§ Lord Borrieasked Her Majesty's Government:
Whether they propose to make binding the rulings of the Monopolies and Mergers Commission when the commission arbitrates in disputes on prices between a utility company and a specific industry regulator.
§ The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)My Lords, my right honourable friend the President of the Board of Trade announced on 30th June an interdepartmental review of utility regulation. The review will look at the existing framework of regulation against guiding principles of transparency, accountability, consistency and predictability. The relationship between the Monopolies and Mergers Commission and regulators will be considered in that light.
§ Lord BorrieMy Lords, I thank the Minister for his Answer. I welcome the review of utility regulation. That is overdue and concerns a subject that the previous government sadly neglected. Does the Minister agree with me that the present position is most unsatisfactory? I refer to recent examples of Northern Ireland Electricity and British Gas, where the regulator asked the monopolies commission for a thorough examination taking a period of six months. Witnesses were examined and a report was published. However, the regulator then seemed to want to reject the verdict of the umpire. Would it not make more sense if the conclusions of the monopolies commission were fully binding and effective?
§ Lord Simon of HighburyMy Lords, I thank the noble Lord for that observation. While I am unwilling to enter the lists, as it were, with probably the most experienced umpire we have in the House on issues of this nature—I record my grateful thanks for the work the noble Lord has done in the area of competitiveness—this is precisely the issue that we think the utility review should look at; namely, the relationship between the commission and the regulator, and indeed the regulator and the licensee. I certainly would not want to invoke television replays of the umpire's decision, but we need to think carefully about where accountability lies.
§ Baroness Oppenheim-BarnesMy Lords, I of course defer with great respect to the noble Lord, Lord Borrie, as the great expert in these matters. Is it 1506 not a fact that, despite what the Minister has said, the Secretary of State could still overturn the monopolies commission ruling if he had a mind to do so?
§ Lord Simon of HighburyMy Lords, it is clear that the relationship between the commission and the regulator allows the regulator to apply the commission's decision in the way which is best fitted to ensure competition. As regards prices, some are already fixed, as in the case of the water industry, but others are free.
Lord RentonMy Lords, if and when there is devolution in Scotland of the kind which we understand is envisaged, what will happen if the utility company is situated in Scotland and the regulator is a nationally appointed official? In particular, which Secretary of State might have any responsibility for considering the outcome?
§ Lord Simon of HighburyMy Lords, we would prefer to leave the definitive answer to that question to the Statement when we shall hear about Scotland. Of course, we must all remember that we are always trying to define the relevant market here.
§ Lord SkelmersdaleMy Lords, the Minister mentioned predictability as one of the parameters of this internal investigation of the DTI into the role of the regulator. Does predictability mean that there will be a single umpire, or is that not part of the department's thinking?
§ Lord Simon of HighburyMy Lords, that is another matter that should be decided by the review. However, I believe that it is clear in principle from what I have said that differentiated regulation is appropriate in differently dynamic markets. As we have freed up the system for the utilities, markets are developing in different ways and therefore different regulatory decisions and processes are necessary at this stage. That is a statement of principle and approach to regulation; let us wait until we have the review.