My Lords, I share my noble friend Lord Whitty’s serious concern about Amendment 26B. It goes to the heart of independent regulation. As I recall, going back a long time now, these regulators were created to be demonstrably totally independent of the Government. The Secretary of State probably appoints the chairman, but he cannot remove him unless he does something very naughty, bad or financially uncertain.
The principle of independent regulation without government interference—and Governments of all hues have a pretty bad reputation about interfering in different things—is fundamental to the operation of a regulated monopoly or series of monopolies. That is certainly the case in the railways and Network Rail, and to some extent it is the case in the water and power industries
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The ability for a Government just to come along, admittedly with a bit of consultation, and say, “We’re going to take these powers away”, will affect confidence in the market and the ability of the sector regulators to set the structure of what they are doing with their boards to get the best out of the industry in terms of efficiency, cost reductions and everything else. We have come a long way since the first regulator, Mr Tom Winsor, who was an eminent lawyer, did this job on his own. There was no board. I remember attending one of his presentations where, in the course of a 20-minute speech, he used the word “I” 64 times, which indicates a collegiate approach that we have not seen in more recent times. However, things have got a lot better since then. We have to be very careful about suddenly making these changes.
I do not think that the Minister is trying to remove the sectoral regulators’ powers and give them to Ministers —I think that the Government are trying to give them to the CMA—because if he did give them to Ministers there would be a complete conflict of interest with the regulated monopolies, some of which the Government have a financial interest in. What does the European Commission think about this clause? I do not know whether the Minister has consulted it. However, I suppose my real concern is: why do it this way rather than try to improve the quality of any sectoral regulator that people, or the Government, believe is not performing properly, as my noble friend Lord Whitty said? I think that the Office of Rail Regulation is doing pretty well now.
As we know, there has been a lot of fuss about the water services and the gas and electricity markets. However, one can debate how much of it is the fault of the regulator and how much is the fault of government policy. I do not want to go into that today but there are always two sides to these arguments. Why is Monitor not included? Sadly, I was not in my place when this matter was debated before, but it is a regulator and what is good for one is surely good for the other. I hope that, not just in today’s debate but at future
stages, we will look more closely at how to improve the performance of some of the regulators that we feel are not doing as good a job as they might be rather than taking this draconian action, as I see it, of removing their ability to look at the competition issues with their specialist knowledge of their industry as at least a first step—