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Lord Sainsbury of Turville: I can only repeat that, as far as I know, no agreed levels have been set for board members. I shall check on that point. If I am wrong and information has been given out or agreed, I shall write to the noble Lord.
Lord Hunt of Wirral: I am grateful to the Minister. I hope that he will accept that my point covered allowances, travel expenses and all kinds of remuneration in addition to direct pay. The Minister is nodding in answer to my question. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 11 and 12 not moved.]
Lord Kingsland moved Amendment No. 13:
- Page 192, line 12, at end insert "and shall publish in full the procedures and criteria in dealing with conflicts of interest"
- "The OFT shall consult the Secretary of State before making or revising its procedures for dealing with conflicts of interest".
As the Minister is aware, conflicts of interest is a very sensitive topic and has a crucial bearing on the legitimacy of decisions which can sometimes cost entrepreneurs and consumers many millions of pounds. It is in the interests of everyone concerned with the operation of the Bill that the public should
know exactly what the rules are. I should be grateful if the Minister could let us know what his intentions are in that respect.
Lord Hodgson of Astley Abbotts: I support my noble friend's amendment. We have already discussed the fact that this will be a small body, the actions of which will be carefully scrutinised. It therefore needs to be absolutely above reproach. There have been debates in the House recently about the decline in public confidence in the probity of our corporate governance. This body, which will be at the heart of British industry and making, as my noble friend said, decisions which will affect millions of pounds and thousands of people, should be prepared to make its corporate governance in regard to conflicts of interest absolutely clear and beyond peradventure. There would then be no room for any misapprehension or misunderstanding, or for any subsequent recrimination and regret.
Lord Sainsbury of Turville: The amendment would require the OFT to publish its procedures for dealing with conflicts of interest. This is an excellent point. The Bill already requires the OFT to consult the Secretary of State on these procedures but, in principle, I can see no reason why they should not be published. I am quite happy to take the matter away and to consider further how it may be set out in the Bill.
Lord Kingsland: I am grateful to the Minister for his extremely constructive response. On that basis, I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Borrie moved Amendment No. 14:
- Page 192, line 12, at end insert—
The noble Lord said: At Second Reading I expressed the view that in the field of mergers and take-overs, more than in any other aspect of competition policy, swift and firm decision making was particularly important for all concerned—that is, the shareholders and employees of companies—because if there are no particular public interest reasons why a merger should be prevented it should be allowed to go ahead as soon as possible. If there are serious concerns that the merger might adversely affect competition, then the public interest is surely that those concerns are speedily addressed and a decision as to whether the merger should be either stopped or allowed arrived at after due process but without undue delay.
It was in that context that I was concerned about the proposal in the Bill to replace the Director-General of Fair Trading with a board of which, as we heard earlier, he will be the chairman and chief executive. If decisions on whether or not to refer mergers to the Competition Commission have to go routinely to this new board, consisting in the main of part-timers, I foresee the risks of serious delays and a serious reduction in efficient decision making.
I drew attention to the advertisement in the Sunday Times, which was referred to by the noble Lord, Lord Hunt of Wirral, and others, for non-executive directors of the board. I was struck by the fact that, according to the advertisement, the non-executive directors are to put in only 2½ days a month. They are, in other words, to be very much part-timers. I wanted a reassurance from Her Majesty's Government that the board of the Office of Fair Trading would not be involved in case-by-case, day-to-day, routine decision making in regard to, for example, prohibitions of cartels, abuses of monopoly position under Chapters I and II of the Competition Act 1988, merger references to the Competition Commission or market investigation references to the Competition Commission, but would concern itself only with strategy, broad principles and priorities.
My noble friend Lord McIntosh of Haringey, who replied for the Government, gave me a degree of reassurance. He said that the new board would focus on the Office of Fair Trading's strategic vision and direction, prioritisation and monitoring progress against targets. He then added:
If the board is to be directly involved in individual market studies, that suggests to me that it could veto a proposal from the chairman to engage in a market study into a particular market or a proposal to refer a particular market to the Competition Commission. I ask the Minister, is that so?
The 2½ days a month that the part-timers on the board will work could be accounted for by a day for a meeting and a day or so for reading the papers. If it is more than that, the advertisement may be misleading to those splendid members of the community who offer themselves to the Minister as willing to become part-time non-executive directors of the board.
I am, of course, aware of the trend in recent years away from individual regulators to regulatory boards. I believe that it was desirable for the director-general of Ofgas to be replaced by a board under the Utilities Act 2000 because where a single industry was dominated by one firm, for example, British Gas, and
I suggest that the work of the Office of Fair Trading is markedly different from that of a single industry regulator because its consumer and competition remits stretch across the whole of industry and commerce. The chance of daily confrontations between individuals is too remote to be thought at all likely.
My case, therefore, to the Government in bringing forward this amendment is to let John Vickers who will be chairman and chief executive of the board—at present he is the Director-General of Fair Trading—continue as now to take all operational decisions otherwise than in exceptional circumstances. The board will be a valuable sounding board for consultation and will deal with strategy. As the noble Lord, Lord Hunt of Wirral, pointed out earlier, there is at present an advisory board. In future there will be the board provided for under Clause 1. But if the board's statutory remit is left uncertain under the Bill, it may at some stage be tempted to interfere in day-to-day decisions at the cost of the efficiency of the organisation and at the cost of the public interest. Diffusion of responsibility could be a recipe for feebleness or delay or both in decision-making. I beg to move.
Lord Peyton of Yeovil: I had a dim feeling while the noble Lord, Lord Borrie, was speaking that he had in mind his own past experience and was speaking perhaps from a somewhat subjective point of view. I do not believe that it would be in any way desirable to underline the power of the chairman by giving him this added provision. He already has a good pair of braces with which to keep up his trousers; he does not need a belt as well. For once I am rather hopeful that the Minister and I will be on the same side and that he will see strength in rejecting his noble friend's amendment.
"( ) Otherwise than in exceptional circumstances, all operational decisions shall be made by the chairman of the OFT following such consultation with the other members of the OFT as he thinks appropriate."
"We expect the board to delegate most operational decisions to the Chairman and OFT officials".—[Official Report, 2/7/02; col. 184.]
My amendment—which I shall not read out because it is in front of the Committee—seeks to put the Minister's assurance on the face of the Bill. I do so, in part, because the advertisement for members of the board to which I have referred is somewhat ambiguous. It refers to the board being responsible for,
"overall strategic direction, priorities, plans and performance",
but it adds that,
"it will also be directly involved in decisions on individual market studies".
It then goes on to state that the board may exceptionally be involved in matters of strategic importance, to which I have no objection.
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