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Lord Sainsbury of Turville: Before it becomes part of the mythology of this debate perhaps I can say that in no way did I dismiss the Financial Services Authority. I felt I was being rather precise in saying that there was not an automatic read-across from the objectives of a Financial Services Authority to the OFT, which is a rather more modest statement of my position.
Amendment No. 2 aims to make the chairman independent. We are doing much in this Bill to increase the independence of the OFT from Ministers and the chairman's role will be consistent with that.
Taken with Amendment No. 3, this amendment would prevent an employee of the OFT being appointed chairman. That is not necessarily the right way forward. As drafted the Bill does not limit who may be appointed chairman. Employees could apply for the post when advertised and be considered alongside other candidates. As Members of the Committee will be aware, we are intending to appoint John Vickers as the first chairman for the remainder of his existing Director General of Fair Trading term.
In terms of independence we are already taking a significant step in depersonalising regulation by abolishing the post of DGFT and replacing it with a statutory authority—a board. Because of his particular skills and to provide for some continuity through this period of change at OFT, we intend to appoint John Vickers as chairman with no separate appointment of chief executive. I do not accept that there is a parallel here between having a chairman and chief executive and having a board; it is having a board which goes a long way to depersonalise the role. We have said that that is what we are doing. There is no parallel between doing that on the one hand and having the same person as chairman and chief executive, on the other.
The Bill provides for flexibility in the future in this area. John Vickers will lead the OFT through the upcoming period of change, working together with the board. He will be independent of Ministers and accountable for the OFT's actions. Similarly, Amendment No. 5 would prevent OFT employees taking up any OFT board appointment. I am sympathetic to the idea that the board should have strong non-executive representation; that is, people who have not been employed by the OFT. Indeed, we expect the final board to have more non-executive members. But I am not convinced that the board should be entirely non-executive. The Bill does not preclude OFT employees being appointed to the board. It is vital as OFT moves forward that its senior managers, through executive members of the board, are fully engaged in the board process. The board will play an important role in steering OFT through a period of change as it takes forward its new powers and responsibilities and its increased independence from Ministers. It is crucial that the executive team is
part of that process. But both executive and non-executive members of the board will be independent of Ministers and bound by the rules on conflict of interest.Amendment No. 4 would set a maximum number of six members of the OFT board. Amendment No. 3A would change the minimum number of members from four to six.
We have not set a maximum size for the board in the Bill because we believe that some flexibility is important if the Bill is to stand the test of time. We believe that the board will need to have at least five members if it is to hold a sufficient balance and range of skills and experience. I am happy to confirm that, as my honourable colleague said in another place, we expect the final board to be between five and seven members, including the chairman, and with more non-executives than executives. That seems to be about the right size to ensure a good range of expert views and expertise without becoming too unwieldy. But, by building some flexibility into the board size, we can ensure that the practice of board appointment reflects the realities of the time.
I accept that the amendments of my noble friend Lord Graham are benign but I think that they are taken account of in the way that we are setting up the board. In view of these arguments I invite him to withdraw his amendment.
Lord Graham of Edmonton: I am grateful to the Minister. The past 23 minutes has been well spent. I plead in aid the advice I have received from the British Retail Consortium. Its members have expressed their fears, concerns or alarms that what is on the face of the Bill appears to be detrimental to their interests. When I discuss today's proceedings with them, I suspect they will point out how the Minister has explained how he envisages the board developing. With the flexibility that will be given to the new board, I imagine that my colleagues outside the House will be reasonably reassured. I shall consult with them. If necessary, I shall return with another amendment at a later stage. At this point, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 3 to 5 not moved.]
Lord Hunt of Wirral moved Amendment No. 6:
- Page 191, line 6, at end insert "of whom at least 50% will be currently active in industry or commerce at the time of their appointment"
- "which could include business".
Obviously, I would not want to proscribe too tightly the importance of having a wide range of interests on the board. Equally, we would not want it to be a parking place for former civil servants, although I have considerable respect, as a former Civil Service Minister, for former members of that great service. But, with the OFT having such a key part to play in the economy, we need to ensure that at least half the members, if not more, will have that activity in industry or commerce at the time of their appointment.
I recall a much greater reassurance being given at the time that the Bill was previewed by Mr Byers, the then Secretary of State. In May 2000, in a Department of Trade and Industry press release, he stated that,
- "board members will give a wider range of expertise to the organisation, rather than executive power resting with one person. This will give businesses a stronger voice at the heart of the OFT".
- "candidates could come from business".
Mr Vickers has set up a four-member advisory panel that meets monthly to discuss policy, strategy, research and communication. It includes a former editor of the Financial Times and a leading competition academic and author. It may be made clear to me by the Minister that this body is purely advisory. No doubt it was in no way intended to be a shadow board or a pre-cursor to the statutory board. But it gives us a feel for the kind of relationship that may exist in the future between the chairman and the chief executive and his strategic board.
I suppose that we could guess from the reaction of the OFT and the director-general that the composition of the new board would be different from that of the advisory panel. It would be helpful if the Minister could give us his more detailed thinking on that point.
When one analyses the powers that will be within this new body, one recognises immediately the vital need for people from the heart of industry and commerce to be well represented. That is why I very much hope the Minister will carefully consider the amendment. I beg to move.
Lord Hodgson of Astley Abbotts: I support what my noble friend has just said. His amendment is rather more elegant than mine which refers to the,
- "directors of public limited companies".
5 p.m.
Lord Brooke of Sutton Mandeville: I shall be extremely brief, but I also rise to support my noble friend on the Front Bench—in particular, his reference to the advertisement and its reference to business. I have previously cited in this House an advertisement in the Church Times in the 1930s: "Rural curate required (slow left-arm bowler preferred)". On many occasions, the words inside parentheses are more revealing than those outside them. The whole Committee should be grateful to my noble friend and, I gather, indirectly to the noble Lord, Lord Borrie, for having drawn that matter to our attention.
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