Enterprise Bill

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Dr. Pugh: My question is on a small matter of detail that has not been covered in the Minister's remarks. Is it expected that board members, as opposed to the chairman, will be involved in executive decisions on major mergers, or is their job purely strategic?

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Miss Johnson: Their job is strategic, but all the powers exist formally at board level and will be delegated for operational purposes to the committees and the rest of the structure, to which the hon. Member for Huntingdon referred. Safeguarding OFT independence has also been raised, and it is important to note that, once appointed, members can be removed only by the Secretary of State on specific grounds of incapacity or misbehaviour. There would be no other reason for which board members could be removed, once appointed.

The staff will be civil servants working in a non-ministerial Government Department that is a Crown body. The number of civil servants, and their terms and conditions of service, will need to be approved by my right hon. Friend the Prime Minister, the Minister for the Civil Service. The schedule allows for the OFT to establish committees and advisory bodies, and to regulate its own ways of working. It must, however, consult the Secretary of State on its procedures for dealing with conflicts of interest—clearly a difficult and important area—so that Ministers can ensure that proper procedures are in place. Indeed, a general problem as a result of potential conflicts of interest concerns the ability to appoint people who will be able to operate in key areas.

In line with the independence principle, the schedule gives the OFT a general power to do anything that will facilitate or assist the performance of its functions. Obviously, that is constrained elsewhere in the Bill.

Mr. Djanogly: We have not touched on decision making. Would decisions be taken on the basis of a majority vote by the full board?

Miss Johnson: As I said, it is for the OFT to regulate its own procedures, such as quorum voting arrangements and committees, in line with its independence. We do not want to interfere in those matters, and it would not be appropriate for the House or the Committee to do so for the reason that I gave; it is important that those arrangements reflect what the OFT needs in order to function effectively. I know that hon. Members are concerned about that.

Mr. Djanogly: When the OFT publicises its decision, will dissenting opinions be laid out specifically, with reasons given as to why the dissenter is dissenting, as in a court judgment?

Miss Johnson: That also is a matter for the OFT. I will take the hon. Gentleman's question away and consider whether I want to comment on it further. However, I believe at this stage that that is a matter for the OFT to consider under the arrangements that I have outlined this morning. As I said, the OFT will be constrained by other Acts and laws. Within the restrictions, however, the OFT is allowed to act as it needs to in order to fulfil its functions.

Finally, the schedule lays down that the OFT, as an authority, may be subject to investigation under the Parliamentary Commissioner Act 1967, which specifies that its members are barred from sitting in this House or the Northern Ireland Assembly. Hon. Members therefore need not apply. The schedule sets out the framework within which the OFT will operate. It also sets important boundaries and confers equally

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important powers and freedoms on the new organisation. That is in line with an authority that is an independent, but still accountable, transparent public body.

Question put and agreed to.

Schedule 1 agreed to.

Clause 2

The director general of fair trading

Question proposed, That the clause stand part of the Bill.

Miss Johnson: The clause will abolish the office of the Director General of Fair Trading and transfer his rights, property liabilities and functions to the new OFT that clause 1 creates. The Fair Trading Act 1973 established the statutory office of the DGFT, as the hon. Member for Eastbourne said. The office holds a wide range of consumer protection and competition powers, many of which are being reformed. In the light of those reforms, the Government believe that an individual should no longer hold the powers. We propose under clauses 1 and 2 to transfer the powers to a new statutory body with a board and a chairman. We already discussed the nature of the board and the expertise and knowledge that will inform its decisions.

As I said, the current DGFT agrees with the decision. He was appointed in the full knowledge that that was the Government's intention. As was set out in Mr. Vickers' letter of appointment, we intend to appoint him as the first chairman of the OFT for the remainder of his existing term. He has stated publicly that he wants to serve only one term, which covers his time as DGFT and chairman. Mr. Vickers has appointed an advisory panel to act as a shadow board that will provide him with advice on the OFT strategy, new policy developments, areas of research and debate, market analysis and communication. The panel is strictly advisory and lacks the executive powers that the new OFT board will have under the Bill. Nevertheless, it has provided useful experience prior to the move to a full board.

The abolition of the office of DGFT and the move to a statutory authority will benefit business and consumers. The new authority will be independent and have a wide decision-making base. It will be fully accountable to Parliament and the public, and will be able to act swiftly and effectively.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3

Annual plan

Question proposed, That the clause stand part of the Bill.

Miss Johnson: The clause will oblige the OFT to publish an annual plan before each financial year. The plan will include a statement of the OFT's main objectives and priorities for the year ahead. The OFT must consult as it prepares the plan, and it must lay the

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published document before Parliament. As I said, this is an important means by which Parliament and the public can hold the OFT to account. It will have published objectives and priorities, which people will be expected to meet. Through the annual report provision in clause 4, the OFT will have to report on its progress against those objectives and priorities.

Mr. Waterson: We welcome the requirement to produce an annual plan. It will be beneficial for the OFT and help it to get its thoughts and priorities in order if it has to set broadly in context its plans and activities for the ensuing year and tell people what to expect, within and without the organisation. It will also help outside bodies, individuals and companies. We shall have more to say on annual reports.

I hope that the Minister will comment on a small practical point. In the clause, as in other provisions in this part of the Bill, there is a requirement to consult before publishing the annual plan. The clause states that

    ''the OFT shall consult such persons as it considers appropriate.''

That is a bit loose; is it really sensible to leave it to a body like the OFT to decide who it thinks appropriate to consult? We have not got our heads round a suitable amendment listing those who would be appropriate and there is always the worry of disappointing those who are not on such a list. The Government should look at that matter again as it must be in everyone's interest, including that of the OFT, if there is as wide a consultation as possible on the annual plan and on its general activities. Too often, bodies regard consultation as a tiresome formality, and I hope that the OFT will not take that view. However, if the Minister had some thoughts on how the provision could be tightened up, they would be welcome.

Miss Johnson: We deliberately left the matter open to reflect the fact that things enshrined in primary legislation are remarkably difficult to change. As the hon. Gentleman said, it might be a while before there is another Bill that allows the flexibility to change something that is already on the statute book. Were we to specify people whom the OFT should consult, we might rapidly find ourselves with an exhaustive list, which would be dangerous. Such lists are seldom exhaustive, although they are frequently exhausting in Committee. On the grounds of future flexibility and because there may be unforeseeable developments, we would not want any further specification.

I entirely accept the hon. Gentleman's point that there may be an interest in who the OFT plans to consult, but it is part of its accountability that it will have to explain who it is consulting and why. I am sure that representations will be made by bodies or persons who are not involved in the process but think they should be, and by the House and its Committees in deciding whether consultation has been appropriate.

Question accordingly agreed to.

Clause 3 ordered to stand part of the Bill.

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Clause 4

Annual and other reports

Mr. Waterson: I beg to move amendment No. 3, in page 2, line 24, at end insert—

    '(c) a detailed summary of OFT decisions and investigations over the preceding year'.

The Chairman: With this we may take the following amendments: No. 4, in page 2, line 24, at end insert—

    '(d) an assessment of the additional costs to business of the exercise of its functions.'.

No. 2, in page 2, line 26, at end insert—

    '(3A) The Government will arrange a debate in each House of Parliament on the annual report within three months of its publication'.

Mr. Waterson: We are really steaming through the Bill, Mr. Conway. I hope that the amendments' intent is obvious, but for the avoidance of doubt I shall go through them in a little more detail.

We welcome the production of annual reports by the OFT, including the annual report, but there should be more prescription of what it should contain. Amendment No. 3 specifies that it should include a summary of OFT decisions and investigations in the preceding year; that, for all I know, is the intention, anyway. As the OFT builds up a catalogue of past decisions and investigations, it helps to have such a record, as it tells people in the outside world how it approaches certain situations and about its powers and functions. I hope that such matters will be part of the report.

Amendment No. 4 makes the point, wholly unexceptionally, that the report should contain an assessment of any additional burdens on business because of the exercise of the functions. Again, I shall come back to that in a moment.

I said on Second Reading—I have not changed my mind since—that it stretches credulity that the regulatory impact assessment report on the competition and consumer protection measures in the Bill suggests that there will be no extra cost to business. In any event, the Bill should oblige the OFT in its ongoing work to apply its mind, at least annually—I would hope that it would do so every day or week—to the effect, burden and cost on business that its activities, particularly investigations, will cause. Again, we will return to that theme.

12.30 pm

Amendment No. 2 concerns the theme of transparency. The Under-Secretary has said that the Government's aim is to have transparency and openness and we welcome those aspirations. Indeed, we welcome them so much that we intend to do our best to ensure that they are cemented into the final version of the Bill. It is right that there should be an annual report and that, as detailed in subsection (3), a copy should be laid before Parliament and arrangements made for it to be published. Amendment No. 2 asks only why, having had the report produced, laid before Parliament and then published, the Government should not also be under an obligation to arrange a debate. It seems sensible for the House to make time for a debate once a year on

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the work of the OFT, particularly in its early life, and I hope that the Government will readily accede to that.

I return now in slightly more detail to amendments Nos. 3 and 4. It is important for there to be an annual survey of the decisions and investigations of the OFT, first of all by way of precedent. As it goes along, the OFT will be setting precedents and we all know that in the field in which it will be engaged precedents can be important in saving time and legal costs.

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