Clause 40 - Intervention by Secretary of State
Enterprise Bill
5:30 pm
Mr Nigel Waterson (Eastbourne, Conservative)
I beg to move amendment No. 66, in page 26, line 7, leave out from ''56'' to end of line 8.
The amendment is quite important and it raises two issues. One is of principle and the other of uncertainty.
The amendment was raised by the joint committee of the Law Society and the Bar, which was examining the legislation, and it raises wider concerns. As one can tell at a glance, subsection (3) refers to a ''public interest consideration''. Our next major debate—with your acquiescence, Mr. Conway—will be under clause 56, which is a convenient place to tackle the issues of principle relating to public interest.
The narrow point is in the words following ''section 56'' in subsection (3):
''or is not so specified but, in the opinion of the Secretary of State, ought to be so specified.''
As a matter of principle, we think that it is quite wrong to pass primary legislation that leaves a door wide open for the Secretary of State, should he experience esprit de l'escalier later, to think of some other basis to intervene. If such a door is left even ajar, it would make nonsensical the care that we lavish on Bills in these Committees. In this case, one could drive the proverbial coach and horses through it, if one were so minded.
It is wrong in principle to say that the Secretary of State should have the power to consider public interest considerations that are not listed in the legislation. Given the care and work that has been directed at drafting the Bill, and the extra care that must be attached to anything that has the phrase ''public interest'' in it, I would be surprised if the draftsmen had not already thought of other possible situations that could have been included. However, as it stands, the Secretary of State will be able to add a new public interest consideration, and will be able to do so in response to a specific or proposed merger, which brings me to my second area of concern.
In essence, a merger could be referred on new grounds that did not exist when the merger was conceived. That is the point about uncertainty. Companies in all good faith will start negotiations to merge their companies and spend a lot of time and money doing so without being sure that the goalposts will not be moved at some subsequent date by the Secretary of State. In other words, they could agree to merge on the basis of the provisions in the clause but, after expending a great deal of time, money and effort, discover that the Secretary of State has said that there will be an intervention on public interest grounds on the basis of something not set out in legislation.
I do not want to be repetitive, so I will not get into the definitions of public interest involved—we will come to that under clause 56. We think that the power is a dangerous one to give any Secretary of State, and that such uncertainty is bound to cause problems in the business community. The Under-Secretary has said more than once, in a number of different contexts and quite justifiably, that we need certainty in the way that the provisions are applied. The clause leaves an enormous lacuna in the legislation that can be filled at any time by any Secretary of State, possibly part of the way through a merger. We feel strongly about the provision, and for us to be satisfied, the Under-Secretary is going to need a pretty good justification for it.