Larry Whitty on the lack of consumer focus within the government's rambling ERR Bill
The Enterprise and Regulatory Reform (ERR) Bill is slowly winding its way through a nine day Committee stage in the Lords, albeit tucked away in the Grand Committee ‘Moses Room’. It is a hotchpotch of a bill that attempts to put on the statute book a lot of Tory prejudices and a lot more old ideas that have been languishing in the bottom drawers of BIS civil servants. Rambling in its scope, the Bill covers issues from employment tribunals to cartels, health and safety to heritage, estate agents to a Green Investment Bank.
During Second Reading I described the Bill as a mixture of the good, the bad and the ugly. On Wednesday – squeezed between some very ugly attacks on employment rights and a blatant attempt to hobble the Equalities and Human Rights Commission – we start on the sections that cover competition and markets.
In principle this is one of the good – or at least better – parts of the Bill; and the large print is largely heading in a positive direction. Ministers are proposing the merger of the Competition Commission and the Office of Fair Trading so there is one authoritative body – the Competition and Markets Authority (CMA) – overseeing the whole of competition policy and the policing of mergers and market abuse. Labour supports the principle. Having two bodies led to delay, duplication and a lack of clear focus. But there are a lot of omissions, as well as details which need challenging.
For a start, competition is not an end in itself but a means of getting a better deal for consumers. Yet there are almost no references to consumer detriment in the description of the role of the CMA. We will look to put that right and to also create a Consumer Panel within the new body.
Moreover in setting up the merger, the government is dropping a lot of the general consumer protection aspects from what has hitherto been the remit of the Office of Fair Trading (OFT) – operations such as scam busting, voluntary codes of practice, and consumer information and education. It is then proposing to passing these either to Trading Standards, a local authority service facing cuts in their resources like many others, or the similarly cash strapped Citizens Advice. Whilst some of this devolution may be sensible, the new CMA does need to retain overall charge of policy and enforcement of market abuse of consumers and small businesses.
Then there is the question of the relationship between the future CMA and the sector regulators –the ‘offs’ (including Ofwat, Ofcom and Ofgem) – plus the new Financial Conduct Authority, only just being established out of the wreckage of the FSA. All these bodies also have so called ‘concurrent competition powers’ with the old Competition Commission and the OFT. Used reluctantly, the ERR Bill attempts to encourage them in that direction (and in a late amendment, to allow the Secretary of State to take those competition powers off the sector regulators completely). Whilst this might actually stir Ofgem, for example, into action on energy market competition, we would prefer to see greater cooperation between the CMA and the regulators to maximise pressure on behalf of consumers.
On mergers, it is unclear how the government wants to deal with wider ‘public interest issues’, such as employment and international competitiveness; but we will try to smoke this out. On cartels meanwhile, Ministers are doing a good thing by removing the requirement that this behaviour must be shown to be ‘dishonest’, but then taking it away in another late amendment – and one not debated in the Commons – which bizarrely says a cartel is not a cartel if you have told someone about it! As with other aspects of this hotchpotch bill, Labour will be looking to alter that.
Lord Larry Whitty is Labour’s spokesman in the Lords on the competition elements of the ERR Bill and a former Chair of the National Consumer Council
Published 12th December 2012
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