Enterprise Bill

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Mr. Field: Like the hon. Member for Southport (Dr. Pugh), I have concerns about the controversy that is likely to arise, and I should like to have a general assurance from the Under-Secretary. The Government have made a big song and dance about the Bill and the idea that it is somehow out of the realms of party politics. My concern is that, although that is the aim, there is a real risk that by appointing figures who are controversial or who have had links with particular political parties, businesses or interest groups, there will be even more controversy, even though there will not be as strong a direct link. In fact, issues may come into play that show that there are strong links.

It has been said that the current system works fairly well. I should like to have some guidance as to why the Government believe it so important to move away from that system—which places more direct accountability on the shoulders of particular DTI Ministers—and why it is desirable to move away from the political input that the DTI has had in this area.

Miss Johnson: I welcome the contributions that hon. Members have made to the debate, and the support that has been expressed for various aspects of the provision, including the establishment on new terms of the Office of Fair Trading and the institution of a board. It was suggested that the OFT board should have four or five members. It might be helpful if I specify that we are looking at five to seven members.

Several hon. Members raised the issue of accountability; we agree that it is probably the most important issue. Accountability is necessary, not least from the point of view of the House. The OFT will be accountable to the Secretary of State, Parliament and the public. The chairman of the OFT could be summoned by Select Committees. Indeed, I am delighted that the Trade and Industry Committee already takes an active role in scrutinising the work of the OFT and the Competition Commission. Its report on the OFT's consumer work in 2000 influenced the OFT's consequent work on consumer credit, for example. I understand that the Trade and Industry Committee will talk to the OFT and the Competition Commission on 23 April.

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On the wider points about accountability, we believe that the OFT should follow the general principles of good governance of all bodies corporate. The working arrangements are for the OFT board to agree but we expect them to fit into the general thrust of transparency, openness and accountability set out in the Bill. We will talk a lot about transparency, openness and accountability because those qualities are vital. Indeed, we believe that making the changes will enhance rather than detract from them.

Clauses 3 and 4 require the publication of an annual plan for the year ahead, as well as an annual report. The OFT must consult when preparing its annual plan which, with the annual report, are to be laid in Parliament. The OFT's performance will be monitored against objectives, both by Parliament and the public. The OFT needs to keep the public informed of its work and, under clause 4, to publish other reports of its work.

Dr. Cable: Will the Minister clarify her definition of accountability? She has acknowledged the role of the Trade and Industry Committee. Why should not the Committee have the same scrutiny role on appointments that the Treasury Committee and the Monetary Policy Committee have, as requested by the Chancellor?

Miss Johnson: Unlike the Monetary Policy Committee, the OFT is and will remain a Department; indeed, it is part of the Executive. It is not normal practice for members of the Executive branch to be appointed or approved by Parliament. I cannot think of precedents for that and it would be an unusual step for us to take. However, as I said, we welcome the interest taken by the Trade and Industry Committee. The chairman of the OFT will be called to give an account of its work and to discuss regularly such matters as the annual plan and the annual report with the Trade and Industry Committee. Those are vital elements in the process. I understand the point of the hon. Member for Twickenham on possible parallels with the Monetary Policy Committee, but I hope that he appreciates that there are also significant differences with that Committee.

Mr. Djanogly: On the OFT being part of the Executive, surely the Minister appreciates that we are talking about individuals who are pulled out of business and various walks of life. We are talking about calling to account not Ministers, but a very different kettle of fish.

Miss Johnson: The hon. Gentleman is right; we hope to draw board members from business and to bring with them a range of valuable outside experience and perspective. The board will be an important part of the function of the OFT. However, there are not parallels between members of an organisation or board acting in that capacity in relation, in an executive function, to other parallel parts of Government, effectively Government Departments; there is no read-across where Select Committees vet, have hearings on or appoint members of other parallel board arrangements—

Dr. Pugh: Will the Minister give way?

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The Chairman: Before I call the hon. Gentleman, I remind the Committee that schedule 1 deals in considerable detail with the waters we are now getting into. It would be helpful if hon. Members did not stray into the next matter for consideration.

Dr. Pugh: Is not there a paradox, in that the Bill sets up a board that is intended to be independent of the Secretary of State, but cannot be scrutinised because it is part of the Executive? Surely it cannot be both a truly substantial body, by itself independent of the Secretary of State, and not subject to scrutiny because it is under the Secretary of State.

Miss Johnson: I am grateful to the hon. Gentleman for making that point. The board's independence is very important so that the OFT can regulate its own procedures—quorum, voting, committees and so on—and have flexible arrangements enabling it to take quick decisions when necessary. It is important, too, that there is no question of political interference. I am grateful for the remarks made by the hon. Member for Twickenham about the standing of the OFT and the fact that there is no question of it being interfered with. As the hon. Gentleman said, it is an honest system that has been sparingly used. None the less, there are risks in having a political dimension.

Taking the step of distancing politicians from the decisions that need to be made about competition on competition grounds is important; we would lose a lot were we to argue our way out of it. I appreciate that there is a desire in the House, and the Committee, to maintain accountability, which is why I stressed that the measures that deliver enhance accountability over the existing arrangements. I hope that what I have said will reassure my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) about the avenues of access, many of which will remain. There will be discussions with the Department on such issues and greater scope for parliamentary engagement. As in the past, there will be the usual scope for Members of Parliament to contact the Office of Fair Trading to raise issues and take matters forward on behalf of their constituents.

On the body corporate and the statutory board, it is a matter of terminology; there will be a board and it will be a legal entity. The OFT and the board are one and the same entity, so the reference to a board is unnecessary in the Bill.

I welcome the focus of the hon. Member for Eastbourne on important issues such as effectiveness, the burdens on business and the resources available. I look forward to further opportunities to debate those matters in the Bill.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Schedule 1

The Office of Fair Trading

11.45 am

Mr. Waterson: I beg to move amendment No. 1, in page 182, line 6, at end insert

    'of which at least 50 per cent. will be currently active in industry or commerce at the time of their appointment'.

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I hope that what we have in mind in amendment No. 1 is clear; it leads directly from our previous debate. I am sure that all members of the Committee are as keen as we are that the new board should have considerable standing. I mention in passing that we broadly share the concerns of the hon. Member for Twickenham, who has tabled a starred amendment on parliamentary scrutiny. He has had his bite of that cherry and made his points well. I will move on rapidly, before I am ruled out of order.

The point of my amendment is that we do not want as appointees to those important positions armchair warriors, retired civil servants, long-retired business men, those with narrow experience or those who are no longer involved in the daily cut and thrust. That is why the amendment states that at least 50 per cent. of appointees should be active in industry or commerce at the time of their appointment. If the Under-Secretary suggests that there may be up to seven such appointees, I will leave it to those who are cleverer than me to work out how the 50 per cent. would work.

The OFT, as it is newly constituted, will have some sweeping powers and responsibilities and is in a position to have a dramatic effect on individual businesses and business sectors throughout the economy. People should therefore be appointed who are, in some measure, engaged in hands-on industrial or commercial activity at the time of their appointment. The other 50 per cent. could be appointed from the categories that I mentioned, or could have competition experience, as the hon. Lady suggested.

The OFT should not be made up wholly of people who represent some narrow consumer or competition interest. There may be some role for one or more academics, but people with hands-on, real world experience are important in this context. Although I hesitate to pray in aid regularly, I do so with the stated views of the former Secretary of State who is now the Secretary of State for Transport, Local Government and the Regions. In May 2000, he stated in a Department of Trade and Industry press release:

    ''The new Authority will give greater transparency and accountability to the OFT. More board members will give a wider range of expertise to the organisation, rather than executive power resting with one person. This will give businesses and consumers a stronger voice at the heart of the OFT.''

Our amendment merely seeks to put into effect the stated intention of the previous Secretary of State to give businesses—in this instance—

    ''a stronger voice at the heart of the OFT.''

The Under-Secretary may be about to tell us that the policy has changed in the meantime. If so, I can certainly understand the desire of any Minister to distance themselves from the record of the right hon. Gentleman in any of his previous incarnations. However, his sentiment seems eminently sensible. I understand that Mr. Bridgeman's successor has set up a four-member advisory panel that meets monthly to discuss policy, strategy, research and communication. It includes a former editor of the Financial Times and a leading competition academic and author. The OFT has been at pains to make it clear that the body is strictly advisory. It issued a press release that stated:

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    ''it is not a shadow board or precursor to the statutory board''.

I assume that one can surmise from that that the composition of the board would be different from that of the advisory panel. It would help to have the Under-Secretary's more detailed thinking on that, which is why we tabled the amendment. However, at the end of the day, the amendment should present no difficulties if the hon. Lady still agrees with the views of the previous Secretary of State.

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