Enterprise Bill

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Dr. Cable: I agree with the spirit of the amendment, but I am not sure whether 50 per cent. is necessarily the correct proportion or whether we should define industry and commerce in a narrow sense. I agree with the spirit for two reasons, which have already been given by the hon. Member for Eastbourne. First, the people who sit on the board of the OFT will be powerful people. They will make major decisions that directly affect the lives of tens or hundreds of thousands of people who are affected by merger decisions, as well as millions of consumers. Secondly, it is important that the OFT does not become just a parking place for ex-civil servants. I do not mean any disrespect to ex-civil servants, as they are undoubtedly admirable people, but such a situation would be wrong. I was slightly worried by the tone of the Under-Secretary's reply on clause 1, in which she seemed to emphasise the closeness of the OFT to the spirit and structure of the civil service. If the OFT develops in that way, it will not be right.

Following the line of argument of the hon. Member for Eastbourne, OFT members will need to be wide in their capabilities and several qualifications strike me as necessary. They must have some understanding of the real world, and I hope that when the hon. Gentleman specified including 50 per cent. from industry, he was not talking only about those from the employers' side. Ex-trades unionists with experience of industry may have something to contribute and if he meant to include them, I would be much closer to his point of view. People who have an understanding of industrial and commercial issues from direct experience would be desirable. One should not be unduly prescriptive about that, and financial and economic journalists are often some of the best-qualified people to make such judgments. Therefore, a first requirement should be an understanding of the world of commerce and industry.

However, that is not all. Members of the OFT will have to have a good understanding of industrial economics, which is a highly technical subject. It is important to follow what has happened in the United States Department of Justice and the European Commission. Some thinking has become very sophisticated, in terms of both legal and economic principles. I shall not bore the Committee with an hour-long dissertation on the Hirschman index and other hot topics in the competition policy world, but members of the OFT will have to be familiar with demanding literature on such subjects. They must be familiar with business and understand industrial economics.

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OFT members must also have a political feel—they must be not politicians, but people who understand that when a merger decision is taken it affects many people down the supply chain. Even though the terms of reference will be narrowly drawn to encompass the competitive effects rather than the wider national interest, OFT members must be sensitive to the problem. They also need to understand the way in which decisions will affect financial markets, so we are talking about people who are qualified in a wide variety of subjects.

The amendment is useful because it flags up the fact that the OFT members are important and must be able to understand both the academic and practical aspects of complex business decisions. They are unlikely to be found in great numbers in the civil service machinery, although some extremely able civil servants may well come forward. I support the amendment in principle, but I am open to suggestions about how it could be couched in slightly different language if that helps.

Mr. Ken Purchase (Wolverhampton, North-East): The hon. Member for Twickenham rehearsed the arguments as to why we should not put off the amendment. This is the age-old problem of seeking people to serve on such bodies who have a sufficiently wide experience and knowledge to make a significant contribution. I have long given up the notion that there is a body of independent people who can express a value-free opinion without let or hindrance and put aside all other interests to arrive at a fair and proper decision. My experience is that such people are in exceedingly short supply and it is chasing an illusion to believe that we could people a body with such super-beings, who do not exist.

The hon. Gentleman also gave us reason to recognise that his own amendment, which would mean that such a person would be interrogated by the Trade and Industry Committee, would also be a bad idea. You wisely did not select the amendment, Mr. Conway. The hon. Gentleman has told us from his wide experience and knowledge of the matter exactly what would happen. It would be worse than an interrogation. People would be put off being on the committee if they had to face the barrage of questions that the hon. Gentleman would ask as a member of the Select Committee.

There is no ready formula by which to appoint people to these important bodies. When the chairman or chairwoman is chosen, after a quite exhaustive procedure, not just a dusting down of the great and the good names that might appear from time to time, that person must be given some credit. He or she must be able to choose and to liaise with the Secretary of State to get a balanced and proper set of people to serve on the committee. The idea that 50 per cent. should represent one interest seems perfectly reasonable on the surface. Of course, we need people who understand what they are doing and have a background in the areas in which they are expected to make important decisions. They will not come with an independence of mind, however. Like most of us in this Room, they will come with bags and baggage that will preoccupy them and affect their decisions.

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It is best left to the Secretary of State and the chairman or chairwoman of this committee to decide who may serve, recognising that we all have our own interests to serve, that we can call upon expert opinion, that we can ask for written submissions and that the body involved can take evidence from as wide a range of people as it wishes in examining any issue that is referred to it. We should therefore reject the amendment on the grounds that we could never satisfy all the different sectors that would want to be represented at this level, but should leave it to the common sense and good judgment of whoever is appointed as chair, in liaison with the Secretary of State.

Mr. Djanogly: I certainly support the amendment, although I should like to turn it around and ask, if the Government are minded to turn this down—I know that this will not happen—what would their policy be for appointing candidates to the board? It is worth speaking frankly. The concern is that this will become another way of appointing cronies. The Labour Government have packed the other place with cronies and they have packed quangos with cronies, so why should they not pack this board with them? It is a straightforward suggestion, but we deserve an indication from the Under-Secretary of the basis on which appointments will be made.

Mr. Barnes: Perhaps the hon. Member for Eastbourne and the Under-Secretary could explain this to me. The amendment refers to those

    ''currently active in industry or commerce''.

The hon. Member for Twickenham assumed that that would include trade unionists and people on the shop floor. While it might cover those who are working and employed in industry and commerce, would it cover trade union officials who were negotiating on behalf of those people and might have some expertise in those areas but were not on the payroll?

Mr. Mark Field: Does the hon. Gentleman regard a full-time shop steward who has spent the past 15 years as a political agitator as someone who is currently and actively involved in industry and commerce?

Mr. Barnes: That is a question for the hon. Member for Eastbourne. He should clarify exactly who is covered.

Mr. Waterson: When I drafted the provision I was not thinking directly of trade unionists. As my hon. Friend the Member for Cities of London and Westminster suggests, one may stretch the phrase

    ''currently active in industry and commerce''

a little too far. We do not want a quota system under which different groups have a certain number of positions. I am merely trying to underline the fact that the people involved should have real experience of the burdens on business that legislation can bring about, sometimes unintentionally.

12 noon

Mr. Barnes: An active shop steward working in a firm who represents people well is likely to have considerable useful experience to draw on. I do not know whether the Minister believes that that example

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is covered by the definition in the Bill. I was worried that the provision might be an effort to turn the appointments procedure into a gaffer's charter.

Miss Johnson: Of course, I greatly hope that strong business candidates will apply to the OFT board because their experience and insight could be valuable. We shall run a fair and open competition to appoint members through Nolan procedures. We are hoping to recruit people with a range of skills, expertise and abilities that are relevant to competition or consumer protection. I do not want to be drawn into the debate among hon. Members on both sides of the Committee about the exact backgrounds from which people will be drawn. I accept all the arguments about the wide skills that are necessary for this important job. A relevant set of skills and abilities will need to be deployed on behalf of the OFT—not least common sense and good judgment, the rarest of qualities in my experience and often difficult to obtain.

At this stage, it cannot be right to appoint half from one background and half from another, thereby imposing a quota. Opposition Members, particularly the hon. Member for Eastbourne, are opposed to the imposition of quotas. We shall appoint the best people through the recruitment process, and I assure the Committee that we want to secure people with business experience. I share the overall thrust of the amendment—though not the 50 per cent.—but, for precisely the reasons mentioned by the hon. Member for Twickenham when he listed all the potentially relevant skills, it is not the best way to achieve the objective. We shall leave it to those appointed to secure the right balance and appoint people of high quality.

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