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Mr. Lansley: I am grateful for the opportunity to support my right hon. Friend the Member for Wokingham (Mr. Redwood) on amendment No. 6, and to speak briefly to amendment No. 51, which would delete from schedule 3 paragraph 7, relating to issues of public policy. I want to add a few points in relation to paragraph 4, which relates to services of general economic interest.

My right hon. Friend is right to say that, in Committee, there was speculation about the purposes for which the Government were proposing paragraph 4. It was suggested--I confess that I cannot remember by whom--that the paragraph was inserted at the request, or at the behest, of the Post Office, which, in United Kingdom circumstances, may be regarded as both a service "of general economic interest" and "a revenue-producing monopoly". That raises the question whether, in any case, the Post Office would be allowed to carry on its activity without infringing a chapter 1 prohibition by virtue of paragraph (5), which relates to a legal requirement, as, if the Post Office is obliged by legal requirement to provide a universal service at a uniform tariff, it might be exempted for that reason.

My right hon. Friend is right to say that the Government have taken that path ostensibly, as argued in Committee, because there is parallel text in the treaty on European Union: article 90. However, we should reconsider the matter, not only to repeat the argument that my right hon. Friend eloquently made about the desirability of promoting competition and not giving the Government a let-out to protect monopolies when it suits them, but to question in this context--as I believe was not done in Committee--whether, even in their terms, the Government have gone about the process of introducing article 90 into the UK context appropriately. I question that, for three reasons.

First, it is obvious that the Government have not gone about the process appropriately in the context of article 90, which consists of three limbs. Limb 1 makes it clear

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that one is talking about public undertakings and undertakings to which member states grant special or exclusive rights. That rubric, which introduces article 90 and makes clear the circumstances in which article 90 and questions of services of general economic interest are to be interpreted, is not carried through into schedule 3 or paragraph (4).

As a result, it is not obvious, in the context of the language used in paragraph (4), that we are dealing with essentially public undertakings, or those that exercise public functions. We are simply talking about services of general economic interest or revenue-producing monopolies, entrusted--the paragraph does not say by whom--with the operation of those services, and where the "particular tasks" are "assigned to that undertaking." Again, the paragraph does not say who assigns those particular tasks. It is all implied that it is the state that assigns those tasks. In the context of the treaty, it is perfectly clear, under article 90, that the tasks are assigned by the state, but that is not carried through into the Bill.

The second problem is the manner in which the Bill is constructed. It would be tedious of me to go on about the form of the language, but essentially there is a difference between the form of article 90, which effectively applies the rules except in so far as that would obstruct the performance of the duties, and that of paragraph 4, which disapplies the rules except


of those tasks.

It is not simply a case of asking whether the bottle is half full or half empty. It is important in law that the prohibitions are applied, but with limits--as distinct from the prohibitions being disapplied, except in so far as they could be reapplied, as it were. That may, in practice, come to be quite a different distinction, and the Minister did not address that in Committee.

A third matter is that, in the context of article 90, the paragraph has a final sentence, which is not carried through into paragraph 4. That sentence reads:


I understand why the Government have not tried to carry that sentence through into the Bill: it would not make sense, in the context of UK domestic legislation, to talk about the interests of the Community. They could have left that out, and said that the development of trade must not be affected to an extent that would be contrary to the public interest. They could apply an overall public interest test.

In the Community context, the protection that is offered to member states should not be allowed to go so far as to hinder trade unduly, but the Government have not taken that important factor into account. I appreciate that the Government should not look at the widespread application of the measure in the way that, for example, the EU contemplates the protection of tobacco or alcohol monopolies in some member states. However, it is important to know under what circumstances the Government wish to proceed.

Amendment No. 51, which deals with public policy, is more straightforward. By their own admission, the Government have introduced paragraph 7 as a catch-all, or perhaps I should say a catch-nothing, because in Committee--

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BUSINESS OF THE HOUSE

It being Ten o'clock, the debate stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),


Question agreed to.

As amended (in the Standing Committee), again considered.

Question again proposed, That the amendment be made.

Mr. Lansley: In Committee, Ministers said that they had no intention of using the paragraph 7 provision, and two questions arise in relation to that. First, if there is no intention to use the provision, why have it? Secondly, if it is intended to be used, under what circumstances will it be used?

I was struck by the debate on "exceptional and compelling". Ministers took great pains to stress how high the test of exceptional and compelling would have to be before Ministers were convinced that it would be right to use the provision--and they said that they had no intention of using it. About two weeks ago, during debate on the Human Rights Bill, there was a question about the circumstances under which Ministers should use a statutory instrument to amend primary legislation rather than waiting for an opportunity to change it by primary legislation.

There were two competing arguments about the circumstances in which Ministers should resort to this Henry VIII measure. The first was under compelling reasons, and the second was under exceptional reasons. As we had recently debated "exceptional and compelling", I told the Home Secretary that Ministers in the Department of Trade and Industry had used the phrase "exceptional and compelling" and regarded it as the appropriate high test. I asked whether it would be an appropriate test in that context.

The Home Secretary has no function to defend Trade and Industry Ministers and, with his customary perspicacity, asked why, if their intention was not to use it, they were proposing it. That is precisely the question. The paragraph 7 provision has no parallel in the treaty on European union, so under what circumstances do Ministers propose to use it? If they do not intend to use it, why not accept the amendment and delete it?

Mr. Nigel Griffiths: I cannot accept amendment No. 6 to delete paragraph 4 of schedule 3, which contains a limited exclusion that is drawn from article 90 (2) of the EC treaty. Including article 92 will mean that the activities that benefit from that article in relation to articles 85 and 86 will not be put in a less favourable position with respect to domestic prohibitions.

It is important to appreciate that article 90 (2) has been interpreted as providing only a limited derogation from the competition rules, and that its definitions are to be strictly interpreted. By virtue of clause 60, we are applying that jurisprudence, which means that the same will be true of the exclusion in paragraph 4 of schedule 3.

Revenue-producing monopolies are undertakings that have been granted monopolies by the state to raise money for the state. When this matter was raised in Committee,

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we mentioned some European countries that have such monopolies, and we agreed with the hon. Member for Daventry (Mr. Boswell) that tobacco was one instance and alcohol was another. In that instance, it is clear that the application of the exclusion will be limited. In such circumstances, we believe that it is entirely right that the prohibitions should be disapplied. Otherwise, the purpose of the act of public authority that entrusted the undertaking with the service would be frustrated.

Let me give some examples of the services that a vote on the amendments would put in jeopardy. They include not just some of the public utility networks, but uniform letter pricing. Is it the real intention of the Opposition to threaten uniform postal pricing and to make it very difficult for many people living in rural and remote areas to post a letter at the same price that people enjoy in the capital city and in major conurbations? That is the effect of amendment No. 6.

I hardly think that that can have escaped the notice of the right hon. Member for Wokingham (Mr. Redwood). I believe that that is a hidden way in which to try to drive a coach and horses through uniform letter pricing and to open it to the private sector, which could greatly damage rural and other areas that require uniform letter pricing. It must be a viable service. I wish just that he had come clean on that.

On amendment No. 51, by its nature the power in paragraph 7 could be exercised only in rare circumstances. Before its exercise, the Secretary of State must be satisfied that there are "exceptional and compelling" reasons of public policy for her to act. That is a high hurdle to surmount. The power is, in that sense, a "reserve" power.

Not surprisingly, we have no present plans to exercise the power. However, if there are grounds to exercise the power, it should be available to us. The hon. Member for South Cambridgeshire (Mr. Lansley) may at some point feel that there are exceptional and compelling reasons of public policy why the prohibitions should not be applied, but this amendment would ensure that they would nevertheless apply. That cannot be right.

The power in paragraph 7 is a necessary safeguard. I note that the previous Administration also considered the power necessary, as it was included in the draft Bill that they published in August 1996. I urge the right hon. Member for Wokingham to withdraw his amendment.


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