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9.44 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson): My right hon. Friend the Secretary of State for Trade and Industry has set out how the Bill will promote a spirit of enterprise in the UK and, along with other Government policies, help to boost productivity. Without strong competition, business, consumers and the economy get firms that have little incentive to provide better goods and services or to innovate and improve productivity.

In developing our proposals for stronger and more independent authorities we have had the challenge of building in proper accountability, transparency and effective checks and balances. My right hon. Friend detailed how we have met that challenge.

The competition reforms and the consumer protection measures will ensure that markets work better for consumers. The insolvency reforms will help to address the fear of failure that is a significant barrier to enterprise and help to prevent companies in difficulty from going under unnecessarily. Together, the reforms will help to make the UK become a better place to do business and a better place to be a consumer.

Many interesting points have been made in this useful debate. I am pleased with the consensus among hon. Members today on a number of points. We agree on the

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benefits of strong competition and of taking politics out of competition decisions and the need to support entrepreneurs.

Several Opposition Members, including the hon. Member for Eastbourne (Mr. Waterson), argued that the Bill should have been given pre-legislative scrutiny, that it will have too little time in Committee and that it is generally being pushed through.

The Bill has been subjected to extensive consultation. We published White Papers last year and the Government's response to consultation at the turn of the year. As the hon. Member for Huntingdon (Mr. Djanogly) remarked, over the past couple of years we have consulted in one form or another on many of the Bill's measures. We have also had continuing and regular dialogue with interested stakeholders throughout the process. The remarks of the British Bankers Association, quoted by my right hon. Friend the Secretary of State earlier, reflect the fact that we have worked closely with a number of groups in building our proposals.

Today's debate has shown that many, if not most, of the Bill's provisions have wide support in the House. We shall work hard in Committee to examine the Bill thoroughly and carefully and I am sure that we will be extremely constructive.

My hon. Friends the Members for Luton, South (Margaret Moran) and for South Ribble (Mr. Borrow) and the hon. Member for Twickenham (Dr. Cable) referred to stop now orders. There is no easy way of legislating against unfair practices that are currently legal. The Bill is about the better enforcement of existing consumer protection law. It will cover what is currently covered by the stop now orders, including the timeshare issue raised by the hon. Member for Twickenham and mentioned by the hon. Member for Eastbourne. Those will be extended to cover other areas too. As my right hon. Friend the Secretary of State said, they will include the breaches of contract for supply of services to consumers, such as those by cowboy builders, rogue planners, car repairers and others. We agree that those are important questions and we shall discuss them in more detail in Committee.

My hon. Friend the Member for South Ribble referred to a constituency issue involving the NHBC. The Bill gives the OFT clear powers formally to approve codes and to remove approval from codes that are not working effectively to protect consumers. I shall write further to my hon. Friend in relation to the points that he raised.

Several hon. Members referred to the importance of trading standards, on which we strongly agree. As my right hon. Friend the Secretary of State said, there are variations between trading standards throughout the country. There are more than 200 of them covering different population levels and types of community. I recognise that that needs addressing in a way that will produce consistent standards, and we are doing so.

Trading standards are funded from general local authority funds, as hon. Members know, but, as my right hon. Friend said, we have introduced the modernisation fund to support trading standards further. That fund is providing £10 million this year, of which £5 million is devoted to effective enforcement and improving trading standards capabilities, and £2.5 million is specifically devoted to supporting the implementation of the current stop now order regime. That is in addition to the £10 million a year that we currently estimate trading standards departments will need to implement the Bill.

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The issue is not just about money, however, as hon. Members know; it is also about planning and performance. We have worked closely with trading standards officers and other stakeholders to develop a national performance framework for trading standards. After a pilot last autumn, I launched the framework in January and it is being introduced by local authorities this month.

I was interested to hear the support for our proposals on competition, and I welcome that. I note that the main concern of Opposition Members seems to be that we should not rest on our laurels after introducing the Competition Act 1998. We are not saying that the prohibitions in that Act are not valuable. It was a major step forward, as the then Secretary of State for Trade and Industry pointed out, and was much quoted by Opposition Members.

The prohibitions are only against firms. We are building on that. The cartel offence will have a serious deterrent effect and that obviously relates to individuals. Merger and market reforms are sensible and have received widespread support.

The hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) referred to criminal offences and the cartel proposals in relation to Europe. The criminal offence is compatible with the EC regime; it is narrower in scope and targeted at a different legal entity. The UK criminal offence targets dishonest agreement to run cartels by individuals whereas the EU civil regime covers a much broader range of competition breaches committed by undertakings.

The evidence for a criminal prosecution will, of course, have to be collected to criminal standards, following the safeguards in the Police and Criminal Evidence Act 1984. The OFT will collect the evidence separately from any civil proceedings. The Serious Fraud Office as prosecutor will take the decision on whether to prosecute in particular cases, in consultation with the OFT. I take the point made by the hon. Member for Orkney and Shetland (Mr. Carmichael) about prosecutions in Scotland. Continuing close co-operation between the UK and EU authorities will be the key to avoiding difficulties in practice.

The hon. Member for Orkney and Shetland and my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) asked about the organisation of particular markets—I think that they both mentioned the petrol and fuel markets. As they are aware, that matter is for the competition authorities and I cannot discuss particular cases for that reason. However, the Bill builds on the Competition Act, giving our competition authorities effective tools to allow markets to be investigated and to deter anti-competitive cartels.

Ms Walley: Does my hon. Friend agree that legislation is introduced so rarely that we need to find some way to address the genuine concerns that exist? Will she consider that point further in Committee?

Miss Johnson: I shall study the report of our debate and if my hon. Friend would like to write to me on the matter I shall consider it. However, without further consideration, I can give her no assurances as to what action I might take.

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The hon. Member for Twickenham anticipated that a far larger number of mergers would be referred to the Competition Commission. I do not share that analysis. I expect that the proportion of mergers to be referred will be broadly the same as at present. In practice, the OFT has already applied a competition test to mergers, but in future the process will be more certain and transparent. That is an advantage of the changes that we have made.

Insolvency was raised by several Members. Our proposals have stimulated a great deal of interest and debate, which is healthy, and I have listened with interest. One point that I must stress before answering individual concerns is that there are two distinct areas of insolvency law, and flowing from that two distinct parts to our insolvency provisions.

The individual insolvency provisions will reduce the stigma of bankruptcy and provide a second chance for those who failed through no fault of their own. The company provisions will ensure that companies do not go to the wall unnecessarily and will ensure a better result for all creditors.

One area where we propose to apply the same provisions to both individual and corporate insolvencies is in the abolition of Crown preference. I am pleased that that provision has been welcomed by so many Members on both sides of the House.

A number of hon. Members suggested that we are looking to copy the US system of personal insolvency and that the problems experienced in America will manifest themselves here. In drawing up the proposals, we have drawn inspiration from the insolvency regimes in a number of countries. I point out that the fundamental principle of our legislation is that those who can pay should pay, and we are not changing that position. The US is in the process of amending its insolvency regime better to reflect that principle, and is moving closer to the system proposed in the Bill.

Our insolvency proposals fall into four broad areas. The hon. Member for Maldon and East Chelmsford has raised concerns about the work load in the courts. I reassure the House that the intention in company insolvencies is to disengage from active involvement of the courts except in cases where there is dispute or complexity. As my hon. and learned Friend the Member for Dudley, North (Ross Cranston) pointed out, in future, both floating charge holders and the company itself will be able to appoint an administrator without a court hearing. The administrator will have extensive powers to deal with cases quickly without reference to the courts.

The hon. Member for Orkney and Shetland alleged that the proposed time scales for the new administration procedure are unrealistic. We have taken soundings from a range of insolvency practitioners, and their feedback indicates that the time scales would be realistic in a significant proportion of cases, although obviously there will be cases in which extensions are needed.

The hon. Gentleman also raised concerns that the company insolvency proposals might affect the cost of lending to business. There is no evidence to support that; it is simply scaremongering. We are not affecting the right

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of lenders to take a floating charge. We are simply providing for them to exercise their rights through collective procedures in which all creditors have a stake. We have liaised closely with all interested parties in developing these proposals, and, as the Secretary of State pointed out, the discussions, as the British Bankers Association acknowledges, were constructive. Secured lenders have nothing to fear from the proposals. I expect that many of those issues will be raised as the Bill progresses through the House.

The hon. Members for South-West Hertfordshire (Mr. Page) and for Twickenham questioned how the distinction will be drawn between bad-luck bankrupts and those who have behaved dishonestly or recklessly. Obviously, that is a matter for the courts, and the Bill sets out some of the criteria that they may take into account. No matter what hon. Members think, people do find themselves bankrupt through no fault of their own. Those who are in business may fail because of the failure of a major customer, and others may be made redundant. At present the law draws no distinction between those individuals and those who set out to defraud their creditors, and that cannot be right.

The official receiver will take a view based on the facts before him, including those provided by third parties, and on whether it is in the public interest to bring a bankruptcy restrictions order application. The court will decide, according the facts of the case, whether an order should be made. It is likely, as in the case of company director disqualification, that case law will develop over time and judgments will provide guidance as to what constitutes culpability and on the length of the orders. Those are matters to which we will no doubt return in Committee.

My hon. Friend the Member for South Ribble raised concerns about the costs of entering into bankruptcy. That point was raised by the National Association of Citizens Advice Bureaux. Individuals with small debts can and do apply to the county court for administration orders, and a growing number of individuals with debt problems seek advice. Voluntary organisations will administer debt repayment plans on behalf of debtors at no cost to the debtor. I recognise my hon. Friend's concerns, and I will write to him with further details.

I reassure my hon. Friend the Member for Harrow, West (Mr. Thomas) that we will take on board his points about industrial and provident societies as far as possible, although clearly some of these policy areas are a matter for the Treasury.

Finally, I turn to the questions about stop now orders raised by the hon. Member for Eastbourne. I assure him that all the areas that he listed, including timeshare, doorstep selling, distant selling and consumer credit, are covered by regulations on stop now orders, and they will be covered by the Bill. We shall provide a draft list of legislation in Committee.

Question put and agreed to.

Bill accordingly read a Second time.

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