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Enterprise Bill

11.10 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.—(Lord Sainsbury of Turville.)

On Question, Motion agreed to.

Commons Amendments in Lieu of Lords Amendments to which the Commons Insist on their Disagreement and Commons Further Amendment in Lieu of a Commons Amendment Not Insisted Upon


[The page and line refer to HL Bill 92 as first printed for the Lords.]

LORDS AMENDMENT

1Clause 1, page 1, line 5, after "corporate" insert "with both a chairman and a chief executive"

LORDS REASON

The Lords insist on their amendment to which the Commons have disagreed, for the following reason—


    Because it is appropriate to make provision for two roles for a Chairman and a Chief Executive which should be performed by two people.

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COMMONS AMENDMENTS IN LIEU

The Commons insist on their disagreement to Lords Amendment No. 1 but proposed the following amendments in lieu thereof—


1DPage 192, line 1, at end insert—
"4A(1) The Secretary of State shall, after consulting the chairman, appoint a person (who may, subject to sub-paragraph (2), also be a member of the OFT) to act as chief executive of the OFT on such terms and conditions as the Secretary of State may think appropriate.
(2) A person appointed as chief executive after the end of the transitional period may not at the same time be chairman.
(3) In sub-paragraph (2) "the transitional period" means the period of two years beginning with the day on which this paragraph comes into force."
1EPage 192, line 3, after "such" insert "other"

Lord Sainsbury of Turville: My Lords, I beg to move that the House do not insist on their Amendment No. 1 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 1D and 1E in lieu thereof.

We have always been clear that the Bill allowed the OFT to create a separate post of chief executive if it wished to do so. Last week, my honourable friend the Minister for Competition, Consumers and Markets and I reassured both this House and the other place that we envisaged that the arrangements at the top of the OFT would be reviewed when John Vickers retires in 2005, so that consideration would be given at the time to whether a separation of the roles of chairman and chief executive would then be desirable.

However, given the strong concerns expressed by this House that the OFT should definitely have a chief executive, Amendments Nos. 1D and 1E proposed by the Commons in lieu would make express provision for such a post on the face of the Bill. The amendments also provide for a transitional period of two years, during which time a combined chairman and chief executive of the OFT could be appointed.

The OFT's particular circumstances have been critical to our decision not to separate the role of chairman and chief executive between two different persons at the present time. We are conscious that the OFT is about to enter a period of substantial change as a result of this Bill and we want to ensure that there is an important degree of continuity to lead the OFT through it. We also want to honour the commitment made to John Vickers when he was appointed Director-General of Fair Trading.

For these reasons, we remain of the view that the OFT should not separate the roles of chairman and chief executive immediately. The transitional provision ensures that the commitments that were given to John Vickers are honoured and it will assist the OFT.

Noble Lords will also be aware that in creating the new statutory authority the Bill provides for a significant depersonalisation of competition and consumer regulation. As I have said previously, we expect the OFT to have a majority of non-executive members. A two-year transition period during which a combined chairman and chief executive may be appointed therefore seems to be sensible.

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I now turn to Commons Amendment No. 2C in lieu. As I have said previously, and as my honourable friend the Minister for Competition, Consumers and Markets has said in the other place, the Government are happy to accept the principle that the OFT should have regard to the generally accepted principles of good corporate governance in its affairs.

However, we believe that it is necessary to amend Lords Amendment No. 2 to ensure that the OFT only has to have regard to the principle of good corporate governance which may be reasonably regarded as being applicable to it, and to ensure at the same time that the OFT must also have regard to other relevant general guidance concerning the governance of public bodies.

The previous Commons amendment, Amendment No. 2A which was designed to achieve this, was modelled on a similar provision in the Office of Communications Act 2002. We have listened to the opinions expressed by this House, which favoured instead an amendment modelled on the Financial Services and Markets Act 2000. Commons Amendment No. 2C is therefore based on that Act, which includes a provision to have regard to the principles of corporate governance that may be reasonably regarded as applicable to the authority. We have added to that model a reference to having regard to guidance aimed at public bodies. That is because the OFT will be a government body and must take proper account of guidance, rules and procedures for such bodies—for example, Treasury rules on public accounting.

In contrast, the Financial Services Authority is a private law body: a company limited by guarantee on which statutory functions are conferred. The Financial Services and Markets Act 2000 provision must therefore be amended, as Amendment No. 2C achieves, to be fully appropriate to the OFT. Amendment No. 2C reflects the will of the House that the OFT should have regard to the principles of good corporate governance with a provision modelled on the Financial Services and Markets Act. We have changed the provision only where necessary to ensure that it is fully appropriate to the OFT.

Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 1D and 1E in lieu thereof.—(Lord Sainsbury of Turville.)

11.15 p.m.

Lord Hunt of Wirral: My Lords, I thank the Government for their proposed solution, which we accept. Our intention was always to provide for the longer term. We accept the need for a transitional period, following which there will now be a chairman and separate chief executive of the newly created Office of Fair Trading. That will enable the present director-general, John Vickers, to complete his contractual term in accordance with the arrangements agreed with Ministers. We wish him well.

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However, there is continuing and increasing concern about how best to regulate the regulators. I hope that the new structure, combined with a clear commitment to the principles of good corporate governance, represents the right way forward not only for the Office of Fair Trading but for other, similar public bodies.

Lord Kingsland: My Lords, although only Amendment No. 1 was moved, the Minister spoke also to Amendment No. 2; so perhaps it is appropriate for me to say a word or two in response. We are extremely happy that the Government have been prepared to make their amendment FiSMA-compliant.

On Question, Motion agreed to.

LORDS AMENDMENT

2Page 1, line 8, at end insert— "(4) In managing its affairs the OFT must have regard to the generally accepted principles of good corporate governance."

COMMONS AMENDMENT

The Commons agreed to this amendment with the following amendment—


2ALine 2, leave out from "OFT" to end of line 3 and insert "shall have regard—
(a) to such general guidance concerning the management of the affairs of public bodies as the OFT considers appropriate;
(b) subject to any such guidance and only to the extent that they may reasonably be regarded as applicable in relation to a statutory corporation, to generally accepted principles of good corporate governance."

LORDS REASON

The Lords disagreed to Commons Amendment No. 2A to Lords Amendment No. 2 for the following reason—


2BBecause the original Lords amendment adequately provided for the application of the principles of good corporate governance to the OFT.

COMMONS FURTHER AMENDMENT IN LIEU

The Commons do not insist on their Amendment No. 2A to which the Lords have disagreed, but proposed the following further amendment to Lords Amendment No. 2 in lieu thereof—


2CLine 2, leave out from "OFT" to end of line 3 and insert "shall have regard, in addition to any relevant general guidance as to the governance of public bodies, to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to the OFT."

The noble Lord said: I beg to move that the House do agree with the Commons in their Amendment No. 2C to Lords Amendment No. 2.

Moved, That the House do agree with the Commons in their Amendment No. 2C to Lords Amendment No. 2.—(Lord Sainsbury of Turville.)

On Question, Motion agreed to.

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