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That the draft Monopolies and Mergers Commission (Performance of Functions) Order 1988, which was laid before this House on 26th October 1988, in the last Session of Parliament, be approved. This order makes two amendments to schedule 3 to the Fair Trading Act 1973 which governs the procedures of the Monopolies and Mergers Commission. The first change will reduce the minimum size of the groups appointed to carry out investigations from five members to three. The second will allow the chairman acting alone to seek the Secretary of State's agreement to the laying aside of a merger reference where the merger proposal has been abandoned before a group has been appointed for that investigation.
Schedule 3 to the Fair Trading Act governs the MMC's procedures for all types of references to the MMC. Investigations are, in practice, carried out by groups of commissioners appointed for that purpose. The schedule provides that the minimum size of such groups is five, but in recent years the usual number has been six. The first of the amendments made by the order would reduce the minimum to three and would apply to all references, except those under the
Telecommunications Act 1984, for technical reasons contained within that Act. The Companies Bill includes a number of amendments to mergers legislation, putting into effect proposals in the Department of Trade and Industry's policy paper on mergers, published in March. This is a useful minor change which can be made now by statutory instrument, as we undertook to do in our policy paper.
The order will not mean that the size of MMC investigation groups will be reduced for all or even most inquiries but it will enable smaller groups to be appointed where appropriate in the interests of greater flexibility. Which references the smaller groups are used for will be a matter for the chairman, who will always have in mind the need to ensure an adequate spread of experience and expertise. The second change relates solely to merger references. Proposed mergers are sometimes abandoned soon after they are referred to the MMC and often that is before the inquiry group is set up. The Secretary of State's agreement is then sought to laying the reference aside. It was in the past the practice for the chairman of the MMC in such cases to act alone. However, in 1986 the Court of Appeal held that the decision to lay aside a reference was beyond the powers of the chairman acting alone. Since then it has been necessary to set up a group just for that purpose. That is clearly inefficient and the change we are making would remove the need to do so by allowing the chairman to exercise the MMC's functions for that purpose alone. Those two changes will not affect the role the MMC performs or substantially change the way it operates. They will certainly have no bearing on the matters referred to the MMC or the way decisions to refer are made. By improving the procedures in two small but useful respects they will contribute to the efficiency of its operations.
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This is not a major matter. We welcome the order. I want to ask the Minister about the role of trade unions in monopolies and mergers. The merger policy paper of the Department of Trade and Industry said that the Department wanted well-balanced groups. That means that trade unions will be included in those groups. As there are only four trade union representatives, does the Minister intend to increase that number, or will he guarantee that a trade union representative appears in each inquiry? That is appropriate and essential. It is the only major point to arise about the order.
I wish to make some general comments about the Government's policy on mergers. This will be a brief discussion, because there is no such policy. It is all over the place. We have a rather zoot-suited jelly in charge of policy--and now the Tebbit doctrine, under which only matters of competition are referred to the Monopolies and Mergers Commission. Typically, for a policy of the right hon. Member for Chingford (Mr. Tebbit), it is clear, simple, straightforward and wrong. The noble Lord who is in charge of the Department seems to prefer a role that is as much hands -on as a Saudi thief who has had two convictions. He wants the market to prevail. He argues that if it does, and the maximum number of takeovers is permitted, there will be an improvement in management.
Academic research tells us that the opposite applies in takeovers and mergers. All the research shows that there is no benefit to the community or the firms, there is a loss of jobs, and there is no greater efficiency. The Conservative party talks about the market because it represents the predators, not the producers. The hands-off policy is being embarked on because of that. We are allowing the merchants of greed to take over British industry.
While saying that they want a hands-off policy towards takeovers and mergers, the Government do not have a consistent policy. They dredge up grounds for referral in each case as it arises, responding to political pressures, to fears about the future of British industry and to the problem of EEC rules. The Government have given up trying to sustain a clear policy on these matters. We urgently need one. If the order had contained a hint of one, it would have been a welcome improvement.
Merger mania rampages on, gobbling British industry. It is running at record levels. Nearly one fifth of British companies have changed hands in the past five years. There is no sign anywhere of a consistent Government approach to these issues. In the case of takeovers and mergers, the sum of the whole is not greater than the sum of the parts. There is no improvement in efficiency, research, design, development or employment. The only benefits go to shareholders selling out at a higher price--a fairly short- term benefit--and to certain people's ability to control and manage the market.
Mergers and takeovers are defensive manoeuvres which are of no benefit to the competitiveness of British industry. A short-term calculation is being made. At the cost of those short-term manoeuvres we are seeing an enormous breach in trust, because a company is an organism, a network of obligations, a network of trust. It is a network
Column 1145of obligations to employees who have devoted their lives to the firm, to managers who devoted their efforts to building up the firm, to suppliers--
Mr. Deputy Speaker (Sir Paul Dean) : Order. As the hon. Gentleman himself said at the beginning of his remarks, it is a comparatively narrow order dealing with the administration of the commission. He is now widening it. I am sure that he will address his remaining remarks to what is in the order.
Mr. Mitchell : I am most grateful, Mr. Deputy Speaker. I am drawing my remarks to a close. But it seems to us that, having changed in a sensible direction the role of the chairman in these matters, and having allowed the Monopolies and Mergers Commission to take on more inquiries by reducing the number of members needed for an inquiry, there could have been further improvement. We await with some anxiety the emergence of any sensible Government policy on these matters because the changes embraced tonight are a postponement of major problems. This rampaging campaign of takeovers is going on and all the Government can propose to cope with it, deal with, adjust to it, is a minor tinkering with the legislation such as we are debating tonight.
Here is an opportunity wasted. The Government must urgently apply their minds to the wider issues raised by this order, particularly the future of British industry under this hands-off regime. We have a very serious problem. Industry is crying out for legislation, the CBI wants it, surveys of managers indicate that they are anxious about the state of takeovers, as well they might be, and Europe is proposing its change. Yet the Government are dragging their feet, proposing a minor tinkering such as we have tonight while all this goes on.
Industry is particularly vulnerable. That is why the number of inquiries that can be dealt with is having to be increased, because British industry is more vulnerable than industry in any other country in the world, with the possible exception of the United States. It is more vulnerable because a higher proportion of its capital is raised from shares, and so it is more liable to takeover.
Mr. Maude : Will the hon. Gentleman explain the fact that in the past year acquisitions by United Kingdom companies overseas exceeded in value, to the power of two, acquisitions by overseas companies in the United Kingdom? The net gain to the United Kingdom has been double the net outflow.
Mr. Mitchell : The Minister is trying to divert me into irrelevancies by raising a trivial and largely irrelevant debating point. There has been a failure of the Department of Trade and Industry's own campaign for awareness about the single market in 1992, with its heavy advertising, featuring people like Sir John Harvey-Jones, about to burp, telling us that history is in the making. Meanwhile British industry is investing in the United States, as the Minister has just told us. If the campaign is so effective, why is it not investing in Europe? Why are European firms taking over British companies to use this country not as a base for exports but as a market to be exploited? The country is being turned into a branch economy, an irrelevant economy, for purposes other than the purposes of this country.
It is time we had a clear, straightforward policy from the Government on monopolies and mergers which puts
Column 1146the onus of proof on the firm which wants to take over, a policy which does not say "Hands off" or "This is an open slather" but which requires proof of benefits to the community, which gives something to the workers in these takeovers, which contains some element of national interest. That national interest must be taken into account. It is an interest in jobs and in exports. This is an essential requirement.
I have curtailed my remarks to a very brief dimension, Mr. Deputy Speaker, and, I hope, stayed strictly within the terms of the order. But there is here a major issue concerning the future of this country. The strength of this nation is a national industry which is controlled in this nation, run for national purposes and working to the benefit of the wider community, using Britain as a base from which to export, not simply regarding it as a market to be exploited. The interests of the nation have been neglected, as have the interests of the workers, of industry and of the future.
Several Hon. Members rose --
Mr. Deputy Speaker : Order. I remind the House again that this is a comparatively narrow debate dealing with the administration of the commission. It would not be in order to broaden it out into a much wider debate about monopolies and mergers.
Mr. Anthony Nelson (Chichester) : Whereas the hon. Member for Great Grimsby (Mr. Mitchell) invariably invigorates the House when he speaks at this time of night, his speech tonight was less of a pep-up and more of a night-cap. He rehearsed the tired rhetoric of employee and trade union rights, whereas we are concerned--as you, Mr. Deputy Speaker, rightly drew to the hon. Gentleman's attention--with the narrower point of the extent to which those sitting in judgment over whether a monopoly or merger is against the public interest should be reduced to three. Although it is a narrow point, some substantial issues should be considered.
This debate provides us with a rare opportunity to pay tribute to the Monopolies and Mergers Commission, which has done an outstanding job over many decades--even before the passing of the Fair Trading Act 1973--and in recent years, since its remit has been substantially increased, enabling it to act as an arbitrator between certain privatised interests and the regulators concerned. In the present chairman, Mr. Sydney Lipworth, his 31 members and staff of 100, we have custodians of the public interest who perform with integrity and assiduity a considerable public service every year.
In the past year they have completed inquiries into 15 cases that have been referred to them, and they have done so against increasing pressure from Secretaries of State who require reports to be delivered within ever shorter periods. Moreover, the bids referred to them have been of an increasingly complex nature.
The order would reduce the minimum number sitting on inquiries into such mergers from five to three. May we have an assurance that the inquiries will still be conducted according to the criteria held uppermost by the MMC --thoroughness and fairness? Does the reduction imply that the MMC or the Government anticipate more smaller mergers being referred to the MMC? The statement that fewer members on an adjudicating committee assessing a
Column 1147merger will be sufficient and that more flexibility is required implies that many more smaller bids will be referred to the MMC. This is an important point for the market and many companies to anticipate.
Is there more danger of perverse decisions being produced by the MMC, and are there possibilities of conflicts of interest? The qualifications of members of the MMC are set out in the annual report. They are all eminent and, in large part, professional people. Inevitably, however, their wide experience brings with it certain preferences and patronage and it is important that public bodies which sit in judgment over questions of objective issue should, in terms of their number and deliberations, reassure the public that their results will be fair and thorough. I am sure that the Minister appreciates my point.
The further the number is reduced--in the extreme, if it is reduced to one person making the judgment--the more subjective the judgment becomes. We are right, therefore, to question a proposal to reduce the minimum number from five to three. I only ask the question because without doubt--I am sure that every chairman of the Monopolies and Mergers Commission would admit it--from time to time there have been perverse decisions. We all have our judgments about what perverse decisions have emanated from the MMC or, indeed, successive Secretaries of State, but there have certainly been some. If the number is reduced to one, two or three persons making recommendations, it becomes more likely that perverse decisions will be made. I believe that my hon. Friend has a case to answer in that respect. I ask my hon. Friend to comment on what is becoming a serious problem. Will any reduction in the number result in the personalities involved in any takeover being assessed more carefully than they have been before? In recent cases of major takeovers, the personalities lying behind them-- whether they be Mr. "Tiny" Rowland, Mr. Arnold Weinstock or Mr. Al-Fayed-- assumed, unfortunately, increasing importance in judgments which should be entirely objective. It is important that the House and the public should be reassured that judgments reached by the MMC and recommendations made to the Secretary of State--as well as decisions made by the Secretary of State himself--are entirely objective and completely divorced from any assessment on a personality basis. After all, in this country there must be compelling reasons of national interest for members of a company--that is to say, the owners and shareholders of the company--to be dispossessed of their right to dispose of their assets as they see fit. Essentially, we must allow people who own assets to dispose of or acquire them freely-- [Interruption.] The House must agree--the legislation was, after all, passed by a Labour Government--that the only reason against allowing that freedom must be where there are compelling reasons of national interest to prevent it.
A Companies Bill in the House of Lords will be coming to this House, and there may be opportunities to assess whether the criteria should go wider than the narrow basis of pure competition policy and the rather negative assessment of national interest provided in the Fair Trading Act 1973. In the meantime, I believe that the House is right to call for some reassurance that the decisions reached by the MMC and the Secretaries of State
Column 1148are on an entirely objective basis and do not take account of any subjective assessments of the personalities involved, difficult though that may be.
With all those questions and reservations, I support what I believe is a fair provision. That is certainly the case in allowing the chairman of the MMC to abandon an inquiry to take account of what I regard as a rather perverse decision of the Court of Appeal. This is an order which I believe the House should be speedy in passing. 12.3 am
Mr. Charles Kennedy (Ross, Cromarty and Skye) : The hon. Member for Chichester (Mr. Nelson) has addressed some characteristically pertinent questions to the Minister. I should like to apologise to the Minister. Such was the brevity of his speech that by the time I reached the Chamber he was half a minute into it. I have a couple of straightforward questions concerning the background to this proposal. If in that opening half minute the Minister dealt with these matters, perhaps he will forgive me for not having heard what he said. Where did the impetus or the encouragement for this come from? Did it come from the commission or from the Secretary of State? Standard wording is used, but it is somewhat ambiguous given the nature of the order before us. Power is given to the Secretary of State to make modifications under the Competition Act 1980, which to him would appear appropriate for improving the performance of the commission. Did the suggestion come from the commission, or did the idea come to the minds of Department of Trade and Industry Ministers in view of the increasingly important role that the commission is seen as having?
There are various functions which constitute a group, and reference is made to the Fair Trading Act 1973, the Competition Act 1980, the Airports Act 1986 and the Gas Act 1986. The explanatory note states :
"For the purpose of the Commission's functions under the Telecommunications Act 1984 the minimum number who may constitute a group remains 5."
What is the reasoning that lies behind maintaining that distinction? To take up the question of the hon. Member for Great Grimsby (Mr. Mitchell) about trade union involvement, will there be any distinction drawn between the operation of the new regulations as it affects groups that come within the Telecommunications Act 1984 as opposed to the other groups that are specified?
As you have said, Mr. Deputy Speaker, this is not the occasion for a broad debate. However, as the Government are showing a willingness, for whatever reasons, to amend the operations of the commission, there is displayed also a willingness to consider some of the broader aspects of policy, not least when the Companies Bill comes to us from another place. The arrival of the Bill will provide us with an opportunity to discuss in greater detail many of the issues to which we are referring in general terms tonight.
There is a growing feeling in the House, and, I think, outside it, that with predatory bids that lead to increasingly personalised media battles-- they are fought as much on television screens throughout the county as on video screens in the City--the Government should consider in due course whether the onus should move more towards the predator. If it is a fundamental principle of law that someone is innocent until proven guilty, it is curious that when a hostile takeover bid takes place the onus is reversed and it is necessary to prove innocence.
Column 1149As hon. Members, we receive representations from the threatened company, be it Scottish and Newcastle or the Guinness bid, which was significant for Scotland slightly more than a year ago. Perhaps Government policy should focus more clearly on the onus. During the passage of the Companies Bill the Government might consider making the predatory or bidding companies honour the guarantees or pledges that they make during the takeover process if it proves ultimately to be successful. Anyone who is concerned with the financial community, not least that which is based in Charlotte square in Edinburgh, is only too well aware that Scottish-based companies may have been offered guarantees when they have been subject to bids from south of the border or abroad. As anyone who is involved in business and company activities will explain, the siting of a company's headquarters--the Minister will appreciate that this can be a sensitive political issue north of the border--may constitute little more than a brass plate on the front door. The real decision making may take place elsewhere.
Mr. Tim Smith (Beaconsfield) : There are two striking features of the 1988 review of the Monopolies and Mergers Commission. The commission has been under pressure from the Government, the business community and the markets to complete its reports with much greater speed. The review makes the point that prior to 1987, the period normally allowed for a merger inquiry was six months or longer, but that today, only three months, or sometimes four, is usual. Another feature is the commission's increased work load. The quarter from July to September 1988 is cited, when the commission dealt with 14 simultaneous inquiries, and in November and December it undertook 16. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) questioned whether that increase originated in the Department or in the MMC. The report refers to that change : "It is proposed to seek powers for the Commission to appoint groups with a minimum of 3 members, and not 5, as the law currently requires."
I believe that that has come about because the commission is required to produce reports at much greater speed, and because of its increased work load. Although the commission has 31 members, and that sounds like a large number, they are busy people who work for it only part-time. They often find it difficult to get together for the required number of meetings within a three-month period. I am concerned that if the minimum number in a group is reduced from five to three, there may be more perverse decisions than there have been in the past.
Will my hon. Friend say something about the commission's resources? Is it not a good idea to increase the number of staff and, if there is more work, of members rather than cut back on the size of groups? When I spoke to the MMC chairman, Mr. Sydney Lipworth, earlier this week, he explained that when the commission finds adversely, there must be a two thirds majority. Therefore, arithmetically, a membership of five is a useless, awkward
Column 1150number. The number needs to be six, or three. It may be that, in future, the commission will work with groups of four, who will be able to reach a two thirds majority if necessary.
I understand the arithmetic of the proposal for groups of three, but I am not sure that that is the right way to go. It will be better to increase the number of commission members. Those who serve it are busy people. Their work load is greater, and they work within greater time constraints. Hon. Members have remarked that they do an important job. We expect them to be objective and to act in the public interest. They make decisions of the utmost importance. If the Secretary of State overturns the commission's decisions, he is always open to criticism. It is important that its members reach the right decisions in the national interest. As has been said, if the membership of any inquiry is reduced by one, it is much more likely that it will reach a contentious decision. The larger the number involved, the better. Reducing groups to a membership of three is fraught with danger.
Mr. John Fraser (Norwood) : For three years, I had responsibility for interviewing and recommending the appointment of commission members. Often, it was difficult to find candidates willing to serve. Although it is a part-time job, it is arduous. I was at pains to ensure the right balance as between men and women, and between those representing trade unions and workers, the consumer, academics economists, industrialists, and those with a detailed knowledge of commerce. It was difficult finding the best people, because they were already preoccupied with their own businesses and had little time to spare for the commission's work.
It is right that a wide range of interests should be involved in examining references to the commission, but if the group number is reduced to three, it will be easier to fix the panel's composition. With only three members, it may be necessary to omit a consumer or trade representative--but that is a risk inherent in reducing the membership from five to three.
There is also the risk, to which the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) adverted, concerning quorums. It is not possible for the Secretary of State to make an order under section 75 of the Fair Trading Act 1973 unless the recommendation is by at least two thirds of the panel's membership. I remember that on one occasion--partly because of a misprint in the Fair Trading Act 1973, and partly because of the pregnancy of one of the panel's members--there was great difficulty in achieving a recommendation on which the Minister involved could act. If the number is reduced from five to three, and if one of the members falls ill, or discovers a conflict of interest, and is unable to perform his or her duties, it will be impossible with just two members--unless there is unanimity--to reach a recommendation on which the Minister can act.
On the other hand, I can see the sense of reducing the number to three for reasons of speed and economy if the inquiry is concerned with matters of an unimportant nature. It is a difficult balance to reach. The Minister's problem is that, because the chairman of the commission acts in a semi- judicial capacity, it is hard for him to give undertakings on the chairman's behalf. I hope, however, that he can assure the House that limiting the number to
Column 1151three will be restricted to cases in which that is appropriate because the matter is not controversial, of major interest or concerned with large assets. Although he cannot give such an undertaking on behalf of a quasi-judicial figure, I hope that the Minister will tell us that that assurance has been given to him voluntarily by the chairman.
I have only one other reservation. I feel that, with five members on a panel, it is much more likely that the commission will take into account matters apart from those of purely economic interest. The Government's stated policy--and they have exerted pressure in this regard--is that competition issues are the main issues to be considered on a commission reference. But many other questions are important, such as whether research and development remains in this country or goes to the United States or elsewhere. Employment too is an important public interest consideration. In such cases as the AI case of 1978, there is the possibility of a whole sector of British industry being destroyed by an acquisition. I fear that in large and controversial cases matters of public interest that have been largely ignored and downgraded by the Government are at much greater risk of being ignored if a panel has three members rather than if it has five.
Mr. Teddy Taylor (Southend, East) : Can my hon. Friend the Minister tell us whether the change will mean that the commission will be able to handle more references? Has there been any indication of restrictions on references, and does he intend to show more liberality as a consequence?
On the basis of an answer given to me by the previous Minister--now Minister for Public Transport--I understand that the commission is the only body that can advise disinvestment in the case of an investigation into a merger previously agreed by the commission. I am particularly worried about cases in which a previous recommendation has been made. If information comes up in the interim to show that the original information was wrong, that the reports on which it was based were bogus and that there was a case for a review, it would be very unfortunate if there were no possibility of any advice on disinvestment. It would mean that the aggrieved party would have no power whatever. The guilty people could perhaps be fined or sent to gaol, but the previously agreed merger would go ahead.
I hope that my hon. Friend can give me an assurance that, because of the extra resources being made available, in future cases in which uncertainty or new evidence arises out of a previously agreed merger, the aggrieved party will be given the advantage of going to the commission, which alone has the power to recommend disinvestment. 12.18 am
My hon. Friend the Member for Chichester (Mr. Nelson) paid a generous tribute--as have other Conservative Members, and the hon. Member for Norwood (Mr. Fraser)--to the work of the MMC. I wholeheartedly endorse what they have said. The
Column 1152commission is a thoroughly professional body whose members give unstintingly of their time, often well beyond the call of duty. My hon. Friend asked whether investigations would continue to be thorough and fair. Of course they will ; the change will make no difference to that. Will more smaller mergers be referred? No. The criteria for referring a merger will remain the same. As we have said on many occasions, the principal criterion is whether there is a competition issue.
Some hon. Members asked whether it will be possible to make more references. There has never been any question of not making a reference because of lack of resources. That is not an issue. The possibility of expanding the capacity and making more references does not arise. Several hon. Members said that there are more types of reference that are available. Under the Water Bill and the Electricity Bill the role of the MMC will be expanded once again. My hon. Friend the Member for Chichester also spoke about the possibility of perverse decisions because smaller groups might make more subjective decisions. The order does not mean that every reference will be considered by a group of only three members. It will remain open to the chairman of the MMC to appoint as many members as he deems appropriate. At present the minimum number is five, and ordinarily six are appointed. He may well decide that in most cases he should continue to appoint six. There is no pressure on him to appoint fewer than that and the matter is within his discretion. Hon. Members have spoken about the quality and standing of the chairman, and I am sure that we all respect the basis on which he makes his decisions.
The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) asked from where the impetus for change came. He will have seen in the policy paper on mergers that we issued last March proposals to improve efficiency and speed in the MMC. I cannot honestly say whether the idea came from the MMC or from my Department. These matters are properly discussed between us. They are operational matters and it does not much matter where the impetus came from. It is a sensible change and no one has seriously argued against it. The hon. Member for Ross, Cromarty and Skye also asked about the Telecommunications Act 1984 and why the order does not change the requirement for a minimum of five. That is simply because for one reason or another the Telecommunications Act does not apply section 24 of the Competition Act 1980 which, in turn, enabled schedule 3 of the Fair Trading Act 1973 to be amended by order. This was an oversight and is being put right in the Companies Bill which is now being considered in another place. I hope that the hon. Gentleman is satisfied with that explanation.
My hon. Friend the Member for Beaconsfield (Mr. Smith) asked whether more resources should be made available to the MMC. He will know that the Companies Bill provides for charging so that when a merger is proposed a fee is payable to the competition authorities. As a result of that, I intend to make it possible to increase the resources available to the competition authorities so that speed and efficiency can be further improved.
The hon. Member for Norwood spoke about the reduced number of commissioners and about any change that that might make to the quality of decisions. He will know from his experience that the quality of the members
Column 1153of any inquiry is of the highest importance. I assure him again that when a reference is made to the MMC it is able to consider any aspect of the public interest. We make reference decisions principally on the basis of competition, but that does not mean that when a reference is made the MMC is limited to that. It can consider any aspect of the public interest.
My hon. Friend the Member for Southend, East (Mr. Taylor) asked about the possibility of advice being given about disinvestment. I canot think of what case he was referring to, but I assure him that, as I said earlier, there is no question of references not being made because of a lack of resources. Therefore, the matter that he mentioned does not arise.
That brings me to the points raised by the hon. Member for Great Grimsby (Mr. Mitchell), whose speech was perhaps not made in his finest flippant form. Nevertheless, he performed his usual task of taking us back through the mists of time to the dear old days when mergers were not done by the market. There was then no question of shareholders being able to sell their shares to whoever they wanted. Mergers were done by the Industrial Reorganisation Corporation and the man in Whitehall knew best, although, luckily, no one paid any credence to that. When the hon. Gentleman says that British industry is extremely vulnerable, he is living in a bygone age. British industry is not vulnerable ; it is doing extremely well. The balance of acquisitions is heavily in the United Kingdom's favour, and that is a sign of the great strength of our economy and industry, not a sign of weakness.
Mr. Austin Mitchell : I did not say that the Industrial Reorganisation Corporation or the man in Whitehall knew best, but we must take as the basis of tonight's debate the fact that the Monopolies and Mergers
Column 1154Commission knows best. Is the Minister saying that the market knows best and that it should determine the future of British industry?
Mr. Maude : We have said repeatedly that we shall only ordinarily refer a matter to the Monopolies and Mergers Commission if competition is seriously threatened. If it is not seriously threatened, the shareholders should sell their shares to someone offering the money for them. That is a perfectly proper principle and there is no reason why it should not operate. The hon. Gentleman seeks to protect inefficient management from those who are prepared to back their judgment with their money and believe that they can manage those assets and that company better. That approach has been tried and tested and is thoroughly satisfactory.
The hon. Gentleman also suggested that our approach to references is affected by political considerations. He will have studied this and will know that, in the 18 months since my noble Friend and I have been responsible for these matters, we have followed the advice of the Director General of Fair Trading. We may be frail politicians who are subject to such pressures, but I am sure that the hon. Gentleman does not wish to make such an accusation in respect of Sir Gordon Borrie. That criticism also falls well wide of the mark.
This is a narrowly defined order, but it raises some wider issues. I have no hesitation in recommending it to the House.
Question put and agreed to.
That the draft Monopolies and Mergers Commission (Performance of Functions) Order 1988, which was laid before this House on 26th October 1988, in the last Session of Parliament, be approved.
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Alan Howarth.]
Ms. Clare Short (Birmingham, Ladywood) : I wish to raise the case of my constituent, Paul Dandy, and further serious allegations that have been put to me, as I have investigated his case, by a number of solicitors and retired policemen in Birmingham. The widespread allegation is that the West Midlands serious crime squad has for many years been engaged in serious and widespread malpractice and that that situation continues today.
I have heard before of allegations of malpractice in the police force and did not think that I would be easily shocked, but the degree and breadth of the allegations of malpractice in the West Midlands serious crime squad which have come to me from solicitors in Birmingham has shocked me. I hope that the Minister will take the issue seriously tonight and not dismiss it.
My constituent, Paul Dandy, was arrested in February 1987 and held as a category A prisoner at Winson Green prison for 10 months during which time he attempted to commit suicide. In November 1987, all charges against him were dropped because his solicitor had obtained forensic evidence which showed that his confession--the charge against him was based on his confession--had been forged by the police. The prosecution consulted its forensic expert, who confirmed the finding and the charge was dropped. The technique that proved this is new. The equipment used is called electrostatic detection apparatus. It can copy a page that has been laid below another one and bring out, through the imprint, a copy of what was written on the page above. The test showed that the crucial page containing Mr. Dandy's admission had been rewritten and the confession inserted. It had not been there when the statement was taken.
Not surprisingly, Mr. Dandy made a very serious complaint against the police. I notice that the Minister is not listening to this short debate about a very serious matter. It amounts to conspiracy to pervert the course of justice--forgery by the police in an attempt to frame an individual on a very serious charge.
What happened then was very shocking. The case was investigated by the Birmingham police force. A person from outside the force was not appointed, which is supposed to be done in a serious case such as this. There was a long delay before any inquiries were made. The guy who was appointed to carry out the inquiry was on holiday at the time. After that long delay, the eventual finding was that the police concerned were not to be charged with a criminal offence, or even disciplined for having fabricated evidence. They were merely reprimanded for disposing of the original page of the statement. Mr. Dandy's solicitors contacted me about the matter. I went to the Police Complaints Authority. I was told that it was very worried about the case, that it was also very worried in general about the behaviour of the serious crime squad in the west midlands but that it could do little because Parliament required the authority to prove cases beyond reasonable doubt. It said that attempts were being made to clean up the serious crime squad in the west midlands. I hope the Minister will tell us more about that.
All that is bad enough, but I am afraid that the story gets very much worse. When I met Mr. Dandy's solicitors
Column 1156they told me that allegations of malpractice against the serious crime squad were widespread. They suggested to me that I should contact a number of other solicitors in Birmingham and the west midlands who could provide me with the details. I do not have the time now to outline all the cases that were put to me when I telephoned a number of solicitors. I have decided not to give the names of the police officers or of cases. The major import of what I want to say tonight is not that injustice has been done in a number of individual cases--bad though that is and true though that is, and I should like justice to be done for my constituent, Mr. Dandy--but that there is a pattern of malpractice. I shall describe it briefly. I want my remarks to be taken seriously and action to be taken to clean up the serious crime squad in the west midlands.
A solicitor in Wolverhampton told me of a case he had handled in the Dudley Green court and of another one in the Stafford Crown court. Three people were involved in each case. They all made supposed confessions, which they denied. As soon as he heard of this new forensic test the solicitor obtained the approval of the court to obtain the original statements. Until that time he had been given only photocopies. The test can only be made with the originals that contain the imprints.
There was a delay of six weeks before the papers were handed over. He made a number of demands that they should be handed over and then he was told that all the papers, involving six individuals in two separate cases, had been lost. That experienced solicitor, who handles a wide range of cases in Wolverhampton, said that the serious crime squad in the west midlands is rotten, that that is known by solicitors throughout the west midlands, that this practice had gone on for many years but that the recent new test had caught out the serious crime squad. He also said that respected judges had complained on a number of occasions but that nothing had been done. Another solicitor in Birmingham told me of a case involving four men who were arrested six months after a jewellery robbery involving goods to the value of £40,000. It was a serious robbery. The only evidence against them was confessions. The same forensic test was used. In one case it showed that two pages had been inserted in a five-page statement. Three pages contained no confession. All the damaging stuff had been inserted on the other two pages.
Another person who was charged in the same case had supposedly made a confession in 14 minutes. Under the Police and Criminal Evidence Act 1984, the amount of time during which people are interrogated is now recorded. The judge agreed that the policeman should be asked to rewrite the confession in 14 minutes. He attempted to do so--presumably writing at top speed, faster than one would when taking down a statement--and it took him 21 minutes and some seconds to do so. The case was thrown out of court. His solicitor said that such things had been going on in the West Midlands serious crime squad for at least 15 years, the time he has been practising in the area. He thought it was astonishing and worrying that absolutely nothing had been done about it.
Another fine solicitor whom I have known for many years as a friend was involved in another bad case which I have not time to outline but which has been publicised in the past. He said to me, "Dandy is the tip of an iceberg." No solicitor in Birmingham would say anything other than that the serious crime squad is fundamentally dishonest. The men in the squad decide who are guilty and frame
Column 1157them. The malpractice goes back to at least the mid-1970s. I remind the House that the serious case of the Birmingham bombers goes back to that time. Many people are convinced that the wrong men were convicted of that terrible crime. So we are talking about something widespread, deep and serious. This solicitor was angry that in the few cases where there was evidence which might have led to things being cleaned up, there was a cover-up and in the individual cases nothing was done.
A retired policeman who served honourably in the Birmingham police force says that the problem is that the serious crime squad is an elitist squad in which there is enormous pressure and competition to get results and convictions. Many men who have served in it for a long time have fallen into malpractice and protect each other constantly. They cut corners. Everyone knows it. The policeman said that other policemen look the other way and that many good policemen in Birmingham refuse promotion so as not to have to serve in that squalid way. Ambitious policemen go into the squad and they have to go along with the malpractice.
I hope that the Minister will not tell me that the Police Complaints Authority will investigate the cases I have outlined and that justice will be done. In the case of Paul Dandy the Police Complaints Authority could not ensure that justice was done. The widespread allegations about the position in the west midlands are so serious that we need more than incomplete investigations in individual cases.
I want the Minister to consider using the police inspectorate. I understand that the Home Secretary talked recently about using the inspectorate to ensure efficiency and good value for money. I assume that the inspectorate has the power to move into the West Midlands serious crime squad in Birmingham to make a full investigation and clean up the squad by moving out the men whose names occur time and time again. A policeman involved in one case to which I have referred was also involved in the case of the Birmingham six.
The squad must be reorganised. Some people who are not guilty are being framed and put behind bars. The new forensic test has only recently become available but according to the solicitors the malpractice has been going on for years. When policemen with a bad reputation appear in court for the prosecution their record is brought into play, juries do not believe their evidence and people are acquitted. I am told by solicitors in Birmingham that serious criminals are being acquitted because of the reputation of senior figures in the West Midlands serious crime squad.
I hope that the Minister will take the matter seriously. I considered that it was right to bring it before the House rather than seek private meetings with, for example, the chief constable, who in any caseá is about to leave us and go off to Northern Ireland. The people in the west midlands are entitled to know about this and they are entitled to action to clean up the malpractice. I very much hope that the Minister will assist us.