Public Bodies Bill [HL]

Lord Borrie Excerpts

Monday 28th March 2011 Lords Chamber

[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?

[Baroness Kingsmill]

My Lords, I support much of what my noble friend Lord Borrie has just said. I have always been in favour of a merger of these two bodies and am pleased to see that the Government are thinking of bringing that about. I have received the consultation paper and I have not yet come to terms with all the points therein. This is a merger that, on the face of it, has a lot to commend it—as I said, I have always supported it—but I feel that the devil is in the detail and that there is much detail to be determined.

From what I have seen in the consultation paper, the one aspect that I regret is the separation of consumer protection from competition issues. When I was at the Competition Commission, our primary and overriding rule was the public interest. We felt constantly that we were protecting the interests of consumers. It is regrettable to separate out those consumer interests and consumer protection from the competition regime. While it is very good that it is proposed that the panel system should be retained, the balance between that panel of, if you like, independents and the professionals who are fully employed must be carefully regulated. I also agree that the part-time nature of the role is one thing that enables its independence and expertise to be maintained.

We also ought to be looking at the separation of the two roles or stages within the competition regime. The first stage is a sort of triage: how serious, how big and how important is this, and what are the main issues? It is important to have that first stage, and it is fundamental to the fairness of the whole procedure that, once that triage stage has happened, it should move on to another panel that looks at it afresh, having had the triage diagnosis to enable it to do so. From my point of view as an ex-regulator and as one who is now on the boards of many companies that have undergone and are undergoing competition investigations, business needs certainty and speedy results. We must ensure that the merged body produces both. If it does, as a result of the consultation document that emerges, that could be a very good thing.

I continue to have a number of questions about this and I think it is a shame that this merger should be regarded and looked at in the context of the Public Bodies Bill. It deserves a piece of legislation of its own and should not just be shovelled in with the consultation document, with such a short time to consider it. Having said that, it is, on the face of it, an appropriate merger.

--- Later in debate ---

[Lord Borrie]

I congratulate the noble Lord, Lord Newton of Braintree, on devising a way of trying to ensure some sort of future for the Administrative Justice and Tribunals Council after my failure in Committee to secure a vote against abolition. I failed by nine votes despite the support of several Law Lords present on that occasion and of the noble and learned Lord, Lord Howe of Aberavon. I remember that on one occasion when we debated this matter the noble and learned Lord, Lord Woolf, stressed the very point just made by the noble and learned Lord, Lord Howe of Aberavon, on the significance of the work done by the Administrative Justice and Tribunals Council for ordinary people in this country. Often that work is much more important for ordinary people than that done by the courts of our land. The noble and learned Lord, Lord Woolf, emphasised the tribunals to which the noble Lord, Lord Newton, has referred and added in employment tribunals. You could hardly have a more significant set of judicial bodies than employment tribunals when dealing with the troubles of ordinary people such as unfair dismissal cases.

The Government narrowly won the vote on this issue in Committee but in seeking to defend the Ministry of Justice from the queries that some of us had raised the only answer they could provide was that the relevant tasks could be carried out by the Ministry of Justice. Of course, the Ministry of Justice has a great deal to contribute on policy and other areas of administrative justice but it cannot replicate the advice and role of independent people from outside the department who have a range of experience. That experience can be tapped individually by the department; indeed, I think that the ministerial representative said that. However, if this council disappears, you will not get a group coming together and discussing among themselves the important issues of administrative justice. They will merely be seen individually by an appropriate department civil servant and we may or may not hear the results of that discussion. Therefore, I again congratulate the noble Lord on bringing forward the amendment and hope that he will press it to a vote.

[Baroness Scotland of Asthal]

My Lords, since the noble and learned Lord, Lord Mackay, does not seem to be tempted by his noble friend’s invitation I rise to respond on behalf of Her Majesty’s loyal Opposition. Not surprisingly, we wholeheartedly support the amendment moved by the noble Lord, Lord Newton. I take this opportunity to commend the noble and learned Lord, Lord Howe, for his powerful intervention and for the work that he did in relation to the Ely inquiry. The House will know that that was seminal to the material changes regarding mental health which came after it.

I invite the noble Lord, Lord McNally, to consider carefully whether he cannot accept the amendments spoken to so ably by the noble Lord, Lord Newton. As we heard from the noble Viscount, Lord Eccles, in regard to the previous substantive debate that we had on the Youth Justice Board, this is enabling legislation. Notwithstanding the fact that the Administrative Justice and Tribunals Council can be abolished, there is nothing to stop Her Majesty’s Government thinking again. They are not bound to abolish it. If they want to abolish it, they should think carefully about how it can still be merged, used or modified in regard to other bodies. I invite the noble Lord to think again about this matter. If Parliament decides that there is to be no independent voice, it is very difficult to see how some of the challenges that have been so forcefully laid out by the noble Lord, Lord Newton, will be responded to.

The noble Lord, Lord McNally, will know the position in relation to legal aid which was touched on by the noble Lord, Lord Newton. As the Administrative Justice and Tribunals Council has recently said in its response to the Ministry of Justice consultation document Proposals for the Reform of Legal Aid, some material difficulties arise in this regard. Your Lordships will know that in its response the council opposed the proposed cuts to legal aid for administrative justice. It gave the example that welfare benefits legal aid costss £28.3 million in 2009-10, representing less than 0.18 per cent of the £16 billion value of benefits that are unclaimed every year. The success rate of legally aided clients in these areas is more than 90 per cent. The council believes that the Government bear responsibility for causing many of the appeals in the administrative justice system through poor decision-making, poor communication, delay and overly complex or incomprehensible rules. Not only will the legal aid cuts affect individual claimants, they will contribute to increasing work and delays in courts and tribunals that are already under pressure. How will such a challenge to the department that is also responsible for legal aid be made, made independently, and by whom? The value of an independent critical eye will remain present. Therefore, merging, modifying or otherwise dealing with this issue remains of critical importance.

I understand what has been said previously about the utility of the council’s work no longer being identified, but we have not had an answer to the question posed in Committee by the noble Lord, Lord Newton, and again now, regarding how the department responsible for all these administrative issues will deal with issues such as these. The difficulty will remain. The challenges are likely to be much more honed, because the issues that administrative justice touches upon in its remit, in terms of everyday lives, become increasingly broad. I invite the Minister to consider very seriously indeed merging the council with another body, modifying the constitution arrangements under Schedule 3, or modifying the funding or transferring the functions—but not to expunge them in their entirety.

The noble Lord will know that acceding to these amendments would not oblige the Government to do all or any of those things. They would be given the power and opportunity to do so if they, in their inimitable wisdom, decided, on mature reflection, that the same was necessary.