Enterprise Bill

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Clause 170


Mr. Djanogly: I beg to move amendment No. 327, in page 123, line 24, leave out

    'and 117 (offences by bodies corporate)'.

The CBI brought this relatively small issue to our attention. Clause 170 deals with offences and provides that the mergers clauses dealing with false or misleading information and offences by bodies corporate apply also to the market regime. It has been suggested that the words ''and 117'', referring to clause 117 on offences by bodies corporate, should not be included. I would be interested to hear the Minister's comments.

5.15 pm

Miss Melanie Johnson: The clause is a standard provision. Under a similar section in the Competition Act 1998, section 72, where a body corporate has committed a relevant offence, an officer of that body corporate is also guilty if it is proved that the offence was committed with his consent or connivance, or resulted from neglect on his part. Without that power, as the hon. Gentleman urges, it would not be possible to hold a person responsible for the offence, committed by consent, connivance or neglect, of providing the Competition Commission with false or misleading information.

There should be a strong incentive for officers of bodies corporate to assist the Competition Commission in its investigations. The amendment would be detrimental to its investigative powers. I therefore hope to persuade the hon. Gentleman to withdraw his amendment.

Mr. Djanogly: Having heard the Minister's assurances, I beg the Committee's leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 170 ordered to stand part of the Bill.

Clauses 171 and 172 ordered to stand part of the Bill.

Column Number: 505

Clause 173

interpretation: part 4

Mr. Waterson: I beg to move amendment No. 328, in page 124, line 31, at end insert

    'and includes a local authority or a public body.'.

The Chairman: With this we may discuss amendment No. 136, in page 124, line 34, after 'is', insert—

    '(a) a consumer of goods or services whether publicly or privately provided.'.

Mr. Waterson: The CBI raised this issue, which has wider ramifications. The amendment seeks to clarify that the provisions would cover public bodies such as local authorities. I have a distinct memory of debating the issues when shadowing local government, particularly when the Local Government Bill was going through its stages. There is an increasing desire in local government to get away from the old ultra vires doctrine and to be permitted to trade and find other ways of producing income. This is the other side of that coin.

The borough of Westminster was particularly active in lobbying on this issue because of the other opportunities available to it in terms of charging film companies, and so on. Local authorities can boost their income in ways other than holding out their hand to central Government for grants—we know that the level for specific grants has gone up exponentially under this Government—and increasing council taxes, and so on, in these days of continued capping, although under a slightly different system.

In its context, this is laudable. Local authorities are looking for innovative ways to raise revenue, or engaging in activities which could loosely be called trade, which they are capable of doing—no one wants to encourage them to go into things that they are plainly not cut out for. However, every silver lining has a cloud, and the other side of the equation is the concern of the CBI and others about unfair competition. It is a little like the concerns that we occasionally hear from our local chamber of commerce about the explosion in the number of charity shops. There is no difficulty if they are genuine, but certain charity shops buy in their produce and operate much more commercially, sometimes using their inbuilt advantages to compete unfairly with genuine local businesses. That is a slightly different illustration of the point.

We must not allow, even unintentionally, public bodies of whatever sort to be outwith the potential investigations. I have mentioned local authorities as perhaps the best example, but I am sure that hon. Members can imagine others. The amendment would ensure that market investigations can apply to publicly owned bodies that may operate as I have described, including by selling goods or services for gain.

Other examples include potential mixed markets in which both private and public businesses operate. They span health care, hospitals, postal services—we have seen the recent proposals from that industry's regulator—and even the defence sector. The CBI has a

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fair point, which is that if such bodies operate in a commercial environment, they should be treated like any other market operator by the competition rules. It is a fair point. It may not have a practical effect on many organisations but, as I said earlier, there is increasing pressure for local authorities to be more involved in commercial activities and for them to be allowed to be.

I recall that there was a Green Paper floating around when I left the job of shadowing the Minister responsible for local government, which may have been firmed up into a White Paper by now. The Government did not seem unsympathetic to the cause. There is also a growing trend of a mixture of public and private provision across our public services. There is a big debate to be had on that, but not today. On that basis, I commend the amendment to the Committee.

Dr. Cable: The hon. Member for Eastbourne (Mr. Waterson) has a point, which is practical rather than a matter of public sector versus private sector. After the changes of the past 20 years, there is not much public enterprise left. Those that remain include the Post Office, which is covered by a separate regulatory regime and we have discussed how that fits in with this Bill, and the BBC, which is currently being debated Downstairs in the context of the draft communications Bill. There are areas in which Government quangos and public entities are being encouraged to operate commercially, and that presents a competition policy problem.

One example, with which I am familiar because of its impact on a company in my constituency, relates to the Department of Trade and Industry and Companies House, which is a public provider of data about companies. It generates the data, transforms it and has been encouraged to sell it into the market. At first sight, getting Companies House to earn some money seems admirable, but there is already a small private sector industry of companies that buy data from Companies House, transform it through sophisticated computers and data processors, and sell it into the market. Those companies have found themselves in the awkward position of buying data from Companies House at a higher price than Companies House charged to its own marketing division. That problem may have been resolved by now, as it was raised with me two years ago, but it illustrates the kind of dilemmas that arise.

The same problem arises with Ordnance Survey, another Government agency that the Government encouraged to be more commercial before they realised that private companies were in the business of using the mapping data on a commercial basis. I do not argue about the rights and wrongs here, but there is a rather awkward borderline between the public and private sector in those little niches of the market. It is important that competition is fair and is seen to be fair and that the Government entities operate on the same basis as their private sector competitors. If the amendment manages to capture that problem, even if it is a rather limited one, it has a good deal of value.

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Mr. Ken Purchase (Wolverhampton, North-East): I strongly believe that local authorities and other bodies, which in essence cannot go bankrupt, should not compete in the private sector for the sale of goods and services of whatever kind. I am a strong supporter of the mixed economy and I believe that competition should be fair. I have no problems in saying that local authorities and other public bodies should be subject to similar rules of the game. I am concerned, however, that the hon. Member for Eastbourne mentions charities. While it is also true that an element of unfair of competition can obtain in the circumstances that he described, charities and other voluntary bodies have to adhere to so many rules and obligations that we are in danger of loading the system to the point where people will no longer volunteer.

I am an honorary parliamentary adviser to the British Healthcare Association, which has come under the scrutiny of the Financial Services Agency. While matters have been resolved, the problems of getting to grips with the new requirements for an essentially non-profit-making charity assisting people with their health care within the national health service resulted in considerable expenditure. Others in the charitable field are concerned about the way that they are being brought under the aegis of bodies like the FSA. If this measure were extended to charities it would be another disincentive to people volunteering for what are often important additions to our social life.

Mr. Djanogly: It seems unfair that the public sector should not be included in the market investigation regime. The hon. Member for Twickenham made a good point. It is not a question of public against private here, but the public sector acting as a private sector body, which is now possible within the law and is increasingly being encouraged by the Government. I do not say that that is necessarily a bad thing. Let us take one example. There has been talk of the NHS buying up private hospitals, either in total or the use of all or a percentage of their beds. A monopoly provider will move into the private sector and compete from a massively dominant position.

Considering that the health service will have an extra £9 billion after the tax increases to play with, that is a massive block compared with private sector competitors. In that context it is a very relevant issue. The NHS is the largest employer in the world. It is a massive corporation, with massive monopoly purchasing power. If policy changes, as it seems to be doing, so that it can compete with the private sector, it should be subjected to the regime outlined here. If the amendments are not carried, I hope that the Government will think about the issue more carefully. That has come across from all hon. Members.

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