§ Brian Cotter
To ask the Secretary of State for Trade and Industry (1) what steps have been taken to implement the Cruickshank report recommendations for regulating the charges on small businesses for credit and debit card transactions; 
(2) what plans she has to establish a payments regulator within the Office of Fair Trading. 
§ Ruth Kelly
I have been asked to reply.
The Cruickshank report on Competition in UK Banking concluded that there was a profound lack of competition in the provision of payment services and recommended the setting up of a regulator to bring about improved competition in this sector. In his March 2000 Budget speech, the Chancellor announced that the Government would legislate to ensure the payments system is open to new competition. The Government remain committed to introducing legislation to give the Office of Fair Trading (OFT) new powers to promote effective competition in payment systems—and will do so as soon as parliamentary time allows.
Progress has already been made through, for example, reforms to the governance structures of the main UK payment systems. The Government welcome these moves by payment system participants to address the competition issues identified by the Cruickshank report and urges the industry to continue with these reforms.
The Cruickshank report did not specifically recommend regulating the charges on small businesses for credit and debit card transactions. What it did recommend, however, was that wholesale prices—such as interchange fees—should generally be derived through a process that is transparent to final users, and that prices should be based on legitimate costs and should anticipate achievable cost reductions. It is envisaged that the Government's proposed legislation will include provisions designed to promote efficient wholesale pricing. This might reasonably be expected to bring about benefits to all end-users of payment services, including small businesses.
To promote its understanding of how payment systems operate, and to help pave the way for its prospective powers, the OFT announced on 27 November that it would conduct an empirical study 238W into recent payment system developments. The terms of reference of this study were published on 31 January 2003—and include issues related to pricing in the credit and debit card markets. The OFT has undertaken to publish a report outlining its assessment and conclusions in spring 2003.