Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014
Debate between Lord Whitty and Lord Borrie
Lord Borrie (Lab)
My Lords, my noble friend Lady Hayter of Kentish Town gave a brilliant exposé and critique of the Government’s approach on this vital matter of organisations and their relationship with each other in the order. I want to concentrate on two matters. One is the National Consumer Council, which is to be abolished by the order; I regard that as a matter of regret. The other is concerned with estate agents. What I want to say about the National Consumer Council is, if you like, old stuff. The Government have heard not just from this side of the House but also from the other side, from people such as the noble Baroness, Lady Oppenheim-Barnes, that, in its day, the National Consumer Council, led by such as herself and the noble Baroness, Lady Wilcox, did a distinguished job with dedicated staff, reasonably well resourced. It did a great deal of research on behalf of the consumer with no ties of any other kind that would have spoilt that.
Being in charge of the Office of Fair Trading for many years, I remember that the pieces of research done by the National Consumer Council were extremely valuable to us. They were thorough and done from a consumer angle that enabled one to counter the other angles that the Government were always getting from the CBI, the Institute of Directors and so on. There needed to be a consumer voice, and the NCC gave it.
Where we have got to at the moment is that we have an order to abolish the National Consumer Council. The Government have made what efforts they can to pass some of its responsibilities on to other bodies. Citizens Advice has long had devoted workers in the field of advice and education, not just on consumer matters but on all sorts of other personal matters of welfare, social security and so on. I do not denigrate the work of the citizens advice bureaux or say that things should not be transferred to them from other bodies. However, the National Consumer Council provided more than simply advice and education, and we are losing something. The Government have never really explained who is to do it now because the other bodies referred to—the co-ordinating bodies such as the National Trading Standards Board, well chaired by my noble friend Lord Harris of Haringey—have other responsibilities. They do not have time, in many cases, to do lengthy research to help government departments and the Office of Fair Trading. Indeed, the Office of Fair Trading is also to disappear in three weeks’ time—on 1 April, I believe, which seems a very suitable date. It is to merge with the Competition Commission to form the Competition and Markets Authority. We have talked about that in the past and I, for one, am reasonably satisfied that what has been achieved in bringing those two bodies together will give them a good start on 1 April to progress their work. However, I still do not understand, and I seriously regret, the abolition of the National Consumer Council.
As far as estate agents are concerned, Members of the House will know that the Estate Agents Act 1979 was a very substantial Act dealing with dishonesty and other breaches of criminal law that required some attention; perhaps that attention should take the form of banning the estate agent from continuing to work as such. Prior to the banning order there would be warnings and so on. The Office of Fair Trading has done that throughout the existence of the Estate Agents Act.
Once the Office of Fair Trading had disappeared, as was intended by the Government through the order now before us, who was to do the work of enforcement, banning estate agents when they had proved themselves to be dishonest and ought not to practise as such any longer? The answer is Powys trading standards department, or Powys Council. I have nothing against Powys; I do not even need to look at an atlas to know where it is. It is, none the less, a smallish area—which happens to be in Wales rather than in England. I have no doubt that my noble friend Lord Harris of Haringey, who may speak in this debate, will say that a competitive tendering process was brought about by the Government, which many county councils responded to, and Powys turned out to be the best. I did not know the various detailed points, which seem to be continuing to change even today, meaning that the order before us is not finally complete. Those matters mainly concern Anglesey —I also happen to know where that is, and I know that it does not border on Powys. However, there we are; there might be some mutual arrangement between Anglesey and another county council.
Since there was a competitive tendering bid, I dare say that it has been clearly established, according to those who examined the matter, that Powys was better than any of the other applicants. That does not mean that it is better than the Office of Fair Trading has been over the past 20 years, or however long it is. Neither does it offer any help to the Minister in suggesting that it is a suitable recipient of the very considerable banning order powers that the Office of Fair Trading has had and used from time to time over all these years. However, the Government have not had much chance of doing anything else. No doubt they searched around to find a remedy, because there are no other national bodies they could latch on to, unless possibly they wanted to overwork the Competition and Markets Authority and give it something entirely different from competition. It is not very satisfactory. If Powys does a good job, which it may well, why does it then have to go through another process of competitive tender in three years’ time? Three years is hardly enough time to get established, let alone to be ready to fight one’s corner against competitors.
The whole Bill was ill thought-out from the beginning, as my noble friend Lady Hayter indicated. It has sorted some things out as regards Citizens Advice and the work of trading standards officers in different departments coming together on a national basis to work across the boundaries. That has gone on, and it is good. However, the whole episode has led to the unsatisfactory order which is before us today. If we pass it, we do so with my regrets.
Lord Whitty (Lab)
My Lords, I support the amendment to the Motion in the name of my noble friend Lady Hayter and her concerns about this order.
We are obviously at the final stage of this process, and the Government have determined for some time to transfer many of these functions as set out in the order. I make it clear that I hope that the new arrangements will deliver for consumers. I declare a past interest as the first chair of Consumer Focus, which was the expanded National Consumer Council, over the past four years, and as a vice-president of the Trading Standards Institute. As this is the final stage of the dismantling of Consumer Focus, which was only established under the 2007 Act, it provides for the responsibility for those issues which still remain with Consumer Futures, the successor of Consumer Focus, namely the regulatory area of energy and post.
I rehearsed at some length in Committee—I do not intend to repeat it entirely—why I felt that the coalition Government had missed a major opportunity of doing what the Minister claims this order does: namely, to create a comprehensive consumer advocacy organisation which is clear to consumers, to government and to business. When the new Government came in they rightly identified the complexity of the existing consumer landscape and the need to simplify it. I still believe that it was the intention of BIS Ministers—the noble Lord’s predecessors—to carry out that comprehensive reorganisation. However, that scheme was hijacked by the Cabinet Office, the desire for a cull of the quangos, and the consequent timetable of the passage of the Public Bodies Bill, and undermined by the squeeze on public expenditure.
It is now three years since the Public Bodies Act was passed. I am afraid that in that time there has been some salami-slicing of the government support for consumer advocacy and of the money available. That has not just hit Consumer Focus but some of the other bodies as well. Passenger Focus, which deals with passenger transport, has had its budget significantly cut, the Consumer Panel within Ofcom that covers communications has virtually disappeared, and there has been some narrowing of the role of the Consumer Panel in what was the Financial Services Authority and is now the FCA. Therefore there is a bit of a pattern. However, at least as far as the future of Consumer Focus’s responsibilities is concerned, we know that very soon Citizens Advice and Citizens Advice Scotland will take on those final responsibilities. That it would have been better to have had a comprehensive organisation which they could take over before transfer into the third sector is, in a sense, water under the bridge. However, we therefore still have a partial coverage and not the fully comprehensive system which the Minister was claiming we have.
As regards Citizens Advice, I do not think there are any noble Lords who do not have huge respect for its work. In one sense, to broaden its policy and advocacy function will turn it into an even more effective body. However, there have to be some anxieties about both its capacity and its resources. Contrary to what the Minister has said, the resources transferred from the previous Consumer Focus structure are significantly less than that which existed within Consumer Focus. Fewer than half the staff posts will be transferred. Although the level of funding for the energy and post side will more or less be kept up, the area to which my noble friend Lady Hayter referred, which is effectively the traditional area of the NCC—consumer interest within the non-regulated markets, the whole area of private services, goods, shopping, financial services, digital affairs and so forth—has been squeezed the most.
In its relatively short life, Consumer Focus produced 300 reports, 500 responses to government consultations, and 200 pieces of research work. That requires significant resources and concentration of effort. In the area of non-post and non-energy responsibilities, that will be severely cut. To take one example, reports of Consumer Focus—or the NCC, as for simplicity we had better call it—on cash ISAs and on travel money indirectly recovered £300 million for consumers.
Enterprise and Regulatory Reform Bill
Debate between Lord Whitty and Lord Borrie
Lord Whitty
My Lords, I shall speak also to Amendment 24M. Amendment 24L deals with what issues the CMA will have to take into account when dealing with completed mergers. The principle should also apply to prospective mergers. When asking whether competition is lessened, as the clauses refer to, we need to consider why we want competition to be maintained or increased. Competition is not, in my view, an end in itself; it is about the efficiency of the newly created entity, its ability to compete—globally, in some instances—and whether it is in the long-term interests of consumers. In the vast majority of cases, the long-term interests of consumers are served by more competition rather than less. Therefore, lessening competition can be, and usually is, a detriment to consumers, but there are instances where that is not the case. Not all competition results in benefits to consumers.
Mergers can often reduce competition but sometimes manage to increase customer service and improve the way in which customers regard the supplier of the product or service. Unravelling mergers, particularly completed mergers, could, on occasion, result in less customer service. Hence, as well as a straightforward metric on what share of the market is covered by an already completed merger, we need to assess what the future of the new entity will be in terms of its long-term global competitiveness, which may not be relevant in all markets, but will be relevant in quite a few, and, in all markets, what is the effect on long-term consumer benefit of detriment. That needs to be written into the Bill. It should not be just a question of the metric of market share.
Amendment 24M also deals with consumer interests. Clause 23 deals with the investigative powers of the CMA. It includes provisions which are three and a half pages long but do not mention consumers once. Clause 23(2) deals with permitted purposes—that is, on what grounds investigations can take place. The amendment simply suggests that one of those permitted purposes ought to be in order to investigate situations when the CMA gets complaints or references from consumer organisations, specifically from those organisations which are designated as having super-complaint powers—that is, they can bring a worked-up super-complaint under present legislation to the OFT or the Competition Commission.
Designated bodies include Which?. They also include Citizens Advice and for the time being Consumer Focus. We will argue separately for a role for small businesses. A super-complaint has to be investigated. To get to that stage the consumer organisations must have a fully worked-out case. There are a number of cases that the OFT has looked into. I have a list here, which includes the supply of beer in UK pubs. Apparently CAMRA is a designated consumer organisation, which I had forgotten and am gratified to hear. We brought in a case when I was chair of the National Consumer Council and Consumer Focus on home credit. Citizens Advice first raised payment protection insurance, which is now a huge consumer issue, with its knock-on effect on other areas of consumer detriment yet to be completely resolved. There are a large number of super-complaints that have been considered over the last five years or so.
Consumer organisations also receive information about things that do not really amount to a super-complaint, or that would take too long, or that are too complex to turn into a super-complaint. At the moment the Bill covers neither the situation with super-complaints leading to an investigation nor complaints raised by designated consumer organisations that are short of a super-complaint. Amendment 24M deals with that situation. It deals with it under the mergers section and should also logically apply to the markets situation. These two amendments would embed more reference to consumers and the way in which consumers and consumer organisations can get into this competition system. I beg to move.
Lord Borrie
I support my noble friend Lord Whitty. He and the Minister, no doubt, will recall that when the Bill was going through the other place the then Minister, Mr Norman Lamb—I think that he now has a different post—got into a lot of discussion, because many people were concerned that the only interest of the consumer that was being expressed or mentioned was the consumer’s short-term interest. You can find references in Hansard, when this was being discussed in the other place, where the Minister emphasised more than once that we must be especially interested in the long-term interests of the consumer. These amendments are concerned with that.
Clearly you can have a merger which, in the short-term interest of the consumer, would seem to be a bad thing. A merger can lead to less competition when a company, rather than battling with other companies in the same field, is no longer inhibited by the competition from the company with which it is merging. We and the relevant regulatory bodies, especially the CMA, need to be concerned with the long-term interest. That is what matters in the long run. What immediately occurs this year or next year may be very unimportant compared with what it leads to. We want to know what are the long-term interest and benefit, or the disbenefit, to the consumer. That is what will count in the long run.
Lord Whitty
My Lords, these amendments are a little more complicated. I am not sure that I understand this myself, I concede to the Minister. They address the issue of employees giving information to the Competition Commission, in this case during the course of anti-trust cases. As I understand it, Clause 33 provides, in secret price-fixing cases for example, powers to ask questions of the employees about the undertakings concerned.
By definition, the actual knowledge of price-fixing will be confined to a few relatively senior people—directors of the company or their senior managers or agents. However, it is the nature of an enterprise that people get to know these things one way or another. Sometimes, indeed, employees who themselves may be quite high up but not immediately responsible for the area get to know about it, or it could be a secretary or a clerk in the finance department, or whatever. They might volunteer the information, or at least respond once the investigators are on the case. The investigators would be using the powers within this clause, and they may get information voluntarily or from pressing a junior employee to say something that, frankly, was damaging, or would be seen as damaging, to the position of the company that had been carrying out the price-fixing, bid-rigging or whatever.
The changes proposed in my amendments would try to ensure that those employees, of whatever status, who give or volunteer information have at least as much protection as in the Employment Rights Act provisions for whistleblowers. It is therefore important that this is put beyond doubt, so this is effectively a “for the avoidance of doubt” clause. Otherwise the investigation may itself be inhibited on the one hand because people will not come forward with information, while on the other hand it could mean that individuals are prosecuted for breach of commercial confidence or, if they have refused information, are themselves prosecuted individually, rather than the company or the senior management or directors concerned, for failure to provide that information. I accept that there may be better ways of doing this but I am anxious that such people, as well as the investigation, should be protected by some clarification here. I beg to move.
Lord Borrie
My noble friend Lord Whitty has tabled a very valuable amendment here. It is most important that any employee who public-spiritedly, and in the public interest, discloses information that he has from his employment that may indicate some illegality on the part of his employer or senior employees must be protected. The Public Interest Disclosure Act is now embodied in the Employment Rights Act, which we discussed at an earlier stage, and it is most important that nothing be done elsewhere in the Bill that would damage that protection.
In some countries—in the United States, for example—employees and others get what is called a leniency benefit. They may have had some guilt themselves in knowing about an illegality that their firm was committing, but they may get leniency by informing the powers that be of what that illegality is. This provision does not go as far as that; I bring that point up only to make it clear that in some countries the protection given to the whistleblower is even better than in ours. Our protection is good and is embodied in the Bill, and the amendment that my noble friend wants to introduce would ensure that that protection existed.