FUNCTIONS OF NATIONAL AND REGIONAL COUNCILS

HC Deb 04 July 1972 vol 840 cc445-51

Mr. Palmer

I beg to move Amendment No. 21, in page 10, line 17, after 'tariffs', insert the terms and conditions of bulk supply tariffs". The Amendment is very important because it deals with one of the primary duties of a regional consumers' council. The Clause says: A Regional Council shall be charged with the duties (a) of considering any matter affecting the interests of consumers of gas in their area (and, in particular any matter relating to the supply of gas, including the variation of tariffs, or to the supply of gas fittings or the provision of other services and facilities)". Experience is showing that the question of tariffs bulk very large in the discussions of the consultative councils, or consumers' councils as they are to be from now on.

It has often been said about the consultative councils that they were the weakest feature of nationalisation Statutes. It has been said, very unkindly, that it was largely a question of a body of excellent ladies and gentlemen coming together and drinking an occasional glass of sherry with the chairman of the gas board or electricity board in question. If at one stage it was a valid criticism of consultative councils that they were not very lively, that they did not have very much cutting edge, I do not think that has been the experience in the past few years. That is because increasingly with inflation, the councils are interesting themselves, as they should, more and more in the question of the price charged by the gas industry to the consumer. It is obviously the most important responsibility of such a council to make certain that the price charged for the commodity is fair, that the consumer is not being overcharged and that the price is compatible with an efficient service.

I do not think anyone would disagree with my argument that arguing, or if necessary quarrelling, with the board or the corporation about the price to be charged is a primary duty of a consultative or consumers' council. That is the point of the Amendment. It was tabled because of a certain revelation when we were discussing the Clause in Standing Committee. To make my point, I am obliged to quote from what the Minister said. By that stage in our discussions the hon. Gentleman had taken over from his predecessor, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who came to an untimely political end. I shall quote the actual words used by the hon. Gentleman on 25th April, replying to my hon. Friend the Member for Newcastle-upon-Tyne, West (Mr. Robert C. Brown).

The hon. Gentleman said that consultative councils might discuss many subjects. He went on to say: On the subject of supply contracts as opposed to tariffs, some have been negotiated which were the commercial responsibility of the Gas, Council in the past and will be the responsibility of the Gas Corporation. He said that some of these large bulk supply contracts—I will come to the question of the wording in a moment because it is important to our Amendment—have contributed to the amortisation of the trunk lines system which has been introduced into the country. No one is disagreeing with this.

At that point I intervened. If I might be allowed to quote my own words, I said: The hon. Gentleman is on a very important point here. I am a little alarmed. Is he suggesting that certain bulk consumers would have their own private contracts and the terms of those contracts would not be available, even on a confidential basis, to the national consultative councils? The hon. Gentleman did not beat about the bush. He was straightforward as he always is. He said: Certainly. And, of course, they should not be. Nor are they able to be made known to an hon. Member here. The competition that exists for certain bulk supply contracts is very definite and very considerable. This is the sort of commercial aspect that I should have thought that the hon. Gentleman opposite would have desired in order to negotiate the best prices. He went on to say: This is a matter of commercial confidence, and it would be quite wrong to run the risk of such information being widely known."—[Official Report, Standing Committee B, 25th April, 1972; c. 786.] This came as a great shock to us because we were assuming, whatever the hon. Gentleman may say about these consultative councils, that commercial companies were the same as they always were. In fact, they have been growing in status and importance, and they are more and more interested in the price being charged for gas. In future, with one centralised corporation running the whole show, probably in London, it is important that both the ordinary domestic consumers and the industrial consumers should have a strong voice on tariffs.

We are arguing—this is the reason for putting down the Amendment—that it is not fair to the consumer councils that certain information about tariffs should be concealed from them. I accept the point that there is probably a case for confidentiality, but that case can be over-stressed. In the Statutes for the nationalised industries, and in this case the electricity board, there is a provision which forbids the electricity board charging one consumer of the same class differently from another. It must not show "undue preference".

I am always in some doubt as to how the provision against undue preference in the matter of tariffs is reconciled with the fact that apparently there can be special tariffs which are secret in their nature, which are not known from one consumer to another and certainly not known to the general public. It is fairly certain that the consultative councils are not going to take very kindly to that state of affairs.

Mr. Emery

Consumer councils.

Mr. Palmer

I am sorry; old habits persist. Wherever I say "consultative council" please read "consumer council" to avoid my saying each time "consultative councils or consumer councils as we now know them".

It is a matter that wants looking at. At any rate, the Minister should favour the House with some facts and figures about the number of special tariffs or special quotations for the supply of gas. Are they diminishing or are they likely to be greater in future? It is no good talking grandly about responsibility of the consumer councils for checking on fair prices for gas and then saying that certain areas will be concealed from them.

2.15 a.m.

We are advised that there is some difficulty over the wording of the Amendment. The Under-Secretary of State, when talking about special contracts for the supply of gas, referred to them as "bulk supply contracts", and I have also used that description in my public utility experience. To me, a bulk supply tariff is a wholesale tariff, where one is taking the energy in very large quantities and therefore gets a special quotation. However, we are advised by the gas industry that the term "bulk supply tariff" is used in the industry to describe tariffs charged under the supervision of the Gas Council to the individual gas boards, taking one with another.

I am a little puzzled by this information because there is, in the gas industry as it is, nobody similar to the Central Electricity Generating Board, but certain financial arrangements were made concerning charges between one individual board and another. Apparently it is the supply to a gas board which is normally referred to as a bulk supply tariff for the kind of contract I have been referring to. The industry uses it in the sense of a special price or special supply contract.

But I do not think the matter greatly important. Reasonable people including even lawyers would interpret the words of the Amendment in an intelligent fashion. In speaking of bulk supply tariffs we are referring to prices to be charged for the supply of gas outside the normal scheduled price. These are special prices to be charged to large consumers, usually industrial consumers.

We think it wrong to establish consumer councils in a reorganised industry with a great blare of trumpets and then say that there are areas they must not look at. Members of consumer councils are responsible people and can be trusted to treat special information in confidence and rationally. It is not good for equality of treatment as between one consumer and another to have no forum where their representatives can ensure that there is fair treatment all round. More open discussion of these matters in consultative bodies will assist relations between the industry and the public generally and between the industry and its industrial and commercial consumers.

Mr. Garrett

On this subject I take a view which is different from that taken by my hon. Friend the Member for Bristol, Central (Mr. Palmer).

If we lived in Utopia this would be a good Amendment. But we are dealing with a consumers council. It would be impossible to keep any degree of confidentiality relative to the different rates paid under the bulk tariff. Something new is not being introduced. Many years ago, when the National Coal Board had a greater and wider supply of fuel, there were separate agreements reached with private industry relative to price per ton. It worked well.

There must be variations in the bulk supply. There must be variations in the cost of supplying the gas to a new factory from the grid. That factory may be one or two miles away from the grid. Perhaps different pipes are required for different pressures. Valves may have to be inserted in different sections of the pipeline. All those would be matters of variation relative to the contract to purchase gas from the new Gas Corporation.

I do not support this Amendment. I could have given my reasons in greater detail. On this occasion the Minister will be pleased to have at least one ally on his side.

Mr. Emery

I thank the hon. Gentleman for his speech and for his extreme pleasantness in not pressing to speak on the first Amendment on fuel policy. He sat through a lot of that debate. I am grateful that he restrained his desire to speak so as to allow progress to be made.

There is a certain amount of confusion about this Amendment. It reflects considerable semantic problems on the part of the mover. He explained the difficulty in terminology. In the gas and electricity industries "bulk supply tariff" means the tariff at which the central body—the Gas Council or the CEGB—sells gas or electricity to area boards. Under a unitary organisation there will, clearly, be no bulk supply tariff in that sense.

The problem is that the hon. Gentleman was coming back to the interpretation of the phrase "bulk supply tariff" as tending to mean that tariff applicable to a special, contracted supply to a very large consumer. I accept that that is what he means.

I do not wish to argue against this Amendment only because of its wording. Even if it were properly drafted I would not be able to accept it. The probable problem is that the special arrangements are not tariffs in that sense. There is not, under the existing law or the Bill, any obligation to publish them; nor could there be any such obligation without breaching commercial confidentiality.

Although the Amendment, interpreted as relating to special agreements, would not place a direct obligation on the Gas Corporation to disclose the terms, there would be a clear implication that the National Council should not be left in the position of having no information about that which it had a duty to consider.

The position is that disclosures on a confidential basis to the National Council would not be satisfactory. Let us follow the example of the hon. Member for Wallsend (Mr. Garrett) in his suggestion that we could not keep this matter absolutely confidential, and let us look at a situation in the Potteries, for example, where one of the members of the consultative council is associated with one of the china firms. Could he be expected to be entirely impartial if he had knowledge of specially negotiated agreements for supplies of gas which might in some ways be different from his competitors? This is not necessary for the correct working of the consumer councils. It is not the big boys who need to be defended, it is the smaller people about whom I am concerned. The big boys can look after themselves.

What is reasonable is that the regional councils should be able to expect to be informed of the general principles on which special contracts are negotiated. This will suffice to enable them to protect the interests of consumers generally. I am willing to give an undertaking—there is nothing new in this—that the consumer councils will be informed of the general principles on which these contracts are negotiated. That would go a long way to meeting the objections of the hon. Member.

Mr. Palmer

I am grateful to the hon. Member for those remarks. Is he outlining the present practice or something which is an advance? It seems to be an advance.

Mr. Emery

I have to say in all honesty that I cannot be absolutely sure. I believe it is present practice. What I am willing to say is that I would want to ensure that it was the practice in the future.

Mr. Palmer

I said in moving the Amendment that there were certain problems about defining bulk supply tariffs, but if the Minister had accepted the principle of the Amendment I am sure that the wording would not have presented a great deal of difficulty. He is not prepared to do that, and he and my hon. Friend the Member for Wallsend (Mr. Garrett) have raised objections with which I cannot agree. There has to be much more diplomacy in these operations. Nothing the Under-Secretary said detracted from that. This kind of arrangement breeds suspicion.

Nevertheless, in view of the Minister's assurance that the principles underlying special tariff arrangements will be explained to the consultative councils, we do not wish to press the Amendment. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.