Public Bodies Bill [HL]

Lord Taylor of Holbeach Excerpts

Monday 28th March 2011 Lords Chamber

Moved by

[Lord Taylor of Holbeach]

22: Clause 2, page 1, line 15, leave out “Subject to section 16,”

[Lord Taylor of Holbeach]

My Lords, I beg to move.

[Lord Whitty]

Are we on Amendment 25?

--- Later in debate ---

Moved by

[Lord Taylor of Holbeach]

25: Schedule 2, page 17, line 14, at end insert—
“Group 5Competition Commission.
Office of Fair Trading (“OFT”).”

[Lord Taylor of Holbeach]

My Lords, now we are on Amendment 25 and I am sure that the noble Lord, Lord Whitty, will be pleased that we have an opportunity to debate it. I am much relieved, as my notes for Amendment 22 had long since disappeared.

Government Amendment 25 would add the Office of Fair Trading and the Competition Commission to Schedule 2 to the Bill, which, as noble Lords will remember, deals with mergers. The purpose of the amendment is to provide a vehicle through which to take forward a merger of these bodies, and it responds to a commitment made in our debate in Committee.

I should remind noble Lords that the Government are also minded to transfer most of the consumer enforcement functions and resources of the Office of Fair Trading to trading standards, and advice, information and education functions and resources to Citizens Advice. For that reason, the OFT will need to remain in Schedule 5 in order to facilitate the transfer of most of these functions prior to the expected order to merge. A number of points relating to the consumer landscape were raised by noble Lords in Committee and I am happy to answer questions that may occur in today’s debate.

In Committee, the noble Lord, Lord Dubs, asked for more detail about the Government’s proposed consultation. I can inform him that the Government published their proposals for consultation to merge the competition functions of the Office of Fair Trading and the Competition Commission and on other changes to the competition regime on 16 March. I do not know whether noble Lords have been able to obtain a copy, but it is a substantial document of 172 pages, covering the breadth of that particular aspect of government. The consultation will run for three months. The Government hope for as wide an engagement as possible, including holding seminars and specific meetings focused on specific issues. The Government intend to issue in May a further consultation document covering a model for the consumer landscape.

Growth matters now more than ever. Businesses—particularly SMEs—and consumers have been hit hard by the economic crisis. Reform is now important to create the right environment for business to create and enter new markets—reducing barriers to entry and encouraging rivalry between firms to promote lower prices and better quality products and services. There is longer-term potential for growth through benefits reaped from innovation that stems from greater competition in the market place.

Competition is the cornerstone of growth, innovation and consumer choice. The UK competition regime is regarded as one of the best in the world. But it can and should be even better. That means that we also need to have a strong regime to promote effective competition in markets. The Government believe that creating one, powerful Competition and Markets Authority would ensure a more dynamic and flexible use of competition tools and resource and a single advocate for competition in the UK and internationally and would end duplication for business.

The proposals in the consultation document include: creating a single, powerful advocate for competition to ensure a dynamic and flexible use of tools to promote strong and fair competition; increasing business confidence through faster decision-making, ending duplication and giving more predictability of competition processes and decisions; reducing barriers to entry by making it easier for the competition authority to tackle anti-competitive mergers and reforming anti-trust provisions to increase deterrence of anti-competitive and abusive behaviour; delivering faster results for consumers by shortening end-to-end studies and investigations into markets where lack of competition is giving consumers a raw deal; reducing the SME burden by introducing an exemption for small mergers from the merger control regime; and giving small business a voice in an extended super-complaints process to spotlight market features that harm small companies.

Those proposals are an excellent opportunity to strengthen and streamline the competition regime to deliver better outcomes for consumers and increase business confidence. The Government want to strengthen and improve the UK’s competition regime in order to promote growth, innovation and competition. The proposed merger of the OFT and the CC is about creating one, single competition authority that is dynamic and efficient and retains the best aspects of those bodies. The proposed transfer of the OFT’s consumer functions to organisations better placed to ensure enforcement against rogue traders and businesses and give consumers the advice that they need is important to ensure action can be taken at a local level. The Government are consulting on all these proposals. I beg to move.

[Lord Borrie]

It would be churlish of me not to welcome the 172-page document that has been issued. I have been one of those who has suggested that one common feature of the Public Bodies Bill is that whole lists of organisations covering every conceivable subject were inserted into schedules, in nearly all cases without any explanation as to why or how their functions would be replaced or where we were to go from here. It was a rushed job. Among the bodies listed when Schedule 7 existed—and I am glad that the Government have got rid of it—were the Office of Fair Trading and the Competition Commission.

The Minister said several months ago when we first touched on this, at Second Reading and in Committee, that the intention was to merge those two bodies. Then it became clear that they were not being abolished but somehow brought together. I say “somehow” because it is only now, or 10 days ago, that we have had the 172 pages of explanation. Delighted though I am to see that document, it still raises the issue of how the Government still want by this amendment to insert the Competition Commission and the Office of Fair Trading into the schedule when they have not yet had the outcome of the consultation. In other words, the Government still want to determine the future and merger of these two bodies before they have received the answers to the question that the consultation paper very fairly raises of what the advantages or disadvantages would be of a merger.

It is not appropriate in this debate to raise large numbers of issues about that very lengthy document, and I hope there will be other occasions on which to do so. However, in relation to the Office of Fair Trading, which is to become part of the Competition and Markets Authority, a number of provisions in the first eight or 10 sections of the Enterprise Act 2002 list a whole lot of functions for the Office of Fair Trading—to promote consumer interest, to educate and inform consumers and to have various other functions. The Minister might say that some of those functions will go to Citizens Advice and some will go to trading standards offices. That might be so. However, as a debate on this Bill and the loss of the National Consumer Council indicated, the Minister explained that Citizens Advice would be adequately resourced to be able to substitute for what the NCC now does. The suggestion in the consultation paper to which the Minister now refers indicates that the consumer functions of the OFT are to disappear, as are the consumer functions of the National Consumer Council. Am I right in thinking that that is the result of bringing together the competition functions of the OFT and the Competition Commission?

Furthermore, how are the new bodies to function? I am interested to find that the consultation document seems to further the idea that has been working well for 40 or 60 years of a two-stage investigation. The main first investigation, the prosecutorial investigation, was done by the first government department, and then the OFT when it came into existence. The second stage investigation was of a more quasi-judicial type, with experts from different parts of business and the professions brought together in panels to determine individual cases. That range of expertise to be drawn upon by the Competition Commission has generally been thought of, internationally, as a very helpful procedure. As far as I read it—I hope that this is broadly correct—it is intended that the panel system should continue but it is suggested that more people should be full-time rather than part-time. I have generally thought that the very part-time nature of the Competition Commission’s panel members is their plus point, because on every day of the week except for one, or perhaps two, they are in their own business, profession or work and bring that in to inform their work as members of the Competition Commission when investigating cases.

I then noticed that it is intended that the actual employees—the economists, lawyers and civil servants within the Competition Commission—are to operate as teams not just at one stage or at the second stage but right the way through. That might be because there is a conflict in the mind of the Government. It might be to do with wanting to save money, which you do if only one team operates on the same case throughout instead of moving from one to another. Yet it also makes it more difficult, surely, for the second stage to be truly independent of the investigation. To make a rather crude analogy, you have the work of the court getting mixed up with the work of the investigators and the police.

I have those various doubts and questions, but then I, like everyone else who has it, has only just received the consultation paper. I think the noble Lord said that we have two or three months to go through it and give our answers but why, here and now in March when the consultation paper has only just gone out, are we as the House of Lords being asked to determine in this Bill that there shall be a merger of these two bodies?

--- Later in debate ---

[Lord Mackay of Clashfern]

My Lords, it is important that this is just a preliminary stage to enable this consultation to happen and, if the results of the consultation are sufficiently clear, to go forward with an order that is, as I understand it, amendable—my noble friend will correct me if I am wrong but I think I am right. If one had to do a lot of these exercises through full primary legislation, not only in competition but in all the other areas that this Bill covers, one would have no time in Parliament to do anything else. A review of this kind requires some mechanism of this sort, and we have endeavoured to make the mechanism as close and as secure as we can. It would be a pity to lose this opportunity to do what might be possible in this way, and, so far as I am concerned, putting this into the Bill at this stage is a step in the right direction.

[Lord Taylor of Holbeach]

My Lords, I thank all noble Lords who have spoken because I think this has been very useful debate. I emphasise the point made by my noble and learned friend that by inserting these bodies into Schedule 2 we are not predetermining their merger; we are facilitating their merger after a consultative process. Indeed, although statutory instruments are not normally amended in this House, an enhanced procedure in this Bill will enable a full consultative process to take place on the statutory instruments that might be brought before Parliament.

More to the point, the whole process has been evidenced in the foreword, and if noble Lords have got no further than page 1 they will see the foreword by my right honourable friend the Secretary of State Vince Cable in which he talks about the wish to be transparent and open about this process. Indeed, it is in the Government’s interest because the contributions made by noble Lords today have been remarkably powerful and useful. I hope all noble Lords who have spoken will feel free to involve themselves in the whole consultative process, because every single one of them will bring their experience to this regime.

I welcome the comments made by the noble Baroness, Lady Kingsmill, about the strategic objective—trying to get a unified Competition and Markets Authority in place with a primary purpose to be decisive, well informed and speedy. Business demands that of us. We live in a highly competitive world, but we can help ourselves and our fellow industrialists and businessmen by the way in which we construct markets and make sure that they operate in the country’s economic interest and in the consumer’s interest. Although the consumer interest part is being transferred—it will be much more heavily based in trading standards and Citizens Advice—the regime will be co-operative; trading standards officers will still feed in abuses of the market that have become apparent during their investigations.

The noble Lord, Lord Dubs, wondered whether small trading standards departments would be able to take on large organisations. With the backing of competition law, it does not matter how small the authority might be; the power of the law in this regard means that no business, however large, can afford to ignore it. Any systemic abuse through the structure of trading conditions is just the sort of thing that the new authority will take up and investigate at speed.

I am pleased that the idea of the panels is being welcomed. It is part of the detail in the consultation. In many ways, it would be wrong to use this speech to try to predetermine the outcome of that consultation, but there are in the consultative documents steers and guides, at least, to the sort of outcome for which the Government wish. I am moving my amendment today with the idea of facilitating that outcome. Parliament’s role will be to scrutinise both the consultation and anything that is produced under the Bill.

Amendment 25 agreed.

--- Later in debate ---

Moved by

[Lord Taylor of Holbeach]

28: Clause 3, page 2, line 11, leave out “Subject to section 16,”