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Lord Jenkin of Roding: My Lords, I reinforce what my noble friend said about the need to live in the real world. I well remember the occasion, because I was at Buckingham Palace at the time, when the news came through that Mr Maxwell had thrown himself off his yacht and was presumed drowned. At that time, I was a non-executive chairman of a company which supplied paper to the Daily Mirror. Within minutes we had put the Daily Mirror on a cash-with-order basis. There was no other way we could ensure that we were going to be paid. That lasted until eventually we were able to resume normal relations. That is what happens. If that were done by one supplier, I have no doubt it

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would have been done in relation to a great many other people who were concerned with the Maxwell empire. Indeed, one knows what happened to the pensioners.

Therefore, one has to recognise that if any event triggers a collapse of confidence in a company, the results are instantaneous and cataclysmic. As drafted, the Bill does not recognise that. The amendment goes a long way to meet the concerns which have been voiced.

I do not deny that at some stage a government may have to step in, as indeed they did with British Energy. As I said in Grand Committee, I think that on the whole that was handled pretty well. However, there needs to be very careful consideration and consultation before that drastic step is taken; otherwise the consequences could be incalculable.

Lord Whitty: My Lords, I understand the concern that is being expressed here about this power. The Secretary of State should not seek a special administration order until she is absolutely clear that that is necessary, which would normally involve talking to the directors of the company concerned and others.

We also have to live in the real world in the reverse situation where there is such an urgent situation and a need to act and supplies could be cut off were no action to be taken. The Secretary of State surely would be under at least a political and moral duty—we would need to use these powers to make it a legal duty—to act to install a special administration order in those circumstances.

I recognise that the noble Baroness has sought to meet those circumstances with her three exclusions, which relate, first, to public interest; secondly, to alternative insolvency procedures being under way; and, thirdly, to what she described as the urgency situation. But the amendment does not quite read that way. In any case, if the presumption is that the Secretary of State does not have those powers, acting in extreme emergency situations would be inhibited by the amendment.

Having said that, I appreciate that the noble Baroness has tried to meet my earlier objections. I also appreciate that the Secretary of State would need, in almost all circumstances but not quite all, to have gone through the procedure set down in this amendment in relation to the directors of the supplier concerned. For the sake of security of supply and the industrial and household consumers dependent on that supply, we must allow the Secretary of State the powers to act in the very special and extreme circumstances that this provision is intended to address.

Baroness Miller of Hendon: My Lords, despite the fact that the Minister speaks very nicely and says that he understands it all, in my opinion he does not understand the crucial point of this amendment, which is important. He is wrong in what he says, but at this time of night I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

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Clause 135 [Energy administrators]:

[Amendment No. 203AB not moved.]

Clause 145 [Modifications of particular or standard conditions]:

[Amendment No. 203B not moved.]

[Amendment No. 203BA not moved.]

Clause 149 [Appeals to the Competition Commission]:

Lord Kingsland moved Amendment No. 203C:

    Page 115, line 12, leave out "whose interests are materially affected by it" and insert "with a sufficient interest in that decision"

The noble Lord said: My Lords, in moving Amendment No. 203C, I shall speak also to a number of other amendments. I hope that your Lordships will forgive me if I begin with Amendment No. 208.

In Grand Committee, the noble Lord, Lord Triesman, said that it was the intent of the Government to create a "tailored approach" to rights of appeal. As I understood him, he meant that the Bill was designed to establish a right of appeal that was something less than a full re-hearing but more than judicial review.

More precisely, the noble Lord said that the purpose of the Bill was to require the Competition Commission, as the body hearing appeals, to

    "adopt the same approach as would, for example, the Court of Appeal in hearing an appeal against a decision of a lower court".—[Official Report, 1/3/04; col. GC 162.]

We believe that the Government have met that undertaking in their amendment at Report stage. The amendment clearly entitles the Competition Commission to re-assess the factual basis on which weights were accorded, and then compared, by Ofgem, and then to make its own independent assessment.

Your Lordships will be relieved to know that I shall turn now to the other amendments in the group in the order in which they are set out. As your Lordships will recall, Amendments Nos. 203C and 203D aim to ensure that persons with a "sufficient interest" in the relevant decision will be entitled to appeal against it rather than only those persons who are "materially affected" by the decision.

The test of sufficient interest has been elaborated by case law and has, on the whole, been interpreted generously. When we raised this issue in Grand Committee, the noble Lord, Lord Triesman, said that he found it difficult to imagine what additional parties we would hope to enable to appeal under a more generous test of eligibility. But our concern was actually the reverse of that. Our concern was that, on the test of material effect, there was no guarantee that all of the parties to an industry code would be equally entitled to appeal in relation to a particular Ofgem decision.

After all, a decision may be perceived as thoroughly bad in principle by those with a sufficient interest in it, even though it might not materially affect them in the accepted sense of these words. On the test used by the

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Bill as it stands, they would not be able to appeal against any such decision that they believed was wrong and should be challenged. This cannot be right.

The legal implications of using the material effect test are also unclear. But for these provisions in the Bill, those parties with a sufficient interest in a decision would be entitled to bring an action for judicial review. Will they still have that right? In other words, if they fail the material effect test to bring an appeal to the Competition Commission, can they go to court and show, instead, that they, none the less, pass the easier test of sufficient interest, entitling them to judicial review? To create the potential for two legal processes that operate in parallel in relation to exactly the same decisions simply cannot be sensible.

Alternatively, will the legal effect of the Bill be, though without any express intention to this effect, that the rights of those with sufficient interest are ousted by the existence of an alternative remedy from which they have been excluded? Might the courts decline judicial review on the basis that Parliament has provided an alternative that it has not seen fit to make available to the sufficient interest applicant? I have not seen any justification for thus disfranchising members of the industry in relation to their existing rights to a review. On the contrary, the stated intention of the appeals provisions in the Bill is to enhance rather than to diminish those rights.

As a matter of law, I do not believe that it can be clear how the courts would approach these questions. There is little precedent to guide us. Neither of the two possible options seems in any way attractive. The use of a novel material interest test in the Bill creates more problems than it can possibly solve. We believe strongly that it should be replaced by the concept of sufficient interest, with which the industry and the courts are already familiar.

By contrast, the amendments proposed by the noble Lord, Lord Whitty—Amendments Nos. 204, 206, and 207—give me reason to thank him very much indeed for reflecting further on the 10-day limit in the Bill and seeing fit to extend it to 15 days. We would have preferred 20 days; but we recognise that the Government have given ground in this area in a way that is sensible, and we are content with a solution that is thought to be the optimum one.

Amendment No. 205A seeks to replicate a deletion that the Government intend to make in Schedule 22 and is an amendment that the noble Lord, Lord Whitty, has made in Amendment No. 205. The Government rightly want to leave out paragraph 1(12). We agree with that. Under some of the earlier provisions of paragraph 1, an authorised member of the Competition Commission, not the commission itself, is able to decide whether to grant permission to bring an appeal, and if so, whether that permission is to be subject to conditions. Such conditions, as I understand it, can be substantive as well as procedural.

Sub-paragraph (12) would give the authorised member a third discretion entitling him to modify subsequently those conditions,

    "in such a manner as he thinks fit".

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It is wholly unclear why this provision is required or why it should be drafted in such wide and unfettered terms. That is presumably why the Government now seek to delete it.

However, the same formula, providing for the same third layer of discretion, is also to be found at sub-paragraph (10) of paragraph 2 of the schedule in relation to the power of an authorised member to direct that party to be added to appeals. Having given the direction that a party can be added to an appeal and attach conditions, which may be substantive or procedural, to the direction, the member can subsequently return to the matter and modify the conditions,

    "in such a manner as he thinks fit".

The same objections apply to this sub-paragraph as to the sub-paragraph which the Government have so wisely sought to delete. In my submission, the Government should follow their own analysis to its logical conclusion and delete both provisions. Our amendment would achieve this. I beg to move.

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