Clause 1 — Office of Fair Trading

Part of Orders of the Day — Enterprise Bill – in the House of Commons at 5:15 pm on 30th October 2002.

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Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry) 5:15 pm, 30th October 2002

I was listening, but the examples did not appear relevant.

I want to consider important sources that were cited in the House of Lords, including the Cadbury report. The Minister will claim that the report referred to public limited companies, but it is nevertheless relevant. It stated:

XThe chairman's role in securing good corporate governance is crucial. Chairmen are primarily responsible for the working of the board, for its balance of membership subject to board and shareholders'— they will not exist, of course—

Xapproval, for ensuring that all relevant issues are on the agenda, and for ensuring that all directors, executive and non-executive alike, are enabled and encouraged to play their full part in its activities . . . Given the importance and particular nature of the chairman's role, it should in principle be separate from that of the chief executive."

The principle is vital. The report continues:

XIf the two roles are combined in one person, it represents a considerable concentration of power".

After that report, the Hampel report was published in 1995. It was established to review the Cadbury code. It states:

XThe chief executive officer's task is to run the business and to implement the policies and strategies adopted by the board. There are thus two distinct roles".

The report continues:

XCadbury recommended that the roles of the chairman and chief executive officer should in principle be separate . . . We agree with Cadbury's recommendation and reasoning, and we also note that in the largest companies there may be two full-time jobs . . . Our view is that, other things being equal, the roles of chairman and chief executive officer are better kept separate, in reality as well as in name. Where the roles are combined, the onus should be on the board to explain and justify the fact."

In the case that we are considering, the onus is on the Government to explain and justify the fact"

We know from the advertisements in the Sunday newspapers that the Government will appoint a strategic board. As the Minister said, it has already been decided that Sir John Vickers will take the post of chairman and chief executive, if the Government have their way. I am sure that Sir John Vickers is an excellent man. I do not know him, but he attended my college in Oxford, and that must be a recommendation, although he is younger than me. However, the question remains: should all the powers be vested in one person?

If I could call on one person to pray in aid the idea that the powers should not be vested in one person, that person would be the Minister. There is certainly a great deal of confusion in the mind of the Government on this matter. In Committee, she said that the Director General of Fair Trading

Xcurrently has a wide range of functions in the areas of competition and consumer protection, many of which are being reformed in the Bill. The Government believe that in the light of the reforms, it is no longer appropriate for all those powers to be vested in one individual."—[Official Report, Standing Committee B, 16 April 2002; c. 12.]

Perhaps the Minister will explain how it is that she seems to have changed her mind.