Enterprise and Regulatory Reform Bill

Baroness Oppenheim-Barnes Excerpts

Tuesday 26th February 2013 Lords Chamber

The bulk of these amendments are to ensure that consumer interest, including the consumer dimension of small businesses, runs through the whole of the CMA in the way that “Blackpool” runs through the stick of rock. At present, frankly, the Bill does not look like that. It is mentioned at the front but it is not followed through. The amendments would lead to some improvement and go some way towards rectifying that. I beg to move.

[Baroness Oppenheim-Barnes]

My Lords, I have to start my remarks with the words, “Oh dear”. We have reached a disappointing spot in the advance of the protection of consumers, with the part of the Bill to which the noble Lord, Lord Whitty, referred leaving out, as it does, all the references that he wants to add about consumer protection. One reason is that the CMA and the consumer body are very different from what exists today. There is direct access for consumers to the Office of Fair Trading. If that is not enough and can be improved, why not improve it? The same applies to all the competition clauses throughout the Bill. They may be good—some of them probably are—but I do not see that what exists today warranted such a total and revolutionary change in the way that these matters have been discussed, enacted and valued by those consumers, consumer organisations and others who have benefitted from it in the past.

The noble Lord, Lord Whitty, spoke in particular about the phrase “promoting competition”. I am not quite sure how you promote competition—I have no idea—but what is important is to ensure that there is protection against anti-competitive practices that are directly harmful to the interests of consumers. It is as simple as that. I do not see the proposed amorphous body getting to the kernel of the problems that will affect consumers.

The noble Lord, Lord Whitty, rightly said that the trading standards departments will need a great deal more financial support than they are likely to get. They are respected by consumers and others alike. They have dealt successfully over the years and most people have thought of them as among our most trustworthy and available resources. They are being given a much more important role, which I am content about, and I am confident that they will, given the right resources, be able to carry it out. They have had the experience and, as long as they are given the opportunity to digest the role, they will know what they will be required to do in borderline cases.

Once again I come to the point about access for consumers. This will now go because the Office of Fair Trading is going. Apparently, collections will be made from the experiences of citizens advice bureaux and of the trading standards officers themselves. They will receive information about the big consumer concerns that will confront them but, once again, there is no clear process in the Bill—and certainly not the funding—for the citizens advice bureaux, which are all staffed by voluntary and diverse workers, to go to their top echelons. They will have to collate the information and carry out research on it, which they have not yet had to do to such an extent, and then pass it on to the trading standards officers. They will discuss it with them and then decide whether the matter—it could be a competition matter—should go to whichever of the respective bodies. That will be their responsibility.

As I pointed out in Grand Committee—I apologise for raising this matter again—the funding of the National Association of Citizens Advice Bureaux, which was announced by the noble Lord, Lord Marland, at Second Reading, was going to be £1.7 million. I was able to look up the figures for 1979, when we were closing some citizens advice bureaux. The National Association of Citizens Advice Bureaux said that it needed more money, and I gave another £1.7 million then, making the amount up to £3 million altogether. In today’s money, goodness knows what that would be. Since Grand Committee, I have looked even further and have found that in 1981, while the process was still going on, I increased funding to £4 million for the citizens advice bureaux alone. If it cannot do its job properly because it has not got enough money, then the whole chain of information going down through trading standards, to the CMA, to whoever will be receiving it, will not have strong enough links. I hope that my noble friend will be able to tell us something encouraging about that.

I do not propose to say anything about the Monopolies Commission replacement part of the CMA at this stage. That may be more appropriate later.

[Viscount Younger of Leckie]

My Lords, Amendments 40, 41, 47 and 48 recognise the importance of consumer protection and consumer interests and I thank the noble Lord, Lord Whitty, for the opportunity to debate this important issue. I also know that the noble Baroness, Lady Hayter, has spoken strongly in favour of consumer rights and I note and acknowledge her interest in this area.

As we said in Grand Committee and in the other place, empowering and protecting consumers is a vital element of our approach to promoting growth in the UK economy. Indeed, in the coalition agreement, the Government committed to take action to protect consumers, particularly the most vulnerable, and to promote greater competition across the economy. That is why we have put consumer interests at the heart of the CMA, and in particular, by the following: first, by giving the CMA a single general duty to seek to promote competition for the benefit of consumers; secondly, to retain the OFT and Competition Commission’s markets powers that aim to make markets work better for consumers; thirdly, by giving the CMA primary expertise on unfair contract terms legislation and additional consumer enforcement powers to address business practices that distort competition or impact on consumer choice in otherwise competitive markets; and lastly, by transferring the OFT’s super-complaint function, which provides a fast track process for complaints by consumer bodies.

Given the vital role the CMA will play in protecting and promoting consumer interests, and this vast range of consumer functions, we do not consider that these amendments are required. Further, in some respects the amendments could produce the wrong result. Amendment 40 cuts across existing legislation where the CMA is required to consider a range of objectives. For example, in carrying out its regulatory appeals functions, the CMA must take into account the objectives of the sector regulators, which may include media plurality or energy security. A requirement for consumer benefit or detriment to be paramount in all its operations might therefore cast doubt on the ability of the CMA to carry out its regulatory appeals functions fairly.

Amendment 40 would also provide that “consumers” include SMEs where appropriate. While I agree with the sentiment, I do not believe that it is actually necessary to deal with SMEs in this way. The existing legislation has not to date constrained the OFT from considering business to business markets, because if there are competition issues in these markets they will usually ultimately affect end consumers as well.

With regards to Amendments 41, 47 and 48, as a core function of the CMA, I expect the board and panel members to have great expertise in consumer issues. However, it would be inappropriate to establish a legislative criterion of this kind for appointments to the CMA board and CMA panel. We should not impose unnecessary constraints on the sort of people who can be appointed to these. As is currently the case for the Competition Commission panel, we expect the CMA panel to be made up of a range of experts, such as lawyers, economists, accountants and business people. Between them, they have the range and depth of expertise to deliver on inquiries across the economy, including on consumer issues and different markets.

I now turn to Amendment 44. In the current regime, the OFT is not subject to a statutory requirement to estimate impact on consumers in relation to its work. At present the OFT and Competition Commission estimate the impact of their past work on consumers over a rolling three-year period, using a common approach. Looking backwards helps to make the impact estimates more precise, and looking over three years helps level out peaks and troughs in impact. Requiring the CMA to estimate impact of its future work would be significantly less precise and in many cases difficult to forecast. Merger cases, for example, are responsive to market developments, and the CMA cannot pre-empt the outcome of independent market inquiries. This amendment could also leave the CMA at risk of judicial review if forecasted consumer benefits were not realised, and it could incentivise CMA to underestimate, and underachieve.

On Amendment 51 we do not consider that the OFT’s function to promote “good consumer practice” needs to be transferred to the CMA. As we said during our debate in Committee, in the current regime, Section 8 of the Enterprise Act 2002 gives the OFT a general function of promoting good consumer practice, which recognises its leading role in providing consumer education, its function in relation to approving consumer codes and its international consumer advocacy work.

In the new consumer landscape, the Citizens Advice service will take the lead role in providing consumer-facing education from the OFT as well as taking over responsibility for consumer advocacy from Consumer Focus; the Trading Standards Institute will have the role of approving consumer codes. The CMA will continue to have an international consumer role—for example, to represent the UK at the OECD’s Committee on Consumer Policy. A specific provision has been made for this in paragraph 19 of Schedule 4 to the Bill.

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I hope that noble Lords will forgive me for giving rather a lengthy answer to these amendments and I hope that the noble Lord will be reassured to some extent by my explanation of how the CMA will operate its consumer role. I hope that he will not press his amendment.

[Baroness Oppenheim-Barnes]

At the beginning of his response, my noble friend said that the fast track would be a helpful element in the Bill. I have looked everywhere but I cannot see anything about a fast track. It would be helpful if he could tell us a little more about it. Who is at the beginning of it and who is at the end, and where is the information coming from?

[Viscount Younger of Leckie]

I thank my noble friend for that point. Given that it is a very specific question, I will most certainly write to her.