do the right thing in this country. We are lucky to have businesses that are law-abiding and wish to do well on the basis of good business, good growth and green growth.
The UK should be a leader, not a laggard, when it comes to good regulation that boosts our economy, protects our environment and, above all, safeguards the public interest. It is up to Labour to remind people of our excellent record in government and to hold the Tories to this standard. I, for one, will be watching closely.
Mary Creagh MP is Chair of the Environmental Audit Committee