My Lords, I apologise to the Committee for having joined your Lordships so late that you seemed to have made good progress without my help and I shall try to focus on this amendment. I do so partly because I was going mildly to support my noble friend but also because the noble Lord, Lord Deben, has provoked me to say how much I disagree with what he has just said, including going into the wider philosophical and ideological areas right at the end, because a free society requires representation of people’s views as well as mechanisms, legislation and regulations and so on.
At various stages, the Government have recognised that consumer organisations of one sort or another
are important in ensuring that competition is delivered. I am very happy to see that this clause gives the CMA the ability to comment on draft legislation, which is absolutely right, but, in doing so, it has to pay attention to its prime objective, which is not to create competition full stop but to create competition in the interests of consumers. Since in various contexts successive Governments have recognised that there needs to be some focus on that consumer input, it is important that we have some requirement on the CMA at least to consult such organisations when it is making an assessment of future legislation.
For example, many of us, including the noble Lord, Lord Deben, sat through lengthy proceedings on the previous Energy Bill, which sets up a whole new system of energy regulation and government interventions, with state and consumer subsidy of various bits of the energy system. It does not look entirely like a free market; I think that the noble Lord, Lord Lawson, at one point referred to it as Gosplan. It is not quite that, but it is a whole range of things to ensure delivery and availability of energy ultimately in the interests of the consumer, but it will change the nature of our whole energy system.
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After that, the Government and Ofgem decided to refer the structure of the energy market to the CMA. Logically, it should be the other way around. Many years ago we should have had—of course the sector regulator rather resisted it—a CMA inquiry into the energy supply system, and we should have based the legislation on that. But we are where we are. However, it is very important that a big piece of legislation such as the Energy Bill is subject to the test of whether it will affect the way in which energy is supplied to consumers, including business consumers.
Looking to the future, we have a quasi-statutory requirement: Citizens Advice acts as the representative of energy consumers. The powers—I declare my past interest as the chair of Consumer Focus—have passed to it, specifically in relation to the energy sector, which is an oligopolistic sector where it is very difficult to ensure that competition operates.
That is not the only example. My noble friend has referred to the financial sector. Seven years after the financial collapse and the “too big to fail” discussions, one organisation still supplies virtually a third of the total mortgage market. We do not have effective competition within the retail financial services sector. In the transport sector, there is a franchising system for the railways which has been shown to be less than totally adequate in recent years. There is a statutory body, Passenger Focus. If there were legislation to change the way in which the franchising system operates, we would expect the Government to take into account the views of that organisation. If the CMA is, rightly, to be given a pole position in commenting on future legislation, and if there was railways legislation in that context, then we would expect it to consult Passenger Focus.
We have just passed a Water Act which has marginally extended competition in the business supply sector. In that area the Consumer Council for Water, another
statutory body supported by the Government, had some doubts as to whether it would operate effectively. That would need to be reflected. The water industry is, par excellence, a so-called natural monopoly on which we are trying to impose some unnatural competition. I am in favour of that, but the way it operates and affects individual consumers and small businesses needs to be brought into the equation.
The CMA’s role is to look at new legislative proposals—sectoral or general—and ask whether they enhance competition for the benefit of consumers. These organisations, which in many ways the Government support and in other ways finance, or require industry to finance, are the repositories of a fair amount of wisdom—not total wisdom by any means—and expertise. It is important, therefore, that, if we, rightly, impose on the CMA a requirement to comment on proposed legislation, it does so after consulting and taking into account the views of such organisations.
With regard to my noble friend’s second amendment, it would be healthy to have from the CMA an overall assessment of the level of competition in our economy, taking into account in its report the views of consumer groups. It may be slightly too frequent to address the total economy once a year, nevertheless the CMA should be required to do that, and there is a role for the consumer organisations in that too. However, my noble friend’s first amendment is essential if we are to give the CMA this responsibility, which I believe we should.