Enterprise Bill

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Mr. Djanogly: Will the Minister give way?

Miss Johnson: I am still trying to deal with issues raised this morning and I want to finish them. I was asked about the nature of regulatory impact assessments. Guidance has been produced by the Cabinet Office, in accordance with which all Government Departments work. It is regularly updated and specifically contains advice about how to produce RIAs. That guidance was used in the construction of assessments for this Bill.

Mr. Djanogly: With respect, having heard the past few interventions, I feel that we are talking increasingly at cross-purposes. How can a regulatory impact assessment conducted at the start of a Bill's progress possibly consider the likely costs involved in what is a transactional-based series of costs? If we were in a recession and there happened to be three takeovers in a particular year, the costs may be very low. If we were in a boom and there were suddenly 20 takeovers, the costs would be massive. I do not see how the costs can be assessed today for what will happen in the future.

5 pm

Miss Johnson: The hon. Gentleman is making a point about the difficulty of varying costs from year to year.

Mr. Djanogly: I am.

Miss Johnson: Indeed, but stating the costs will not give any useful comparative data and, as I outlined, there are many reasons why it is difficult to bring those costs together. On the regulatory impact assessment, hon. Members asked whether we examined the opportunity costs. Yes, we do, as well as the one-off costs and recurring costs. However, we also assess the benefits to business, consumers and the economy as a whole. The figures have been produced on that basis in the regulatory impact assessments of the Bill.

Mr. Field: It seems from the Under-Secretary's last comments that she is suggesting that where some individual businesses lose out as a result of an OFT

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inquiry, others gain. Are those costs being quantified and is she suggesting that gaining companies should look to compensate those who lose out because of a draconian OFT inquiry?

Miss Johnson: The hon. Gentleman is missing my point, which is that it is impossible to quantify. We make our best efforts at quantifying the costs and benefits in such situations, but it is well nigh impossible to come up with formulae. In my experience, benefits are more difficult to quantify than costs, which is true in most regulatory impact assessments. I agree with the comments of my hon. Friend the Member for Hemel Hempstead, who said this morning that many other businesses benefit. An economist would have to spend a lot of time quantifying the benefits of specific OFT inquiries or investigations to other businesses that, from a better operation of competition in the market, may gain substantially.

Mr. Djanogly: We are talking not about assessing benefits, but about an amendment that concerns assessing costs. I sympathise with the Under-Secretary's comments, but they do not relate to the proposal. Another point is that we are debating an annual report, so the issue will have to be reassessed annually. She seems to be talking about the position today, but this will recur.

Miss Johnson: Regulatory impact assessments are conducted when Bills are produced. The hon. Gentleman is not arguing for other regulatory impact assessments of the Bill at intervals. As I understand it, he is arguing for the costs to business to be quantified and specifically laid out, and I have given several reasons why I believe it is impossible to quantify the costs to business. The point about benefits is that they must also be taken off the bottom line to work out the net costs. Some benefits are to businesses themselves, and if we were to accept a cost assessment–which I would not–we would need to assess the benefits in some cases. They are benefits not only to others, but to business.

Mr. David Borrow (South Ribble): Does the Under-Secretary share my concern that many of the comments made by Opposition Members seem to imply that the information in an annual report about the costs to business of the investigations will be used to discourage the OFT from conducting thorough investigations and that should expensive investigations not produce results, those costs will be used to berate the OFT for undergoing the investigation in the first place? The basis of any effective regulation system is to be prepared for thorough investigations while recognising that some will find nothing wrong.

Miss Johnson: Indeed. There is a danger that the costs, rather than the operation of the competition authorities, become the direct issue in all cases. Obviously, the authorities will have to maintain their credibility, including producing outcomes that one would expect from worthily undertaken investigations. None the less, there will be occasions when the points made by my hon. Friend the Member for South Ribble (Mr. Borrow) will come into play and the costs could act as a disincentive.

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As I said, the Bill has been the subject of a comprehensive and considered regulatory impact assessment. It took into account the responses to the White Paper consultations and concluded that no significant costs will be directly imposed on business from the consumer and competition measures in the Bill. Of course, there will be some additional costs but, as the assessment noted, there will also be benefits for business. That overall picture is the accurate one.

Amendment No. 2 would require a debate in each House of Parliament each year on the OFT's annual report. Again, I agree with Opposition Members that the OFT should be fully accountable, but I am not convinced that the amendment is necessary to achieve that. At present, the Director General of Fair Trading publishes an annual report, which is laid before Parliament. The Bill will strengthen that by requiring the new OFT to publish and lay before Parliament an annual plan as well. As with the current DGFT, the chairman of the board will be the accounting officer and, therefore, accountable to Parliament for how the OFT's resources are used. He may be summoned by parliamentary Committees, and the OFT will have to agree a service delivery agreement with the Treasury for it to obtain resources in the first place. That SDA is also a public document.

All that means that both Parliament and the wider public will be able to hold the OFT to account, and if at any point in the future hon. Members decide that they wish to hold a debate on the OFT's annual report, that can be considered in the normal way at that time. It is unnecessary to decide that now and commit parliamentary time for every future year. Furthermore, there are processes by which Select Committee investigations form the subject of debate, so issues can be brought up in that way.

The amendments are unnecessary, and I trust that having heard my arguments, Opposition Members will feel able to withdraw them. If not, I regret that I shall ask the Committee to oppose them.

Mr. Waterson: I confidently predicted to someone recently that I thought that there would be few, if any, votes in this Committee, but I might be proved wrong. The Under-Secretary is being wholly intransigent.

Let us first consider amendments Nos. 2 and 3, which from any view are less controversial. Amendment No. 3 calls for a summary of OFT decisions, which would help people to see a pattern emerging on how it approaches matters, and amendment No. 2 would require a debate on what the OFT has been up to. I find it inexplicable that the Government would not want to see both those things happen to help their purported agenda for transparency.

The meat of this particular sandwich comes in amendment No. 4.

Miss Johnson: Before the hon. Gentleman moves away from amendment No. 3, does he accept that I agree entirely with the thinking behind it but do not think that it is appropriate to put the measure into the primary legislation? That is the only difference between us.

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Mr. Waterson: I am grateful for that point, but the difference is crucial. The OFT could conceivably take a different view and consider that the details of its investigations should not be reported, in which case the body of precedent would not be available to the outside world, which would be an enormous shame.

Moving on briefly, and finally, to the more controversial amendment, amendment No. 4, I was interested to see that in a group of only two Liberal Democrats, we seem to have two different views. There is a split, as it were, but Liberal Democrats are not unknown for working both sides of the street on any number of issues.

Our debate on the regulatory impact assessment seems to have got rather fraught. As I have said more than once, I do not understand how the Bill can fail to have a significant impact on business. Even if I am wrong about that, it must surely be easier for the OFT in effect to produce its own annual regulatory impact assessment based on real facts rather than on what might happen when the Bill becomes law. The assessment will be based on real investigations, costs and companies.

It is all very well for the Under-Secretary to go on about the slightly airy-fairy notion of there being benefits to ''business'', or the gaffers, as the hon. Member for North-East Derbyshire (Mr. Barnes) might put it. However, if she is making the point that some businesses might benefit from a specific investigation, it is equally unarguable that the business investigated successfully–and even more so in the case of the business investigated to no purpose–will have costs to bear. The hon. Member for South Ribble made an interesting intervention. We seek simply to put information in the public domain. It is entirely neutral of itself what use is made of it. It is not some Tory plot to batter the OFT into not doing any investigations. It is information that should be available and people can make of it what they will.

 
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