Leading Article: For once, tough words must be matched by action

THE CHANCELLOR and Stephen Byers, trade secretary, have announced a new tough, independent, hard-hitting mergers and competition policy. It could be this Government's most important commercial measure. It could also be the least important.

Most important because, if the Government means what it says, Britain will at last have a fair trade apparatus to match the free trade policy that it has embraced with such enthusiasm in its fiscal and monetary policy.

It could also be the least important policy, because so far we have had a great many words threatening action against restrictive traders and promising ruthlessness of investigation. What we have yet to see is a new apparatus in action that really would reduce prices and put caution into the eyes of would-be monopolists and cartel operators.

That matters, because, in any deregulated market, rules are essential for fair and open competition.What is needed to ensure that they are kept by the players is not so much constant whistle-blowing by the referee, but fear on the part of the players that at any moment they may be sent off .

So far, it has to be said, the Labour Government's record has been far from reassuring. It has embraced, as the Chancellor did again in his Budget speech, the rhetoric of encouraging small businesses and entrepreneurship. But in its relations with business itself the Government seems almost obscenely ready to curry favour with the big battalions, such as, most notably, Rupert Murdoch.

Nor, despite the years of Thatcherite and now Blairite deregulation, can it be said that the British consumer has benefited in terms of lower prices. The cost of too many goods, including cars, food and clothes, remains far higher here than the US and most of continental Europe.

No competition policy can of itself make an economy competitive, and it was quite wrong of Gordon Brown to imply on Tuesday that it could. But it can prevent the worst distortions. The Government's new competition bill, announced last year, should help. Its determination, stated yesterday, to increase by a quarter the resources given to the Office of Fair Trading to investigate cases of alleged unfair pricing and competition, is also a good sign of intention, although hardly overwhelming in impact.

Still more important, potentially, is Stephen Byers' announcement that the Monopolies and Mergers Commission (or whatever its replacement is called) will be freed of political control and left to operate mergers policy, as the Bank of England does monetary intervention. Sadly, the legislation will not be introduced until the next parliament.

So far, so good, in principle. Now let us hope that we see some tough action to go with all these tough words, by a Government that claims to have the interests of the consumer at its heart.