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The Parliamentary Under-Secretary of State for Trade and Industry (Barry Gardiner): Since the beginning of 2004, DTI officials have had at least 25 meetings with the utility companies and their representative organisations. These have discussed the impacts and benefits of the proposed permit schemes for street works and the way in which they will enable the local highway authority better to regulate disruptive activities on the highway. We have estimated that the cost of the permits will be more than counterbalanced by the savings from less congestion and improved transportation of goods and services.
Tom Brake: I thank the Minister for his response. As he has had so many meetings, he will be aware that the National Joint Utilities Group believes that about 2 million permits will have to be issued each year at a cost of about £350 million, plus £56 million to set up the IT systems needed to manage it. Those costs will of course be passed on to the customer. What cost-benefit analysis has been carried out into the scheme?
Barry Gardiner: The residents of Beddington lane in the hon. Gentleman's constituency may feel a mild sense of outrage at his remarks. Three years ago, he was in the Select Committee on Transport bemoaning the fact that
Mr. Henry Bellingham (North-West Norfolk) (Con): I welcome the Minister back to the mainland. If he carries on in the same vein as his reply to the Liberal spokesman, he will do very well in his new job. Is he aware that last summer King's Lynn in my constituency was basically gridlocked, with major roadworks on Gayton road, roadworks on Southgates roundabout and other roadworks? It seemed to me that the different authorities were not talking to each other and that there was a real problem about co-ordination. What does the Minister think we should do to solve those problems in future?
Barry Gardiner: I agree that clear co-ordination is needed, which the permit scheme is supposed to introduce. This is DTI questions, not Transport questions, but the costs of a permit scheme must be counterbalanced by the benefits that it will bring. The regulatory impact assessment calculates that the cost of congestion to industry and the public is in the region of £4.3 billion a year. Even if one uses the National Joint Utilities Group's assessment of the fraction of that cost that relates to digging up the road and disruption caused by utilities, a 1 per cent. reduction in disruption would still result in a huge saving.
The Minister for Industry and the Regions (Alun Michael): The prime responsibility for operating our competition regime rests with the independent competition authorities. In the specific case of supermarkets, the Office of Fair Trading is responsible for keeping under review the code of practice governing supermarkets' relations with their suppliers, and it is engaged in doing so.
Mr. Carmichael: The Minister will be aware of the recent OFT report on the operation of the code, which, even if it achieved nothing else, highlighted how many suppliers are afraid to complain about supermarkets' practices because they fear the consequences of doing so. Will he examine the proposals from the National Farmers Union of Scotland and others on the creation of an independent regulator to investigate complaints confidentially and anonymously and to protect complainants against reprisals from the supermarkets?
That sounds a bureaucratic response. I am well aware of the OFT report, of which I have a copy in front of me. The audit of competition issues undertaken for the OFT does not show evidence of failure that would require intervention, but the period in which people commented on the report was extended to the end of May to allow suppliers to comment, and we await the result of that process with interest. Frankly, the supermarket code is effective only if suppliers use it, and the OFT can take action under the code only if there is firm evidence of problems. I have answered this question on a number of previous occasions and in a
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number of different contexts, and the answer remains the sameit would be wrong to over-regulate without evidence of the need to do so.
Mr. David Drew (Stroud) (Lab/Co-op): My right hon. Friend must understand that even the supermarkets see the code of practice as a bit of a joke, which is why they are happy to sign up to it. Is it not about time that we examined the true criterion, which is how many shops are being lost on the high street and the degree to which the supermarkets are swallowing them up? Is it not about time that the Government took real action on that issue?
Alun Michael: My hon. Friend needs to read the detail of the report that was prepared for the OFT; I do not know whether he has made any comments on that. The OFT is analysing the responses that it has received. I look forward to receiving that analysis, and then will be the time to discuss whether there is a need to do anything further. There are also proposals on the table from, among others, the National Farmers Union and the British Retail Consortium, and those also need to be considered by the supermarkets. Let us see where we get to through effective regulation rather than increasing bureaucracy.
Mr. Peter Robinson (Belfast, East) (DUP): Given the massive buying power of the supermarkets and the recognition that the code of practice is ineffective and meaningless, does the Minister accept that there is a need to have real teeth in regulatory methods? The Minister for Competitiveness, who was at the Northern Ireland Office in a previous life, will be able to tell him of one supermarket company that persuaded a major supplier to spend more than £10 million on upgrading its plant, only to take the business away from it several months later without giving it any opportunity to submit a meaningful tender.
Alun Michael: It would be wrong for us to have a dog and to bark ourselves. I know that hon. Members have strong views when they see a particular circumstance involving competition leading to the closure of a shop or shops. However, I suggest that the hon. Gentleman looks at the work that is being done by the OFT, as well as by the Department for Environment, Food and Rural Affairs in relation to the milk supply chain, and invite him to agree that we should have an evidence-based approach to any changes in regulation rather than one that is based on impressions.
Keith Vaz (Leicester, East) (Lab): To use the Minister's analogy, if he has a dog, it sometimes needs to be put on a lead. Companies such as Tesco are behaving like pit bull terriers. Tesco controls the market, has done huge damage to our high streets, and is forcing suppliers to reduce their margins. That costs jobs. I know that my right hon. Friend is an extremely decent and hard-working Minister, but he cannot just sit back and allow that kind of dominance to continue in a free market.
We have a supermarket code that arose from the original Competition Commission report in 2000 and which deals with supermarkets that have more than 8 per cent. of the market. Those supermarkets would certainly not be enthusiastic about the idea of a further commission reference and investigation, and that will encourage them to sign up to the new arrangements. These matters are far better dealt with between supermarkets and their suppliers. The regulator considered all the evidence and then produced the report to which I referred. I invite my hon. Friend, and all hon. Members, to read the report, look at the evidence, and be prepared to take part in a good discussion about this when the responses that followed the extended period have been analysed and presented by the regulator.
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