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30 Oct 2002 : Column 906—continued
Mr. Andrew Lansley (South Cambridgeshire): I apologise to the Minister and to you, Madam Deputy Speaker, for not being here for the opening speech on this group of amendments. I hope that the Minister will forgive me if I reiterate a point that she has already made.
I had thought that I understood what the Government were trying to do when we discussed in Committee the issues related to Lords amendment No. 1. The Government had previously vested the powers in one person—the Director General of Fair
Trading—but had resolved that it would be better in future for powers to be vested in a board, or body corporate, rather than a single individual. It is therefore suggested in the schedule that there be a chairman and not fewer than four other members.The other place helpfully explored the underlying intention of that change. The intention is, of course, to try to ensure corporate responsibility—a division of powers that does not allow their arbitrary exercise by an individual. No one is accusing the Director General of Fair Trading of acting in such a way, but there is a tendency in the media, if not in the business community, to personalise matters and to suggest that the exercise of powers by a single regulator relies excessively on that person. That is especially true when a regulator might be replaced.
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Corporate responsibility makes possible a sense of continuity and consistency on the part of a body corporate over a period of time, regardless of changes of personnel. That is a positive move, but it is curious that the Minister, in her response to my hon. Friend the Member for Blaby (Mr. Robathan), seemed to be reinventing the idea that the OFT chairman would be its director general. However, although the chairman may act as chief executive, under the Bill it is possible for the chairman to be appointed and for another OFT member to be the chief executive.
Miss Melanie Johnson: I hope that I can help the hon. Gentleman. I pointed out earlier that the Bill allows the OFT to have a separate post of chief executive.
Mr. Lansley: I thank the Minister, whose intervention reinforces my point. That possibility—of the OFT having both a chairman and a chief executive—is entirely consistent with the structure of schedule 1. I presume that the chief executive would be one of the other board members.
However, the Government seem to be contemplating that their objective will be frustrated, initially at least. The fact that the chairman of the OFT will be its chief executive reinforces the sense that the office is governed by an individual more than by a set of corporate responsibilities. That is a pity. Business people say that experience tells them that it is desirable to separate the roles of chairman and chief executive, and they believe that that separation should be evident in a body with so much power over them.
There is no notion that it is best practice among regulators to separate the roles of chairman and chief executive. There are good examples of people combining those roles in a satisfactory manner, but we are moving away from that structure and towards having a board in which the roles are separated.
Mr. Robathan: This issue is so complex that it is beyond the grasp of some very clever accountants and lawyers, but does my hon. Friend agree that the checks and balances governing the relationship between a chairman and a chief executive are especially desirable in respect of the OFT?
Mr. Lansley: It is not just a question of complexity. Indeed, that complexity suggests that the technical
nature of a problem might be understood better by an extremely able person such as John Vickers than by a board comprising some part-time members. The point of separating the roles of chief executive and chairman is to allow the chairman not to become immersed in detail. The chief executive needs competence when it comes to technical factors, but the chairman should be able to see the strategic wood rather than the trees. That is not to say that the chief executive should not have a role in strategy, but that can happen more satisfactorily if the chairman is distanced a little from the chief executive's responsibilities.I had understood that that was the direction in which the Government wanted to go. Lords amendment No. 1 seems merely to reinforce that intention on the Government's part and is consistent with the structure of clause 1 and schedule 1. I am surprised, therefore, that the Government are resisting something that is in line with their intentions.
Mr. John Redwood (Wokingham): I have declared my interest in the register. I was a fellow of an Oxford college that received an application from Mr. John Vickers for a fellowship by examination. As one of those who voted when he became a fellow of that college, I have the greatest regard for his intellectual ability and the high standard of his written work. I have since got to know him rather better and I also have a high regard for his fairness of mind and his independence, so my remarks are in no way an aspersion upon the present personality in the role. When legislating on such a powerful position, however, it is incumbent on the House to think about what might be needed were a less suitable candidate to be in the position at some future date, or were some unexpected events to transpire that, by definition, we cannot—and would not—forecast today given the personalities involved. To have good and fair law, it is important to think about what would happen should there be problems with the personality and decisions of the director general. I do not think that that has been adequately covered so far by the legislation or by ministerial statements.
The most obvious way in which power is sensibly limited in a pluralistic democracy is through competition. The irony of this post is that we are creating a monopoly to enforce competition on the commercial world. It is a paradox rather than a contradiction. Much as I admire competition, I would not want to advocate two or three offices of fair trading. That might be taking a good thing a little too far. However, that means that the most obvious way to control power, which we are rightly recommending to the private sector, cannot apply in this case.
The Minister may say that legal action could be taken if individual companies or industries do not like the way in which verdicts and judgments are going. There are legal remedies, but often it is not good practice, even for a powerful company, to take a regulator to court— it prejudices the relationship considerably. Many businesses and industries understand that they have to live with these regulators for the foreseeable future and are naturally reluctant to go to court.
There are appeals procedures against the judgments of the competition authorities, which are welcome and very necessary, but which are not sufficient for all the circumstances that might arise if a director general has
gone wrong and the concentration of power is being abused. That is the situation that my hon. Friends the Members for Blaby (Mr. Robathan), for Cities of London and Westminster (Mr. Field) and for Huntingdon (Mr. Djanogly) rightly said requires special attention.Splitting the roles could be of some assistance. There would be another senior figure to whom Ministers, the public and others could turn if it were felt that a director general had become unreasonable or unfair and was pushing the power too far. That provision would provide a balance or check in addition to the court and appeal system, which applies in some cases but not others. I want the Minister to reconsider all those factors because the Government have removed one of the most obvious ways in which this used to be done. They have decided that Ministers and politicians are particularly dangerous beings—I can understand why, given some of the Ministers that we have, although I am not commenting particularly on the present Minister. As a democrat before anything else, I believe that the correct way to control the power of powerful regulators is through democratic accountability to Ministers and this House, but the Government have made a series of legislative manoeuvres that will limit the power of politicians to intervene and, therefore, the power of the House to hold the regulator to account. That is a pity. In that context, I urge the Minister to think again about the Opposition's reasonable suggestion that a countervailing power should perhaps be introduced by having another senior person in the regulatory system who could be a court of appeal—a second place where one could go for informal redress and someone who could ultimately take action if the director general went over the top, became systematically unreasonable or became too powerful a figure.
I can understand why the Minister might not want to retrace steps by increasing the accountability of the regulator to this House and to Ministers, although that is a pity, so the second best answer is the one that my colleagues recommended so strongly and I urge the hon. Lady to think again.
Miss Melanie Johnson: First, the vast majority of the Lords amendments are minor drafting amendments. About 40 or 50 amendments were accepted in the other place in direct response to arguments put forward by the Opposition—indeed, some were Opposition amendments. I hope, therefore, that this Chamber will agree that the passage and consideration of the Bill has improved it as appropriate and that the Lords have played a useful role in that.
The hon. Member for South Cambridgeshire (Mr. Lansley) mentioned the strategic board, which is to be a minimum of four plus the Director General of Fair Trading, and the hon. Member for Twickenham (Dr. Cable) mentioned accountability. First, it is not necessarily the case that it is easier to hold to account a chairman whose role is separate to that of the chief executive. Whether there is one person occupying two roles or two people with two different roles, they will still have to answer in the role in which accountability has to be exercised. We have improved that accountability in many ways, not least through the provision for public
consultation on an annual plan and a report. Although it is obviously a matter for this House and its Committees, we expect that an appropriate Select Committee, or Select Committees, will exercise scrutiny powers. A whole range of provisions have improved accountability rather than weakened it.
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