At the Commons Treasury select committee meeting last Tuesday, David Loweth, head of central accountancy at HM Treasury, said the reduction of the Big Five to four raised issues that needed to be considered by the Competition Commission.
He told MPs: ‘It will either be ministers making the referral or approving officials to make the referral.’
This came hard on the heels of remarks made by financial watchdog chief, Sir Howard Davies, chairman of the Financial Services Authority, who said the consequent lack of choice was ‘most unfortunate’.
He said: ‘The competition authorities need to think about it.’
But later that day the Treasury’s press office was forced into issuing a ‘clarification’ of Loweth’s remarks.
A spokesman for the Treasury said: ‘Mr Loweth’s comments need to be seen in their proper context. He was talking about the broad range of issues the accountancy and audit review was considering.’
The spokesman added that the joint Treasury/ DTI review, headed by Melanie Johnson and Ruth Kelly, would leave no stone unturned and would be prepared to consider all options. ‘But the final recommendations are a matter for the review team and have not yet been finalised,’ he said.
But Loweth’s slip showed a referral to the competition authorities, irrespective of any European Commission approval for the proposed get-together between Deloitte & Touche and Andersen in the UK, was certainly on the minds of the review.
Insiders at the Commons certainly think Loweth made a gaff.
And it was clearly an issue Sir Howard Davies would like to see investigated.
The FSA boss said he now would have real difficulties finding an independent large firm to act for the authority if it required expertise not available inhouse.
‘One or two times we have been unable to find one,’ he said.
This was a view shared by Dr Vincent Cable, the Liberal Democrat’s trade and industry spokesman.
Cable first raised the issue in a parliamentary question to Melanie Johnson, the DTI minister, back in April, when the deal between Deloitte and Andersen was announced. ‘The minister expressed absolutely no interest in the idea, but seems to have been persuaded to change her mind,’ Cable said, adding that there appeared to be a ‘lack of joined-up government’.
Cable was in favour of an inquiry, and predicted that if the Competition Commission were to look at the Big Four market, it would recommend one of the firms would be broken up.
‘Some break-up is called for and long overdue,’ he said.
But the Big Four will have to wait until the end of the month to get a clear idea of government thinking.
The joint review team includes Sir John Bourn, head of the National Audit Office, and Mary Keegan, chairman of the Accounting Standards Board.
And both have given evidence before the Treasury select committee, though neither hinted at a competition inquiry. Of course, the question still remains – which firm could be broken up?
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