Schedule 1 - The Office of Fair Trading
Enterprise Bill
11:45 am
Dr Vincent Cable (Twickenham, Liberal Democrat)
I agree with the spirit of the amendment, but I am not sure whether 50 per cent. is necessarily the correct proportion or whether we should define industry and commerce in a narrow sense. I agree with the spirit for two reasons, which have already been given by the hon. Member for Eastbourne. First, the people who sit on the board of the OFT will be powerful people. They will make major decisions that directly affect the lives of tens or hundreds of thousands of people who are affected by merger decisions, as well as millions of consumers. Secondly, it is important that the OFT does not become just a parking place for ex-civil servants. I do not mean any disrespect to ex-civil servants, as they are undoubtedly admirable people, but such a situation would be wrong. I was slightly worried by the tone of the Under-Secretary's reply on clause 1, in which she seemed to emphasise the closeness of the OFT to the spirit and structure of the civil service. If the OFT develops in that way, it will not be right.
Following the line of argument of the hon. Member for Eastbourne, OFT members will need to be wide in their capabilities and several qualifications strike me as necessary. They must have some understanding of the real world, and I hope that when the hon. Gentleman specified including 50 per cent. from industry, he was not talking only about those from the employers' side. Ex-trades unionists with experience of industry may have something to contribute and if he meant to include them, I would be much closer to his point of view. People who have an understanding of industrial and commercial issues from direct experience would be desirable. One should not be unduly prescriptive about that, and financial and economic journalists are often some of the best-qualified people to make such judgments. Therefore, a first requirement should be an understanding of the world of commerce and industry.
However, that is not all. Members of the OFT will have to have a good understanding of industrial economics, which is a highly technical subject. It is important to follow what has happened in the United States Department of Justice and the European Commission. Some thinking has become very sophisticated, in terms of both legal and economic principles. I shall not bore the Committee with an hour-long dissertation on the Hirschman index and other hot topics in the competition policy world, but members of the OFT will have to be familiar with demanding literature on such subjects. They must be familiar with business and understand industrial economics.
OFT members must also have a political feel—they must be not politicians, but people who understand that when a merger decision is taken it affects many people down the supply chain. Even though the terms of reference will be narrowly drawn to encompass the competitive effects rather than the wider national interest, OFT members must be sensitive to the problem. They also need to understand the way in which decisions will affect financial markets, so we are talking about people who are qualified in a wide variety of subjects.
The amendment is useful because it flags up the fact that the OFT members are important and must be able to understand both the academic and practical aspects of complex business decisions. They are unlikely to be found in great numbers in the civil service machinery, although some extremely able civil servants may well come forward. I support the amendment in principle, but I am open to suggestions about how it could be couched in slightly different language if that helps.