Privatised Industries: Regulators (Hansard, 28 June 1994)

§ The Minister of State, Department of Trade and Industry (Lord Strathclyde)
My Lords, the Government have no plans to establish such a commission.

§ Lord Taylor of Gryfe
My Lords, is the Minister aware that the first appointment of a regulator was 10 years ago and since that time the regime of regulation has spread to gas, water, telecommunications and now railways? Is he aware that 20 per cent. of the total GDP of the United Kingdom is now under regulators? Has the attention of the Minister been drawn to a statement by the chairman of the Trade and Industry Committee in another place that: Government by regulation has … become a substitute for policy making, with crucial decisions left in the hands of unaccountable and unelected regulators"? Is it not time that we had a look at the working of this regime to consider its impact on British industry as well as on the economy of the country?

§ Lord Strathclyde
My Lords, the noble Lord may well believe in government through regulation, but we on this side of the House believe in government through Parliament. That is what we have done. The regulators exist only as a result of Acts passed through both Houses of Parliament. Regulators are accountable. They can be called by Select Committees. Their decisions are liable to judicial review, and are also subject to public, media and other parliamentary scrutiny. The fact is that the whole privatisation process has been extremely successful, much to the embarrassment of noble Lords opposite.

§ Baroness Seear
My Lords, in view of that reply, is the Minister telling us that he is going to withdraw the deregulation Bill?

§ Lord Strathclyde
My Lords, as the noble Baroness knows, that too is—at least at this stage—going relatively smoothly through Parliament.

§ Lord Skelmersdale
My Lords, while I agree with my noble friend on the need for regulation when there are monopolies, is he telling the House that life in the regulatory garden is beautiful? Does he recall Sir Bryan 648 Carsberg writing in an article in The Times about this time last year that regulators need clear concepts and that this, helps the regulatee to anticipate: the direction of future decisions and this creates confidence in the regulatory arrangements and an ability to plan more effectively for the future"? Is not that what is needed on all sides of this particular argument?

§ Lord Strathclyde
My Lords, I entirely agree that regulators need to have clear concepts. I believe that they have discharged their duties extremely successfully to protect consumers' interests, including in relation to prices charged: for example, in the case of domestic gas prices, the real cost of British Telecom services and electricity prices.

§ Lord Dean of Beswick
My Lords, is the Minister not aware that the figures quoted by my noble friend Lord Taylor of Gryfe indicate that there is a danger of the number of regulators catching up with the number of quangos? That would be very hard to sustain. Will the noble Lord consider substituting for any form of inquiry a procedure of appeal against decisions? The Minister said only last week that the Government and Ofgas are producing proposals following a consultation exercise. If that is the case nobody will have the right to challenge those proposals. The people who carry out the service, who may be asked to do things which are detrimental to the consumers they are supposed to serve, should have a right of appeal which can be exercised quickly if they feel that wrong decisions have been made.

§ Lord Strathclyde
My Lords, regulators cannot change the terms of a licence without consulting the licensee. If the licensee disagrees the case can be referred to the MMC for its decision.

§ Lord Cochrane of Cults
My Lords, does my noble friend agree that there exists within at least Ofgas an excessive regulatory zeal? The noble Lord, Lord Dean of Beswick, referred to the consultation document which refers to the possibility of requiring gas meter readers—I should have thought that that was a fairly harmless breed—to be individually approved by Ofgas. Will the Minister assure the House that such a proposal will not be allowed to come into force in the current deregulatory climate?

§ Lord Strathclyde
My Lords, as my noble friend wisely recognises, it is a proposal in the consultation document. By definition it is open to consultation. I shall certainly pass on his words to my friends in the department.

§ Lord Holme of Cheltenham
My Lords, does the noble Lord agree that there is a case for more focused regulation? Is it not slightly absurd, for instance, that both the Office of Fair Trading and Ofgas referred British Gas to the MMC? Would not one of the reasons for a review be to see whether we could have industry-specific powers confined to the specialist regulators, with competition policy dealing with such issues as market dominance?

§ Lord Strathclyde
My Lords, as the noble Lord will know, the powers of the sectoral regulators and the 649 Director-General of Fair Trading run concurrently on a number of those issues. However, we believe that the current system is the right one. We do not envisage a need for a general review or reform of utility regulation. The system is generally working satisfactorily.

§ Lord Peston
My Lords, has the noble Lord ever reflected on the powerful figures who have rights to interfere with private enterprise? When did it become Conservative doctrine that such people and such interference should be favoured? I should have thought that to almost everyone else it sounds like socialist doctrine, in particular if one considers some of the people involved and what they do. I must admit that I rather approve the doctrine, but I am amazed that the noble Lord is so supportive of those people.

§ Lord Strathclyde
My Lords, I am delighted that the noble Lord seems to be happy with the privatisation process of the past 15 years. Of course we have regulators. We have regulators when we believe that there is a monopoly situation and therefore a clear case for outside regulation.

§ Lord Peston
My Lords, the noble Lord misses the point. None of us is keen on privatisation. If we are to have privatisation, does the noble Lord realise that we favour strong regulatory interference? I should like to hear from the noble Lord, on perhaps another occasion —the subject is worth debating philosophically— whether he can demonstrate that there is anything within the history of the philosophy of his party which justifies those regulators?

§ Lord Strathclyde
My Lords, the justification is plain for everyone to see. Where a monopoly has been created out of the public utilities it is absolutely right to set up a regulatory system where there is no competition. On the other hand, where there is clear competition—for instance, in the commercial markets for gas—the regulator has no powers.

§ Lord Wyatt of Weeford
My Lords, Sir Bryan Carsberg has been referred to already this afternoon. Is the noble Lord aware that his main endeavour is to ensure competition within the framework of the privatised industries? Therefore, it is not necessarily a socialist doctrine.

§ Lord Strathclyde
My Lords, the noble Lord is absolutely correct. Professor Carsberg has done his work extremely well. As Director-General of Oftel, and now as Director-General of Fair Trading, his main role is to increase competition.

§ Lord Ezra
My Lords, perhaps I may—

Noble Lords
Oh!

§ The Lord Privy Seal (Lord Wakeham)
My Lords, I believe that the feeling of the House is that we ought to move on.