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Lord Higgins: My Lords, what is product market regulation?

Baroness Hollis of Heigham: My Lords, it is an attempt to control standards and the like, as opposed to labour regulation.

The main rate of corporation tax is now the lowest ever in the UK and the lowest in any major industrialised country. We have cut the small companies' rate by 3 percentage points from 23p to 20p. We have introduced a 10p starter rate of corporation tax, and so on. The Chancellor announced in the pre-Budget report that the Government are considering other ways in which to provide a more competitive environment for business, including the abolition of outdated requirements for withholding tax on intra-UK interest and royalty payments, reform of the tax treatment of intellectual property, goodwill and other intangible assets, regimes for the tax treatment of gains on the disposal of substantial shareholdings, and extending the on-shore

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pooling rules for double taxation relief. I should be glad not to be pressed further on what that might entail. I could go on, but I hope that the noble Baroness will accept that in relation to all those dimensions the Government are committed to establishing a regime in which business can thrive and be competitive.

Essentially, the noble Baroness is arguing that businesses should not incur any costs in helping the Government to fight benefit fraud. That is where we part company. Fraud is theft from the taxpayer. Businesses which operate in the UK enjoy an environment and infrastructure paid for by the UK taxpayer. The police, who protect businesses from crime, are funded by the taxpayer. The courts, where businesses defend their rights, are funded by the taxpayer. And businesses are taxpayers, too.

However, the fact remains that businesses enjoy the many benefits of trading in this country and, in so doing, make strong and handsome profits. The share of the cost of enacting these proposals in the case of, for example, Barclays would amount to approximately 75 minutes' profit for the whole year.

I have heard the argument that the costs would be passed on to customers in the form of higher charges. I do not accept that for one moment. The debates which we had in Committee about profits speak for themselves. I understand why businesses would seek not to carry that responsibility, but I believe that it is right that businesses should meet the costs for the greater good of the country.

Amendment No. 25 seeks to require the Secretary of State to pay information providers an amount equivalent to the costs that they have reasonably incurred rather than an amount which he considers appropriate. The point that I wish to make in this respect is that this amendment undermines the whole logic of paying credit reference agencies. As a result of this amendment, they would be worse off than they would be under the Government's proposals.

Credit reference agencies accumulate information in order to sell it. I believe that that point was made by the noble Earl, Lord Russell, in discussing where we should draw the line. That is their business and it is how they make their profit. We believe that it is only right for the DSS to pay them the market rate--

Baroness Noakes: My Lords, perhaps the Minister did not hear what I said when I talked about profit. I said that there was no reason why it should not include the opportunity cost of capital, which in ordinary accountancy language translates into profit when the books are made up at the end of the year. I did not say that using costs would deprive businesses of the ability to pay a profit-inclusive price. Indeed, that would be a possibility.

Baroness Hollis of Heigham: My Lords, I believe that the noble Baroness is saying that it would be a possibility, not an inevitability. Am I right?

Baroness Noakes: My Lords, I am saying that if the Government wanted to, they could do that.

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6.15 p.m.

Baroness Hollis of Heigham: My Lords, certainly I would not wish to put words into the noble Baroness's speech which she did not intend to use.

I return to my substantive point. We are trying to distinguish organisations to which we seek to pay the going rate because they make their profit from that activity. This amendment, as pressed by the noble Baroness, would limit us to paying only their costs. The credit reference agencies might be surprised at that suggestion, particularly given the noble Baroness's experience in the business world and their expectation that she might speak on their behalf.

Although the noble Baroness says otherwise, we believe that the amendment would plunge the department into complex negotiations and renegotiations with specified suppliers of information about what they consider to be the reasonable costs of providing each and every piece of information. As I said, while that was happening the system would continue to be defrauded. I believe that the better way forward, as provided in the Bill, is for the Secretary of State to be able to meet the costs which he considers appropriate. Businesses can rely on the fact that the unreasonable use of the power would be curbed by judicial review.

I do not doubt that the utilities, the credit reference agencies and the telecommunications companies could afford to meet the costs of compliance. However, that is not the issue. We are seeking to make a distinction in paying those categories of business for those types of information. We were not motivated by whether or not they could afford to help us. It was a question of whether or not it was their task or job to help us.

The job of credit reference agencies is to sell information. If that information were made available free of charge, they would have no business. In the case of the utilities and telecommunications companies, in Committee I explained in detail why we considered it right to pay them for some of the information that they would provide--that is, for the purposes of electronic matching. Again, we consider that approach to be fully in line with the department's approach to the Royal Mail, which we also pay for providing electronic data for matching.

We included telecommunications companies because, for the purposes of data matching, they have invested in special technology to help to meet government inquiries. The House will note that those powers do not allow us to require organisations to alter their procedures or invest in special technology, and so on. That is why we believe that they are in a special position.

We do not believe that we are making unreasonable demands. We are seeking to make our inquiries in such a way that the costs are minimised. I have given commitments that businesses will not be required to invest in special software. They will not be required to obtain information especially in order to meet inquiries. They will not be required to store information differently or to store it for longer. Businesses need not fear these powers.

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I hope that I have reaffirmed the distinction that I tried to draw in Committee between paying for information which, on the one hand, it is the sole purpose of an organisation, such as a credit reference agency, to provide, or to pay for the additional costs that we may impose on telecommunications companies for the technology required for data matching. We consider it reasonable to meet those costs. However, we do not believe that we should pay banks and insurance companies and the like for information which we can reasonably expect them to provide in our combined effort to fight fraud, particularly financial fraud, of which they are almost as much the victim as is the DSS.

Finally, the noble Lord asked me a question about mutual companies. Mutuals and non-profit organisations are also liable to respond to our requests for help without payment. If they have information, we shall seek to pursue it.

In the light of those assurances, apart from the broader debate about regulatory burdens on industry, which may indeed be the subject of a proper Wednesday afternoon debate on some occasion, as the noble Earl, Lord Russell, suggested, I hope that the noble Baroness will feel able to withdraw her amendment.

Earl Russell: My Lords, before the Minister sits down, does she accept and share with her right honourable friend the view that this is not simply a particular problem but one part of a rather more general problem?

Baroness Hollis of Heigham: My Lords, I do not wish to trespass on debates that have already taken place on the Regulatory Reform Bill, in which these issues were addressed on a wider front. However, I certainly agree that the interaction of government with business takes place across a wide front of government activity. Therefore, it is important that there is an overview and that these interventions and interactions are coherent and reasonable. I believe that I am right in saying that my noble and learned friend Lord Falconer has responsibility in the Cabinet Office for that function. That is why in each department a Minister is appointed to ensure that the burdens are reasonable. They are overviewed by the Cabinet Office. Therefore, I hope that the noble Earl will accept that the Government are acting to ensure that an oversight of this information is held at a most senior level.

Baroness Noakes: My Lords, I thank the Minister for her response. It disappoints me but perhaps does not surprise me. Perhaps I may state for the record that I was not trying to propose an amendment which would have deprived the department of the ability to pay the credit reference agencies a price which included their normal profit. Indeed, if the words that I proposed were deemed to be seeking that, I should have considered amending them. That was not what I sought. I was seeking to make a general point about the increasing regulatory burdens and the need to draw the line as to when those burdens should be more fairly shared out. I accept that that is a bigger issue.

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The Minister recited many details to establish the competitiveness of the UK economy, including lower regulatory burdens compared with those in other countries. I do not deny that, but that advantage has been eroded in recent years. All of the surveys carried out by the Institute of Chartered Accountants, the Institute of Directors, the Confederation of British Industry and the British Chambers of Commerce constantly refer to the rising tide of regulation and the associated increasing costs. That was the motive behind my amendment. However, I accept that it is part of a larger issue and I shall not test the opinion of the House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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