My Lords, I rise to deal with an amendment in relation to what I would call the broad powers of making this Act work. Whether we call it regulation or self-regulation, there has to be a system of compliance. We looked at one, disclosure, and earlier we looked at the CMA’s role. Now it is the CAT’s turn and, before we conclude tonight, we will look at the role of the High Court and the Court of Session on enforcement against the devolved legislatures.
I was going to say something about the Minister’s remarks relating to what he sees as the role of the CMA, but the noble Lord, Lord Lamont, has dealt with this. I think it is only fair to the Minister to allow him to come back and explain what he said, in slightly more detail, about the role of the CMA. Obviously, the role of the CMA relates very closely to the role of the CAT.
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This amendment tries to make sure that the CAT is effective. Obviously, the reasons for that are the whole purpose of making this an effective regime: avoiding waste, with funds directed to the right purposes, and with complete compliance. There are so many examples where self-regulation, without it being properly supervised, have been a disaster, that I need not go into them. Of course, there is the regime that we are required to operate under the TCA. It seems to me, that the really good way of making sure that the CAT is effective is to allow the CMA to have standing to bring cases before it.
To appreciate that, it is necessary just to say a few words by way of background. First, as is accepted I think on the face of this Bill, the CMA will have nothing more than advisory powers, although one would hope that its advisory notices would be accorded great respect by those who were giving subsidies or seeking them. It is very important that there are cases that show where the lines are, so it is very important that there are cases that come to the CAT to act as a deterrent against improper, impermissible and wasteful subsidies.
Secondly, there will be the need—and we have touched on this, and so many parts of this Bill interlock—for authoritative interpretations of what the subsidy control principles mean. I could talk about that now, but as I am coming back to that later this evening, I will not, because I can see the pressure of time.
Thirdly, we need to look at enforcement. As the Minister said, there is a legal duty, but public authorities quite often do not comply with their legal duties unless there is strong enforcement. It is quite remarkable how this Government have resisted enforcement in relation to its legal duties, in relation to climate change. Saying that we do not want effective enforcement will, to my mind, drive a coach and horses through this Bill. The mechanism for enforcement here is that parties have to be able to bring private proceedings.
I notice from the impact assessment that it is thought that 23 cases a year would be brought, in a range of 15 to 30. Those are the figures that have been worked through. What I simply do not understand at all is how it is thought that so many cases, or any cases, will be brought. Enough has been said about the cost of lawyers that I do not think I need add to that. Also, there is the rule in all litigation, and this is not different, that if you lose you pay the costs of the other side. As the author of the impact assessment accepts, and it is perfectly obvious, no one is going to take the risk of an adverse costs order, or spend money on his own lawyers, unless there is a real chance of the recovery exceeding what he is going to get and a bit more to take care of the risk. Otherwise, self-enforcement just does not work.
In the Sherman Act and the various anti-trust measures, the Americans provided for triple damages. One knows how effective, as one hears from time to time in newspapers, this is as an incentive to lawyers to make their services available for this kind of action. In the UK, and elsewhere in the world now, we have third-party litigation funding, but that is unsustainable unless the third-party litigation funder sees the prosect of significant recoveries.
What I would like to know from the Minister, when we turn to evaluate the effectiveness of this, is what the estimated amount of the recoveries is in relation to the costs—I appreciate that he may not be able to give me those figures now—and how the amount likely to be recovered is estimated. Will there be damages? Will local authorities that grant subsidies wrongly, which has disadvantaged one public body over another, have to pay damages? What are the amounts of the recovered subsidies likely to be? Unless one does a hard and fast financial calculation, it is in my view illusory to rely on private enforcement.
If we translate this to other industries, we see that private enforcement is quite effective in the copyright industry, where businesses tend to protect themselves and make significant recoveries—but that is a careful business calculation, and what is absent at the moment is any careful business calculation. The really effective way of enforcement is to allow the CMA to go to the CAT and say, “We think there’s a problem here. We want to enforce it against someone.”
There is a second consideration. Private individuals are not only influenced by money. They may be influenced by political or other considerations so that they do not want to challenge something that is obviously wrong. It must be in the public interest for an independent person—here, the CMA—to be able to challenge such a scheme.