United Kingdom Internal Market Bill

Baroness Altmann Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I thank the Minister for some of the considerations on which he elaborated around some of the penalties, but I find it hard to accept this in principle. The information-gathering procedures in the Bill seem without any limit on them in the Bill—an unreasonable measure. To try to find a way to tackle that, I tabled three amendments. I thank the noble Baroness, Lady Altmann, and the noble Lord, Lord Vaux, for signing Amendment 62A on the small business exemption. From among the amendments, we hoped the Minister might consider adopting that one or come forward with a version for Third Reading.

Understanding why the penalty provision is unreasonable requires analysis of the background. Section 5 of the Enterprise Act 2002 gives the CMA an information-gathering function for obtaining, compiling and keeping under review information about matters relating to the carrying out of its functions; it does not give a fining power in order to compel businesses to respond. Such compulsion can come later, at a stage when a market study is undertaken, but the circumstances then are that some suspicion exists that businesses themselves have contributed to failures in the market. In contrast, Clause 38 of this Bill gives the CMA, in connection with reports under Clauses 31 to 34, or under Section 5 of the Enterprise Act when it concerns those clauses, the power to collect information and impose penalties on individuals and businesses in order to make them respond.

This power exceeds what the CMA can do for ordinary information gathering, and the provisions are a copy and paste of the powers that accompany the stronger measure of a CMA market study. But there has not been any corresponding copying of the other conditions that surround a market study; nor is it a comparable situation to a market study, because there is no suggestion that the things being investigated might be happening because of what businesses themselves are doing.

The powers in this Bill are about investigating regulations, which is entirely beyond the control of business, and there is no wrongdoing by business. These investigations are about circumstances created by legislatures and which legislatures wish to investigate. It is more comparable to a departmental consultation than to a market study, so what is the justification for coercing and burdening businesses, even if the Minister says there will be rules making that perhaps a bit less onerous? In Committee, the noble Lord, Lord Tyrie, said of these powers:

“The argument that they were derived from legislation the purpose of which was very different is well taken and might point to further amendment.”—[Official Report, 4/11/20; col. 726.]


That is the view of the recent, former chair of the CMA.

One of my amendments would delete the penalties clause, which is really what I think should be done, although I see little hope of persuading the Minister. My second attempt, Amendment 63B, tried to recreate some of the circumstances of a market study, but as the Minister recently confirmed that only regulations can be investigated, not business cases, it does not fit and it does not work. So my third attempt—Amendment 62A—concentrating where it really matters, exempts small businesses from the penalties. It uses the small business definition from the Companies Act, expanded to cover non-company structures. The Companies Act recognises that small businesses should have a lesser public interest burden by exemption from some filings and it recognises that in primary legislation—it does not rely upon regulations or codes of conduct. Why not apply similar logic here?

Small businesses do not all have the wherewithal to respond to onerous consultations, although many will help when they can, but the information requirements in this Bill can require work to be done or attendance at a given place, both causing financial loss. There is no compensation save travel expenses. Yes, there is a “without good reason” defence, but the smallest businesses cannot afford a legal challenge even if they knew of the defence.

Perhaps the CMA will be reasonable itself in setting its code of practice. The Minister hopes so, but there is no certainty, and a notice detailing applicable penalties is a frightening thing. Of course, it belongs to another culture, in which the CMA’s core functions require confrontation with business and suspicion that businesses and companies are doing wrong.

In Committee I asked the Minister what would constitute a reasonable excuse, giving a wide range of examples relative to small businesses. I got no reply, nor have I had a written reply despite having asked for one—although I know the Minister is very busy, not least writing to colleagues.

This is a huge encroachment on civil liberties and the freedom to conduct business. I hope that, at this 11th hour, the Minister will listen and come back with something at Third Reading to put in the Bill that reinforces the statements he has made. But, if there is not that prospect, this is a matter of deep principle—and I speak as somebody who ran a small business for 30 years—and I must give notice of my intention to call a vote on Amendment 62A if negotiations cannot proceed at Third Reading.

[Baroness Altmann (Con) [V]]

My Lords, I am delighted that my noble friend has listened to many of the concerns raised in Committee. I also welcome his saying that the Government will consult carefully on penalties, and the penalties will be limited. I thank him for saying that the needs of small businesses will be taken into account as well.

However, I cannot help but continue to support the amendment in the name of the noble Baroness, Lady Bowles, which I have added my name to, alongside the noble Lord, Lord Vaux, because the points she made seem most persuasive. She has clearly explained that the proposed penalty regime is not comparable with that of the current CMA, despite my noble friend indicating that it is.

The penalties under the CMA would apply in cases where firms are suspected of wrongdoing or unfair competition or practices. But it has already been acknowledged by my noble friends Lord True and Lord Tyrie that the Bill is concerned here merely with data gathering itself, such as would occur in consultations or calls for evidence, rather than information requests that follow from suspected failures. Therefore, I urge my noble friend the Minister to reconsider the position that many small businesses could find themselves in if information is demanded of them under these powers. It would take scarce corporate resources away from operating the business and is likely to pose significant difficulties for firms that do not have lots of employees available to comply with such an information request.

I point out to my noble friend the Minister from these Benches—as a member of a party that has always been the friend of small business and has promoted the value and virtue of people starting up businesses and running small firms themselves—that there is a significant risk here of imposing unreasonable burdens. I echo the call from the noble Baroness, Lady Bowles, for a meeting with him before Third Reading to see if we can find a form of words that the Government could accept, to avoid the need for a vote on Report.

I hope my noble friend understands that this is about a fear that the Bill imposes unreasonable and abnormal demands. For example, on pensions, the Pensions Regulator has not previously had the power to demand information from schemes unless it suspected wrongdoing. I hope we can find a way in this Bill to exempt small businesses from this burden and the potential threat of penalties.