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Sir Nicholas Lyell: The Minister said that she disagrees with what I have said. Will she examine the record, write me a letter explaining why she disagrees, and place a copy in the Library?
Miss Johnson: I shall consider the right hon. and learned Gentleman's request, although I am not sure that any useful purpose would be served by my complying with it.
As I explained, if there were a better formulation of "must have regard to", it is certainly not "seek to", as that would weaken the provision's force.
We have considered how best to address the competition issue in the formulation of the Bill's wording. As clause 2(3) states, in conducting its business, the authority must have regard to various specified principles. We believe that the strength of the injunction and the duty
imposed on the authority by the subsection will ensure that, in seeking to achieve its objectives, the authority will give full consideration to all aspects of its duty, including the particularly contentious issue of competition and competitiveness.
Sir Michael Spicer:
I am grateful to the Minister for giving way, not only because of the lateness of the hour, but because, earlier she said that she was on my side--which seemed to worry the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) a bit. However, if there are various bodies with different objectives, how will we decide who should win?
Miss Johnson:
We drafted the clause with that in mind.
Many hon. Members expressed an interest in the United Kingdom's international competitiveness. Clause 2(3)(e) provides that, in performing its duties, the authority must have regard not only to competition, but to
The hon. Member for Arundel and South Downs (Mr. Flight) called the Competition Commission the piggy-in-the-middle in this matter. That is most unfair. The Competition Commission will take the place occupied by Ministers in the competition scrutiny regime. It, rather than Ministers, will take the final decision on whether a rule or practice is anti-competitive, or whether it is justified. The commission's decision will stand and will be put into effect, unless exceptional circumstances--some of which I set out earlier--lead Ministers to a different conclusion. Far from being the piggy-in-the-middle, the Competition Commission will be the final arbiter of competition matters.
Finally, several hon. Members have said how important it is to get the right balance between competition and competitiveness, and regulation. All have their proper role to play, but it is misleading to suggest that good regulation is anything other than an asset. The circumstances governing the competitiveness of the City of London are important, but so is the very good regulation in the UK, which continues to assure the City's position in the global market.
Sir Nicholas Lyell:
The Minister is disagreeing with Don Cruickshank, the whole point of whose report was to tell the Government that the "have regard to" formula in clause 2(3), on which she is relying, is too weak. The report called on her to extend the regulatory functions in clause 2(2) to cover the requirements set out in clause 2(3).
Miss Johnson:
As I said earlier, in his comments on his interim report and the Bill, Don Cruickshank said that
I commend the measures to the House.
Mr. Heathcoat-Amory:
The debate has been about a fundamental aspect of the Bill that goes to the core of what the FSA is set up to do. The Minister's responses have not measured up to the importance of the subject, and there has been no real attempt to answer the many questions of Opposition Members.
The Liberal Democrats tabled one sad little amendment that was not selected. That lack of enthusiasm is not surprising: almost no Liberal Democrat Members turned up to the sittings of the Standing Committee, which ran from last July to just before Christmas. Given that they could find no one to man the Benches then, it is hardly surprising that none has intervened in the debate. But given that that party is inclined to lecture the rest of us about the need for parliamentary scrutiny and all the changes it wants to improve it, it is treating the House with some contempt when it does not bother to put in the hours and the work to hold the Government to account on a Bill of this importance.
The Minister started her last speech rather unfortunately by saying that she was not clear whether we supported competitiveness or competition, when it is perfectly clear in our amendments, particularly amendment No. 192, that it is both. All my right hon. and hon. Friends who have spoken have made perfectly clear their concerns about both. If the hon. Lady has not understood our position on that, she cannot have been listening to us.
It is really quite simple: we want to elevate the importance of competition at home and the maintenance of international competitiveness to being an objective of the FSA. At present they are referred to as principles to which it must have regard. We are trying to do so on behalf of consumers at home, who will be better protected by a fully competitive market, and the million or so people who work in the industries concerned, whose jobs depend on maintaining international competitiveness.
This is a vulnerable, fragile market in a ferociously competitive global environment. Nothing that the regulator does must needlessly undermine that competitiveness. Therefore, it is essential that it be elevated from being simply a principle to which the authority must have regard to an objective that must be pursued. That is why Mr. Cruickshank in his report emphasised the importance of making competition an objective in the Bill.
Instead of that comparatively simple approach, the Government now wish to erect a fantastically complicated bureaucratic system, whereby supposed inadequacies in the Bill and in the way in which the FSA exercises its authority on this subject are referred to the Director- General of Fair Trading, then to the Competition Commission and then to the Treasury, which will have the final say, and then back to the authority to make the changes. How much better it would be to put in the Bill the duty, the obligation, the requirement, the objective of competition so that the FSA can do it right at the start.
Sir Nicholas Lyell:
Does my right hon. Friend agree that this is all pointless on the key question
Mr. Heathcoat-Amory:
My right hon. and learned Friend reminds me of that essential point. International competitiveness is nothing to do with the authority's duty, so that would go entirely by the board.
Mr. Heathcoat-Amory:
I hope that the hon. Gentleman will forgive me if I do not give way. I am concluding.
To express our dismay over the way in which the whole issue of competition has been handled, we shall divide the House on new clause 27, as a mark of our suspicions and doubts not only about the new competition authority, but, more important, about the Government's wholesale rejection of our alternative approach, which would be simple and which has the support of outside commentators and experts, including Mr. Don Cruickshank. We believe that a Division is essential to demonstrate those points.
Question put, That the clause be read a Second time:--
"the international character of financial services and markets and the desirability of maintaining the competitive position of the United Kingdom".
That requirement has now been encapsulated and included in the principles governing how the FSA does its business. It also addresses the issue of whether it is appropriate to impose such an obligation on the FSA. Some aspects of competitiveness are the Government's responsibility. There are aspects of competitiveness that are the industry's responsibility. The Bill encapsulates the responsibilities of the FSA in that regard.
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