§ 2.45 p.m.
§ Lord Dean of Beswick asked Her Majesty's Government:
§ Whether they are satisfied that their plans to increase competition in the gas supply industry will be to the benefit of all consumers.
§ Minister of State, Department of Trade and Industry (Lord Strathclyde)My Lords, we are satisfied that competition and choice are a spur to efficiency and better tailored standards of service. Their principal effect is likely to be a strong downward pressure on costs and prices for the average consumer. The Government and Ofgas have set out, in a joint consultation document, proposals to enable the benefits of competition and choice to be brought to the domestic sector in an orderly manner.
§ Lord Dean of BeswickMy Lords, I am grateful to the Minister for that reply. I am rather surprised that he referred to a joint consultation paper—this is the first I have heard of it—prepared by Ofgas and the Government themselves. Will the Minister confirm that Ofgas is supposed to be totally independent of the Government and British Gas? Does he agree that the recent appearance of Miss Spottiswoode, the Director-General of Ofgas, before a committee of the other place on her role in the situation and where she stands concerning the protection of the consumer suggests that the distance between them should be as far as possible?
As regards the Question on the Order Paper, the Minister must be aware of the serious concern of the groups representing the consumer at the lower end of the scale? They say that under the present plans the exercise known as cherry picking may take place where the most lucrative parts of providing gas and energy are syphoned off, leaving the expensive parts to be carried by people at the lower end of the social scale?
§ Lord StrathclydeMy Lords, I do not agree with the noble Lord. It was right that there should be a joint consultation document. It was published on 9th May by 1580 my colleague, Mr. Tim Eggar, the Minister for Energy, and the Director-General of Gas Supply. That consultation document makes a number of comments, requests and various observations. I hope that the noble Lord will put those comments forward. As regards cherry picking, it is a fact that the managing director of Western Gas has said that he is confident that he can give domestic customers something like 10 per cent. off their current British Gas bills. That is a very optimistic note.
Lord Stoddartof SwindonMy Lords, is the noble Lord aware that I can remember the arguments against competition that were put forward when the Gas Bill was going through this House? It will be interesting to know why the Government have changed their mind. I ask the noble Lord two questions: can we have an assurance that there will be a unified gas price throughout the country, or will competition mean that some people in one part of the country will be paying more than people in another part of the country for the same product? Secondly, is it true, and does the Minister agree, that it is good for the industry and the country that about 25,000 people in the gas industry will be sacked as a result of government policy?
§ Lord StrathclydeMy Lords, competition has proved itself in so many areas since 1979 that I find it strange that the noble Lord should question it as regards British Gas, particularly since the more commercial aspects of that enterprise which have been subject to competitive pressure have led to a substantial reduction in prices. The noble Lord will know that in 1986 Parliament decided that there should not be a unified gas price and there has never been a commitment to change that. The noble Lord referred to 25,000 people being sacked. Clearly he knows a lot more than anybody else and I dispute that figure.
§ Lord EzraMy Lords, I have been in competition with British Gas for most of my working life. Nonetheless, does the Minister agree that British Gas has supplied the domestic consumer on an excellent basis and that the company has a good record? Is the Minister aware that it has a good back-up service and that it deals instantly with any risk of the escape of gas? Can the Minister assure us that if deregulation is extended to the domestic gas market the service will be at least as good, if not better, than presently provided by British Gas?
§ Lord StrathclydeMy Lords, with the substantial shake-up of the energy market more and more people will be able to follow the noble Lord's example in competing with British Gas and providing substantial benefits to all types of consumer. I join the noble Lord in congratulating British Gas on its record over recent years in providing, generally speaking, a fine, efficient service and particularly on its safety record. Equally, I join the noble Lord in saying that safety is of paramount importance. Broadly, the present system for handling gas emergencies will continue.
§ Lord Morris of Castle MorrisMy Lords, can the Minister give the House any idea of what the likely 1581 restructuring costs of the operation will be? If, as many experts advise us, the costs will be huge, who will pay them?
§ Lord StrathclydeMy Lords, I have no details of the likely costs. That is the kind of investigation that may well take place over the course of the next few months. We can then make decisions on how to proceed.
§ Lord Taylor of GryfeMy Lords, does the Minister agree that although the regulation of the industry is important in terms of promoting competition and support for the consumer, the gas industry, and British Gas, is now essentially an international operation? Does the regulator take account of the international role of the gas corporation when making decisions? Is it not time that we looked at the role of regulators in general?
§ Lord StrathclydeMy Lords, I am glad to have the noble Lord's general support for the principle of competition. He is right in the sense that this is a market that is regulated by the regulator. The regulator looks at the domestic market and has to look at the players who operate within the domestic market. There is nothing to stop those who operate in the domestic market bringing their international businesses to the regulator's attention.
§ Lord Dean of BeswickMy Lords, as usual the Minister has given some very forthright answers today. Indeed, I recall that last week he gave some forthright answers in an attempt to affect the result of the European election. Does he bear any responsibility for the devastating effect that that had on the Government?