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Mr. Redwood: I hope that the Liberal Democrat party will make it clear how it wishes to help the pharmacists, if it does not wish to support either the amendment or new clause tonight. We think that they are the best way in which to do it.

Mr. Breed: I did say that we would support the Opposition's amendment as I was about to sit down.

Mr. Letwin: I want to discuss the substantive issue--community pharmacies--and move to an issue of much wider significance, which arose from the exchange between my right hon. Friend the Member for Wokingham (Mr. Redwood) and the Minister for Competition and Consumer Affairs, where matters have reached a serious pitch.

In common, I suspect, with many hon. Members on both sides of the House and certainly with many of the Liberal Democrat Members who are present, I represent a seat that is perhaps the archetype of the problem. It is inconceivable that there should be available in the smaller towns of West Dorset sufficiently elaborate national health service provision to meet all the needs of the ordinary citizen, who is often unable to move around easily because of necessarily limited rural transport. The Government's persistent attack on rural transport by car through short-sighted actions with environmental aims has limited it even more. It is of the essence that such citizens in West Dorset should have available to them what has been available to them for a long time, and will, if the amendment is passed, continue to be available to them--access to a rural pharmacy. That will not continue to be available for much longer if the amendment is not passed.

Our pharmacies in West Dorset depend on the amendment. I speak not speculatively, but on the basis of intensive discussions with each of the principal rural pharmacies in each of the smaller towns in my constituency, of which there are not very many; it is possible to cover them all because their number is small. The number of villages is, of course, great and, again, that is an archetype. There are some 55 larger villages in West Dorset, each clustered around the towns. They, too, depend on the rural pharmacist. In discussions with rural pharmacists--in many cases, I have gone to the trouble of asking them specific questions about their turnover, margins and current profitability--it has become clear that their existence depends on resale price maintenance or some equivalent.

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I thought that the interjection of my right hon. Friend the Member for Wokingham during the remarks of the hon. Member for South-East Cornwall (Mr. Breed), who spoke for the Liberal Democrats, was highly pertinent. It is possible to imagine--it has always been possible to imagine--that the Government would seek to introduce alternative means of supporting rural pharmacies. There may even be, theoretically, preferable alternate means of supporting such pharmacies.

I have a worry, which I suspect is shared by many hon. Members who represent seats such as mine, which is not a theoretical worry; it is substantive, practical and based on a knowledge that I suspect all hon. Members have of how Government and, in particular, the Treasury, under any Administration, work. If grants, subsidies or special arrangements are introduced to support a particular cause when there is a ferment about that cause--this would be one such case, potentially--they are always a soft target for any Chief Secretary to the Treasury when he comes in the spending round to look at what might be eliminated.

For all the dangers that the hon. Member for South-East Cornwall pointed out, resale price maintenance has at least persisted for a long time and is difficult to dislodge, because it requires action in the courts and may take time. At least that system is not as likely to suffer from the vicissitudes of the attentions of a Chief Secretary which, alas, can quickly be brought to bear on any grant system.

6.15 pm

Essentially, if the amendment is not passed, the access of many of my constituents to what is effectively the only source of help and advice available to them other than GPs, many of whom they find it difficult to reach on many occasions, will depend on the hope that the Government will introduce an as yet unknown mechanism--there is no certainty that they will do so--and that no future Chief Secretary will remove the mechanism.

There is a ready remedy, which is to extend the provision of NHS services in rural areas. That takes us way outside the scope of the amendment and anything, I suspect, that the Government are willing to guarantee. The costs of doing that vastly exceed the economic cost of resale price maintenance in this sector.

That point is of great interest. I was, alas, unable to continue as a member of the Committee during the stages when these matters were considered, but I have had the opportunity to read the official record. I find to my intense surprise that the Minister for Competition and Consumer Affairs has not brought forward any analysis of the economic cost of continuing with resale price maintenance for rural pharmacies. There is a good reason why he has not. It is extremely difficult to identify a significant economic cost in that case.

If one looks at the cost of providing alternative NHS services, the economic and, in particular, fiscal gain of having these pharmacies is fairly easy to ascertain. A cost-benefit analysis of the amendment, so to speak, could easily identify the costs of not having the amendment, but trying to identify the benefits of not having the amendment--the economic gain to the country from abolishing RPM--is quite a task.

Alas, we discovered at a much earlier stage in the proceedings of the Committee that the President of the Board of Trade had conducted a compliance cost

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assessment that was probably wrong by some magnitude. Therefore, it is not surprising that the Minister has been reluctant to conduct any economic analysis in this particular case, but, if he had done, he would probably have found that the figures would have worked against him.

This is a remarkable case. We have a system, which is theoretically imperfect, but nevertheless produces what I think is by universal accord a practically beneficial result, with probably a low economic cost--it has certainly not been ascertained--almost certainly a high fiscal gain and hence an economic gain. There is no certainty about any replacement and there is an extreme danger that, if there were to be a replacement, it would come under attack from a future Chief Secretary.

That chain of argument suggests that there is a strong reason for seeking to retain the ability for this industry to engage in resale price maintenance. That is the substance of the matter. In rising, my main intention was not to address that issue.

Mr. Lansley: Before my hon. Friend moves on to a separate argument, does he agree that, in this respect, it is not so much the compliance cost assessment that is the mechanism through which the Government should assess what the costs and benefits of proceeding through legislation are, but the regulatory appraisal? While he was speaking, I have taken the opportunity to look at the regulatory appraisal and it is silent on the issue of the economic costs and benefits that might result from the abolition of a number of pharmacies as a result of the Bill.

Mr. Letwin: It was one of the abiding sadnesses of being removed from the Committee that I was no longer able to benefit from the shafts of wisdom that my hon. Friend so often cast on aspects of the Bill. He is right to remind me that it is not the compliance cost assessment, but the regulatory appraisal that should have contained the information. To say that the regulatory appraisal is silent on this issue is, in the now immortal words of Mr. Draper, the understatement of the century. The regulatory appraisal is silent on almost every issue. It is a document of such extreme gnomic quality that it is rather like the holy Roman empire, which was neither holy nor Roman nor an empire. The regulatory appraisal is to do neither with regulation nor with appraisal; it is a piece of paper. However, it would have been possible for the Under-Secretary to produce a serious analysis in Committee, had he wished to do so. I have no doubt that he did not do so because he would not have liked the results.

Mr. Redwood: Will my hon. Friend also think about the plight of the retail pharmacist? He will also need reassurance from the Government that the complicated arrangements to remunerate him for his NHS work will not fall foul of the Bill. Presumably, the Government will have to make use of the public policy provision or the general economic service provisions to exempt retail pharmacists. Would not it be helpful to the pharmacists to be reassured at least about one of their strands of income? Otherwise, they might find that all their income was under threat from the Bill.

Mr. Letwin: My right hon. Friend is absolutely right. He will recall, as I do very poignantly, that both the

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Under-Secretary and the Minister were wholly unable to deliver to the Committee the slightest remnant of a definition of general economic service that would illuminate the question whether that point would actually apply. Manifestly, there are serious issues about whether the Bill will allow provisions to be made to support rural pharmacies. That has wider implications because it is not just rural pharmacies or even pharmacies generally with which we are concerned; it is the general principle of whether a Competition Bill ought simply to take into account the narrow focus of industrial economics, or whether some kind of social cost or social benefit--especially when there are fiscal consequences--should be taken into account.

I come now to the major topic that I want to discuss. I am afraid that I shall make a very grave accusation. I hope that it can be rebutted; I hope that the Under-Secretary will produce evidence to show that I am wrong. No one would be happier than I to withdraw my accusation, in an open and fulsome way, if it turns out that it is false. My accusation has to do with the character of government. It is raised, in particular, by the response to this amendment and by the interchange between my right hon. Friend the Member for Wokingham and the Under-Secretary earlier.

I begin with a question. What was the treaty base upon which the Commission was operating when it produced the letter to which the Under-Secretary referred? I stand open to correction. The hon. Gentleman has vast legal resources at his command, while mine are negligible. It may be that I am, therefore, wholly misled, but I imagine that the treaty base was article 85--subject to the Under-Secretary's correction. I should be grateful if he would save me and himself from further embarrassment, and intervene at any stage of my argument if he feels that something that I am saying is incorrect.

Article 85 is very clear, unlike its transposition into English law in the Bill, which is very unclear. It states in its first clause:


I have not the slightest doubt that resale price maintenance falls into those categories--


    "which may affect trade between Member States."

Alas, Mr. Deputy Speaker, you were not the Chairman of our Committee. Those who were present during our sittings will remember that on many occasions during the deliberations of the Committee--and I find on reading the Official Report that this persisted beyond the time when I ceased to be a member--points were made about the contrast between the specific clause


    "which may affect trade between Member States"

and its transposition into UK law in the Bill. We frequently pointed out the clarity of the statement in article 85 and the fact that it made it clear that the Commission, in applying the article, was to restrict itself to those sorts of action that affected interstate trade. We drew attention to the difference between that and the lack of clarity about the Commission's scope for action within the United Kingdom.

The Under-Secretary and the Minister had ample opportunity to challenge us on that point in Committee. They had ample opportunity to say that they or their legal

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advisers thought that we were misinterpreting article 85. In short, they had ample opportunity to tell us that article 85 was not restricted to interstate trade. However, I would have found it odd if they had said that because if we look back through the legislative history of article 85 to the early writings of Monnet and Schuman on the origins of the competition sections of the treaty of Rome, it is clear that in the minds of those who formed the treaty, it should restrict itself--admirably to my mind, and, I suspect, that of my right hon. Friend the Member for Wokingham--to interstate trade.


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