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Baroness Howe of Idlicote: My Lords, I support the amendment tabled by the noble Lord, Lord Phillips,
and I do so for two reasons. First, I declare an interest in that I chair a foundation for the environment which was set up some 10 years ago by BOC. We have funded the encouragement of the dissemination of information on the environment to schoolchildren. I therefore believe that this is an important area as regards good governance, social responsibility and the environment. I must also report that from everything the foundation has picked up subsequently we know that children and young people are far more alive to the benefits for the consumer of having such issues taken into account.The second reason I support the amendment is the importance to competition. Without doubt, the bottom line benefits from the growing acknowledgement by companies that their customers, the citizens of their country, want them to be good corporate, community-involved bodies in the broad sense and to follow good environmental practices.
I therefore warmly support the amendment and I hope that if it is not accepted at least the OFT, with its new responsibilities in this regard, will take on board the aims behind it. I warmly approve of them.
Lord Hodgson of Astley Abbotts: My Lords, my Amendment No. 23 is in this group. I have a great deal of sympathy with what the noble Lord, Lord Phillips, is trying to achieve. I do not want to go over issues debated in Committee, but I have read carefully what the Minister said on that occasion. I did not find his words convincing.
The amendment refers to Clause 6, the heading of which is,
- "Provision of information etc. to the public".
The OFT is a regulatory body; it holds the reins. It needs to be seen to be even-handed, not a propagandist for one side of the argument. That is not to say that the operation of the market is not important and is not supported by me and all other noble Lords in the House. It is an educational role, but not a propagandist role. Let the public know about competition. In Committee, replying to the noble Lord, Lord Phillips of Sudbury, the Minister said:
- "Quite simply, I believe that we should require the OFT to concentrate and focus on its primary task; namely, the promotion of competition. We should have the confidence to let it promote the benefits of competition, because that is its role".—[Official Report 16/7/02; col. 1159.]
We have already referred today to the Financial Services and Markets Act 2000. As I was a member of one of the regulatory bodies—the Securities and Futures Authority—subsumed under the FSMA, I learned a little about the discussions in your
Lordships' House, before I became a Member, about the roles given to the Financial Services Authority. Section 2(2)(b) of the Act states that one of the FSA's regulatory objectives is to promote "public awareness", which is a perfectly fair objective. The Act goes on, in Section 4, to explain what is meant by "public awareness". It states:
- "The public awareness is: promoting public understanding of the financial system . . . It includes, in particular . . . promoting awareness of the benefits and risks associated with different kinds of investment or other financial dealings".
The duty to inform and educate the public and to help them understand what happens in the financial services arena is therefore absolutely fairly and squarely defined and imposed on the Financial Services Authority. It is Clause 6 of the Bill that is lopsided and should be made much more even-handed.
Lord Hunt of Wirral: My Lords, I rise with some trepidation because I think that I am about to disagree for the first time with my noble friend Lady Oppenheim-Barnes. I feel trepidation because, in 1979, as Parliamentary Private Secretary to the then Secretary of State, I was one of my noble friend's very junior administration members when she took through, against all the odds, the Price Commission (Amendment) Act 1979 which abolished the Price Commission. I have always had the profoundest respect for all that she utters—at least until today when she said that she did not agree with these amendments, particularly Amendment No. 22. I agree with her on the issue of consumers, but I think that the attraction of this amendment is that it seeks to put competition itself in a context of responsibility as expressed by the noble Lord, Lord Phillips of Sudbury.
I listened to my noble friend Lord Hodgson of Astley Abbots when we debated this issue in Committee. Now that we have had some tautological discussion about "affect" or "effect", I think that it is entirely apposite to insert the word "affect" in place of "benefit". I agree with the noble Baroness, Lady Howe of Idlicote, that these two amendments would be beneficial to the way in which the OFT will perform its functions. I hope that the Minister will see the amendments as genuine attempts to try to present a balanced approach. As my noble friend Lord Hodgson of Astley Abbots put it, we have to try to strike a proper balance between competition per se for its own sake and the more interesting discussion of ways in which it can affect consumers either positively or negatively.
While I am on my feet—I wanted to do this in our debate on an earlier group of amendments—I should like to thank the Minister for listening in Committee to my noble friends and to other noble Lords. We are grateful to him for having listened and coming forward with those amendments on Report. I hope that he will listen and be as positive about these two amendments as well.
5.45 p.m.
Lord Borrie: My Lords, I have rather enjoyed the intra-party disagreement on the other side of the Chamber. I come down on the side of the noble Baroness, Lady Oppenheim-Barnes. I thought that the noble Lord, Lord Hodgson of Astley Abbots, was quite wrong to say that, in either the past or the future, it is intended that the OFT should "hold the ring". The OFT is a partisan body which determines whether there is a prima facie case that a matter requires investigation. Subsequently, someone else will do the balancing and hold the ring and reach a conclusion. In this Bill, for the very first time, there is even provision for something called a "cartel offence" in which the OFT, with the Serious Fraud Office, will be the prosecutor. It will be the courts, however, that determine whether that case is justified.
Lord Hodgson of Astley Abbotts: My Lords, I understand the noble Lord's point about holding the ring. He will appreciate, however, that the Financial Services Authority is also a prosecuting authority.
Lord Borrie: Indeed, my Lords. However, my point is to undermine the argument of the noble Lord, Lord Hodgson, and indeed that of the noble Lord, Lord Phillips of Sudbury. I do not disagree at all with the type of educational materials that the noble Lord, Lord Phillips, would like school children and even adults to receive; what I dispute is whether the OFT—with its partisan role, as I said, in the sphere of consumer and competition affairs—is the appropriate body to fill that role. I do not think that it is. To include the type of words that the amendment seeks to introduce would be to ask the OFT to fill a role that is not really apt for that body to perform.
Lord Sainsbury of Turville: My Lords, Amendments Nos. 22 and 23 seek to amend the Office of Fair Trading's function of making the public aware of the ways in which competition may benefit consumers and the economy. I begin by reminding noble Lords of the purpose of Clause 6. A key role of the OFT is to make markets work for consumers. This is reflected in the clause which gives the OFT the function of promoting to the public the benefits that competition has for consumers and the economy and providing the public with information or advice on matters relating to its functions.
Competition does indeed benefit consumers: the best form of consumer protection is choice. The aim of the clause is to help to create assertive and knowledgeable consumers who are aware of the importance of competition. There is much to be done in this sphere. The DTI peer review of the UK's competition regime showed that while more than 83 per cent of respondents in the United States thought that competition policy was important to the US public, the equivalent figure in the UK was just 10 per cent. So there is a very substantial job to be done.
I turn to the two amendments. I have great sympathy with Amendment No. 22, but rather little sympathy with Amendment No. 23. Amendment
No. 23 proposes that the OFT should have the function of making the public aware of the ways in which competition may affect, rather than benefit, consumers and the economy. I find that an extraordinary statement. We are establishing this body because we believe that competition is a good thing. The alternative would be to say that we do not think that competition is a good thing—that we think that some monopolies and a few cartels would be an excellent thing. In establishing this body, we are clearly making the judgment that competition is a good thing.To ask the body established to make that statement to express the view that competition is other than a good thing would be to make an extraordinary assumption. We did not, for example, establish the Equal Opportunities Commission and tell it, "By the way, you should put forward a balanced view about equal opportunities. Perhaps equal opportunity is not always a good thing". Rather, we said to the EOC: "We expect you to promote equal opportunities". The same applies to the treatment of racial discrimination. I do not know what we are doing in this legislation if we are not starting with the assumption that competition is a good thing. We should therefore refer to the "benefits" and not just the "affect" of competition.
When consumers understand the benefits of competition—which include quality, choice and accessibility as well as price—I believe that they become more powerful, more confident of their rights and more demanding. I understand from what the noble Lord, Lord Phillips, said in Committee that he believes that competition may have adverse consequences for consumers. I beg to differ. Of course, competition can be abused but that does not alter the fact that, overall, competition is a good thing. Anti-competitive behaviour constitutes abuse but competition does not. Anti-competitive behaviour harms consumers. However, competition benefits consumers and the clause should reflect that.
Amendment No. 22 falls into a different category. I have a great deal of sympathy with it, particularly as regards the context of school education. However, I wish to explain why the Government do not want to accept the amendment. It seeks to amend Clause 6 to give the OFT the function of making the public aware of the role of competition within a context of social community and environmental responsibility. As I am sure the House is aware, I certainly accept the importance of social community and environmental responsibility. Indeed, those are matters which the Government actively promote. I also accept that consumer and competition policy must function within the broader framework of social welfare. We are not saying that competition which in any way detracts from legislative, social or environmental frameworks should be excused or condoned. However, I do not believe that it is right to broaden the specific focus of the OFT which is rightly focused on
making markets work for consumers. To broaden the OFT's general function as proposed in the amendment would seem to be a rather arbitrary choice.
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