My Lords, this is a characteristically interesting and deep group, and it is a pleasure to follow the noble Baroness. Having listened to and thought through all the contributions, I start by asking the Minister a question. Did the CMA respond to the Government’s consultation on their White Paper? If so, will the Government publish that response? Over the years, the CMA, as an independent body, has responded to many consultations on government proposals. What was its response to this? We know, as the Minister has indicated in answers to previous groups, that the Bill was, to put it most kindly, drafted within a constrained period; others may say that it was rushed. It seems there are concerns that the Government have found the CMA to be the appropriate body for a function to identify problems which the Government themselves have not indicated exist yet. It is all to do with future problems.
I will start by reflecting on the very good point made by the noble Baroness, Lady Noakes, who is frequently wrong in these debates. Her points are excellent, but when she shows the working of her arguments, we often come to a different conclusion. I have struggled to find a recent example of a UK body, operating on UK reserved matters, which has a direct role on devolved Administrations and Parliaments for areas within their competencies. Maybe the Minister can indicate where that has been the case. If that is not common practice, then we are in new territory. The closest that I can think of would be the operation of certain UK regulators that, by virtue of the decisions they can make within the reserved functions, could have an impact on devolved ones. We addressed that in the Scotland Act 2016, under which there are, for example, new requirements, which did not exist previously, for Ofgem and Ofcom to lay their reports to the Scottish Parliament. Interestingly, both Ofgem and Ofcom have a statutory duty under that Act to appear before a Scottish Parliament committee. This is part of an advance recognition that the decisions that they can make in regulating a UK market will have an impact.
In response to the noble Baroness, the role that the Government seek for the CMA is now markedly different, because the CMA is not just a UK body operating under explicitly UK issues of competition and regulatory functions. It will now report on non-UK-wide policy proposals made by the UK Parliament for England
only, for Wales only or for Scotland only. That is a very different way for that body to operate; it was not the policy intent when it was formed in 2013. It is worth considering in detail, because it is a deviation from the policy intent in its parent legislation.
The CMA is also, fundamentally, about private enterprises in the market and the protection of consumer interests, but it will now have new responsibilities to report directly on decisions made by one Parliament, within its legislative competencies, which do not have private enterprise relationships or consumer interests at their heart. This goes back to the debate about what legitimate aims are. We are moving from a single market which had a wider scope of legitimate aims—environmental policies for example—to a more restrictive one. However, the decisions that will be made for England, Wales or Scotland alone will be within their existing devolved competencies or, indeed, their new ones. It goes far beyond what we have at the moment.
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Neither have the Government explained fully why they do not believe that they have existing powers under Section 139 of the Enterprise Act 2002, which allows Secretaries of State to intervene in the market, or Schedule 3 to the Competition Act 1998, which gives the Secretary of State powers to make an order prohibiting an agreement or concerted practice which has the effect of preventing, restraining or distorting competition. If the thrust of the argument was that the CMA will continue to operate as far as competition or market operation is concerned, then the Government have existing powers. However, the proposal is that the CMA will now have the power to report on proposed legislation within the devolved Administrations. I did not get much from the Government’s Explanatory Memorandum on the proposals, so I studied the impact assessment, which was far more telling about what the Government intend for the OIM. It struck me that, given the current tight financial framework, the £5 million a year cost of the OIM, with 55 staff, seemed rather excessive to be operating on an annual report and, potentially, being asked to report on proposed legislation in three years’ time, but not having the power to report on existing legislation. What will those 55 people be doing at a cost of £5 million a year? It is quite extraordinary.
Page 35 of the impact assessment was interesting. Ministers have said, with full assuredness, that these powers are absolutely necessary for the oversight of the internal market. Page 35 says that
“the inherent uncertainty associated with quantifying benefits that depend on hypothetical regulatory scenarios means that the benefits of delivering UKIM functions are presented qualitatively.”
So even in the impact assessment, they do not know the benefit of the operation of the office for the internal market; it is currently all hypothetical. I wonder why, as my noble friend Lady Bowles of Berkhamsted and other noble Lords have indicated, the Government are rushing to have this established now, when the only function for the 55 people in it, spending £5 million of taxpayers’ money a year, is sitting waiting to work out what the hypothetical benefits could be of regulatory scenarios that are themselves hypothetical.
Worryingly for the devolved Administrations, the impact assessment goes a little further on who will be gathering the information about the functioning of the market overall. The impact assessment says:
“The development of a central repository of information and expertise will ensure the most robust and consistent practice when it comes to the estimation of UKIM impacts.”
Let us not forget that these are hypothetical at the moment. The Governments in Wales and Scotland already look at forming and developing policy for their legitimate aims of legislating on the environment or other areas. However, that “central repository of information” somehow gives the impression that the Government believe that they will not continue to have their own economic development departments to forecast what they consider beneficial, because the central repository of information and expertise will somehow supersede these.
The policy analysis that is put into legitimate policy proposals for legislation and regulations in Wales, England and Scotland are very valuable tools that they themselves will have. However, if that is being denied them, then it is very questionable as to what the Government’s intentions are for this. Do the Government believe that the OIM will be able to be the arbiter for what the market access principles are overall? The OIM will be asked to give an annual report and then a five-monthly report on developments under Clause 31. The report may consider,
“developments in the operation of the internal market, for example as regards … (i) competition”,
but it does not say between whom. Is this competition within businesses or is it about policy competition, as in: will each Administration seek to have an aim to meet a policy objective differently from another Administration with a similar policy objective but seeking to do it in a different way? That was the first one. It goes on:
“(ii) access to goods and services”.
By whom? Does it mean consumers? Is the OIM reporting on consumer access to goods and services? The third is,
“(iii) volumes of trade … between participants in different parts of the United Kingdom”.
How the OIM will be doing that and how it will be defining competition is questionable.
Clause 31(8)(b) is very worrying and goes to the heart of why so many noble Lords are taking part in this debate. Clause 31(8)(b) states that the OIM will be reporting on an annual basis about,
“the practical implications of differences of approach embodied in regulatory provisions, falling within the scope of this Part”.
This goes to the heart of what devolution is. Devolution is allowing decisions to be made within different component parts of the United Kingdom, potentially taking a different approach that might meet the objectives that they have set that have been endorsed by the people in those countries through democratic elections. The OIM, under this legislation, will be asked to report on the practical implications of the “differences of approach”, not necessarily on the regulations themselves or on the changes to regulations. But what does “differences of approach” mean? If I were a Scottish or a Welsh Minister, or a UK Minister acting on
behalf of England, I would say, “I think our approach to meeting this legitimate policy aim is the correct one”. So what does that mean as far as the OIM is concerned?
This leads on to the next point about why there is concern. As my noble friend Lord Fox indicated in previous groups, along with the noble and learned Lord, Lord Falconer, and others, one of the consequences of this is the ability of certain private enterprises to seek to challenge decisions that are likely to be made. It is very interesting that page 36 of the impact assessment, to which I again refer, says about the role of the CMA:
“Administrations, businesses, and consumer groups would be able to seek clarity on the operation of this system and raise concerns around specific decisions taken within it, to an independent body with a suitable remit and mandate to review these issues.”
What that means, as far as the Government’s intent is concerned, is that a private enterprise, which would be able to view a policy choice made within a devolved competence, would be able to ask the OIM to seek clarity, as it says, on the operation of this system and raise concerns.
This brings the CMA into a wholly different situation. Since the whole of the impact assessment of the operational view is hypothetical, my final question to the Minister is hypothetical. What on earth is the incentive for a devolved Administration ever to ask the OIM to carry out a report on any of their policies? In the absence of the OIM being a body that can resolve a dispute, ultimately, if there is a difference in approach on a legislative or regulatory proposal under the internal market, where the devolved Administrations know that the final arbiter is this Parliament on regulations brought forward by UK Ministers to disapply devolved Administrations, why on earth would the devolved Administration ask the OIM to report on it? There is absolutely zero incentive for them to do that at all.
If the issue is whether the devolved Administrations will then ask the OIM to report on a UK proposal for England, as our Constitution Committee report indicated, there is not a level playing field as far as the powers over legislation are concerned. Therefore, UK legislation can disapply devolved legislation, but the Bill will prevent any reciprocal action if, indeed, the OIM says, “Yes, I agree with Wales” and an Act for England will be acting against the interest of the market access principles, because ultimately this Parliament will decide whether that is the case. I really cannot see what the incentives are for the operation.
On a whole series of grounds—the cost and efficiency of the OIM, with £5 million and 55 staff working on hypothetical benefits; the lack of clarity as to the OIM’s role when operating in the devolved Administrations; the concern that the OIM will have a view of making a judgment on a devolved Administration’s different approach; and a lack of incentive—I hope that the Government will listen to our arguments about these amendments. If this is to progress, these amendments really need to be in this legislation.