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4.45 pm

Since that time, I have been interested in the provision in the 1973 Act that allows such reference and why it was not acted on in the Clay Cross case. I became aware that the DTI sought to remove the provision from the legislation through a consultative document and a later White Paper. I have always pressed for the provision to be retained.

It is a modest measure. The Fair Trading Act 1973, which contains the provisions about the public interest, was introduced by the Heath Government. In 1973, I was fighting that Government on their housing finance legislation and ended up in court, with several other people, in relation to its abject provisions. It can be seen from that that I did not generally share the Heath Government's attitudes, but it is interesting that I am now seeking to defend a measure from that period against a worse proposal from this Government.

Mr. Waterson: My first task as researcher to Sally Oppenheim, who was then the Member of Parliament for Gloucester, was to assist her in her work as a member of the Committee dealing with the housing finance legislation. It was a gruelling battle by any standards, but in those days the Opposition were allowed much more licence than they are now.

Mr. Barnes: Perhaps some licence will be granted to the amendments before us now.

The Fair Trading Act 1973 provides that the Secretary of State or the director general of the OFT may refer a merger to the Monopolies and Mergers Commission, which later became the Competition Commission, when it is in conflict with the public interest, which is defined to cover job losses, the loss of industry in an area, the loss of export trade and factory closures. The present Bill contains very limited provision on the public interest. Clause 57 contains an element of public interest, in that the Secretary of State may refer a bid on grounds of national security and can seek an order in the House for something that is as yet undefined but appears to be a sort of fall-back position for making a reference on the ground of public interest.

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The Opposition and their friends in the CBI are running worried about clause 57, because they think that it could release all sorts of hobgoblins and create huge difficulties. The TUC and many others think that the problem is that clause 57 is just dead words. It does not mean anything and we cannot envisage any circumstances in which the provision would be used. We cannot persuade the Minister to give us any theoretical examples of the circumstances in which it would be used, so we cannot tell whether it is possible that it could be used to defend the interests of the trade unions in any way in the future.

In 1973, when the Fair Trading Act was passed, Labour was in opposition and it adopted the position that the TUC has adopted now on this issue. The Labour party wanted the public interest provisions to be extended; it did not want their virtual removal, which is the position with this Bill.

Things were somewhat different in those days. Tony Benn was shadow Secretary of State for Industry. An interesting debate took place in Standing Committee, where some interesting people moved amendments to improve and strengthen the public interest provisions. They included Bruce Millan, the then Opposition spokesman on industry and aviation, who later became a Commissioner in Europe, and the late John Golding—the Library tells me that he was then an Opposition Whip, in which case I am not sure why he was tabling amendments, but he was certainly associated with the Labour Front-Bench team. My right hon. Friend the Member for Swansea, West (Mr. Williams) was the industry spokesperson. They all had some interesting things to say about extending the public interest. The logic of their position would be to be aghast that we are now virtually ridding ourselves of any concern about the public interest, apart from matters of national security.

In Standing Committee B on 3 April 1973, Bruce Millan, opposing the Heath Government, introduced an amendment that would strengthen the resolve of the Fair Trading Bill. He said:


Certainly, the merger that took place in Clay Cross was in every way contrary to the public interest and the public good. It is to the detriment of the former Secretary of State for Trade and Industry that he did not refer that matter to the Competition Commission—nor did the Office of Fair Trading do so.

In my amendments I am asking the OFT to use these provisions, hopefully in the spirit of the 1973 legislation, and not to ignore them. In the case of Biwater, the report that was issued to the Secretary of State, which said that it was okay for the takeover by Saint Gobain in France to take place, did not reveal that the Director General of Fair Trading knew that the plant would close. In fact, when I raised that matter with the Department of Trade and Industry in the House, I was told that it did not need to know that and that it was not a material consideration. It was certainly a material consideration to the people in Clay Cross and the surrounding area, where 700 people within a five-mile radius lost their jobs. Often, they were

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mature workers and it was very difficult for them to find any other reasonably paid employment. When Bruce Millan was speaking in 1973, the Labour party was aware of such concerns.

The late John Golding also tabled amendments to the 1973 legislation. He was not known as a left winger in the Labour party. He would in many ways seek out the left and try to contain its activities. However, we are now past that stage. The Enterprise Bill is the avenue through which we are trying to get the economy moving—to produce the dynamic economy and the free markets that are associated with it—and it follows a somewhat different pattern from the one with which many of us would normally be associated.

After the Minister had replied to John Golding, the latter replied:


Much damage is being done to manufacturing industry now, some 29 years later. I hope that the present Minister is not insensitive to those concerns and will ensure that moves are made to establish means by which the public interest could be re-established in the Bill.

At the Report stage of the 1973 legislation, my right hon. Friend the Member for Swansea, West introduced a measure similar to the one put forward by John Golding in the Standing Committee. My right hon. Friend pointed out:


I do not know what the figures are today, but a similar argument could be used. He continued:


As I said, that comment is certainly of great relevance to the case that brought these matters to my attention.

The TUC and major trade unions feel that there should be provisions to take account of the public interest. I am suggesting, rather moderately, that we should merely return to the position held by Ted Heath in 1973. The left wing is now defending Selsdon man against the further extension of those powers in another direction.

Mr. Waterson: Before the hon. Gentleman gets too carried away, does he agree that he and the Government are at one on the issue, even though they approach it from completely different directions? As we shall debate in more detail when we come to the next group of amendments, the Government seem to take the view that the public interest will have to be expanded and are trying to take the powers to do so, but they will not tell any of us what they have in mind.

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5 pm

Mr. Barnes: I offered an answer earlier when I pointed out that the Conservatives and the CBI saw these provisions as hobgoblin arguments and believed that all sorts of evils would spring forth—as regards their interests—owing to the Secretary of State's ability to extend such powers by order, as a fallback position. However, that is not the same as the introduction of a specific enabling commitment, such as the one included in the 1973 legislation, for the Office of Fair Trading and the Secretary of State; it is certainly not as good as what the TUC really wants—a provision whereby action must be taken in the public interest in certain circumstances.

Although the current proposals would sideline the 1973 legislation, the public interest provision has not been greatly used since the early 1980s. From Thatcher's time, that has been the policy of successive Governments. However, public interest concerns have crept through in some cases. It is difficult to define them because the Secretary of State or the Office of Fair Trading do not refer matters to the Competition Commission on public interest grounds A, B, C or D. They make a submission that argues which matters should be investigated, but it is not always easy to sort out whether those are the acceptable competition grounds to which the Government have referred or the unacceptable public interest considerations.

Other bodies can take on board the public interest considerations. For example, when the MMC recommended blocking BSkyB's attempted takeover of Manchester United, it used a public interest argument as well as a couple of competition arguments. My research briefing notes:


The last Secretary of State for Trade and Industry to make direct use of the provision was my right hon. Friend the Member for Derby, South (Margaret Beckett), the present Secretary of State for Environment, Food and Rural Affairs. In 1997, she made a reference on public interest grounds in the PacifiCorp Energy Group plc case, where an energy supplier wanted to extend its operations in a particular sector. The MMC cleared the bid and found that it would not operate against the public interest, but the reference was made on those grounds and some interesting recommendations were made in the report in order to contain similar operations.

A case in 1995 affected my constituency. Stagecoach Holdings plc attempted to take a 20 per cent. stake in Mainline Partnership Ltd. I have regular problems with both companies, especially with Stagecoach whose buses do not turn up, or are late, or miss stops. Public inquiries were held in Mansfield and Chesterfield about aspects of its provision, including, in the Mansfield area, the collapse of certain buses which were towed away on the orders of the traffic inspector.

In that case, although the commission did not rule against the 20 per cent. stake holding, it said that it should not be extended. My research briefing notes:


As I pointed out earlier, there are avenues that can be used.

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Further back, there are other examples. In 1988, a reference was made when the Government of Kuwait attempted to take over British Petroleum Co. plc. There was also a reference in 1982 when the Hong Kong and Shanghai Banking Corporation attempted to take over the Royal Bank of Scotland.

The measures may not have been used as they should, but that does not mean that they did not exist. They existed so that people could put pressure on their elected representatives and Governments to gain responses for their concerns.

The current political climate may be against those matters being dealt with, and the attitude that existed in the Biwater case may persist, but the climate can at least change, circumstances can alter and different pressures can be applied if the measure is in place.

The Government should be concerned with those issues, but they claim that it is very good that they are now at arm's length from them because of the measure; it keeps them out of things. However, the measure keeps the democratic process, argument and pressure away from involvement. Of course the Government should not manoeuvre, fiddle, spin and do the things that people claim they do to get their way; they should act openly and we should be able to see what is taking place.

The Government should act openly and be subject to representation and pressure from organisations. The democratic process involves not just voting at elections, but people being mobilised and organised and having rights to represent their sets of views and ideas, and the pressure group system is supposed to be part of the democratic process.

So the public interest argument has been used in various arenas, and we need to try to preserve it in the future. Even though we could ideally do with such a measure now, I would be chancing it even more if I were to move amendments to try to improve things in the way that John Golding, Bruce Millan and my right hon. Friend the Member for Swansea, West did way back in 1973.

I want to mention some of the support for my proposals in the trade union movement. In Committee and now on Report, the Bill has been dominated by dollops of representation and amendments from the CBI. Other amendments have come from the Consumers Association and other more acceptable avenues, but it seems as though we have just had to sit here, gritting our teeth, while all that has shot forward, normally in the shape of probing amendments, so that the CBI's view could be presented.

We have heard nothing about the TUC's view. Perhaps the TUC and some of the major trade unions should have made a greater effort to ensure that members of the Standing Committee and other hon. Members, including Labour Members, were informed of such things. Perhaps, to an extent, that shows the way the balance of forces has altered in this country. The TUC felt it needed to make formal representations and to produce documents and reports; it was not going to try to stimulate a rebellion on the Back Benches of the Labour party, so some of us have had to try to do that ourselves on this occasion.

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In September 2001, the TUC produced a document in response to the White Paper that led to the Bill in which it discussed politicians' roles—the issue that I have been raising. It stated:


in its earlier arguments—


We tried to promote such a discussion in Committee, but exceptional public interest is still something we know not—it will not speak its name to us.

The general secretary of the TUC wrote to the Secretary of State for Trade and Industry on 20 March saying:


He then suggested amending the Bill to provide an avenue for written representations to be made in order that that door should be left open.

The Secretary of State replied on 9 April, repeating the points about clause 57 to which I have referred, but offering nothing else. The letter indicated that the Government were moving in a different direction. I at least hope that the Under-Secretary will be able to say that there will be a response to the general secretary's suggestion through suitable amendments in the Lords.

The argument is further pressed by Roger Lyons of the MSF section of Amicus. In its huge document on mergers, it expresses the need for ministerial answerability on these matters and for the ability to take things up. At a meeting in the House on 23 April, John Edmonds discussed these matters, and I have copies of statements of the GMB's position and its submission to the European Commission's Green Paper on merger matters.

I have letters from Unifi on the subject. I quoted its General Secretary, Ed Sweeney, earlier. In his letter to the Financial Times, he says:


I also have letters from Equity, the National Union of Journalists, the Prison Officers Association and the National Association of Educational Inspectors, Advisers and Consultants, which all stress similar points. So there is a strength of feeling in the trade union movement that there should be a response. It is only correct that that view should be expressed in this debate.


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