Enterprise and Regulatory Reform Bill

Debate between Lord Whitty and Baroness Oppenheim-Barnes

Wednesday 12th December 2012 Grand Committee

[Lord Whitty]

My Lords, this amendment puts the consumer interest at the centre of everything that we are doing. A number of organisations have, one way and another, had some changes proposed to them in the consumer field in recent years, since the advent of this Government, who call it the “consumer landscape”. They are changing the role of the OFT and slightly changing the role of the sector regulators; they have, somewhat to my distress, changed the role of Consumer Focus, the major consumer organisation, previously the National Consumer Council, of which I was chair and the noble Baroness, Lady Oppenheim-Barnes, was a distinguished chair at an early stage. They are not leaving a consumer voice in the same central way as was provided in the previous 37 years. Some of those functions will be done elsewhere, some will be inherited by different bodies and some will be in the public sector, but most will be in the third sector or somewhere in the ether.

That is not a satisfactory position. If the regulator and the industry are to deal with the consumer interest in the central way that the department continues to emphasise in all its publications—though its actions somewhat belie it—we have to be clear where the functions that used to exist now lie. In relation to this part of the Bill, the OFT already included a number of functions beyond the areas of market structure—in other words, beyond merger, monopoly and dominant position. It had general responsibilities to look after the consumer interest, consumer protection and duties and consumer law. Some of those duties are now to go out of the organisation; in fact, on the face of it, most of them are to go out of the organisation, and the new organisation will primarily be concerned with market structures. This could prove to be unsatisfactory. I appreciate that BIS is still issuing consultation papers, replies to consultation and new White Papers in the consumer area, but it would have been more appropriate if they had all been brought together in one Bill. Instead we have some of it in the Public Bodies Act, some of it in this Bill and some of it yet to come—so we do not get a very coherent position.

To be more specific, as the amendments are, the present duties of the OFT include responsibilities for general protection of consumers, including responsibilities for consumer education, information and advice. Section 6 of the Enterprise Act provides for information and advice and Section 8 for support for consumers in the market and the particular provisions in relation to consumer-facing codes of practice for different sectors. Those have been important roles for the OFT, and in addition it has developed other roles, such as the scam-busting role and other interventions in pursuit of consumer protection and acting against consumer detriment. Those roles, as far as I can see, are not to be part of the roles of the CMA.

Section 8 of the Enterprise Act is to be deleted entirely. Amendment 24F reverses that deletion, so that the OFT could continue to provide help to consumers in relation to their general protection and the codes of practice. Section 6 of the Enterprise Act, which deals with education, is still there. However, as I understand it, it will be devolved to Citizens Advice. Indeed, any of these powers can be devolved. However, whether or not the powers are devolved, the question is: which government organisation is responsible for ensuring that they are properly carried out and that consumer detriment is not increased but diminished as a result of the changes?

The amendments seek to deal with what I understand to be a situation that is not covered in the Bill. As I said, consumer education is now to be the responsibility of Citizens Advice. The codes are, vaguely, to be the responsibility of trading standards departments and a new body, the National Trading Standards Board, which is in the process of being established—however, it is not a statutory body or a body mentioned in statute—and another, rather shadowy, body to be established called the Strategic Intelligence, Prevention and Enforcement Partnership, which does not exactly trip off the tongue. Its acronym is SIPEP, which is a particularly apposite title.

It is to all these slightly shadowy bodies, based in part on trading standards and in part on the third sector organisations, that the powers which previously belonged to the OFT—and which were very important in establishing new benchmarks for the consumer interests—are to be devolved somewhere down the line. I am a great admirer of trading standards—indeed, I am a vice-president of the Trading Standards Institute—and have a great respect for it. However, it has for some time—not only under this Government, I am afraid—been deprived of resources and reduced in scope so that its ability to deal with major scams across the borders of local authorities is limited. Although the National Trading Standards Board may enhance that a little, it will not be able to do so without strong backing from the centre. However, that backing from the centre, which the OFT previously provided, is not in this Bill.

My amendments seek to provide a number of things. They seek to restore Section 8 and to ensure that these functions are robustly devolved—because these functions can be devolved; I am not necessarily objecting to that—and that it is made clear to Parliament that they are being devolved. Where they are devolved to public sector bodies such as trading standards departments at local authority level, or to third sector bodies such as Citizens Advice, Parliament should know and deliberately make those decisions.

It is also important that those decisions are reviewed and reversible, and these and later amendments provide for a review system. Much of this is new territory. Taking it away from the centre and pushing it down the line may be a dimension of localism, reducing the role of the state and increasing that of the third sector, but we need some means of judging whether it works or not. I therefore propose five-year reviews and an ability to reverse the devolution of responsibilities. However, we cannot reverse devolution if they are not referred back to either the Secretary of State to give the responsibilities to some other body or to the CMA. All this needs to be in the Bill.

If we do not do that, there is a real danger that we will dilute the achievements of the OFT. I know there have been criticisms—I have had criticisms—but the OFT has raised the standard of consumer protection in this country and is recognised by the consumer movement internationally and by other bodies as having done so. The danger is that the central regulator’s role will be diluted; that it will be differently effective in different parts of the country and in different sectors; and that the independent voice of the consumer will be less than it was previously. This all adds up to a serious diminution of the consumer influence on policy.

I hope we can ensure, even if we do not adopt my exact words, that the Bill makes clear where those responsibilities are going, how they are to be assessed and, if necessary, how they can be reversed and reallocated. I beg to move.

[Baroness Oppenheim-Barnes]

I would like to make clear at this point that I agree with every single word that the noble Lord said. I hope to have similar support from him when the time comes.