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5 Nov 2002 : Column 248—continued
10.45 pm
Bob Spink (Castle Point): I cannot agree that the roles of chairman and CE can be sensibly combined for any period. That is organisational nonsense. It would not pass even key stage 1 in management philosophy.
I do not want to be a killjoy, but such confusion on the part of the Government should not be allowed to pass unmentioned. I am pleased that the Government have caved in on the amendment, but I cannot see why the transitional period should be set at two years. I had hoped for a more detailed explanation of that from the Minister. Perhaps there is still time for her to cover those
points. Why is it two years? Why not one year, six months or even two months? We need to ask those questions.If the structure of the OFT is not right, how can it do its important job in our economy? The answer is that it probably cannot. I like the idea of the hon. Member for Twickenham (Dr. Cable) that a new appointment should at least, out of courtesy, be scrutinised by the Select Committee. I hope that those on the Treasury Front Bench will take that on board.
I will not delay proceedings further but I thought that those points should be raised.
Miss Melanie Johnson: I reiterate the fact that we have always accepted that a split could be made: the Bill always made it possible for the two roles to be split. However, we have always said that we wished to honour an existing appointment. In response to the hon. Member for Castle Point (Bob Spink), the reason why we have gone for two years is that John Vickers retires in 2005. In fact, it will make little difference because the amendment relates to a process of appointment, not to any existing post holder. However, it is clear that, within two years, there will be a change at the top of the OFT. That change is recognised in the transitional period in the amendment.
On the role of the Select Committee on Trade and Industry or indeed any other Select Committee, we are enthusiasts—I am sure that the OFT is—for parliamentary accountability, for seeing that that accountability is exercised fully, and for members of Select Committees taking an interest directly in the work of the OFT in its many guises. I trust that that work will go on. It is unlikely that we would want to go down the path that the hon. Member for Twickenham mentioned. In any event, as he rightly said, the amendment is concerned not with that issue directly but with ensuring that, after the honouring of the two-year period, the two jobs of chairman and chief executive will be split. I gave the House an assurance that we would look at that matter. This is a more formalised arrangement to reassure this House and another place. I trust that Members will receive it in the spirit in which it is offered.
Government amendments (a) and (b) in lieu of Lords reasons agreed to.
Miss Johnson: I beg to move, That this House does not insist on its amendment 2A to Lords amendment No. 2 to which the Lords have disagreed, but instead agrees with amendment (a) in lieu thereof.
As I said in last week's debate on Lords amendments, I am happy to accept the principle of Lords amendment No. 2—that the Office of Fair Trading should have regard to the generally accepted principles of good corporate governance in its affairs. However, I consider it necessary to amend the Lords amendment to ensure that the OFT must have regard only to the principles of good corporate governance that may reasonably be regarded as being applicable to it, and to ensure that the OFT must also have regard to other relevant general guidance concerning the governance of public bodies.
As hon. Members will know, we tabled an amendment last week, modelled on a similar provision in the Office of Communications Act 2002, to achieve
these changes. However, we have listened to the strong opinions in the other place, which favoured an amendment modelled on the Financial Services and Markets Act 2000. Today's amendment is therefore based on the 2000 Act, which includes a provision that refers to having regard to the principles of corporate governance, which may be reasonably regarded as applicable to Xthe Authority". Obviously, our draft refers instead to the OFT. We have added to that model a reference to having regard to guidance that is aimed at public bodies. This is an important change. The OFT will not be a company, so it must take proper account of guidance, rules and procedures for public bodies, such as Treasury rules on public accounting.By way of contrast, the Financial Services Authority is a private law body—a company limited by guarantee, on which statutory functions are conferred. The provision in the 2000 Act therefore needs amending to be fully appropriate to the OFT. I believe that amendment (a) achieves the Lords' underlying aim—that the OFT should have regard to the principles of good corporate governance—with a provision that is modelled on the 2000 Act. We have changed the provision only where necessary to ensure that it is fully appropriate to the OFT.
Mr. Robathan: It is interesting to note that yesterday in the Lords, at the early hour of 6.41 pm, long before dinner, the Government could summon only 129 people in support of their position—seven fewer than they managed some 20 minutes earlier for the first amendment. I am not sure whether wiser and more learned counsel prevailed—
Miss Johnson: Given today's circumstances, would it not be wiser for Opposition Members to refrain from mentioning support that can be achieved in furtherance of particular aims or objectives?
Mr. Robathan: I am sorry, but I was discussing the matter in hand—amendment No. 2 to the Bill—rather than making cheap and foolish comments about the Opposition.
Bob Spink: Perhaps I can help my hon. Friend by suggesting that the Government's lack of support in another place was due to the contradictory nature of these amendments. According to any management textbook, the principles of good corporate governance generally require the splitting of the roles of chief executive officer and chairman. How does the Minister square that with her amendment?
Mr. Robathan: My hon. Friend makes a good point. The Government are in confusion over this issue, which is why the Minister tried to deflect my observation with a rather foolish comment that had nothing to do with the matter in hand. However, our exchange must have been in order, Mr. Deputy Speaker; otherwise, you would have pulled me, or her, up. [Interruption.] Hon. Members may jest, but we are talking about corporate governance, a very serious matter in the light of Enron and of other scandals in the United States.
What I and most other Opposition Members do not understand is why the Government exhibit such antipathy towards good corporate governance. Lords amendment No. 2, which was passed last night, states:
- XIn managing its affairs the OFT must have regard to the generally accepted principles of good corporate governance."
As the Minister has pointed out, the exact words of the amendment were taken from the Financial Services and Markets Act 2000, which instructed the Financial Services Authority to
- Xhave regard to the generally accepted principles of good corporate governance."
Good corporate governance is the cry of the moment, especially on the Labour Back Benches. A ten-minute Bill was introduced by the hon. Member for Ilford, North (Linda Perham) on 15 October, entitled XCorporate Responsibility". A Government White Paper on company law—which I am sure has been read by all hon. Members—was published in July. It is called XModernising Company Law". It is a detailed document, but I shall cite only one example. It states:
- Xwe are also taking a number of other initiatives to promote improved corporate governance, such as . . . the work undertaken in the wake of the collapse of Enron".
The Government's amendment appears to have been produced in a fit of pique. It dilutes the provision, although less so than the amendment they produced last week. It sends the message that good corporate governance is necessary for everybody except the regulator or a Government body. We can all make our own judgment about why the Government are so unhappy with the totally innocuous wording of Lords amendment No. 2. However, I know that discussions have taken place in the other place, and the Government have their huge and somewhat mindless majority here, so I will not press the issue to a vote.
The Bill has been hugely improved by close scrutiny in both Houses, but especially in the Lords. The scrutiny of the Bill has forced the Government to think about what they are doing and to defend their case, however badly. I came to the Bill a little late in the day—
Mr. Tony McWalter (Hemel Hempstead): It shows.
Mr. Robathan: From my reading of Hansard, I do not recall that the hon. Gentleman took much part in the debate. I was astonished to read that the Bill has had nearly 750 amendments.
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