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30 Oct 2002 : Column 900—continued

Mr. Andrew Robathan (Blaby): I come to the Bill rather late in the day after it has undergone a marathon. I pay tribute to my predecessor, my hon. Friend the Member for Eastbourne (Mr. Waterson), who represented the Opposition in earlier proceedings, and my colleagues in the House of Lords who have done sterling work.

The Bill tackles many issues; enterprise is only an incidental part of it. It deals with consumer protection, insolvency and competition. The question of how to stimulate enterprise has taxed Governments and others throughout the ages. Not many have succeeded in answering it. The Bill returns to the Commons in a much better state than when it went to the Lords. However, it should be a grave embarrassment to the Government that it left the House of Commons with 420 amendments and nine new clauses. In the House of Lords, 326 amendments were made, the majority being Government so-called technical amendments.

The Bill is highly complex and deals with people's livelihoods. Like so much legislation, it may have serious unintended consequences. It is a gross understatement to describe it as ill prepared and badly drafted. The Government should be ashamed of themselves. However, it was examined in detail in the House of Lords and we broadly agree with the Government about some of the amendments that were forced upon them in the other place.

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The amendments that we are considering deal with good corporate governance. The Government should be particularly interested in that, especially in view of the Enron scandal and others which have occurred since the Bill was first drafted. Those scandals have brought corporate governance into not only the public eye but that of Governments everywhere.

Let us consider the two amendments with which the Government disagree. First, on what basis do the Government believe that the chief executive officer and the chairman should be the same person? We believe that it is important to emphasise the chairman's independence because the heart of the Bill involves the creation of a body that is free from political interference.

I appreciate that the Office of Fair Trading will not be a public limited company, but apart from the Financial Services Authority, where else does no separation of power exist between chairman and chief executive officer?

Miss Johnson: The hon. Gentleman appears not to have been listening. I provided two further examples in my remarks only a moment ago.

Mr. Robathan: I was listening, but the examples did not appear relevant.

I want to consider important sources that were cited in the House of Lords, including the Cadbury report. The Minister will claim that the report referred to public limited companies, but it is nevertheless relevant. It stated:

they will not exist, of course—

The principle is vital. The report continues:

After that report, the Hampel report was published in 1995. It was established to review the Cadbury code. It states:

The report continues:

In the case that we are considering, the onus is on the Government to explain and justify the fact"

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We know from the advertisements in the Sunday newspapers that the Government will appoint a strategic board. As the Minister said, it has already been decided that Sir John Vickers will take the post of chairman and chief executive, if the Government have their way. I am sure that Sir John Vickers is an excellent man. I do not know him, but he attended my college in Oxford, and that must be a recommendation, although he is younger than me. However, the question remains: should all the powers be vested in one person?

If I could call on one person to pray in aid the idea that the powers should not be vested in one person, that person would be the Minister. There is certainly a great deal of confusion in the mind of the Government on this matter. In Committee, she said that the Director General of Fair Trading

Perhaps the Minister will explain how it is that she seems to have changed her mind.

Miss Johnson: I am happy to reiterate something else that I remarked on earlier. The Director General is to be backed up by a strategic board of four or five members who will oversee the work of the Office of Fair Trading under the new arrangements proposed in the Enterprise Bill.

Mr. Robathan: The Minister did indeed say that earlier, but she has not quite explained how the powers currently vested in the Director General of Fair Trading will not be vested in the same person, although there will be non-executive directors, as she said. We believe that it is a good principle in corporate governance that there should be two people for two posts. That is true of public limited companies, and I suggest that it should also be true here, especially in a body that is required to oversee so many plcs and to consider fair trading. The Government have certainly not convinced me or my hon. Friends, or, I suggest, the Lords, otherwise.

The second amendment under discussion is like unto the first. It talks about Xgood corporate governance", and I find it strange that the Government should want to change it at all. It states:

I sat in this Chamber only the week before last and listened to the introduction of a ten-minute Bill that lauded the merits of good corporate governance and stated how important it was that we all adhered to them. I do not understand why the Government want to change this proposal. Their amendment is woolly, it dilutes the purpose of having such a statement in the Bill, and it is rather meaningless. It follows the same basic idea but dilutes the principle. I do not think that it is worth opposing, but I would like the Government to explain why they intend to change the wording because the Minister has not explained, whatever she may say.

Dr. Vincent Cable (Twickenham): I support the previous contribution and the Lords amendments generally. This is an important issue. We are talking not

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about a technical change but a fundamental issue of principle involving the question, XWho regulates the regulators?" The Bill has implications for others—the way that we shall deal with Ofcom in due course, for example.

We are considering an extraordinarily powerful post that has very little public accountability and mechanisms to address that problem. I suggest that there are two fundamentally different ways of doing that, involving two models. It does not really matter which we adopt, and I think that we should be open-minded. The first model is the one that the Conservatives have been promoting. I would not necessarily adopt it, but it has merits and it certainly improves the Bill. It uses the model based on corporate governance. We are clearly not dealing with a plc here—there is no direct read-across—but there are lessons to be learned from the way in which good business practice operates, and if this is the amendment on offer, I will happily support it.

The alternative approach, for which I have argued right from the beginning of this legislation, is to strengthen public accountability. That is partly captured, rather weakly, in Lords amendments Nos. 3 and 4, but the principle of involving Parliament more directly in scrutinising the appointment of the Director General is a matter to which I shall return.

Why is the issue of who regulates the regulators so important here? The appointment of John Vickers has already been mentioned. He is an admirable individual, whose work I have encountered professionally. As an economist, he is a very clever guy, and I have no doubt that he has complete integrity. That is not the issue here. This post is very important in different ways. It inherits the discretionary powers that used to be held by Ministers. It has substantial enforcement powers—we debated at some length the power to initiate criminal action against cartels.

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