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Session 2001- 02
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Standing Committee Debates
Enterprise Bill

Enterprise Bill

Standing Committee B

Thursday 18 April 2002


[Mr. Nigel Beard in the Chair]

Enterprise Bill

9.30 am

The Chairman: Before we begin, I should point out that amendment No. 135 was wrongly printed at the beginning of the selection list. We have passed that point in our consideration of the Bill.

Clause 11

Super-complaints to the OFT

Mr. Nigel Waterson (Eastbourne): I beg to move amendment No. 19, in page 5, line 6, leave out '90' and insert '60'.

The Chairman: With this it will be convenient to take amendment No. 25, in page 5, line 13, leave out subsection (4).

Mr. Waterson: Clause 11 is crucial, as it deals with super complaints. The amendments have slightly different functions: one would reduce the period for responding to a complaint from 90 days to 60 days; the other would remove subsection (4), which allows the Secretary of State to substitute any period for the period set out in the Bill.

We discussed the need to ensure that super complaints, stop now orders and Office of Fair Trading investigations do not impose unnecessary burdens and costs on business, even if they are unobjectionable or a good thing. During our lively debate, it was clear that a deep, philosophical difference split the Committee, and the Liberal Democrat party, down the middle. [Interruption.] The hon. Member for Orkney and Shetland (Mr. Carmichael) did not attend that sitting, so it would be fascinating to know whether he can break the tie among his colleagues, who seem to have different views. Naturally, it is a pleasure to have him with us.

Those with old and new Labour tendencies are happy to heap ever more burdens on business—probably because they believe that business deserves it—and have no concern for the results. The first instinct of others—the official Opposition—is to check whether the cost-benefit ratio is out of kilter, resulting in the burdens on business being excessive. I leave aside another great theme that runs through this Bill and much of the Government's legislation; the law of unintended consequences.

In a sense, that is rendered irrelevant by yesterday's events. As Mr. Digby Jones of the CBI said in response to the Budget:

    ''there will be deep dismay at the net increase of some £2.5 billion in the cost of doing business in Britain''.

All our deliberations on the so-called Enterprise Bill must be seen against that background.

The Bill rightly sets out a period within which a

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response to a super complaint must be received. The OFT must indicate what, if any, action it intends to take in response to that complaint. We deal with all these issues on the hopeful assumption that the resources, including staff, will be available to ensure that the OFT can deal with them. I suspect that there will be a rush of super complaints from the designated bodies. I will discuss who may be a designated body in a moment. The consumer organisations, the most likely candidates, are keen, to put it mildly, on the new provision. The OFT will therefore suddenly find its in-tray filling up. Let us hope that it is in a position to respond rapidly to the complaints.

Having said that, we believe that once things have settled down, the OFT should be able to respond more quickly. If a case is serious enough to form the basis of a super complaint, it must mean one or both of two things: first, it is serious matter affecting many consumers up and down the land, and secondly, because it will have taken a while to come to the attention of trading standards officers, Members of Parliament, consumers associations or whomsoever, the problem will have been in train for some time and will need addressing.

We have plumped for a period of 60 days, so that the response is fairly rapid. It does not have to be the final word on the matter, but it should be possible within that period for the OFT to take at least a prima facie view—I assume that is what is envisaged—on whether the matter should be pursued. The complainant organisation and the consumers that it represents can then be assured that the issue will be taken further.

We agree with having a limit on the period of response for another reason. Companies should not have to contend with a sword of Damocles hanging over them; an open-ended risk of being in jeopardy of investigation. Companies should be told quickly either that the matter will or will not be pursued, and 60 days is not an unreasonable period. I look forward to hearing the Under-Secretary's response. If she were to argue for an even shorter period, we might be prepared to accept it.

Amendment No. 25 deals with the Secretary of State's powers to change this period. Clause 11(4) refers to

    ''substituting any period for the period for the time being specified''—

90 days—but should mean substituting only a shorter period. The clause does not say that. Despite the scramble to table amendments on other subjects as a result of the Government's own actions, we should have tabled an amendment to that effect.

I hope to receive the Under-Secretary's assurance that the Government envisage reducing the period only when the OFT has bedded down with its new functions, the staff is in place and everything is running efficiently. It would be disappointing to consumer bodies—particularly the designated ones—as well as to us, if the OFT used the excuse of pressure of work or inadequate resources to extend the period. By definition, if dealing with super complaints is to

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have the dramatic effect that the Government promise, the process must surely move swiftly. The OFT may have the best intentions in the world, but we should be cautious about this provision.

Mr. Jonathan Djanogly (Huntingdon): In that context, it is interesting to note that with respect to the preliminary investigation—before the statute comes into force—of dentistry, the OFT answered the complaint exactly within the 90-day period. Will the Under-Secretary confirm that that is how it will be done in future? If so, 90 days, as opposed to a shorter period, becomes a highly pertinent issue.

Mr. Waterson: My hon. Friend has examined the dentistry complaint in greater detail than most of us, for which we are all deeply grateful to him. If the dentistry complaint is punted as the sort of matter that will be handled under clause 11, it is a tad disappointing, as my hon. Friend suggested, that it took right up to the wire—the full 90 days—for the OFT to respond. Clearly, it was driven not to take beyond 90 days, which would have been poor salesmanship in the context of this Bill. However, it is unfortunate that the OFT took that long when it does not yet have the panoply of powers and functions that we are proposing to heap on it and when, by definition, it is considering only one or two prototype investigations. There is a concern. I do not want to overstate it, but I will be interested to hear what other Members and the Under-Secretary have to say.

Mr. Tony McWalter (Hemel Hempstead): I have not yet had a chance to say this, but I am pleased to serve under your chairmanship, Mr. Beard.

Clause 11 is obviously important, but a series of amendments have been tabled, including amendment No. 19, which would have the effect of, to use a dentistry analogy, drawing the teeth of the provision. I hope that my hon. Friend the Under-Secretary will resist many of the amendments, even though they are backed by, for example, the Finance and Leasing Association, an estimable body. However, it would not be in the interests of the consumer for such tooth-drawing to be allowed.

The general character of much of the Opposition's response to the Bill has been to consider the effects of an investigation on legitimate businesses. That is extraordinarily back-to-front thinking, because the provisions are designed to deal with businesses that are operating illegitimately or which prompt a prima facie case for thinking that. If no business ever worked illegitimately, there would be no need for the Bill. It is because uncompetitive or, as I have said before, nefarious practices occur that we need the Bill, and I find it absurd that the Opposition consistently harp on about the Bill's burden on business. If the bodies that are involved with the Competition Commission and the OFT carry out their duties reasonably respectably, the Bill's provisions will bear harshly on illegitimate businesses and lightly on those that are carrying out their competitive functions honestly and genuinely.

Mr. Waterson: The hon. Gentleman must accept that his point could apply to almost any piece of

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legislation. If we were considering a Bill that dealt with burglary, it would be only reasonable to examine the rights and protection of innocent people as much as ensuring that burglars were convicted. Other parts of the Bill include criminal sanctions, and his point could apply to any legislation that carries sanctions.

Mr. McWalter: I agree, but all of the Opposition contributions have, to use the hon. Gentleman's example, factored burglars out of the picture almost entirely. He even said that his first response was to examine the effect on business without differentiating between legitimate businesses, which the Bill is designed to protect, and illegitimate businesses, which the Bill is designed to nail. He also spoke about the idea that an extensive series of victims of practice would be needed before a super complaint was put forward. That should not be the case.

Two months ago, an investigation by The Guardian found that a mobile phone company had decided that anyone who cancelled a contract would be slammed with a bill that was almost unintelligible, which would be followed a few days later by a threat to take the person to county court. Furthermore, the company decided to contact all the credit agencies to try to scupper the credit ratings of those who had had the misfortune to have a contract with it. As a Member of Parliament, I have received several complaints from constituents who have been victims of that company.

9.45 am

The Bill is designed to address that sort of practice. This country is fortunate in that we have tremendously strong and honourable consumer protection bodies. I am not sure whether I should declare an interest, in that I subscribe to Which? magazine and the Consumers Association. I suspect not, but the quality of their investigations and work is such that we should be grateful to have the opportunity to avail ourselves of their expertise, and that of similar bodies, in considering the Bill.

Amendment No. 19 would reduce the time within which a response must be published from 90 to 60 days, but when there is a novel practice such as I have described, it takes a significant time to work out the company's modus operandi. I did not have the full resources of the OFT, but I spent a considerable time trying to find out how extensive the practice was—and whether it was a one-off or there was some peculiarity in a particular office of the company—before I decided to raise the matter in Parliament. I did so because the practice seemed to be widespread and not related to a particular functionary of the company.


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