Enterprise Bill

Public Bill Committee, 16 May 2002.

Standing Committee B

Enterprise Bill

Clause 262 - Provision of financial assistance forconsumer purposes

Nigel Waterson (Conservative, Eastbourne)

I ask the Under-Secretary for a little clarification. The Conservatives are the true champions of the consumer; indeed, I had a walk-on part in the fair trading legislation of the 1970s. We are clearly in favour of financial assistance being provided to consumers. I merely probe to discover what sort of ambit the clause will have. Advice and information, education materials and so on are extremely welcome. I assume that the clause seeks to exclude provision for the running of existing consumer bodies; and I assume, because of the way in which it is worded, that it also excludes providing financial support to consumer bodies that are taking super complaints or other legal action, whether under the Bill or other legislation. It would help if the Under-Secretary sketched out, with some concrete examples, what she has in mind.

Jonathan Djanogly (Conservative, Huntingdon)

I back what my hon. Friend had to say. The clause provides that ''any person'' can be in receipt of funding from the Secretary of State. That needs clarification. It is fair to say that people may be concerned not only about the scope of the provision and who will be funded but about how the funding will work. How much influence and patronage will the Government give to those organisations? Will the Under-Secretary say whether such provisions are normal? I say that in an open way; I do not know whether it is a normal situation.

Melanie Johnson (Labour, Welwyn Hatfield)

We intend to use the clause to finance projects from a new consumer grants fund. I must tell the hon. Member for Eastbourne (Mr. Waterson) that we do not intend to use it for legal aid or funding other legal activities. We are particularly keen to use the fund for projects in instances when consumers have suffered harm but when it is not possible for individual consumers to be identified or to seek redress. In such cases, the fund could effectively be an indirect form of redress for consumers. However, we will consider the merits of other projects and activities that might also benefit consumers.

I have an illustrative but non-exhaustive list of activities that could be funded. They include promoting public knowledge, understanding consumer rights, promoting higher standards, providing information and advice, encouraging business, practical child and home accident prevention work, projects to benefit socially or economically vulnerable consumers and so forth.

Nigel Waterson (Conservative, Eastbourne)

Is it intended to channel at least some of those activities through trading standards departments? Will she assure the Committee that if there is any conflict between the funding of the routine work of trading standards departments and of the work that she describes, the core work of those departments should take priority?

Melanie Johnson (Labour, Welwyn Hatfield)

We see this as specific, project-related finance, not as mainstream finance. Trading standards departments may well receive some of these moneys in the fullness of time, and they are already doing projects on such extra funding.

In a case from the 1980s, involving Rover and the Consumers Association, it was discovered that Rover was using anti-competitive practices. By the time that that emerged, however, it was no longer possible to identify the consumers who had lost out. Rather than undergo an investigation, Rover admitted what it had done, and donated £750,000 to the Consumers Association to establish a self-financing information service for car buyers in the UK, and £250,000 to the Research Institute for Consumer Affairs to help fund its ability car programme of research, information and action on goods and services for disabled motorists. That is an indication of what could be done in the context of market-related competition fines.

We are making the money in the clause available in addition to our continuing commitment to fund the promotion of consumers' interests by bodies such as the National Consumer Council. We are, therefore, talking about an extra, project-related fund, as I explained.

Question put and agreed to.

Clause 262 ordered to stand part of the Bill.

Clauses 263 and 264 ordered to stand part of the Bill.

Schedule 24 agreed to.

Clause 265 - Power to make consequential amendments etc.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 143, in page 180, line 34, at end insert—

'(1A) But no order made under subsection (1) may amend or alter or in any way affect Part 6'.

This debate echoes one that we had couple of times on part 6, which dealt with cartels. The clause gives the Secretary of State pretty wide powers to amend the Bill and other legislation by regulation. The Committee can take as read the usual outrage of Opposition

parties over the inclusion of such powers; our outrage is almost as routine as the inclusion of the powers themselves.

There should, however, be no way of amending the provisions of part 6, in particular. As we said when we debated that part of the Bill, it provides for serious penalties and powers to deal with the perceived problem of cartels. We debated the criminalising of cartels, and there is no need to go over that ground again, save to say that importing severe criminal penalties and pretty draconian measures of investigation into the law may be counterproductive and not strictly necessary. Such provisions may hamper investigations and affect co-operation with other regimes, such as that in Europe. We have, however, been into all that.

The powers in part 6 are important and serious, and the amendment makes it clear that the Secretary of State would have to put primary legislation through the House if she wanted to alter them or make them even more draconian. I commend that perfectly sensible safeguard to the Committee.

Melanie Johnson (Labour, Welwyn Hatfield)

As the hon. Gentleman said, the amendment would exclude the application of a power to make supplementary, incidental or consequential provisions by order. It would exclude the application of such a power to part 6, which provides for the new cartels offence.

The purpose of the clause is to provide the flexibility to make, by delegated legislation, any minor revisions to legislation that are required to ensure that the Bill's provisions fit well with those of other legislation. I am told that such clauses are common.

In a Bill of such complexity that covers several policy areas, the provision is entirely sensible. The powers are limited. They can be used only for the limited purposes given in subsection (1), which specifies that supplementary, incidental or consequential provision can be made only for the purposes of the Bill and in consequence of or to give effect to its terms. I emphasise that the powers would not permit the wholesale rewriting of substantive parts of the Bill, including part 6. Therefore, it would not be possible to make substantive changes to the cartels offence, for example, as a result of the provision.

We do not intend to change the Bill through the powers, and part 6 is no exception. However, it would be unwise to assume that any provision made under the powers could have no effect on part 6. It would be unwise to exclude that part from the clause, so I ask that the amendment be withdrawn.

Nigel Waterson (Conservative, Eastbourne)

I am content, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 265 ordered to stand part of the Bill.

Clause 266 ordered to stand part of the Bill.

Schedule 25 - Minor and consequential amendments

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move amendment No. 596, in page 298, line 28, leave out sub-paragraph (4).

Derek Conway (Conservative, Old Bexley and Sidcup)

With this it will be convenient to take Government amendments Nos. 597 to 617.

Melanie Johnson (Labour, Welwyn Hatfield)

These consequential amendments and repeals flow from the main changes to the mergers and monopolies regimes. I set out the nature and purpose of the amendments in my letter to the Committee of 15 May, which was copied to you as Chairman, Mr. Conway. They are not controversial in any sense, so I hope that the Committee will accept them.

Nigel Waterson (Conservative, Eastbourne)

I predicted from the outset of the Bill that there would be a raft of Government amendments at the last minute, and here they are. We have not had time to consider them all in detail. For the present purposes, I accept the Under-Secretary's assurance that they are technical and minor and, on that basis, we will not oppose them.

Amendment agreed to.

Amendments made: No. 597, in page 298, line 30, after '(1)' insert—

'(a)'.

No. 598, in page 298, line 31, at end insert—

'(b) for ''Parts IV, V, VI'' there is substituted ''Part 5'';

No. 599, in page 304, line 13, at end insert—

'Competition Act 1980 (c. 21)

6A (1) The Competition Act 1980 is amended as follows

(2) In section 11 (references of public bodies and certain other persons to the Commission)—

(a) in subsection (1)—

(i) at the end of paragraph (a) there is inserted ''or'';

(ii) paragraph (c) and the word ''or'' before it shall cease to have effect;

(iii) for ''paragraph (a), (b) or (c)'' there is substituted ''paragraph (a) or (b)'';

(b) subsections (2), (9) and (9A) shall cease to have effect.

(3) After section 11 there is inserted—

''11A References under section 11: time-limits

(2) A report of the Commission on a reference under section 11 above shall not have effect (and no action shall be taken in relation to it under section 12 below) unless the report is made before the end of the period specified in the reference or such further period (if any) as may be allowed by the Secretary of State under subsection (3) below.

(3) The Secretary of State may, if he has received representations on the subject from the Commission and is satisfied that there are special reasons why the report cannot be made within the period specified in the reference, extend that period by no more than three months.

(4) No more than one extension is possible under subsection (3) above in relation to the same reference.

(5) The Secretary of State shall publish any extension made by him under subsection (3) above in such manner as he considers most suitable for bringing it to the attention of persons who in his opinion would be affected by it or be likely to have an interest in it.

11B References under section 11:powers of investigation and penalties

(1) The following sections of Part 3 of the Enterprise Act 2002 shall apply, with the modifications mentioned in subsections (2) and (3) below, for the purposes of references under section 11 above as they apply for the purposes of references under that Part—

(a) section 105 (attendance of witnesses and production of documents);

(b) section 106 (enforcement of powers under section 105 general);

(d) section 108 (penalties: main procedural requirements);

(e) section 109 (payments and interest by instalments);

(f) section 110 (appeals);

(g) section 111 (recovery of penalties); and

(h) section 112 (statement of policy).

(2) Section 106 shall, in its application by virtue of subsection (1) above, have effect as if—

(a) subsection (2) were omitted; (b) in subsection (4), for the word ''publication'' there were substituted ''laying before both Houses of Parliament''; and (c) in subsection (9) the words from ''or section'' to ''section 63(3))'' were omitted.

(b) in subsection (4), for the word ''publication'' there were substituted ''laying before both Houses of Parliament''; and

(3) Section 107(5)(b)(ii) shall, in its application by virtue of subsection (1) above, have effect as if for the words from ''the latest'' to the end there were substituted ''the day on which the report of the Commission on the reference concerned has been laid before both Houses of Parliament''.

11C References under section 11:further supplementary provisions

(1) Section 113 of the Enterprise Act 2002 (false or misleading information) shall apply in relation to functions under this Act as it applies in relation to functions under Part 3 of that Act but as if, in subsections (1)(a) and (2), the words ''the OFT'' were omitted.

(2) Section 117 of the Enterprise Act 2002 (offences by bodies corporate) shall apply for the purposes of this Act as it applies for the purposes of Part 3 of that Act.

(3) For the purposes of section 12 below, a conclusion contained in a report of the Commission is to be disregarded if the conclusion is not that of at least two-thirds of the members of the group constituted in connection with the reference concerned in pursuance of paragraph 15 of Schedule 7 to the Competition Act 1998.

11D Interim orders

(1) Subsection (2) below applies where, in the circumstances specified in subsection (1) of section 12 below, the Secretary of State has under consideration the making of an order under subsection (5) of that section.

(2) The Secretary of State may by order, for the purpose of preventing pre-emptive action—

(a) prohibit or restrict the doing of things which the Secretary of State considers would constitute pre-emptive action; (b) impose on any person concerned obligations as to the carrying on of any activities or the safeguarding of any assets;

(b) impose on any person concerned obligations as to the carrying on of any activities or the safeguarding of any assets;

(c) provide for the carrying on of any activities or the safeguarding of any assets either by the appointment of a person to conduct or supervise the conduct of any activities (on such terms and with such powers as may be specified or described in the order) or in any other manner;

(d) do anything which may be done by virtue of paragraph 20 of Schedule 7 to the Enterprise Act 2002 (information powers).

(3) An order under this section shall come into force at such time as is determined by or under the order.

(4) An order under this section shall, if it has not previously ceased to be in force, cease to be in force on the making of the order under section 12(5) below or (as the case may be) on the making of the decision not to make such an order.

(5) The Secretary of State shall publish any decision made by him not to make an order under section 12(5) below in such manner as he considers most suitable for bringing it to the attention of persons who in his opinion would be affected by it or be likely to have an interest in it.

(6) The Secretary of State shall, as soon as reasonably practicable, consider any representations received by him in relation to varying or revoking an order under this section.

(7) The following provisions of Part 3 of the Enterprise Act 2002 shall apply in relation to orders under this section as they apply in relation to orders under paragraph 2 of Schedule 6 to that Act—

(a) section 82(2) and (3) (enforcement orders: general provisions); (b) section 83 (delegated power of directions); and (c) section 90(1) to (5), (8) and (9) (rights to enforce orders).

(b) section 83 (delegated power of directions); and

(8) In this section ''pre-emptive action'' means action which might impede the making of an order under section 12(5) below.''.

(4) In section 12 (orders following report under section 11)—

(a) in subsection (5) for the words from ''by order'' to the end there is substituted ''make an order under this subsection''; (b) after subsection (5) there is inserted— ''(5A) An order under subsection (5) above may contain anything permitted by Schedule 7 to the Enterprise Act 2002, except paragraphs 8, 14 and 15 of that Schedule. (5B) An order under subsection (5) above shall come into force at such time as is determined by or under the order.''; (c) for subsection (6) there is substituted— ''(6) The following provisions of Part 3 of the Enterprise Act 2002 shall apply in relation to orders under subsection (5) above as they apply in relation to orders under paragraph 11 of Schedule 6 to that Act— (a) section 82(2) and (3) (enforcement orders: general provisions); (b) section 83 (delegated power of directions); (c) section 84 (contents of certain enforcement orders); (d) section 90(1) to (5), (8) and (9) (rights to enforce orders); and (e) Schedule 9 (procedural requirements for orders). (7) The Secretary of State shall publish any decision made by him to dispense with the requirements of Schedule 9 to the Enterprise Act 2002 as applied by subsection (6) above; and shall do so in such manner as he considers most suitable for bringing the decision to the attention of persons who in his opinion would be affected by it or be likely to have an interest in it.'' (5) In section 16 (general provision as to reports)— (a) subsection (1) shall cease to have effect; (b) in subsection (2) the words ''or of the Director'' shall cease to have effect. (6) In section 17 (laying before Parliament and publication of reports), in subsections (1), (3), (4) and (5), the words ''or 13(5)'' shall cease to have effect. (7) Sections 18 (information and advice about operation of Act), 21 (monopoly references by Secretary of State alone) and 24 (modification of provisions about performance of Commission's functions) shall cease to have effect. (8) In section 31 (orders and regulations)— (a) in subsection (1) the words ''or regulations'' shall cease to have effect; (b) in subsection (3)— (i) the words ''regulations under this Act or'' shall cease to have effect; (ii) after ''11(4)'' there is inserted '', 11D''; (iii) after ''above'' there is inserted '', or section 107(4) or (6) of the Enterprise Act 2002 as applied by section 11B(1)(c) above,''; (c) subsection (4) shall cease to have effect; (d) after subsection (4) there is inserted— ''(5) Any power of the Secretary of State to make an order under this Act— (a) may be exercised so as to make different provision for different cases or different purposes; and (b) includes power to make such incidental, supplementary, consequential, transitory, transitional or saving provision as the Secretary of State considers appropriate.'' (9) In section 33 (interpretation), for subsection (2) there is substituted— ''(2) Unless the context otherwise requires, in this Act ''Minister'' includes a government department and the following expressions shall have the same meanings as they have in Part 3 of the Enterprise Act 2002— ''business'' ''the Commission'' ''enactment'' ''goods'' ''services'' ''supply (in relation to the supply of goods)'' ''the supply of services''.''' No. 388, in page 305, line 5, after '(6)' insert '— (i)'. No. 389, in page 305, line 6, at end insert— '(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'. No. 390, in page 313, line 18, after '(9A)' insert '— '(a)'. No. 391, in page 313, line 19, at end insert— '(b) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'. No. 600, in page 314, line 40, at end insert— '(3A) In section 66 (amendments of the Fair Trading Act 1973)— (a) for subsection (3) there is substituted— ''(3) For the purposes of Part 3 of the Enterprise Act 2002 (merger references), where a person enters into a franchise agreement as a franchisee, there shall be taken to be brought under his control an enterprise engaged in the supply of the railway services to which the agreement relates.''; (b) for subsection (6) there is substituted— ''(6) Expressions used in subsection (3) above and in Part 3 of the Enterprise Act 2002 have the same meaning in that subsection as they have in that Part.'''. No. 392, in page 315, line 20, after '(6A)' insert '— (i)'. No. 393, in page 315, line 21, at end insert— '(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'. No. 601, in page 319, line 24, at end insert— '(33A) In section 45 (the Competition Commission), after subsection (7) there is inserted— ''(8) The Secretary of State may by order make such modifications in Part 2 of Schedule 7 and in Schedule 7A (performance of the Competition Commission's general functions) as he considers appropriate for improving the performance by the Competition Commission of its functions.''.' No. 602, in page 320, line 2, at end insert— '(e) in subsection (8), for ''Director'' there is substituted ''OFT''.'. No. 394, in page 320, leave out lines 7 to 20. No. 603, in page 321, line 10, after 'investigation),' insert 'in subsection (1), for ''Director'' there is substituted ''OFT'', and'. No. 604, in page 321, line 21, at end insert— '(47A) In section 71 (regulations, orders and rules), in subsection (4), after paragraph (c) there is inserted— ''(ca) section 45(8),''.'. No. 605, in page 321, line 22, after 'concentrations)' insert '— '(a) in paragraph 1— (i) in sub-paragraph (1), for the words from ''Part V'' to ''1973 Act'')'' there is substituted ''Part 3 of the Enterprise Act 2002 (''the 2002 Act'')''; (ii) in sub-paragraph (4), for ''Section 65 of the 1973 Act'' there is substituted ''Section 24 of the 2002 Act''; (b) in paragraph 2— (i) in sub-paragraph (1)(a), for ''Part V of the 1973 Act'' there is substituted ''Part 3 of the 2002 Act''; (ii) in sub-paragraph (2), for ''Section 65 of the 1973 Act'' there is substituted ''Section 24 of the 2002 Act'';'. No. 606, in page 321, line 27, at end insert— '(d) in paragraph 5, for paragraphs (a) to (d) there is substituted— ''(a) the OFT or (as the case may be) the Secretary of State has published its or his decision not to make a reference to the Competition Commission under section 20, 31, 43 or 60 of the 2002 Act in connection with the agreement; (b) the OFT or (as the case may be) the Secretary of State has made a reference to the Competition Commission under sections 20, 31, 43 or 60 of the 2002 Act in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a relevant merger situation or (as the case may be) a special merger situation; (c) the agreement does not fall within paragraph (a) or (b) but has given rise to, or would if carried out give rise to, enterprises to which it relates being regarded under section 24 of the 2002 Act as ceasing to be distinct enterprises (otherwise than as the result of subsection (3) or (4)(b) of that section); (d) the OFT has made a reference to the Competition Commission under section 32 of the Water Industry Act 1991 in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a merger of any two or more water enterprises; or (e) the Secretary of State has made a reference to the Competition Commission under Part 3 of the 2002 Act as applied by virtue of paragraph 1 of Schedule 5 to that Act (application of Part 3 to water mergers) in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a merger of any two or more water enterprises.'''. No. 395, in page 325, line 11, after '(11)' insert '— '(i)'. No. 396, in page 325, line 12, at end insert— '(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'.—[Miss Melanie Johnson.] Schedule 25, as amended, agreed to.

(b) after subsection (5) there is inserted—

''(5A) An order under subsection (5) above may contain anything permitted by Schedule 7 to the Enterprise Act 2002, except paragraphs 8, 14 and 15 of that Schedule.

(5B) An order under subsection (5) above shall come into force at such time as is determined by or under the order.'';

''(6) The following provisions of Part 3 of the Enterprise Act 2002 shall apply in relation to orders under subsection (5) above as they apply in relation to orders under paragraph 11 of Schedule 6 to that Act— (a) section 82(2) and (3) (enforcement orders: general provisions); (b) section 83 (delegated power of directions); (c) section 84 (contents of certain enforcement orders); (d) section 90(1) to (5), (8) and (9) (rights to enforce orders); and (e) Schedule 9 (procedural requirements for orders).

(a) section 82(2) and (3) (enforcement orders: general provisions); (b) section 83 (delegated power of directions); (c) section 84 (contents of certain enforcement orders); (d) section 90(1) to (5), (8) and (9) (rights to enforce orders); and (e) Schedule 9 (procedural requirements for orders).

(b) section 83 (delegated power of directions);

(d) section 90(1) to (5), (8) and (9) (rights to enforce orders); and

(e) Schedule 9 (procedural requirements for orders).

(7) The Secretary of State shall publish any decision made by him to dispense with the requirements of Schedule 9 to the Enterprise Act 2002 as applied by subsection (6) above; and shall do so in such manner as he considers most suitable for bringing the decision to the attention of persons who in his opinion would be affected by it or be likely to have an interest in it.''

(5) In section 16 (general provision as to reports)—

(a) subsection (1) shall cease to have effect;

(b) in subsection (2) the words ''or of the Director'' shall cease to have effect.

(6) In section 17 (laying before Parliament and publication of reports), in subsections (1), (3), (4) and (5), the words ''or 13(5)'' shall cease to have effect.

(7) Sections 18 (information and advice about operation of Act), 21 (monopoly references by Secretary of State alone) and 24 (modification of provisions about performance of Commission's functions) shall cease to have effect.

(8) In section 31 (orders and regulations)—

(a) in subsection (1) the words ''or regulations'' shall cease to have effect;

(b) in subsection (3)—

(i) the words ''regulations under this Act or'' shall cease to have effect;

(ii) after ''11(4)'' there is inserted '', 11D'';

(iii) after ''above'' there is inserted '', or section 107(4) or (6) of the Enterprise Act 2002 as applied by section 11B(1)(c) above,'';

(d) after subsection (4) there is inserted—

''(5) Any power of the Secretary of State to make an order under this Act—

(a) may be exercised so as to make different provision for different cases or different purposes; and

(b) includes power to make such incidental, supplementary, consequential, transitory, transitional or saving provision as the Secretary of State considers appropriate.''

(9) In section 33 (interpretation), for subsection (2) there is substituted—

''(2) Unless the context otherwise requires, in this Act ''Minister'' includes a government department and the following expressions shall have the same meanings as they have in Part 3 of the Enterprise Act 2002— ''business'' ''the Commission'' ''enactment'' ''goods'' ''services'' ''supply (in relation to the supply of goods)'' ''the supply of services''.''' No. 388, in page 305, line 5, after '(6)' insert '— (i)'. No. 389, in page 305, line 6, at end insert— '(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'. No. 390, in page 313, line 18, after '(9A)' insert '— '(a)'. No. 391, in page 313, line 19, at end insert— '(b) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'. No. 600, in page 314, line 40, at end insert— '(3A) In section 66 (amendments of the Fair Trading Act 1973)— (a) for subsection (3) there is substituted— ''(3) For the purposes of Part 3 of the Enterprise Act 2002 (merger references), where a person enters into a franchise agreement as a franchisee, there shall be taken to be brought under his control an enterprise engaged in the supply of the railway services to which the agreement relates.''; (b) for subsection (6) there is substituted— ''(6) Expressions used in subsection (3) above and in Part 3 of the Enterprise Act 2002 have the same meaning in that subsection as they have in that Part.'''. No. 392, in page 315, line 20, after '(6A)' insert '— (i)'. No. 393, in page 315, line 21, at end insert— '(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'. No. 601, in page 319, line 24, at end insert— '(33A) In section 45 (the Competition Commission), after subsection (7) there is inserted— ''(8) The Secretary of State may by order make such modifications in Part 2 of Schedule 7 and in Schedule 7A (performance of the Competition Commission's general functions) as he considers appropriate for improving the performance by the Competition Commission of its functions.''.' No. 602, in page 320, line 2, at end insert— '(e) in subsection (8), for ''Director'' there is substituted ''OFT''.'. No. 394, in page 320, leave out lines 7 to 20. No. 603, in page 321, line 10, after 'investigation),' insert 'in subsection (1), for ''Director'' there is substituted ''OFT'', and'. No. 604, in page 321, line 21, at end insert— '(47A) In section 71 (regulations, orders and rules), in subsection (4), after paragraph (c) there is inserted— ''(ca) section 45(8),''.'. No. 605, in page 321, line 22, after 'concentrations)' insert '— '(a) in paragraph 1— (i) in sub-paragraph (1), for the words from ''Part V'' to ''1973 Act'')'' there is substituted ''Part 3 of the Enterprise Act 2002 (''the 2002 Act'')''; (ii) in sub-paragraph (4), for ''Section 65 of the 1973 Act'' there is substituted ''Section 24 of the 2002 Act''; (b) in paragraph 2— (i) in sub-paragraph (1)(a), for ''Part V of the 1973 Act'' there is substituted ''Part 3 of the 2002 Act''; (ii) in sub-paragraph (2), for ''Section 65 of the 1973 Act'' there is substituted ''Section 24 of the 2002 Act'';'. No. 606, in page 321, line 27, at end insert— '(d) in paragraph 5, for paragraphs (a) to (d) there is substituted— ''(a) the OFT or (as the case may be) the Secretary of State has published its or his decision not to make a reference to the Competition Commission under section 20, 31, 43 or 60 of the 2002 Act in connection with the agreement; (b) the OFT or (as the case may be) the Secretary of State has made a reference to the Competition Commission under sections 20, 31, 43 or 60 of the 2002 Act in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a relevant merger situation or (as the case may be) a special merger situation; (c) the agreement does not fall within paragraph (a) or (b) but has given rise to, or would if carried out give rise to, enterprises to which it relates being regarded under section 24 of the 2002 Act as ceasing to be distinct enterprises (otherwise than as the result of subsection (3) or (4)(b) of that section); (d) the OFT has made a reference to the Competition Commission under section 32 of the Water Industry Act 1991 in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a merger of any two or more water enterprises; or (e) the Secretary of State has made a reference to the Competition Commission under Part 3 of the 2002 Act as applied by virtue of paragraph 1 of Schedule 5 to that Act (application of Part 3 to water mergers) in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a merger of any two or more water enterprises.'''. No. 395, in page 325, line 11, after '(11)' insert '— '(i)'. No. 396, in page 325, line 12, at end insert— '(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'.—[Miss Melanie Johnson.] Schedule 25, as amended, agreed to.

''business''

''the Commission''

''enactment''

''goods''

''services''

''supply (in relation to the supply of goods)''

''the supply of services''.'''

No. 388, in page 305, line 5, after '(6)' insert '—

(i)'.

No. 389, in page 305, line 6, at end insert—

'(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'.

No. 390, in page 313, line 18, after '(9A)' insert '—

'(a)'.

No. 391, in page 313, line 19, at end insert—

'(b) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'.

No. 600, in page 314, line 40, at end insert—

'(3A) In section 66 (amendments of the Fair Trading Act 1973)—

(a) for subsection (3) there is substituted—

''(3) For the purposes of Part 3 of the Enterprise Act 2002 (merger references), where a person enters into a franchise agreement as a franchisee, there shall be taken to be brought under his control an enterprise engaged in the supply of the railway services to which the agreement relates.'';

(b) for subsection (6) there is substituted—

''(6) Expressions used in subsection (3) above and in Part 3 of the Enterprise Act 2002 have the same meaning in that subsection as they have in that Part.'''.

No. 392, in page 315, line 20, after '(6A)' insert '—

(i)'.

No. 393, in page 315, line 21, at end insert—

'(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'.

No. 601, in page 319, line 24, at end insert—

'(33A) In section 45 (the Competition Commission), after subsection (7) there is inserted—

''(8) The Secretary of State may by order make such modifications in Part 2 of Schedule 7 and in Schedule 7A (performance of the Competition Commission's general functions) as he considers appropriate for improving the performance by the Competition Commission of its functions.''.'

No. 602, in page 320, line 2, at end insert—

'(e) in subsection (8), for ''Director'' there is substituted ''OFT''.'.

No. 394, in page 320, leave out lines 7 to 20.

No. 603, in page 321, line 10, after 'investigation),' insert

'in subsection (1), for ''Director'' there is substituted ''OFT'', and'.

No. 604, in page 321, line 21, at end insert—

'(47A) In section 71 (regulations, orders and rules), in subsection (4), after paragraph (c) there is inserted—

''(ca) section 45(8),''.'.

No. 605, in page 321, line 22, after 'concentrations)' insert '—

'(a) in paragraph 1—

(i) in sub-paragraph (1), for the words from ''Part V'' to ''1973 Act'')'' there is substituted ''Part 3 of the Enterprise Act 2002 (''the 2002 Act'')'';

(ii) in sub-paragraph (4), for ''Section 65 of the 1973 Act'' there is substituted ''Section 24 of the 2002 Act'';

(b) in paragraph 2—

(i) in sub-paragraph (1)(a), for ''Part V of the 1973 Act'' there is substituted ''Part 3 of the 2002 Act'';

(ii) in sub-paragraph (2), for ''Section 65 of the 1973 Act'' there is substituted ''Section 24 of the 2002 Act'';'.

No. 606, in page 321, line 27, at end insert—

'(d) in paragraph 5, for paragraphs (a) to (d) there is substituted—

''(a) the OFT or (as the case may be) the Secretary of State has published its or his decision not to make a reference to the Competition Commission under section 20, 31, 43 or 60 of the 2002 Act in connection with the agreement;

(b) the OFT or (as the case may be) the Secretary of State has made a reference to the Competition Commission under sections 20, 31, 43 or 60 of the 2002 Act in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a relevant merger situation or (as the case may be) a special merger situation;

(c) the agreement does not fall within paragraph (a) or (b) but has given rise to, or would if carried out give rise to, enterprises to which it relates being regarded under section 24 of the 2002 Act as ceasing to be distinct enterprises (otherwise than as the result of subsection (3) or (4)(b) of that section);

(d) the OFT has made a reference to the Competition Commission under section 32 of the Water Industry Act 1991 in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a merger of any two or more water enterprises; or

(e) the Secretary of State has made a reference to the Competition Commission under Part 3 of the 2002 Act as applied by virtue of paragraph 1 of Schedule 5 to that Act (application of Part 3 to water mergers) in connection with the agreement and the Commission has found that the agreement has given rise to, or would if carried out give rise to, a merger of any two or more water enterprises.'''.

No. 395, in page 325, line 11, after '(11)' insert '—

'(i)'.

No. 396, in page 325, line 12, at end insert—

'(ii) for ''sections 55 and 56 of that Act (disclosure)'' there is substituted ''Part 9 of the Enterprise Act 2002 (Information)''.'.—[Miss Melanie Johnson.]

Schedule 25, as amended, agreed to.

Schedule 26 - Repeals and revocations

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move amendment No. 574, in page 333, line 24, at beginning of second column insert—

'Section 9.'.

The amendment ensures the repeal of section 9 of the Insolvency Act 2000. That repeal was missed in the first print of the Bill.

Amendment agreed to.

Amendment made: No. 398, in page 333, line 30, after '9,' insert '10,'.—[Miss Melanie Johnson.]

Schedule 26, as amended, agreed to.

Clause 267 - Commencement

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 45, in page 181, line 9, at end add—

'(2) Parts 3, 4, 5, 6 and 7 of this Act shall not come into force before 1st March 2005'.

It is relatively rare, I suspect, to seek to amend the commencement provision. Normally by this stage in the proceedings, members of the Committee are already fantasising about their next activity. I will not detain them long.

The amendment is designed to make the point—unless the Under-Secretary is with us on it, all we can really do of course is make a point—that, given how much feeling about the Bill's competition provisions has been expressed, both in our debates and, through Conservative Members, by business, industry and practitioners, it is very early to be revisiting such aspects of the competition regime. There are two main reasons for that. The first is the way that the European regime is developing, which could be different from developments in Britain, or vice versa. Secondly, and perhaps even more importantly, it is so soon after the Competition Act 1998 came into force.

The idea behind the amendment is to give everyone a sensible breathing space in which to continue to try to get to grips with the previous legislation and the implications of this further layer, as well as with what is happening in Europe, so that businesses can spend a bit of time on making profits and producing goods and services. That would allow for a specific period following the coming into force of the Competition Act.

Tony McWalter (Labour/Co-operative, Hemel Hempstead)

I merely want to point out to the hon. Gentleman that, as of yesterday, fantasising is not permitted on the Labour Benches.

Melanie Johnson (Labour, Welwyn Hatfield)

I am steering well clear of that subject.

The significance of 1 March is that it will be the fifth anniversary of the coming into force of the Competition Act 1998. I do not believe that there are any grounds for delaying important reforms to the UK competition regime. I realise that the hon. Member for Eastbourne (Mr. Waterson) is making a point, and I accept that point. However, I have explained to the Committee the rationale for our reforms, many of which we have debated at considerable length. I therefore urge the Committee to resist the amendment if it is put to a vote.

Nigel Waterson (Conservative, Eastbourne)

I do not want to introduce a churlish note on the last day of the Committee's proceedings, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 267 ordered to stand part of the Bill.

Clauses 268 and 269 ordered to stand part of the Bill.

New Clause 7 - Person supplying goods

New Clause 8 - Annual report of Commission

Nigel Waterson (Conservative, Eastbourne)

We need not detain the Committee long. It is sensible that any public body produce an annual report so that we can get to grips with what it is doing. My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) was eager to debate this, but I understand that he is indisposed and, sadly, will not be able to do so. The

burden of his song was to ask what the Competition Commission will be doing that warrants an annual report. However, we covered that ground in sometimes hilarious detail on a previous occasion, so I shall not pursue the matter.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 10 - Application of insolvency law to foreign company

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move, That the clause be read a Second time.

The new clause provides a power for the Secretary of State to extend the application of the provisions of the Insolvency Act 1986 to companies incorporated outside Great Britain. Under current legislation, it is unclear whether a company incorporated outside Great Britain—apart from companies from certain Commonwealth countries, whose courts might request the assistance of the UK courts in insolvency matters—can make use of company voluntary arrangements or the administration procedure. Its only option, probably, is winding up as an unregistered company.

We believe that there is a strong case for allowing foreign companies to make use of the rescue provisions of the 1986 Act, particularly in today's business environment, in which many foreign companies operate in Great Britain and have assets and creditors here. The new clause will allow the Secretary of State, following consultation, to extend the rescue provisions and other corporate insolvency proceedings of the Insolvency Act to such companies.

Nigel Waterson (Conservative, Eastbourne)

The provision sounds eminently sensible. I have just one query: to what extent is the provision based on or related to any international convention? Is a reciprocal arrangement either in place or envisaged? In the increasingly globalised business world, multinational companies face a range of insolvency regimes. I do not want to open that can of worms at this stage, save to say that one can imagine the possible complexities of the insolvency of a large corporation that straddles various countries or even

continents—hence my interest in whether the measure is to be linked with reciprocal arrangements internationally.

Melanie Johnson (Labour, Welwyn Hatfield)

The answer is no.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 14 - Minority reports of Commission: Part 3

New clause 15 - Minority reports of Commission: Part 4

New Clause 5 - Use of fines by OFT

Nigel Waterson (Conservative, Eastbourne)

I beg to move, That the clause be read a Second time.

I hope that, for once, the purpose of the new clause is obvious from the wording. Under the current regime, fines may be imposed under chapter I and II of the Competition Act 1998. In a sense, the aim of the new clause dovetails with the provision of funding for consumers or consumer groups that we have just debated. Consumer bodies have asked what will happen to the fines and whether they might be applied to the benefit of consumers generally. I appreciate that that process is different from an education or information-spreading process. When taking the class action approach, however, it will sometimes be impossible to identify all the consumers affected.

The Under-Secretary gave an example a moment ago, albeit in a different context, of a problem with Rover car parts or car sales. That example ties in neatly: one could devote the funds to remedy

''harm suffered by consumers generally'',

as the new clause says. That would be welcomed by consumers, consumer bodies and the OFT, and I hope that it receives the Under-Secretary's support.

Melanie Johnson (Labour, Welwyn Hatfield)

I have considerable sympathy with the aims of the new clause, in so far as I am keen that there should be projects to help consumers who suffer as a result of anti-competitive practices. However, that will be possible under clause 262, which allows the Secretary of State to

''give financial assistance to any person for the purpose of assisting . . . activities which the Secretary of State considers are of benefit to consumers''.

That may include specific groups of consumers who have suffered harm as a result of a particular anti-competitive practice.

In fact, clause 262 has a wider application than the new clause. Although the priority will be to fund projects relating to the markets in which fines have been levied for anti-competitive behaviour, the clause will also ensure that consideration can be given to financial assistance for a wide range of projects and other work that would benefit consumers. It is not confined to consumers who have suffered from anti-competitive practices for which fines have been levied under the Competition Act. The clause will benefit consumers more widely and ensure that a more strategic view can be taken of the issues that need addressing and of the funding available.

For those reasons, clause 262 is better for consumers than the new clause would be. In view of that, I hope that the motion will be withdrawn.

Vincent Cable (Liberal Democrat, Twickenham)

I should like to say a few words in support of the new clause. I do not understand the Under-Secretary's reply, because the alternative that she offers relates to the powers of the Secretary of State. We are not concerned with whether the Secretary of State should be able to dish out money to consumer groups, which is fine in itself. However, the new clause would establish a flexible link between the abuse and some restitution for the people affected, without making that restitution mandatory. It would give the OFT the power to use the fine revenue for the consumer group, under certain circumstances, and is far more targeted than the Under-Secretary implied.

Nigel Waterson (Conservative, Eastbourne)

I accept what the Under-Secretary says, but I remain wedded to having a separate power for the OFT to deal with the funds, which will otherwise simply disappear into the Treasury and be of no benefit to anyone. I would like to return to the point, but I shall be withdrawing the motion.

Melanie Johnson (Labour, Welwyn Hatfield)

I should like to explain further our reasons for resisting the new clause, in response to the points made by the hon. Members for Twickenham (Dr. Cable) and for Eastbourne. Initially, we entertained a similar idea to theirs, but it did not seem a good idea for the OFT to be allocating fines money

to projects benefiting consumers, because there might be a conflict of interest. Allegations might be made that fines were taken for a specific purpose or that specific projects were favoured. That would make it difficult to maintain business confidence, so we thought that it would be inappropriate for the OFT to occupy the position suggested in the new clause.

As regards links to fines for anti-competitive behaviour, it is better to agree the level of funding in the context of the Department's budget. We can then plan and ensure that the money is well used to fund groups generally for the benefit of consumers. Fines are unpredictable, and we do not know which organisations will be subject to them and how much they will be fined until the fine is imposed. Linking consumer benefits to fines could, therefore, lead to a rather erratic cash flow.

For all those reasons, we felt that it was inappropriate to pursue the proposed mechanism.

Nigel Waterson (Conservative, Eastbourne)

It is always interesting when the Under-Secretary gets down to the part of her brief that says ''if pressed''.

Melanie Johnson (Labour, Welwyn Hatfield)

I have not got down to that part—none of the points are headed ''if pressed''.

Nigel Waterson (Conservative, Eastbourne)

In that case, if the argument is so good, why did she not deploy it the first time around? Perhaps she simply shuffled her papers the wrong way. I must say, however, that her argument is still not very good.

One of our set books at school was Evelyn Waugh's wonderful ''Scoop'', which is set in what we would now call a third world country—I think it was called Ishmaelia—where the country's army and inland revenue are combined, and punitive columns are sent out to lay waste to villages and to collect tax in kind. It is a little far-fetched to suggest that under new clause 5 the OFT would operate a slash-and-burn policy and go round finding people so that it can generate cash flow. We are still wedded to our proposal, and although we shall not press the motion, we shall be back. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 6 - Enforcement orders: costs

Jonathan Djanogly (Conservative, Huntingdon)

I beg to move, That the clause be read a Second time.

We return to consumer legislation. The new clause deals specifically with provisions under which the enforcer—it may be the OFT or the local trading standards body—applies to the court for an enforcement order that subsequently fails. I hope that the Under-Secretary will confirm that, in that situation, existing legislation allows the court to make an order for costs to go to the winning party.

The new clause gives us a good and possibly final opportunity briefly to remind the Committee of a point that my hon. Friends and I have made throughout our proceedings. In many ways, the Bill has been drafted too one-sidedly and against the interests of business. Although that has happened for all the right reasons in many cases, there has been a massive increase in the OFT's power. That will often have dramatic implications for businesses, in terms of the costs that they will have to incur to defend themselves. Indeed, they will incur costs even before they are prosecuted, when they respond to requests for documentation that are made under the Bill's investigatory powers.

For all those reasons, it was necessary to include in the Bill provisions to redress the balance and to give business more rights to obtain compensation where it had acted properly and has been found innocent at the end of the day. Of course, the business will often have been subject to insolvency in the meantime, and the personal reputations of its owners will have been subject to a significant downside. The new clause would redress the balance by stating that, where the court finds against the enforcer making the application, it is just and correct that the person on the other side receives their costs.

John Pugh (Liberal Democrat, Southport)

I do not quite understand the principle that is operative in the new clause. If such a clause were appropriate, it would also be appropriate in a whole range of legislation, and all sorts of enforcement bodies would be faced with the same proposition: if they prosecuted their businesses properly and acted in a perfectly valid and sensible way, but judgments were none the less not in their favour, they would incur costs. I am all in favour of taking the concerns of business seriously, but a principle is involved.

Enforcement legislation that is not successfully carried out has an effect on the enforcer, even if the enforcer is a public body. If the new clause is serious, it ought to be read into all manner of legislation, including that for trade description bodies and the like. I cannot see how it can seriously be sustained without taking that principle and running it right across all legislation. That, however, would have dangerous consequences for the public good.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Member for Southport (Dr. Pugh) is right in thinking that the new clause would have widespread consequences. As he said, present provision is in line with civil proceedings provisions in other legislation. The new clause would introduce an entirely new element. Proceedings under this part of the Bill would be subject to civil procedure rules, including the provisions on costs in part 44 of the rules.

The rules already provide that costs normally follow the event—that the loser pays the costs of both parties. From that point of view, the rules are wholly appropriate and reasonable.

A provision such as that proposed in the new clause would result in the enforcement bodies being required to meet the costs of every failed claim regardless of the merits of the claim or of the behaviour of the defendant. That would effectively negate the new provision, as enforcers would be highly unlikely to make a claim unless it was 100 per cent. guaranteed to win—and that will seldom, if ever, be the case. Under the circumstances envisaged in the new clause, were an enforcer to win a case, it might not receive some or all its costs because of its behaviour—perhaps because it had pursued an allegation unreasonably. I therefore ask the Committee not to support new clause 6.

Jonathan Djanogly (Conservative, Huntingdon)

I take some satisfaction from the Under-Secretary's clarification that the courts would be able to award costs. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 12 - Vesting: the family home

David Borrow (Labour, South Ribble)

I beg to move, That the clause be read a Second time.

The new clause raises an issue that has come to the fore during the past few years. It relates to the rise in the equity market and to the many individuals made bankrupt during the recession at the end of the 1980s and in the early 1990s. A bankrupt's interest in the family home, like any other asset, is part of the estate and is available to creditors. It remains so regardless of the bankrupt's discharge, usually after three years, and regardless of whether there is equity in the property.

Some people who were made bankrupt many years ago have continued to pay the mortgage on their property and have continued to live in the family home. Because there was no equity in the home, the trustee did not sell it in order to realise the assets and thereby pay the creditors. Now, many years later, those people are finding that although the bankruptcy has been discharged, their family homes are being sold from under them in order to realise the equity that has accrued as a result of rising house prices and of paying the mortgage over the intervening years. The question is whether that is a fair way to deal with such cases.

A number of organisations involved in insolvency and bankruptcy have made representations. I shall cite three. The Insolvency Practices Council states:

''There is clear evidence that there are too many variations on how the Matrimonial Home is dealt with by IPs''—

insolvency practitioners—

''in the case of the bankruptcy of the sole or a joint owner of the property. It is accepted there are many different circumstances affecting the value of the equity and the potential value to the bankruptcy estate. When should a decision be taken on realisation? At present some of the variations do not seem to be soundly based.''

The Bankruptcy Advisory Service wrote:

''We continue to hear from people who were bankrupt some years ago and who have not taken steps to secure their home from any action by their Official Receiver/Trustee in Bankruptcy. Now years later, they find that the property has increased in value and their regular mortgage repayments have reduced the borrowing, putting substantial equity in the property for the Official Receiver/Trustee to claim.

We are now seeing an increasing number of cases where the matrimonial home was in negative equity at the date of bankruptcy (particularly where Bankruptcy Orders were made in the late 80s/early 90s) and in which there is now substantial equity.''

R3, the association of business-recovery professionals, stated:

''There is another issue in relation to matrimonial homes which is not dealt with in the paper but which we think the present consultation provides a useful opportunity to consider. This is the concern, which has been identified by the Insolvency Practices Council, about variations in practice between trustees in bankruptcy in how they deal with the matrimonial home, and a perceived unfairness in selling the home many years after the bankrupt's discharge.''

Individual bankrupts can deal with the issue if they arrange to vest the equity in the property in their spouse. However, that has not happened in many cases. The new clause would ensure a consistent approach by trustees in bankruptcy. Under it, they would need to take action during the three years that followed bankruptcy. Therefore, if an individual came out of bankruptcy and was discharged, the trustee in bankruptcy could not return many years later when equity had accrued in the property to claim it.

Melanie Johnson (Labour, Welwyn Hatfield)

I thank my hon. Friend for tabling the new clause. I am grateful for his views on the subject, and for those of Opposition Members on it on earlier occasions. The matter warrants further consideration, as it can lead to a certain rough justice in practice and is not entirely compatible with ''A Fresh Start''. The responses to the White Paper and recent contact with interested parties show that there are continuing concerns, and my hon. Friend cited several such cases. Indeed, hon. Members have received related correspondence.

I welcome my hon. Friend's suggestion of a sunset provision after which, if the trustee has not exercised his or her rights, the interest reverts to the bankrupt. Any solution ought to provide flexibility to deal with a wide variety of different situations. In some instances, a trustee will be able to deal with the matter promptly, but in others he or she will not. A time limit by which the trustee must act, as suggested by my hon. Friend, seems entirely sensible. That act by the trustee might be, for example, a sale of the bankrupt's interest, or an application to the court for an order for sale, perhaps when the bankrupt seeks to delay the process. It might be an application for a charging order, or an

agreement between the trustee and the bankrupt, which would crystallise the value of the bankrupt's interests when the trustee was unable to sell at that time.

There are problems with the drafting of the new clause, so I ask my hon. Friend to withdraw the motion. However, I am happy to give him an undertaking that we shall consider it further and hope to table a Government amendment on Report in response to his concerns.

Jonathan Djanogly (Conservative, Huntingdon)

There are concerns on the subject, so I am pleased to hear that the Government will look into it further. I want to consider it more generally.

In fairness to the banks or building societies, they do not normally simply forget about their security. There is normally a long period before which loans or mortgages for houses are filled in. That is normally related to the fact that children are involved. Until the children reach an age at which they are no longer reliant on the parents, banks are understandably reluctant to force families out of their homes. We should support that.

Although I understand the point made by the hon. Member for South Ribble (Mr. Borrow), it is important to consider the overall reasons why it is often wise and beneficial to society as a whole that there is a decent delay before the banks can enforce the security.

David Borrow (Labour, South Ribble)

I recognise that the new clause may not be perfectly drafted. In view of the supportive comments of my hon. Friend the Under-Secretary, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 13 - Application of law about company arrangementor administration to non-company

Gareth Thomas (Labour, Harrow West)

I beg to move, That the clause be read a Second time.

The purpose of the clause is to enable the Treasury and the DTI, if they are so minded, to allow industrial and provident societies to take advantage of administration orders and company arrangements, which are available to companies in trouble and have been since corporate insolvency law was reformed in 1986. The legal forms of the industrial and provident society and the friendly society are used by a range of businesses that operate and compete on the same ground as those businesses that use the company legal model. The larger retail co-operative businesses and credit unions are examples of that.

Industrial and provident societies and friendly societies are distinguished from companies because they operate on the basis of mutuality. They seek to serve the interests of their members or in the case of some types of industrial and provident society, of the community. As businesses, they are nevertheless subject to the same risks and opportunities as the businesses using the company legal model with whom they compete. Sadly, there is the same possibility of insolvency. The fact that they are not able to use all the same rescue procedures potentially places them at a significant disadvantage.

A case in 1993, re Devon and Somerset Farmers Ltd., concerned a co-operative that had gone bust. It went to court, where the judge refused to interpret the definition of a company to include industrial and provident societies. That judgment made it clear that industrial and provident societies—friendly societies are similarly affected—cannot take advantage of the options of an administration order or company arrangement, simply because they are not covered by the term ''company'' in the legislation. Unlike another type of mutual—the building society—they have not had the modernising legislation to allow them those options.

The problem for industrial and provident societies is that the administration order and the company voluntary arrangement approach were not established concepts when the last major reform of industrial and provident societies took place in 1965. Hon. Members will know that a rather excellent private Member's Bill—the Industrial and Provident Societies Bill—has just gone through the House with, I am delighted to say, all-party support. It is now in the House of Lords. That Bill seeks to modernise certain key parts of the legislation relating to such societies. Nevertheless, there is a gap in our legislation, an anomaly that precludes industrial and provident societies and

friendly societies from benefiting, should they get into trouble, from the administration order and company voluntary arrangement process.

There have been cases in which the lack of those tools has caused difficulty. In one example from June 1993, the Northern Co-operative Society, a Scottish consumer co-operative, had to go into liquidation, and because the administration procedure was unavailable to it at the time, rescue or partial rescue of the business could not be considered. The co-operative had to use the liquidation tool that was applicable to it. On that basis, I hope that hon. Members will agree that new clause 13 should be added to the Bill, so that if the Treasury and the Department of Trade and Industry are so minded, suitable statutory instruments can be drafted to allow two additional tools of rescue to apply to industrial and provident societies and friendly societies.

Nigel Waterson (Conservative, Eastbourne)

The provision seems sensible, and I hope that the Under-Secretary will smile on it, even if not in this form. The hon. Gentleman talked with characteristic modesty about his private Member's Bill, which has all-party support and is making good progress.

I want to raise briefly the issue of registered social landlords. I tabled an amendment from the Council of Mortgage Lenders, which arrived too late for us to debate it in Committee, about the position of those who provide loans to housing associations. I do not expect the Under-Secretary to deal with it in detail, but I want to put down a marker that we hope to return to the issue on Report. The amendment would allow such bodies to appoint an administrative receiver because—this is a similar point to that raised by the hon. Member for Harrow, West (Mr. Thomas)—they form a special category. The law of unintended consequences may take a hand here. The Under-Secretary may have noticed the amendment, and we hope to return to it, but if she has anything to say about it now, that would also be nice.

Vincent Cable (Liberal Democrat, Twickenham)

I want to say a few words in support of the new clause. I am one of many hon. Members from both sides of the House who supported the private Member's Bill, which is important and covers many organisations such as British Legion clubs, as well as sports clubs, allotments and other organisations that use the provident society model and are potentially affected by the law that governs provident societies. The hon. Member for Harrow, West has achieved several objectives, notably strengthening mutual ownership against carpet-bagging. Although we are not concerned with that today, one of the key objectives of the Bill is to enable mutual organisations to keep up with corporate law, because one of the problems has been that provident societies have not been able to keep up with the advance of company law. The Bill would help to cover that gap, so I urge the Under-Secretary to accept the hon. Gentleman's suggestions.

Jonathan Djanogly (Conservative, Huntingdon)

Without professing to have detailed knowledge of mutual societies, I think that the proposal seems sensible. I noted that the hon. Member

for Harrow, West spoke about giving mutuals the benefit of voluntary insolvency procedures. I would be interested to hear from the Under-Secretary whether compulsory insolvency procedures would also apply to those bodies, or whether they already do.

Melanie Johnson (Labour, Welwyn Hatfield)

I am grateful to my hon. Friend the Member for Harrow, West for tabling the new clause. I am aware that, for some time, he has been championing the cause of modernising the legal framework for industrial and provident societies. Indeed, he is the promoter of a private Member's Bill on that, which has received its Third Reading in the House and now falls to be considered in the other place.

I agree with my hon. Friend that industrial and provident societies and friendly societies should be able to use a range of insolvency procedures, including administration, to provide access to rescue mechanisms as an alternative to winding up. Therefore, I welcome the new clause, which will help to extend the rescue culture that we are promoting in the Bill to industrial and provident societies and friendly societies.

The hon. Member for Eastbourne raised a particular point about the Council of Mortgage of Lenders, which has written to me, too, on that subject. It might, therefore, be helpful if I set out the legal position. Floating charge holders are not currently able to appoint administrative receivers over industrial and provident societies. That was established in the case of re Devon and Somerset Farmers Ltd., as mentioned by my hon. Friend the Member for Harrow, West. Fixed charge holders are able to appoint receivers over societies and that will continue to be the case.

The power contained in the new clause is an enabling power that will enable the Treasury to extend specified insolvency rescue procedures to certain mutual societies with whatever modifications are necessary to ensure that the procedures meet the needs of each society. It is a good idea to provide the power; it will enable mutual societies to make use of the rescue procedures where at present they can only be wound up. That has to be a positive development. I urge the Committee to accept the new clause.

Question put and agreed to.

Clause read a Second time and added to the Bill.

Title

Derek Conway (Conservative, Old Bexley and Sidcup)

May I take this opportunity on behalf of my fellow Chairman to thank the Committee for the good temper with which the debates have been conducted. It has been an enjoyable Committee and we have been served very well by our Clerks, the official reporters, the police and the Serjeant-at-Arms Department whom, on behalf of the Chairman's Panel, I also thank.

Melanie Johnson (Labour, Welwyn Hatfield)

When I moved the resolution of the Programming Sub-Committee at our first sitting on 16 April, I said that I was confident that we could look forward to constructive scrutiny of the Bill. The Committee has taken full advantage of that opportunity, with your able assistance, Mr. Conway, and that of Mr. Beard, who is not with us this morning. He will, I am sure, be devastated to find that there is no sitting this afternoon.

The Bill will proceed in even better shape than it enjoyed on introduction. That is down to the hard work of the whole Committee, to which I pay tribute. We sat for some 44 hours over 18 sittings; 612 amendments and 15 new clauses were tabled, of which 174 amendments and five new clauses were tabled by the Government.

I thank all Opposition Members for their constructive approach to the Bill. I am grateful for their support for the majority of measures and for their tireless endeavours to make improvements to the text. I trust that they feel that it has been worthwhile. We have accepted a number of proposals and the Bill is all the better for that. The Committee has done an excellent job, in improving not just the content but our understanding of the Bill. I pay tribute to the hard work of all Committee members and to the excellent chairmanship that has steered the Bill through.

I am particularly grateful to my hon. Friend the Minister for E-Commerce and Competitiveness for stepping into the breach with such assurance for four of the sittings. Finally, I join you in thanking the Clerks, the Hansard reporters, the doorkeepers, the police officers and the officials from the Department of Trade and Industry, who have supported us so ably, for all their work in ensuring that our deliberations could be constructive and come to this ready conclusion.

Nigel Waterson (Conservative, Eastbourne)

I associate myself with most of the Under-Secretary's remarks. I thank you, Mr. Conway, and your fellow Chairman—it has been interesting to see the different styles that you have brought to the task—and the staff, the police, the Hansard reporters and, in particular, the Clerks who have had to deal with shoals and shoals of amendments and new clauses, and the officials. I have never seen so many officials involved in a Bill. The DTI must have been a pretty empty place during the Committee stage of the Bill.

Melanie Johnson (Labour, Welwyn Hatfield)

I am grateful for that notion of the scale of the DTI.

Nigel Waterson (Conservative, Eastbourne)

It has been interesting to see so many hands put to work on the Bill. We have had a friendly and constructive Committee. It has been not easy to rattle through a Bill of 269 clauses and 26 schedules in the time allotted, but we have done our best. As the Under-Secretary kindly mentioned, we tabled a great number of amendments and new clauses.

There have been some interesting and colourful members of the Committee, not all of whom are here today. The hon. Member for North-East Derbyshire (Mr. Barnes), for one, took us back to the days of people such as G.D.H. Cole. It was the first time I heard that name since leaving university. He brought his distinctive starting point to many arguments in the Committee, although he may not have done his chances much good of being appointed to many more such Committees.

The hon. Member for Staffordshire, Moorlands (Charlotte Atkins) once wrote a book called ''How to Select or Reselect Your MP'', which strikes me as an interesting title. She and I have an interesting link, in that she contested my seat in the 1990 by-election.

The hon. Member for South Ribble made some interesting contributions. He was president of the Society of Clerks at one time, and knows his way around the drafting of documents. Looking at the details that I obtained from various websites, I was impressed to discover that among the many accomplishments of the hon. Member for Cambridge (Mrs. Campbell), she is director of the Welding Institute. That is not something that arose during our discussions.

I can inform hon. Members who are fascinated by the name of the hon. Member for Ogmore (Huw Irranca-Davies)—whose career has got off to a racing start by being appointed to this Committee—that it derives from his wife being from Sardinia. The name did not strike me as being very Welsh. He may be interested to know that the Welsh Labour website said that he was the party's surprise choice for the seat; he may want to have that amended.

We have been top-heavy with philosophers, including the hon. Member for Southport, who taught philosophy, and the hon. Member for Hemel Hempstead (Mr. McWalter), who co-edited something called ''Kant and His Influence.'' He also supports a charity called Philosophy in Britain, which is presumably for philosophers down on their luck who need the price of a cup of coffee or the next edition of Kant's collected works.

On the Liberal Democrat Benches, we have had the pleasure of seeing all three Liberal Democrat tendencies represented. We have heard pro-business and anti-business arguments, and the third category of argument—always important with the Liberal Democrats—which says, ''I haven't a clue, but what do you think?'' All those tendencies have been on display during the Committee. The leading member of their Front-Bench team, the hon. Member for Twickenham, lists ballroom and Latin dancing in his biography. He has obviously enjoyed a long personal

odyssey, because at one time he was special adviser to the late John Smith when he was shadow Secretary of State for Trade and Industry. Like me, he has had a long involvement with the House.

The hon. Member for Orkney and Shetland (Mr. Carmichael) made many interesting contributions, and has been assiduous in the Committee. He was educated at Islay high school, so he must have some knowledge and interest in Scotch malt whisky.

Our deliberations have been too fast, but, for the most part, constructive. Some clauses and amendments have not been debated at all, under the guillotine procedure, so unresolved issues remain to which we look forward to returning on Report.

Vincent Cable (Liberal Democrat, Twickenham)

I add my thanks to you, Mr. Conway, and to the other Chairman, to the officers who have helped us and to the Committee. In my five years in the House, I have served on several Committees. All too often, they are characterised by filibustering and time-wasting by the Opposition and Ministers who do not listen on the Government Benches. In this case, although the discussions have sometimes been long,

most criticisms have been constructive and businesslike and the Under-Secretary has shown a commendable ability to listen, respond and debate points, creating a good atmosphere.

I had a brief moment of doubt when, a few days ago, I saw the hon. Member for Huntingdon (Mr. Djanogly) staggering along the corridor with large boxes in his arms. I briefly wondered whether they contained his speaking notes on the bankruptcy clauses. However, apart from that brief passage, I have no reservations about the way in which the Committee has conducted itself.

Some of us, including the hon. Member for Eastbourne and I, have unfinished business. We remain unhappy with some elements of the Bill, especially the gaping hole in the area of consumer protection. However, we may return to those issues on Report and in the other place.

Question put and agreed to.

Bill, as amended, to be reported.

Committee rose at twenty-six minutes to Eleven o'clock.