Enterprise and Regulatory Reform Bill
Debate between Lord Whitty and Viscount Eccles
Lord Whitty
My Lords, these amendments have been tabled simply to raise the issue. The Government may well have a different solution. They all relate to the incredibly detailed provisions in Schedule 8 for the procedures and time limits of how the CMA should carry out its business. We have nine pages of procedures set down in the schedule. I think it is a lawyer’s paradise and a regulator’s nightmare. These amendments suggest different ways in which we can simplify them, while at the same time remaining bomb-proofed to judicial review and so on.
Some of the problem stems simply from the amalgamation of the two bodies and having to preserve two stages of the investigation. Consequently, there will have to be ring-fences, Chinese walls and, for all I know, barbed wire and high hedges, but it does not need to be as complicated as this. Is setting it out in statute, in a complex and incomprehensible schedule, the best way to deal with it? My noble friend Lady Hayter mentioned the other day that it might be better to leave the board of the CMA to sort out in detail what the procedures should be, like most regulators and most organisations. The role of the board could be separated from the role of the investigators, as other regulators, such as the pensions’ regulator, do.
These amendments are tabled to give us a brief debate on the issue. They offer a number of alternatives. Amendment 24Q would make it clear that the board can set its own procedures, subject to the time limits. Amendments 25ZA, 25ZB and 25ZC would delete those paragraphs of Schedule 8 that relate to procedures and just leave the time limits. The Question that Schedule 8 stand part could delete the whole of that schedule and leave everything to the board. There are probably other options.
The Minister’s amendment was a tiny snip. We need wholesale pruning of this schedule, but it does not appear to be on offer. I seriously suggest that, if we leave it like this, the CMA will get caught up in procedural challenges and threats of judicial review. Every corporate lawyer in the land will be looking at this and ensuring that they follow every dot and comma of it. I think that the Government would be wiser to prune it and leave much more to the CMA board to sort out for itself. I beg to move.
Viscount Eccles
My Lords, I am very grateful to the noble Lord, Lord Whitty, because his contribution means I do not really have to say much about Clause 26 stand part. The real effect of knocking out Clause 26 would be to knock out Schedule 8, so perhaps we can elide the two.
This is a very tricky area and I am sure that it should be thought about again. There is already a time-limit regime—lots of it from 1998 and 2002—and there is a clear general duty of expedition, which is referred to in Clause 26:
“duty of expedition in relation to references”.
It is clear in the current legislation that everyone is supposed to do things in as timely manner as possible. The question then arises of why the Secretary of State thinks that his or her intervention is helpful in this matter, which was very much the line along which the noble Lord, Lord Whitty, was going. I cannot see that it is helpful, nor that it is consistent with the coalition’s policy towards these matters. I thought that we believed in decentralisation, deregulation and trusting the professionals. It seems quite strange to introduce this regime, and of course it has to be hedged about with all sorts of escape clauses. If something gets as far as Brussels, all time limits are off the table; it says so in the schedule. The 40 days can be extended by 20 days, you can stop the clock in certain circumstances and—again I agree with the noble Lord, Lord Whitty—the lawyers will have great fun, as they always do, with this kind of overcomplicated and apparently statutorily enforceable system because they find ways around it. I am very much in support of the noble Lord’s amendment—if it is not to be accepted as it is, I very much support the way in which he put it across.
Lord Marland
We have had two excellent points of view, but the reality is as follows. Britain is seventh worst out of eight regimes in the world in terms of speed, in a review carried out by KPMG. That is a terrible place to be. We are seeking here to give some real clout to the process. Yes, the OFT exists on a 40-day rule but it is not statutory, and as a result 15 out of 76 cases have exceeded that time limit. We want to enforce that limit because it is absolutely no good being seventh out of eight in the world. We are enforcing the 40 days and we have put a period of undertaking in lieu of 50 days, as opposed to nil, and a period of implementation of 12 weeks, as opposed to nil. That is a very big step forward.
Often you are damned if you do and damned if you don’t, but one thing is for certain: we have to get our speed and efficiency up in getting these deals sorted, because that sends a clear message to industries that are merging. As we know, businesses want one thing, and that is clear messages. I therefore feel that this is the right approach for this Government. I do not totally disagree with the noble Lord, Lord Whitty, as on many occasions—I have rarely disagreed with him—we could perhaps have taken a more aggressive stance. This is a very good start, though; we will of course keep these things under review, but this is progress. On that basis, I hope that the noble Lord will withdraw his amendment and, when we come to it, that my noble friend Lord Eccles will do the same.
Lord Whitty
My Lords, I have tabled my intention to oppose Clause 29. It is not that the clause does not bring in some useful stuff, but I find myself in some bemusement over quite what the Government ultimately intend in relation to the public interest and the kind of interventions in that regard. I am hoping for some clarification of the strategy here. I do not yet know whether or not I agree with the Government because it is not clear in the clause, or in anything that anyone has so far said, what lies behind Clause 29. I hope that I will be a bit wiser at the end of this debate.
At present, as I understand it, the criteria under which the OFT and the CMA operate are clearly related to market structures or competition, and only the Secretary of State can intervene to require them to look at wider issues of public interest or himself deal with issues of public interest. A narrow definition of what the public interest is operates at present, principally, as I understand it, relating to national security. We all know, though, that when high-profile mergers come up, the public, by which I mean both interested parties, consumers, suppliers, workers, the financial press and so on, are often concerned about much wider issues than competition as such—the issues of employment or the potential loss of employment, the loss of UK control, technology, intellectual property or international competitiveness as well as the long-term effect on consumers, workers, communities, the environment, and so on.
Almost all these issues get raised when we are faced with a big merger. For example, in the Kraft takeover of that old and respected English company, Cadbury, all these things were gone over with a fine-toothed comb, but none of them was particularly relevant to the final agreement to the merger. Perhaps I can make one little gripe: despite assurances, the Bristol factory in fact closed. There was no issue of national security and no other issue on which the Secretary of State felt able directly to intervene, although there was a requirement frequently to explain the position to Parliament and to committees of another place.
There are two arguments. One is what constitutes the public interest beyond the stipulations of the competition regime. The other is who invokes the public interest and how. As I read Clause 29, it seems to attempt to transfer some of the responsibility of the Secretary of State on to the CMA; it does not at all attempt to define the public interest. One could take different positions on this. Some would say that the Secretary of State should retain some responsibility, as is largely the case now. Some would say that he or she should retain that control but have a wider range of criteria on which to define the public interest.
You could also say that the CMA should be able to invoke the wider public interest, such as competitiveness or employment issues, but that the Secretary of State should still retain powers to intervene as an alternative. Others say that the Secretary of State should be the judge of national security issues but that the CMA should have other aspects of the public interest in mind in its investigations and decisions. At the other extreme, some say that the CMA should have the sole role and that politicians should keep out of it. I think that the Government are veering towards that position but are not quite getting there. The cleanest position, which some of my colleagues have taken, is that the Secretary of State should have the sole initiative in issues of wider public interest and that the public interest definition should be narrow.
I take a wider view; I tend to think that the CMA should be able to initiate consideration of what the wider issues are if it considers that those could outweigh the competition issues. I do not think that, on this front, the Government’s position was clearly spelt out in the House of Commons or elsewhere. This clause stand part debate gives the Minister the ability to spell out clearly and precisely where the Government are going with this. Once we are clear on that, we can decide whether we take it any further at a later stage, but at the moment I am essentially unclear, so I hope that it can be clarified now.
Viscount Eccles
My Lords, in supporting the thesis of the noble Lord, Lord Whitty, I just wonder whether this is meant to be unclear. It is very long and there are lots of tos and fros. You get caught up in considerations of exactly how independent the CMA is when something called public interest comes on the horizon. My suspicion is that it is not very independent at all. Schedule 4 makes certain that you had better do what you are told when the chips are down. It also seems to me that the weakening of the operations of phase 2 by the creation of a panel that floats freely without being rooted into the ground in any way that I can see also makes it all a bit unclear. Surely the sort of panels that there have been on the Competition Commission have been pretty good at public interest considerations, which vary widely. I entirely agree that there needs to be some clarity as to what this is all for.
Lord Whitty
My Lords, this amendment and the others in this group are pretty straightforward and deal with the level of fines in relation to Schedule 11, which relates to non-disclosure or falsification of information in the course of an investigation. It is about the maximum level of fines.
The maximum level of £15,000 or £30,000 would be significant fines to the kind of small businesses to which the noble Lord, Lord Hunt of Wirral, referred earlier. For many in large markets, though, these would be a flea bite. For the investigatory powers to work, they need to be able to ensure that the procedures are honestly met by those companies that they are investigating.
It is unlikely in any case that small businesses would be caught under these provisions; it is middle-sized and larger companies that are likely to be caught. You need a deterrent to dishonesty, which is effectively what this is. We are suggesting that up to 10% of turnover would be an appropriate deterrent whereas, frankly, £15,000 would not. That runs through all these amendments. The Government would be wise to look at this again. I beg to move.
Viscount Eccles
My Lords, I part company a little from the noble Lord, Lord Whitty, here and I shall illustrate why. I think that the Competition Commission has had the power to exercise civil sanction or administer fines—I am not too sure exactly what it can and cannot do. On the information that it has sent me, it has not ever done so, yet I have not heard any complaints that people have not given it the information that it has asked for.
A fundamental point needs to be remembered. We live under the law by consent. If the assumption is that people will live under the law only if they are threatened with fines and that the fines are big enough, and you go on down that road, in the end, people will not obey the law by consent.
Viscount Eccles
My Lords, I am probing to see whether there is some way in which some of these arrangements could be drafted to simplify their implementation. I worry about the amount of work that we are giving the legal profession by some of these arrangements. This is a very complicated piece of paper chase. New Section 40A amends the 1998 Act. We have been talking mostly about the 2002 Act. It relates to powers when conducting investigations, to failure to produce documents, destroying or falsifying documents, and providing false or misleading information. The 1998 Act contains in Section 27 powers to enter premises without a warrant and with a warrant. In a statutory instrument in 2004—which, incidentally, is not included in the latest printed edition of the 1998 Act, you have to find it some other way, but it is an amendment to the 1998 Act, statutory instrument 1261 —there is a power to enter domestic premises with a warrant. That is the 1998 Act. However, new Clause 26A to that Act, which we have just been looking at, is in Clause 33 of this Bill. That leads me to ask one or two questions.
I should say to the Bill team: thank you for your assistance with my eventually finding Amendment 28A and that statutory instrument because it was a very interesting chase. No wonder I could not find it in the 1998 Act; it was not there.
New Clause 26A(6) says,
“For the purposes of this section … an individual has a connection with an undertaking if he or she is or was … concerned in the management or control of the undertaking”.
I started to get into a terrible panic and wondered what sort of information I might be required to provide about when I was laying graphite cores in nuclear power stations or something. Is there any limitation on that subsection, such as a statute of limitations?
I have many questions in my mind, but I shall limit myself. With regard to new Clause 40A in Clause 34, BIS’s presentation to the Delegated Powers Committee says that the Bill,
“removes … criminal sanctions attached to failure to comply … and replaces them with a new civil sanction”.
However, when I read the amendments in Clause 34, particularly the ones near the end about omitting subsections (1) to (4) and so on, I could see where we were omitting certain of the criminal sanctions, but there followed two or three other clauses in the 1998 Act that seemed still to apply and still to envisage criminal proceedings. All that I am asking is that some real effort is made to clarify some of these matters in a way that means that businesses, their secretarial departments and legal departments will understand them, and they will not have to go to outside lawyers too much. We keep on talking about making things certain so that people know that they can get on and do the things that they want to but, believe you me, it is some endeavour to find out what this means. I beg to move.
Lord Whitty
My Lords, I am in danger of re-establishing my alliance with the noble Viscount. There are aspects of this clause that could do with clarification. It had not struck me until he spoke that the wording,
“is or was … employed by”,
might refer to when they were an employee, a subcontractor or a director 20 years ago, and that would still be covered by this clause. Clearly the noble Viscount’s previous career flashed past him. Mine did so a little earlier this afternoon when watching the interplay between the Minister and his team; I recall that many decades ago my Civil Service career was clearly doomed when I passed the Secretary of State an illegible note during the course of one bit of legislation. There must be equivalent things that people have seen, and have had in their hands; they may not have realised their importance at the time but they still have vague knowledge of them. The criminal sanctions that are implied by the interplay of the various pieces of past legislation here could raise anxieties that the Government do not really intend. The noble Viscount is essentially right that perhaps once again the draftsman could have another look at this. Clearly the noble Viscount and I will quietly let any amendments on this front through at later stages.
Postal Services Bill
Debate between Lord Whitty and Viscount Eccles
Lord Whitty
My Lords, I was not going to intervene in this debate because I agree with much of what has been said by the noble Lord, Lord Rogan, and my colleague on the Front Bench and I have intervened in this area at earlier stages in the debate. Parliament has a huge responsibility here as two great parts of the nation’s infrastructure are in trouble and both require a new start. The Government have concluded that, in respect of the Royal Mail part, the new start shall be under private ownership. As the noble Baroness knows, I do not entirely agree with that, but nevertheless that is where we are. Everybody who has contributed agrees that there has to be some sort of stable relationship between the two parts, as we move into this new world. The Government’s difficulty is that they have to find a buyer for Royal Mail, the logistics part of the operation. Nobody is saying, and indeed my noble friend Lord Stevenson explicitly said, that Parliament should lay down the terms of that relationship, but Parliament has a right to know that that relationship will exist because it will determine the nature of both sides of that organisation—in terms of this amendment for the next 10 years. Clearly both sides may have an interest in ensuring that such an agreement is established prior to this Bill being implemented and the privatisation going through.
If I can be a little rude, I want to talk about the elephant in the room. The suspicion on this side is that if an amendment of this nature is not passed then the issue will not be the nature of the negotiations between Royal Mail and the post office network but the nature of the discussions between the Government and a potential investor. The Government will not find it easy to find an investor. The last Government did not find it easy to find an investor for a rather smaller proportion of Royal Mail and, if the interests of Post Office Ltd were sacrificed by untying some of the responsibilities of Royal Mail towards its Post Office Ltd partner as part of the deal, the interests of both sides and particularly those of the post office network will have been sacrificed. I hate to put it this way, but I have a degree of suspicion not of Royal Mail or the post office network but of the Government’s need to induce an investor in Royal Mail in the first place. If one of the terms of that inducement were to prejudice the future relationship with the post office network then the suspicions could be justified.
Viscount Eccles
Can the noble Lord can give us some indication of how he comes to the conclusion that somebody buying into Royal Mail would have a different interest and would not wish to use the Post Office in the same way?
Lord Whitty
My Lords, it would be the nature of any investor in any situation to maximise their degree of flexibility—any company investing in any potential asset, particularly one which has so many obligations on it in the public domain, wants to maximise its flexibility. I do not know the investors the Government have in mind—we have not been clear on that; we have not even been clear whether it will be a single investor or an IPO or another arrangement—but my expectation is that it will be one or perhaps one or two in a consortium buying Royal Mail. They would wish to maximise their investment, on that front, as on other fronts. Giving them that flexibility could seriously prejudice the future of a socially, economically and regionally important part of our infrastructure. That is the suspicion that lies, in my view, behind this amendment.
I do not understand the point of the noble Lord, Lord Razzall, about state aid because if you have an agreement of that length in any case, whether it was voluntarily negotiated or imposed by Act of Parliament, state aid may be involved. So either way the possibility of state aid interest arises, and I recognise that that is one of the inhibitions on government. I am afraid that, if the noble Baroness does not accept this amendment or something like it, then she is heightening the suspicion that we are going to fall over backwards to placate a potential investor to the potential detriment of the post office network and those who depend on it.
Public Bodies Bill [HL]
Debate between Lord Whitty and Viscount Eccles
Lord Whitty
My Lords, if that is where the line is, we understand it. Public bodies were set up primarily to administer policies which have been established by Parliament. Therefore, I still think that their inability to comment on policies pursued by government and others, or to inform Members of this House or another place of their opinion of the Government’s approach in this Bill, is a very severe inhibition of democracy. I think that is what the noble Lord is now saying. I understand that they can talk to their own departments and that they can respond in those areas, but if they cannot even inform Members of Parliament of their views, I think that is a restriction on the ability of Parliament to make a judgment.
Viscount Eccles
My Lords, it would help me if the noble Lord, Lord Whitty, would tell the House how he could be prevented from making his opinions known if he wished to make them known to anyone?
Lord Whitty
My Lords, as a Member of this House, I can say what I like. As an officer of one of the bodies covered by the Bill, the injunction is that I shall not inform or campaign, or lobby Members of Parliament about a view which that organisation has and, in this context, a view which it has over its own future. I think that is a pretty severe restriction and it is something to which this House may wish to return. I do not want to pursue it further, but I put down a marker now that this seems to be quite an interference of the normal process of parliamentary government.
Viscount Eccles
My Lords, perhaps I may have one more go at this. The noble Lord, Lord Whitty, and I have held positions in public bodies in our careers. If someone sent me that injunction, I would pay no attention to it.