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Lord Sharman: I have two amendments in the group—Amendments Nos. 21A and 177A. Both deal with accountability to Parliament. I strongly support what the noble Lords, Lord Graham of Edmonton and Lord Kingsland, have said. We are creating yet another hugely powerful and influential quango. In addition to covering what we need to see in an annual report from that immensely powerful body, it is essential that we place on the face of the Bill provisions that ensure that those who are charged with the stewardship and operation of the body are fully accountable to Parliament.
Other parts of the Bill make a significant difference to the influence of Ministers in decisions on competition and investigations and the like. We
wholly support the removal of that to an independent body, but it is vital that that independent body is not only accountable to Parliament, but seen to be so properly and in the best possible manner.
Lord Brooke of Sutton Mandeville: My remarks will be brief. I support my noble friends on the Front Bench. When we discussed the 1998 Competition Bill in Committee in another place there was a considerable discrepancy between the views expressed by the Opposition on the costs to business arising from the Bill and the Government's forecast in their assessments. I have read Miss Johnson's response in Committee in the Commons on this occasion to amendments similar to those that we are talking about. I am surprised that there is no reference to the comparative outcome between 1998 and 2001. That suggests at first blush that perhaps the Government are not anxious to revisit the subject.
Lord Sainsbury of Turville: Amendments Nos. 19, 20 and 21 would set out on the face of the Bill certain material that the OFT must include in its annual report. The Bill was drafted on the basis that such specific detail was not appropriate for primary legislation. We have included in the Bill only the minor broad minimum criteria that the annual report must fulfil. That allows flexibility in the light of experience and ensures that the Bill can stand the test of time.
The annual report will have to include a general survey of developments on matters relating to the OFT's functions and an assessment of the extent to which the OFT's main objectives and priorities for the year, as set out in the annual plan, are met. In doing so, the OFT will need and wish to include the sort of information covered by Amendment No. 20. The Director-General of Fair Trading already includes such information in his current annual reports. I expect the new OFT to continue to do so.
I turn to the specific issues raised by Amendment No. 19. Under Clause 6, the OFT has a very general function to promote the benefit of competition to the public. This function is, by its nature, not capable of quantification in terms of success. All the OFT can do is to outline in its annual report any initiatives that it has taken during the course of the year, and any feedback it has received on the results. We have considered that it would be inappropriate to require in the legislation that it must provide such details.
The OFT's present statement of purpose, published on its website, is,
- "to make markets work well for consumers. Markets work well when there is vigorous competition between fair-dealing businesses. When markets work well, good businesses flourish".
A more fundamental reason is that the OFT will only be exercising the powers granted to it by Parliament. There are appropriate checks on the OFT. For example, the OFT is not able to make a market reference unless it has reasonable grounds for suspecting that the reference criteria are satisfied. The OFT will not use its powers without good reason, and the Bill includes measures to build the OFT's accountability into the system at all levels.
Finally, on the content of the annual report, as Amendment No. 19 recognises, enforcement of competition and consumer protection rules is a key area of OFT activity. The OFT has publicly accepted the principles of good enforcement set out in the Cabinet Office's Enforcement Concordat. The OFT and all who subscribe to the concordat are committed to good enforcement policies and procedures, and the principles of the concordat form the basis of the OFT's enforcement procedures. This includes helping businesses to meet their obligations through giving advice and assistance with compliance, as well as more formal enforcement action when proportionate to the risks to consumers.
I turn to Amendments Nos. 21A and 177A. The Bill already states that the OFT and the Competition Commission must lay their annual reports before Parliament. If Members of this House or of the other place wish to examine these or other reports published by the OFT in more detail, or propose at any time that a report should be considered in depth, it is open to them to do so. In any event, I should imagine that the Trade and Industry Select Committee would take a good deal of interest in both the OFT's annual report and that of the Competition Commission. In addition, the chairman of the OFT board will be accountable to Parliament for the OFT's performance, and both he and the chairman of the Competition Commission can be summoned to appear before Select Committees at any time. I therefore do not think it necessary to specify in the Bill further possibilities for parliamentary scrutiny of either body's activities. Such possibilities already exist and it is open to Members of both Houses to use them.
I hope that I have helped the Committee to understand the rationale for our drafting this clause in broad terms. However, given the strength of the concerns expressed today about the content of the OFT annual report, I propose to consider further what we might set out in the Bill, paying particular regard to noble Lords' concerns over the impact on business, and to come back with something at Report.
Lord Graham of Edmonton: I think that that is the nearest I am going to get to a concession. I shall certainly not put words into the Minister's mouth, but I am very grateful indeed for his indication that there may be scope to look again at the provisions. I was also interested in his repeated use of the word "inappropriate". If the provision we seek is inappropriate, to whom or for whom is it
inappropriate? It is not inappropriate to those who are asking for it, because they genuinely believe that it would be helpful. However, the Minister himself has been very helpful by indicating that he will examine the whole situation and return to it at the next stage or later. In those circumstances, I am very pleased to beg leave to withdraw the amendment.Amendment, by leave, withdrawn.
[Amendments Nos. 20 to 21A not moved.]
Clause 5 [Acquisition of information etc.]:
On Question, Whether Clause 5 shall stand part of the Bill?
Lord Peyton of Yeovil: A clause like this one makes my nerve ends twitch a bit. Before giving very wide powers to a body which has yet to prove its virtue to obtain almost any type of information that it thinks would be helpful, appropriate or relevant, we should consider such a possibility and ask ourselves: just how far is this to go?
I am prompted to make these brief comments by the conduct of the Financial Services Authority in pushing, pressing and cadging every banker, stockbroker and accountant to chivvy and vex their clients, some of whom they have known for many years, to discover whether or not they are money launderers. I do not want to discuss the vices of the Financial Services Authority at great length. However, I hope that the Minister will take on board the fact that people are reluctant to give to such official bodies the power to collect such information as they think fit. Some of those bodies have an overweening and excessive curiosity to poke their noses into things that are none of their business.
Lord Kingsland: I am most grateful to my noble friend Lord Peyton for raising this issue in his inimitable fashion. I should like to develop it, if I may, by reminding the Minister of the remarks I made in support of Amendment No. 1. I drew his attention to Section 2 of the Financial Services and Markets Act 2000 and pointed out how the Government had set out in that legislation with quite considerable rigour—although not quite the amount of rigour that I sought when the Bill was passing through Parliament; nevertheless with some rigour—the regulatory objectives and other matters to which the Financial Services Authority should have regard.
That is in stark contrast to Clause 5, the first in a series of clauses headed "General functions of OFT". If noble Lords care to glance through those clauses, they will see that the general functions amount simply to a set of powers, if the OFT so wishes, to acquire information, to provide information, to obtain information and to promote good consumer practice. What is lacking here is an expression of functions. At an earlier stage, the Minister responded to a question from the noble Lord, Lord Phillips of Sudbury, by saying, "It is true that we have not consolidated the functions under the Bill, but they are in other legislative measures". It seems strange that the
Government have given themselves an opportunity to set out and consolidate the functions of the OFT in this series of clauses but have not taken advantage of that opportunity.I should therefore like to encourage the Minister, in the spirit of what was just said by my noble friend Lord Peyton, to try to tighten up this part of the Bill; to draw together from other bits of legislation the various functions that, as we know, the OFT already has; and to set out those functions in a logical manner. This would have two benefits. First, it would let us all know where we stand. Secondly, it would enable us to see in exactly what circumstances the OFT was acting within the law and in what circumstances it was acting without.
6.30 p.m.
Lord Hodgson of Astley Abbotts: What is lacking in this regard, apart from generality, is a requirement to be cost effective. The body is permitted to do almost anything and not necessarily ensure that there is a real return—a real benefit—to the consumer, a business, the country or whatever. My noble friend Lord Peyton raised the issue of money laundering, about which I know he feels very strongly. That initiative began with very good intentions but now thousands of reports are produced and there are, I believe, 12 people looking after the inquiries in NCIS. Most of us believe that nothing ever happens as a result; all of the information is filed away and never used again. One can foresee something similar happening under subsections (1), (2) and (3) of the clause. Huge amounts of research will be commissioned, no doubt for all sorts of very good reasons at the time and no doubt at very great cost, but it will all be put in a pigeonhole and no one will ever follow it through. That is rather like what most of us believe has been happening with money laundering. The idea was very good but the system is now so thorough that it has overwhelmed those who run it. We need to get down to some cost-effective requirements with regard to the acquisition of information under Clause 5.
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