§ Mr. Waterson
I beg to move amendment No. 91, in page 184, line 4, at end add—'(2) Parts 3, 4, 5, 6 and 7 of this Act shall not come into force before 1st March 2005'.I shall speak briefly to the amendment. We discussed this in Committee but, given our slightly truncated debates last Thursday, I still think it is worth debating the amendment, which would ensure that parts 3, 4, 5, 6 and 7 of the Bill, once enacted, do not come into force before 1 March 2005.
I am sure that it is rare to propose amendments to the commencement provisions in a Bill. However, we have received very strong lobbying from the CBI and other organisations which feel quite aggrieved, not unreasonably, that we are revisiting competition law only a very short time after the Competition Act 1998, which was described at the time as the state-of-the-art measure on competition, and an even shorter time after the Act came into effect. We believe that there is a symbolic importance in suggesting that there should be a moratorium before the new provisions on competition come into force.
I am sure that Members want to get on to Third Reading, so I will desist from going through all the provisions that are being proposed on competition matters. We had some debate on it last Thursday. However, this seems eccentric for two reasons—first, it will place extra burdens on business because companies will have to become au fait with these new competition provisions very soon after doing so in respect of the 1998 Act.
Secondly, it was clear from our deliberations in Committee that on certain key issues the regime in this country and the European Union would be moving in opposite directions. That is very unfortunate; there is no doubt that the European regime for competition is developing, and developing quite fast. Again, there seemed to us to be great sense in waiting to see how that regime, to which British companies are subject, developed before committing ourselves to further changes in competition law. That is the purpose of the amendment, and I commend it to the House.
§ Mr. Carmichael
I can probably beat the hon. Member for Eastbourne (Mr. Waterson) for brevity. I believe that 107 there is some force in what he says. I feel as if passing competition legislation is almost like buying a new computer—by the time everything is installed and all the games are up and running, it is obsolete and something better has come on the market. [Interruption.] Or, indeed, as my hon. Friend the Member for Southport (Dr. Pugh) says, it has crashed.
I am not convinced that the length of the delay envisaged in the amendment is desirable, but as I have said on a number of occasions in Committee, there is a good reason for having a period of mature reflection on the progress of the Competition Act, which is of two years' vintage only. Before the Bill comes into force in its entirety, it might be possible to commence introducing some of the provisions over a longer period of time.
In the interests of brevity, I will not go over all the reasons why we propose to have the Bill. Its provisions build on those of the 1998 Act. There is no real reason for delaying it, as the amendment proposes, until at least 1 March 2005. It would be unusual for the House to introduce legislation, support it and then suggest that it needs to be delayed for so long.
I set out the rationale for each of the reforms on Second Reading and in Committee. Merger and market reforms will depoliticise the process; they will improve the clarity of the framework for decisions and the predictability of the decisions made under it. The introduction of an offence for cartels will create a real deterrent against individuals who enter into cartels, and the effect will be fewer cartels. The civil regime introduced by the 1998 Act imposes civil fines on companies but it does not deter individuals in this way.
I do not believe that there are any grounds for delaying the introduction of this package of important reforms, and I urge the hon. Gentleman to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Order for Third Reading read.7.57 pm
§ Miss Melanie Johnson
I beg to move, That the Bill be now read the Third time.
I thank hon. Members for their valuable contributions to our debates on the Bill, not only on Report but on Second Reading and in Committee. The Bill is set to go on to the other place in even better shape, I believe, than it was on its introduction. That is due to the diligence that many Members of the House have demonstrated in scrutinising the Bill. I am particularly grateful for the constructive approach of Opposition Members to the Bill, their support for the majority of the measures and their determination to improve it.
Hon. Members have asked how much of a difference the proposals will make to people's lives in practice; they have sought reassurance that the Bill will not create new burdens on business and have asked whether sufficient resources will be available to back up the new powers in the Bill. I have sought to reassure them on these points throughout the passage of the Bill and will do so again this evening.
108 There remains a productivity gap with our key competitors—France, Germany and the United States. My Department's No. 1 public service agreement target is to tackle this productivity gap. The measures in the Bill will boost productivity through promoting stronger competition and an enterprise culture. They will make a real difference to people's lives. It is no wonder, then, that the Bill has wide support. The Federation of Small Businesses says:We do not see anything controversial in these proposals and would urge all party support and speedy implementation through Parliament".Sheila McKechnie of the Consumers Association said that the measures willput an end to the billions lost to consumers each year from rogue traders".Digby Jones of the CBI expressed support for the Bill "in the round" and said that
we value a very tough competitive regime because it will enhance productivity".The Bill has also received support from leading competition experts such as Michael Porter and Irwin Stelzer, from the British Chambers of Commerce and other consumer organisations.
§ Mr. John Redwood (Wokingham)
If competition is so good, why are hon. Lady's Government delaying its introduction in the Post Office?
§ Miss Johnson
My right hon. Friend the Secretary of State for Trade and Industry recently made a statement on the Post Office and we are trying to ensure that the Post Office has a secure future. That is not a matter for the Bill, which does not need to deal directly with issues of enterprise and productivity in the Post Office, as they are being fully addressed elsewhere. Indeed, it could be said that insufficient action by the Conservative Government meant that the future of the Post Office was not what it would have been had the organisation been suitably released from the constrictions under which it worked at that time.
The result of our extensive consultation on the Bill is a measure that reforms existing regulatory frameworks for the better. For example, there will be better competition regulation. By removing from Ministers decisions on mergers and market investigations, we are removing a layer of regulation and streamlining the regime. We are ensuring that decisions are taken by competition experts, free from short-term political pressures. By ensuring that those decisions are taken on the basis of a competition test, rather than a public interest test, we are improving the clarity of the framework for decisions and the predictability of the decisions made under it.
Opposition Members have expressed concerns about the manner in which the Office of Fair Trading will investigate markets. The OFT threshold for making references will be no lower than at present. The OFT will naturally want to concentrate its resources on the most serious cases. It will certainly not be in the OFT's interests to refer markets for detailed investigation unless there is a reasonable prospect that the Competition Commission will make an adverse finding. That has not happened in the past, and I cannot envisage its happening in the future.
109 Some forms of anti-competitive behaviour, specifically hard-core cartels, are highly damaging to consumers and a major drain on the world economy. Those are serious economic crimes and that is why the Bill provides for a criminal offence with the possibility of a maximum five-year criminal sentence.
The Competition Act 1998 already provides civil fines against firms, as I said a moment ago. However, to prevent the formation of hard-core cartels, we need to create real deterrents for individuals. Cartels operate undercover and are notoriously difficult to detect. That is why we are providing for tough but appropriate and proportionate investigatory powers, with significant safeguards.
As well as benefiting from stronger competition, consumers will benefit from effective consumer protection. The stop now orders, introduced last year for certain aspects of consumer protection, were widely welcomed by consumer organisations. The Bill will extend that protection to other sectors—especially the service sector—where consumers' interests are harmed by traders not meeting their legal obligations. The new framework will work better for consumers and for business.
We have heard several calls for the Bill to include a general duty not to trade unfairly. I agree that businesses should trade fairly. but I am not convinced that enshrining a general principle of that kind in legislation is necessarily the best way forward. Policies must be founded on a robust evidence base to ensure that they are effective and necessary, do not place undue burdens on business and serve the purpose of protecting the consumer—the overriding reason for those aspects of the Bill. That is why I shall invite key stakeholders to a seminar to explore their concerns with me in more depth. In the light of that seminar, I shall assess the case for further action.
If we are to build a truly enterprising economy, we must ensure that our insolvency regime supports rather than stifles the development and growth of new businesses. The Bill will deliver that support while striking a balance between the interests of creditors, companies and the public.
In providing early discharge for those who have failed through no fault of their own and by introducing a more stringent regime for the rest, we are drawing a clear distinction between the culpable and the non-culpable. That is vital if we are to move away from our current one-size-fits-all approach to bankruptcy which is inappropriate and unfair.
On earlier occasions and, indeed, this evening, some hon. Members have said that bankruptcy will become an easy option. That is a cynical argument that has no basis in fact. Debtors who can pay should pay and will pay. Trustees will be entitled to realise the same assets and income as they do at present, and that is why we are introducing bankruptcy orders for protection against the most reckless and dishonest people. However, we also believe that the consequences of bankruptcy should reflect the circumstances of the case.
As well as encouraging individual enterprise, we want to ensure that companies facing financial difficulties do not go to the wall unnecessarily. That is why we are restricting the use of administrative receivership and creating a new streamlined administration procedure with a clearer purpose and clear time scales. The procedure 110 will focus on company rescue and better returns for the company's creditors as a whole. We will also ensure that the interests of all creditors are taken into account.
The measures in the Bill are radical and bold, but based on careful consultation. We have developed them to strike the right balance and to reform the existing framework of regulation for the better—without creating additional regulations for business. We will provide the necessary resources to ensure that the measures are effective. Together, the package of reforms will make a real difference to this nation's prosperity and I commend the Bill to the House.
§ 8.6 pm
§ Mr. Waterson
One might think that it was difficult to say anything new about the Bill by this stage, but I shall do my best—as the Minister and I prepare to stagger back to our respective corners to receive the ministrations of our managers.
We have been considering a long and detailed Bill: 274 clauses and 26 schedules. As I have said before, much of it is common ground. To call it an Enterprise Bill is puzzling, as it is a collection of different Bills—some of which contained sensible provisions—which have somehow become attached to one another. That makes it all the more surprising that the Government wanted to rush it through in such a hurry. I have already referred to the fact that we scarcely had time to draw breath between the coming into force of the Competition Act 1998 and the introduction of these new provisions and their effect on business.
Last Thursday, we managed to avoid any debate of cartels—which are, as the Minister explained, an important aspect of the measure—or market investigations, and there was precious little debate of mergers. That is extraordinary, because it is not as though there were massive party political differences on the entirety of the Bill, although there are some differences between us here and there which we have tried to bring to the fore. There has been relentless pressure to push the measure through. The point that I made on Thursday bears repetition: many people apart from ourselves will have to grapple with the complexities in the Bill when it becomes law.
I am still mystified that the Bill was not considered appropriate for pre-legislative scrutiny, as that would have created an opportunity to deal with many of the practical and technical objections that we have tried to raise in our role as the official Opposition. However, in fairness to the Government, several of our amendments were accepted and the Government have introduced some amendments based on our proposals.
I want to deal with some of the broad issues in the Bill. We welcome, of course, the formal recognition by statute of the ending of political interference by Ministers in decisions on takeovers and mergers. However, as I have explained previously, in theory, that should not make a vast difference to individual cases; since the Tebbit guidelines, Ministers have on the whole adopted that approach—a self-denying ordinance.
I hope that the provisions mean what they say. because the Government have fought like tigers to retain not only a provision about the public interest but also one that allows them to expand the definition of public interest by regulation. They assure us that they do not envisage 111 circumstances in which they might do so, but let us hope that the House can hold a debate, which is as full as the rules allow, if and when the Government want to expand that definition.
I hope that shabby episodes of the sort that we debated on Thursday—the way in which the takeover of Express Newspapers Group by Mr. Desmond's companies was handled by the then Secretary of State—will be a thing of the past. There are still some major unanswered questions about that whole episode, not least about the precise criteria adopted by the then Secretary of State in making his decision on what the Office of Fair Trading called the non-competition issues. Fortunately, the Opposition are not alone in wishing to get to the bottom of those questions. A large and growing number of Labour Members would also like to know on what basis that decision was made and why it was followed only a few days later by a substantial donation to the Labour party.
Of course we welcome the strengthening of the competition regime, although we expressed our concerns in Committee about the apparent divergence between the new regime under the Bill and what is happening in the European Union. That will create extra problems for businesses, and it is completely at odds with this Government's attitude when the Competition Act 1998 was being debated. They then took the view that one should not be able to get a cigarette paper between what was happening in Europe and what was happening in this country. I wonder why.
The issue of criminalising cartels is great for a headline, but not much else. In Committee, we heard about the EU's express reservations about our moving in that direction if it is not doing so. There were concerns about how whistleblowers will be treated in practice and whether they will feel able to come forward if they know that criminal sanctions may await them. There were also concerns about the effect on investigations and, crucially, the effect on exchanging information between our regime and that in Europe or those in countries without express criminal sanctions.
We discussed those countries that very rarely used criminal sanctions even though they were on their statute books. It was interesting that our debate on that subject occurred precisely at the time of the result in the Sotheby's cartel trial. Mr. Alfred Taubman was sentenced to a period in Club Fed, whereas Sir Anthony Tennant will not be subject to criminal sanctions, let alone imprisonment, so long as he does not set foot in America.
In practice, will the directors of major companies be less willing to err or cross the line because criminal sanctions exist? Their existence does not seem to have affected Mr. Alfred Taubman in America, and they will not have the desired effect here. The proposal is a bit of gesture politics, but it will have a serious practical effect on the efficacy of investigations in this country.
We could have had a substantial debate on market investigations if we had had enough time last Thursday. The Government have failed to strike the balance between the need for proper investigations and the extra burdens to be placed on business by the various types of investigations that the OFT will be able to conduct with its new powers, functions and resources. The Government even resisted our modest amendment to place in the 112 OFT's annual report an assessment of the cost to business of the investigations that it carried out in the preceding year.
Of course what really beggars belief is the fact that the regulatory impact assessment of the Bill itself concluded that there would be no effect on business if those provisions were placed on the statue book. I find that very difficult to believe, and have done throughout the proceedings on the Bill.
On consumer protection, we broadly welcome extending stop now orders, introducing super-complaints and the OFT's powers and functions, but we remain disappointed, as do many consumer organisations, that the Government have not been prepared to grasp the nettle of creating a general power to deal with the sort of scams, frauds and abuses that I described earlier today in the debate on those provisions. Despite the Bill's reaching the statute book, it is clear that many of those activities will continue unabated simply because the fraudsters are one step ahead of the law and the Government.
We debated the insolvency provisions at length today. Of course we welcome the abolition of Crown preference. That must be a practical and sensible step. We have significant reservations about the Government's attempts to remove or certainly to reduce the stigma of bankruptcy. It is absolutely impossible to understand how a genuine judgment can be made between culpable and non-culpable bankrupts. Not only do we believe that there is a third category of what I call pathological optimists, but the fact is that it will be very difficult to make those judgments, particularly as the period will be reduced to 12 months or less; as there will be no formal requirement on the official receiver to investigate all cases; and as the Insolvency Service's resources will be stretched to breaking point.
That would be bad enough with the existing number of bankruptcies, which has been steadily rising over the years, but we have predicted—the Government have not challenged this—that there will be a significant increase in the number of bankruptcies following the introduction of the provisions. In fact, we go further than that: there will be an explosion in the number of bankruptcies, as happened when similar measures were put into effect in the United States.
What blows out of the water any pretence that the Government have that the Bill is really about enterprise is the Minister's admission that she sees no theoretical reason to differentiate the length of the bankruptcy period for business and consumer bankrupts. She also made the separate assertion—it was perfectly open for her to do so—that it was difficult and impracticable to make that distinction. It will not be very long before the resources available to deal with the growing number of personal consumer bankruptcies in this country will become obviously inadequate.
The real problem with the Bill is that it has absolutely nothing whatever to do with enterprise, for we are debating it against a background of understandably deteriorating relations between the Government and industry and business. Britain is now 16th in the world competitiveness league tables. Ernst and Young's latest report shows that 52 per cent. of those asked—the sort of entrepreneurs to whom the Government like to feel they are close—thought that the Government gave low priority to entrepreneurship, and a staggering 1 per cent. thought 113 that they gave it high priority. Even if the Government do not understand what they are trying to do, business men and women do.
The Minister quoted the Federation of Small Businesses, but it also had this to say:All the welcome measures have been undone by the increase in National insurance. For three million self-employed workers, it will mean increases in tax…it is a tragedy that the Chancellor has decided that the self-employed will also pay higher National Insurance Contributions".The Independent—not exactly a sub-department of central office—said this about the Bill:these are largely candy floss measures which fail to address the main problem facing Britain's enterprise economy—namely the growing burden of regulation, especially as it concerns the labour force…the Government's pro-business agenda is at odds with its social objectives, for business will always do best if the Government simply gets out of its way.However, the Government simply and fundamentally fail to understand how business and entrepreneurial activity work. They simply do not understand. When we come right down to it, it is difficult to disagree with the CBI's judgment that the Bill's title is something of a misnomer.
§ Mr. Carmichael
It is an unexpected pleasure for me to address the House on Third Reading and from this position in the Chamber. Hon. Members will be aware that my hon. Friend the Member for Twickenham (Dr. Cable) usually leads for the Liberal Democrat party on such occasions. Unfortunately, he has been on unavoidable business elsewhere today, and I suspect that he has been caught out by our alacrity and great progress in finishing our debates on Report as early as we did.
If my short speech in this debate is punctuated by a series of dull thuds, I can probably account for that by saying that it is the sound of senior members of the leader's office and the Whips Office throwing themselves out of high windows when they see my name on the monitor at this stage in the proceedings. What I am about to say may or may not he party policy; I merely ask Members not to assume that I say it simply because of where I am standing. The absence of my hon. Friend the Member for Twickenham has given me my big chance, however, which I shall take with all the skill and precision of an Irish footballer taking a penalty—[Laughter.] As a Scotsman, I feel that I am one of the few people in the Chamber in a position to make fun of anybody else's soccer skills.
On Second Reading, the Liberal Democrats' position was that we agreed with much of the philosophy behind the Bill, and we recognised the contribution that the principles of competition could make to the development of a culture of entrepreneurship. That was our approach throughout the Committee stage and on Report. As is the case with all parties, we will not be forcing a Division on the Bill. We wish it good progress in another place.
This is the second Bill on which I have served in Standing Committee since I came to the House last year. Again, I was impressed at the manner in which the issues raised were dealt with. I pay particular tribute to the Under-Secretary and her colleague, the then Minister for E-Commerce and Competitiveness, who has been made Minister of State, Cabinet Office in the meantime. I also pay tribute, despite our occasional differences, to the 114 contribution made to the debate by the hon. Member for Eastbourne (Mr. Waterson), who was always well briefed and put his points with force and eloquence, and to my absent hon. Friend the Member for Twickenham.
My view of this Enterprise Bill—I wonder whether it might please the hon. Member for Eastbourne were a small amendment made to its title at a later stage, as I suspect that it would save us all a lot of grief—is that it is all right as far as it goes. The Government's approach to competition as presented in the Bill, however, lacks a little imagination. It seems to be driven by a conventional and—dare I say it?—conservative view of competition and what it can achieve. As we have tried to suggest in Committee and on the Floor of the House, it seems that it will not allow sufficiently for concerns to be addressed in relation to local monopolies, for example.
It also seems that the Labour party has a remarkable ideological commitment to competition as a tool of economic management, about which I am surprised and disappointed, as it is a one-size-fits-all approach. There are parts of the country, one of which I represent, where competition alone will not be enough. There is still a role for the Government in economic management. Clearly, they will not have the primary role, but were Governments simply to say, "That is a matter for the market to take care of, and we are not going to deal with it", that would be an abdication of part of the responsibility that voters feel that they entrust to us. The more we abdicate our responsibilities, the more disengaged we will become from our electorate.
I was disappointed that the amendments tabled by the hon. Member for North-East Derbyshire (Mr. Barnes)—who, I am pleased to see, is now in his place—were not given a fairer wind. I was pleased that Liberal Democrats were able to support them. On Thursday last week, my hon. Friend the Member for Southport (Dr. Pugh) suggested that the hon. Member for North-East Derbyshire was trying to smuggle in social revolution by the back door. It is difficult to see the hon. Member for North-East Derbyshire, who is one of the most thoughtful and, at least in his delivery, gentle Members of the House, cast in the role of the foot-in-the-door salesmen whom we were so deprecating earlier today. If he was seeking to use the Bill as a tool for social change however, more power to his elbow. My hon. Friend the Member for Twickenham made the point that the need for accountability underpinned his amendments; it is all very well for Government to use competition as they do but, at the end of the day, there must still be political input. The amendment seeking to introduce the public interest to the considerations underpinning the Bill would have been a useful reinstatement of that accountability. The Bill is the poorer for not having it.
The right hon. Member for Wokingham (Mr. Redwood) offered earlier the example of Consignia and the Post Office. Why, he asked, if the Government are in favour of competition, are they delaying its introduction in the Post Office? I would hope that the answer to that is obvious to all Members of the House. It would be an absolute disaster if unlimited competition were introduced to the Post Office. The universal service obligation would disappear like snow off a dike. That ideologically driven approach to competition, which accepts no role for the state, is very dangerous.
§ Mr. Redwood
Does the hon. Gentleman not know that the introduction of competition to postal services is a 115 requirement under European law, and a very good European policy? Is he saying that he is not a good European? What will he do about the fact that he is at variance with a decision already taken by the European Union?
§ Madam Deputy Speaker
Order. I remind all hon. Members that, on Third Reading, we should be discussing the content of this Bill.
§ Mr. Carmichael
Indeed, Madam Deputy Speaker. It is for others to decide whether I am a good European. I merely point out to the right hon. Member for Wokingham that he poses a different question, because the European proposals for postal services liberalisation operate to a different time scale, and he was asking why the Government were delaying it. It is therefore not the same point.
Unfortunately, we did not discuss the operation of cartels on Report. I am comfortable in principle with the criminalisation of cartels. I have severe reservations, however, about the practical aspects of their prosecution. Were I still in practice as a solicitor, I would much prefer to defend a client on a charge under the cartel offence provisions than to try to gain a prosecution.
I regret that we were not able to make more progress today in relation to the protection of consumers. I welcome, as far as it goes, the Under-Secretary's commitment to a seminar on this issue. I hope that it will produce some inspiration for her, as I feel that that has been slightly lacking.
The amendments tabled by the hon. Member for Eastbourne, although he slightly undersold them, sought to introduce a system based on certain principles. I suggested to him that the great attraction of such a system was that principles are there for application by the court, and that they can be interpreted to defeat new forms of the old evil or mischief. His response was that, as long as that was consistent with current law, that was fine. In Scotland, of course, which has a principle-based system, that is entirely consistent with our current law. Had we never departed from the true principles of Roman law that underpin Scots law, I suspect that we might not be in the mess that we are in today.
In Committee and on Report, the Government made several concessions which I welcome. One of my constant refrains in Committee was that not sufficient account had been taken of what is, in many respects, a distinctly Scottish position. It remains my impression that the Scottish position has simply fallen off the radar screen for a number of Whitehall Departments since devolution. In many respects, the Bill forcefully illustrates the need for that to change.
A great many reserve powers remain at Westminster and they will have a direct impact on Scots law. To that extent, I am grateful for the help that I have had in the deliberations on the Bill from members of the Law Society of Scotland and the Institute of Chartered Accountants in Scotland. I place my gratitude to them on the record. However, if future Bills of this sort do not take on board the Scottish position at an earlier stage, that will be very dangerous for the Union.
116 Although good progress has been made, a lot more could be done. I shall watch the Bill's further progress in the other place with interest, but I am more than pleased to give it the good wishes of the Liberal Democrats as it leaves the House tonight.
§ Mr. Redwood
I have declared my interests in the register.
I welcome the Government's conversion to the idea that competition is a good thing, but my worry is that the Bill is exceedingly schizophrenic. Provisions in it rightly say that competition is the way to produce lower prices, more choice, better innovation and better standards of service; the Bill also says that, wherever possible, we need to find better ways of enforcing that competition message. I entirely agree. However, when we look at the Government's practice in the sectors that they regulate, control and own, we see that they practise the opposite of what they preach. If the Bill becomes an Act, it will allow them to carry on merrily in their bad old ways. It will be a question of "do as I tell you, not as I do".
The Bill will tell the competitive private sector that it needs to be even more virtuous in believing in the benefits of competition, and it will impose even stronger penalties on any director or business person who does not behave and does not understand the need to avoid price rigging, monopoly practice and damaging activities vis-à-vis the market. Yet the Government, in their policies towards regulated businesses, will often move in exactly the opposite direction. The Bill, if passed in its current shape, will allow them to carry on doing just that.
As a former Minister with responsibility for competition, I very well remember attempting to enforce the Tebbit doctrine on the private sector on behalf of the then Secretary of State. I attempted to liberalise and open up those parts of the public and regulated monopoly sectors that needed liberalising, to start to spread some of the benefits of competition to those sectors. For example, we liberalised telecommunications and the results were astonishingly good. I am pleased that the Government do not wish to reverse that. We have much more service, innovation, capacity and choice, and much lower prices, as a result of the liberalisation of telecommunications. Why are the Government therefore unwilling to learn those lessons when it comes to sectors such as the railways, the provision of road space or postal services? If anything, it seems that they are trying to move in the opposite direction.
When I was the Minister responsible for competition, I accepted fully that it was my duty and that of the Secretary of State to come to the House when necessary to explain our activities. I saw nothing wrong with that. However, I have worries about the Bill if the Government are to use the creation of an independent Competition Commission as an excuse to avoid coming to the House to talk about the most sensitive and important business issues that might come up.
I hope that Ministers will recognise that, even if they have delegated more of their authority and power through the Bill to more independent bodies, they will still feel that they have to explain to the House of Commons if things go wrong or are contentious, or if people on either side of the House feel that the decisions taken by that independent body are not right, just, fair or in the wider 117 national interest. It is most important in a democratic society that still pays salaries to many people in the Department of Trade and Industry that we should have the right of access to Ministers even if, under the Bill, some of their activities will be delegated.
I remember that there were occasions when Conservative Members, let alone the then Opposition, rightly wanted to expose to scrutiny and debate the decisions that I and the then Secretary of State had taken in rather tricky merger cases. We had deliberately applied the Tebbit doctrine and tried to provide a fair and sensible regime. However, on occasion, the results seemed perverse to people with constituency interests, with worries about jobs or with other public considerations. It was therefore our duty to come to the House to explain why we had come to the view that we had taken. I hope that we shall still have access to Ministers when difficult decisions are taken under the new regime.
When I was able to work through and with the then Government to liberalise things, it was my experience that liberalisation always yielded much better results. That is why I find the present Government's schizophrenia as regards competition surprising and worrying. For example, transport is covered by the regulation provisions of the Bill, but the Government take a divergent approach to different parts of that sector.
The Government are proud of following a strongly pro-competitive approach to air travel services. They promote more competitive airlines, they welcome ever cheaper fares and the additional services offered by low-cost airlines, and they are vigilant about ensuring that the major players do not have an unreasonable advantage. If they do, the Government may even intervene to move against those who they think have an unreasonable advantage, so as to open up the market to a wider number of players. I fully welcome that. It has brought visible benefits and means that many people can go to exotic destinations to which they could not have afforded to travel 10 or 15 years ago. An explosion in jobs, success and prosperity has followed on the back of that obviously competitive market working well, with the encouragement of Her Majesty's Government.
Why then is the railway industry treated so differently that the Government want to take away the rather modest elements of competition that the previous Government introduced? The Government do not appear to want to strengthen them and take them further in the way they wish to in other sectors. Why do they want only one train operating company to go into each London terminus? Given the strong statements in the Bill about the advantages of competition, it will be a great pity if and when the Government decide to use the obvious windows in the regulated provisions to allow a restriction of the competition and choice going into each major London terminus. For reasons that we do not understand, they think that that is better for this industry, even though it demonstrably does not work in any other industry where monopoly or cartel has been allowed. Their approach is clearly against the spirit of the general thrust of the Bill.
Why are there no worries about the monopoly over the railway network—Railtrack itself—when the Government support the opening of other networks and encourage competitive challenges to them in much more interesting ways? Why do the Government seem not even to be keen to encourage proper competition for proposals to replace Railtrack in administration with something rather better? 118 They have come up with the monopoly solution that Railtrack should become a company limited by guarantee, a vehicle not before attempted on such a scale for anything so heroic without first encouraging proper debate and proper canvassing of the marketplace to determine what alternative options might produce a better result under a more competitive challenge. Why do the Government fully support a monopoly canal system entirely under their control? Have they not noticed that that system has continued to decline, with its high prices and inability to attract any commercial use of the assets? Things might be different under a competitive challenge in the private sector.
In the case of road transport, why are the Government keen on promoting ever more competition for the provision of road vehicles? Although I welcome that—it is producing phenomenal choice and lower prices—when it comes to the provision of road capacity, we have to face a solemn public monopoly that never builds any roads. Indeed, it seems to be proud of the fact that there are not enough roads and then blames the people who want to use them for the fact that the roads are so awful. The Government go even further by encouraging a reduction in road space from the limited amount that is available by a stunning array of road works, impediments, chicanes, blocks, humps and traffic lights that ensure people cannot use the network properly.
When I challenged the Minister on postal competition, she said she could not understand what it had to do with either the fundamental purpose of her Department, as she called it, of improving British productivity, or the Bill, but it is central to both issues. Postal competition is clearly governed by the Bill because it has to exempt restricted competition areas, such as post or road supply, thus showing that the Government clearly want to exempt themselves from the competition that they urge on everyone else.
The Minister should also understand that getting more competitive postal services or, for that matter, a much better road and rail system, is fundamental to raising British output and productivity. Does she not understand that some of the main problems holding Britain back from achieving even higher levels of prosperity, productivity and commercial success are the services that are delivered as monopolies by the state in the public sector? What are we worst at? Roads and railway lines, and they were provided by the state for most of the last century. Railway lines are even going to be provided badly again by the state through the administration and then the back-door renationalisation of the company limited by guarantee—technically a private sector company, but I am sure a pensioner of the state in all but name.
The Government are finding it difficult to provide health services as a centralised planned monopoly, however much money they tip in. There is a shortage of supply and people are not happy with the service. We notice that the Government have considerable difficulties in supplying a high-quality education service to the standards everyone would like, because once again they wish to frustrate choice. They do not want parents to have a real choice of school and are not prepared to expand the more popular schools so that they can give places to the children of parents who seek them.
§ David Winnick (Walsall, North)
Does the right hon. Gentleman advocate dismantling the national health service?
§ Mr. Redwood
No. I have set out my views on the NHS at considerable length in print and the hon. Gentleman is welcome to read them. I suspect that I would be out of order if I wandered too far into the bigger health debate under the pretext of the Third Reading of this Bill. My point is that people are not offered a choice in those great public services, which are either removed from the Bill or, in the case of the regulated monopolies and regulated public enterprises, are covered by it but differently from anything else in the private competitive enterprise sector.
The aim of the Department of Trade and Industry—raising productivity and getting us up to the standards of the best in the world—is thoroughly laudable. I also agree that the prime method of sharpening competition even further, as recommended in the Bill, is the natural way to bring that about, because it will happen by the activities of people competing in the marketplace. However, the Government must think again on those parts of the economy that are Government owned, Government monopolies, or regulated in a way that makes them into cartels.
The Government should tell the House why they are deliberately trying to limit competition in the railways, where it is only just beginning to emerge, by reducing the number of companies offering services. They must tell us why they are not prepared to try out competition in a range of other public sector areas. They must also tell us why the areas in Britain that are furthest behind our foreign competitors are practically all in services and goods that are supplied by the public sector, usually through a monopoly, a cartel or a heavily hedged-about operation in which the Government are directly involved.
It is well known that the Government are the biggest monopoly in the country and that the Chancellor of the Exchequer is the biggest exploiter of monopoly in the country through his phenomenal powers to tax, with occasional support from people in this House. He is certainly not shy about proving beyond doubt that monopolies with too much power always overcharge and always deliver a lousy service for the money that they charge. We have seen that in the huge increase in taxation and the lack of improvement in public services.
We should also note—this is entirely relevant to the Bill—that in the most crucial ways of improving our productivity and business success, such as our transport and postal services, the Government do not practise what they preach: far from it. Instead, they are moving in the wrong direction by going towards monopoly cartel and protection and further away from the competitive model, which would produce better results.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. I am sorry to interrupt the right hon. Gentleman. I have allowed him a little scope, but I must remind him that on Third Reading we should he discussing the contents of the Bill, and he is tending to make remarks that would have been more suitable for Second Reading.
§ Mr. Redwood
I am very grateful for your guidance, Mr. Deputy Speaker.
120 I welcome the Bill's thrust towards more competition in the private sector, but I do not like the possibility that Ministers will use the Bill as an excuse to evade proper accountability to the House on difficult business issues. I certainly do not like the different treatment for the regulated businesses, because I believe that the Government will use that route to develop their public enterprises in a less competitive direction, which will be deeply damaging to overall productivity and to the success of the freely traded competitive sector, which in turn has to rely on many of those crucial public enterprises. For that reason, I do not welcome the Bill. It comes too fast on the heels of the Competition Act 1998.
The Bill seems to avoid the obvious point made by my Front-Bench colleagues, which is that we are, for these purposes, a vassal state. We are primarily under a European competition regime, which has been considerably strengthened in recent years. It is therefore strange to see the Government wandering further away from the European regime in this Bill, so shortly after the passage of the 1998 Act, when we were told that it was crucial to follow that regime in every twist and turn and that that was the sole purpose of the Act. Indeed, we were told that so perfectly had the Act mimicked the European system that we were in sync, and Europe would take most of the big decisions.
Apparently, that is not so. That shows that old Labour is beginning to come back, and it wants certain regulatory and monopoly activities to move in the other direction.
§ Mr. Redwood
I am pleased to see that there are hon. Members present, representing old Labour, who know that they are on a roll. This Parliament is much more interesting because there are lively Back Benchers behind what was new Labour and is now rather tired-looking old Labour. It is now having to recognise that there are many people in the party who want to go in a rather different direction from the punk-Thatcherism that is sometimes sketched out by the right hon. Member for Hartlepool (Mr. Mandelson) and others.
I cannot say that I welcome the Bill. It is bizarre because it does not recognise European realities; it is dangerous because of the way in which it treats regulated monopolies. Let us hope that it at least increases competition in what remains of the free trading sector, because that would be a modest advance.
§ Mr. Mark Field
It is a great pleasure to follow my right hon. Friend the Member for Wokingham (Mr. Redwood), who took what I hope he will forgive me for describing as a broad-brush approach to many of the issues.
One of the difficulties of having been in Committee and having gone through the mill on the Bill, as I have with several other hon. Members present, is that sometimes one cannot see the wood for the trees. I certainly do not think that my right hon. Friend could be accused of that. He made valid points about a range of competition issues, not least on the clear dichotomy between public sector and private sector competition. As he pointed out, it is clear that the Bill has several intentions that many Conservative Members would 121 support as they affect competition in the private sector, but it is a shame that they have not been replicated for our public sector monopolies. I also share a number of the concerns expressed about accountability, and I shall turn to those in a moment.
Many of the Bill's provisions are positive reforms that will receive support from the Conservative party, and I understand that we will not be voting against Third Reading. However, it seems that it will have little effect on the British enterprise culture as long as the Government continue their policies of high tax and over-regulation. The Government seem to think that they can pick winners. An example is their help for the small business sector. I accept that they have been positive about entrepreneurialism, particularly in the capital gains tax regime that they have put into place over the past four or five years. However, the main effect of the policies, as we have seen from the Finance Bill, which is currently in Committee, is to encourage expensive avoidance measures and complicate the entire commercial framework.
Returning to competition, the Government are proposing ferocious new criminal powers. Those were brought into being under the Competition Act—even though it became an Act in 1998, many of its provisions came into effect only 18 months or two years ago. The Government's approach appears to be confused, but the penalties are draconian. Perhaps, as we have argued both today and in Committee, there should be a more meaningful assessment of the impact of the 1998 Act before we go though another set of wholesale changes.
My view is that the super-complaints procedure epitomises some of the worst aspects of what we might suffer in coming years. I am not convinced that Ministers will not utilise the spurious elements of consumer protection to undermine business certainty and add to commercial costs. When he was Secretary of State for Trade and Industry, the right hon. Member for Tyneside, North (Mr. Byers) conducted a misguided and cynical campaign against supermarkets as part of the "Rip-off Britain" campaign in 1999. I am glad that that has been put to one side.
One of the concerns expressed about many of the competition and Office of Fair Trading aspects of the Bill is that there will be insufficient accountability in the House. I have made it clear that I have some sympathy with the idea that certain competition decisions should have a political element, although I know that that view is no longer in vogue on either the Opposition or the Government Front Bench. It strikes me as invidious that decisions might all too often be made behind closed doors, with Ministers making representations away from Parliament, with the consumer none the wiser and no better off.
On bankruptcy, especially individual bankruptcy, there have been several debates on the way in which the Government seek to remove the stigma of bankruptcy. There are real dangers in their approach—dangers that we have articulated repeatedly. One need only look at the United States experience in the past decade or so of consumer-led bankruptcies. My main concern is not merely that the Bill will adversely affect a range of lending institutions, but that smaller businesses, which will be the main creditors in such cases, are the most likely to suffer from the relaxation of the personal bankruptcy rules. We fear that in the next few years we 122 will receive significant representations from the very small businesses that are supposed to benefit from the Bill, but that are the worst to suffer from aspects of its insolvency provisions.
When the Government introduced the Bill, they referred to a regulatory impact assessment. With a wry smile, one reads that, in terms of the impact on businesses, the overall costs arising from the competition and consumer reforms would be neutral, and that the insolvency reforms and proposals on the employment of insolvency practitioners would have only a minor impact on business. One has to be somewhat cynical about the assertion that business will pay nothing directly.
We were told that there would be costs for Government—both sides of the House were approving of the fact that £70 million to £100 million a year was likely to be lost from the Government purse because of the changes to the Crown preference rules. We broadly support those changes, despite the concerns articulated by hon. Members on both sides about the fact that many small businesses find that the Government, in the form of the Inland Revenue or Customs and Excise, are often able to take a moderate view of debts built up when a business encounters difficulties during the early years of its existence, whereas the ending of Crown preference might mean that those institutions now try to get their money sooner, not later, rather than risk losing out entirely if bankruptcy results.
Apparently, the Bill will impose no costs on consumers. However, if our worst fears are realised and businesses have additional costs, undoubtedly consumers will suffer, because businesses will to a large extent pass on those costs to consumers where they can. We will have to wait to see the longer-term overall costs and benefits. I think I speak for many Opposition Members in saying that I support a number of provisions in the Bill which, however, is not simply an enterprise Bill, but an enterprise and regulation Bill. In the context of enterprise, we must ensure that we have proper scrutiny in the House of competition policy, which is inevitably political with a small "p" and always controversial. However, I hope that the Minister will reflect on the matter tonight, when the Bill becomes an Act, and as business develops in different ways in future. I wish the Minister godspeed in getting the legislation onto the statute book; I hope that she retains an open mind about the things that we have discussed tonight which we will no doubt continue to discuss both when statutory instruments are introduced and on the Floor of the House in the months and years ahead.
§ Mr. Harry Barnes (North-East Derbyshire)
I wish to make two small points. First, I thank the Liberal Democrat spokesman—a temporary spokesman on this issue—for his kind remarks, which I shall spread across north Derbyshire so that people will be aware that there is at least some appreciation of the matters that I sought to propound on Thursday. Secondly, I wish to pick up a point made by the hon. Member for Eastbourne (Mr. Waterson) which he also made in Committee. He talked about pathological optimists, a phrase that I shall use in a different context.
I am still trying to appeal to the Government to take into account public interest considerations and perhaps I am a pathological optimist to believe that they will 123 introduce such measures in the Lords. However, strong representations have been made which have been only partly heard in the Chamber. The TUC and major trade unions are greatly concerned about the withdrawal of public interest considerations which, indeed, they want to expand. Instead of being enabling measures, as they were in the Fair Trading Act 1973, they should be matters which we should be obliged to instigate and act upon. The least that we can do is to try to hold on to what was introduced under the Heath Government in 1973. It seems that new Labour will not go beyond that stage, but as it becomes more mature, I hope that it will take into account the points that I have made. However, I am sorry that the Government have lost interest in the public interest.
§ Mr. McWalter
I want to say something about a defining characteristic of the Bill. A lot of people complain that the Bill is not quite there and say that things are missing from it. For example, it does not include anything to contradict the assertion of the hon. Member for Orkney and Shetland (Mr. Carmichael) that we are introducing a Tebbit doctrine for the unalloyed operation of competition as an economic force. One of the great strengths of the Bill is its provisions on anti-competitive practices, including stop now orders and the attempt to try to produce a culture in which people challenge an existing business regime to develop new enterprises that produce services and goods in new ways. It is a jewel within a crown, as it were—[Interruption.] No doubt, this is a popular analogy in jubilee year. The crown itself is the raft of policies that the Government are introducing, not to produce Tebbitised competition, but to produce fair competition.
I think that that is tremendously important, because fair competition is not achieved only by introducing a measure such as the Bill. Among other things, it is achieved by bearing down on enterprises that cheat. That is the case whether they cheat their customers—there is a strong desire to ensure that consumer law is amplified and improved—or whether they cheat the environment, by polluting it, or their workers, by underpaying them. The Government have introduced legislation to try to ensure that companies cannot cheat their workers too much. They cannot do so, for example, in respect of the minimum wage and the right to be recognised by a trade union. The effect is to create an environment that makes competition between companies fairer than it would ever have been under a Tebbitised doctrine. So the first thing that the Bill does is contribute to an environment in which entrepreneurial activity is given a genuine boost, and that is how it should be read.
The second issue is what the Bill does not do, in terms of the contribution of the right hon. Member for Wokingham (Mr. Redwood): it does not propose in a Tebbit or Redwood way that competition is the answer to every economic puzzle. It manifestly is not the answer. For example, to cite the recent report of the Select Committee on Science and Technology, of which I 124 happen to be a member, it is clear that to establish wave and tidal power systems that achieve non-carboniferous energy generation, there may be a need for a time scale of, say, 50 years, and an investment plan far exceeding anything that the normal market would be willing to produce and develop. That is a role for Government as assuredly as the delivery of health services to people who are poverty stricken is a function for Government.
Let us be clear: the Bill is saying not that every economic problem has a competitive answer, but that where competitive elements are possible, they should be fostered, encouraged and nourished. For instance, if the Government start along the path of major long-term investment in wave and tidal power, and start to issue many subcontracts as part of that grand scheme, it would be utterly inappropriate for them to try to cosset and keep to themselves all those contracts and all that activity, ingenuity and capital. It would be absolutely right for them to try to find partners, in whatever sector, and whether that involved other countries, companies and so on, to bring forward such a project as effectively as possible.
The Bill does not do what some hon. Members—they include the hon. Member for Orkney and Shetland, in his way, and some Labour Members—have suggested, and propose an agreement with my right hon. Friend the Member for Hartlepool (Mr. Mandelson), who said that we are all Thatcherites now. If the Bill is read as a component of a strategy for fostering business and enterprise, but one that does that in a way that maximises social responsibility and uses appropriate economic instruments for the multifarious economic problems with which this country and its people are faced, I believe that it should be very much welcomed by all hon. Members.
§ Question put and agreed to.
§ Bill accordingly read the Third time, and passed.