Introducing the Green Paper on restrictive practices(*) last week, Lord Young — perhaps carried away by his own enthusiasm and eloquence — managed to get things badly wrong when he declared that many professions, including estate agency, “enjoy a carte blanche exemption from restrictive trade practices legislation”. With the greatest respect to an enterprising and energetic minister, this statement, so far as agency is concerned, is palpable nonsense. Mandatory fee scales for agency have long since disappeared and the professional societies’ rules of conduct for estate agency and valuation work have been properly registered with the Office of Fair Trading for some time.
Two contrasting views can be taken of the Government’s latest initiative in so far as it affects the professions. On the one hand it can be seen as an extension of the Thatcherite philosophy of competition into what have been described as the “cosy cartels” organised for the benefit of the middle classes. Having successfully taken on the unions and blunted their arrogance, this line of reasoning runs, the Tories must be seen to be dealing equitably right across the board, even though this means taking measures potentially unpopular with some at the very core of party support. Only a supremely confident administration could afford this radical approach. On the other hand the Green Paper can be seen as a first step in updating and simplifying a complex and outmoded structure first established to deal with the cartels prevalent in UK industry and commerce in the 1950s. The present law, largely centred on the Restrictive Trade Practices Acts of 1976 and 1977, is expensive to administer, capricious in operation and effect, and largely avoidable by those minded to circumvent it. The Government is determined that revisions to the law should be defined in terms of the effects which restrictive agreements have on competition rather than in terms of their legal form, thus bringing the scope of the law in line with its purpose.
But so far as agency and surveying are concerned Lord Young is pushing energetically and unnecessarily against an already open door. The only fee scales published by the RICS are those for building and quantity surveying work, but these are recommended and not mandatory. And in today’s sharply competitive agency environment, increasingly dominated by chains of offices run by banks, building societies and insurance companies, the emphasis is heavily on fee cutting: restrictive practices have no place here. This, for some, is the brave new world, but whether its climate is always beneficial to the public interest is debatable.
There can, of course, be no going back: the die is cast. Nevertheless the Conservative insistence that competition should be by price rather than by quality of service has its disadvantages. They may not be obvious in house agency, where the vendor, coming to the market only very occasionally, will have no loyalty to a particular firm: what he wants is a quick sale at the highest price for the lowest fee. But in the broader context of surveying services the recommended (not mandatory) scale had its place as a yardstick against which the general practitioner could measure his fees. More importantly, the scale provided a clear indication to clients of the level of payment appropriate to particular work. It is not without significance that in 1976 and 1977, when the Monopolies and Mergers Commission was investigating surveying services, there was overwhelming agreement among major clients — including government departments — that recommended scales should be retained as a basis against which negotiation could take place. Has so very much changed in the interim to make the Government’s rather abrasive approach essential? Or is more than a hint of a witch-hunt emerging?
(*) Review of Restrictive Trade Practices Policy (HMSO £5). See our issue of March 12 at p2.
