HC Deb 08 March 1979 vol 963 cc1623-30

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Jim Marshall.]

10.16 p.m.

Mr. Arthur Palmer (Bristol, North-East)

I wish to raise this evening, in the short time available on the Adjournment, the question of the refusal, in effect, of the south-western branch of the Gas Corporation to provide a supply of gas to would-be consumers in a road in my constituency called The Chippings, in the Stapleton ward of Bistol. I want to make to my hon. Friend the point that there are about 30 residents in this road anxious to take a supply. They read the advertisements of the Gas Corporation and, in their innocence, suppose that they can obtain supplies, but the Corporation, while admitting that there is an existing supply in adjoining roads, has said that the cost of extending it to The Chippings would mean a contribution of approximately £500 being required from each householder. The Corporation admits that such a fantastically large amount is impossible for the residents to find and I suspect that it is not particularly interested whether or not they find the money.

In any case, the Corporation is right to blush at its own effrontery. Why should a public corporation, able to raise money from the Treasury, or by loan with Teasury guarantee, expect citizens to provide capital free of interest when such citizens could invest that capital at the present high going rates of interest? The more one thinks about it, the more untenable becomes the position of the Corporation, because, after all, it is a public utility. In this respect it is in the same position as that of other utilities, such as electricity, water and telephones.

Because of that, in Victorian times the first Acts of Parliament regulating utilities gave utilities a territorial monopoly, whether publicly or privately owned. As a return, Parliament imposed on them a statutory obligation to give a supply. The present nationalised electricity supply industry retains that obligation. It is compelled to give a supply in principle. Those ancient Acts that have been incorporated in the nationalisation statutes came into force between 1882 and 1936. Ironically, the beginnings of some of the provisions are in the Gasworks Clauses Acts of 1847 and 1871. I say "ironically" because the Corporation has been virtually freed from a statutory obligation to supply even to domestic consumers living in an urban environment. I am not talking, of course, of a supply to some remote part of the countryside. The Chippings is three-quarters of a mile within the Bristol city boundary and less than two miles from the centre of the city.

Under paragraph 3 of schedule 4 to the Gas Act 1972, brought in during the time of a Conservative Government, the Corporation is relieved of an obligation to give a supply if that involves laying a new main or enlarging an existing main. I served on the Standing Committee of the Bill, and was prominent in the debates, with my interest in these matters. It was good sense that the gas industry should not have to give a supply in remote rural areas, but it was never the intention that the provision should be used in the highhanded way that South-Western Gas is using it against my urban constituents. It is telling these good citizens of Bristol that they may own in small part the nationalised undertaking and back it with their taxes funded in the national Treasury, but that does not ensure a supply of gas if the gas authority decides against it.

I started corresponding on this matter with Mr. A. I. D. Frith, the chairman of South-Western Gas, in September 1978. I say nothing against Mr. Frith. He is a most pleasant man, who has behaved with perfect courtesy. Indeed, his letters have grown longer and longer since I began my arguments. I told him that the Gas Corporation could not plead falling revenues. The industry is in a highly prosperous position, due largely to the careless way in which it is depleting the North Sea gas resources at low prices. The system under which Sir Denis Rooke, the chairman of the Gas Corporation, is apparently allowed by the Department of Energy to wreck the British fuel economy with little regard for the future is a negation of the planning to which I thought the Labour Party was dedicated.

I now quote from a long letter of Mr. Frith's, dated 21 November 1978. He says: Our general practice therefore is to ensure that the costs associated with providing a gas supply to new housing developments or to an existing community should be recovered from that particular project. The use of any surplus achieved by the Gas Industry for the purpose of subsidising uneconomic supplies would in my view be in conflict with our statutory requirements and would probably lead to considerable criticism from existing consumers. That is a remarkable statement of policy. Why should the Gas Corporation not take the rough with the smooth? It was on the basis of urban consumers subsidising would-be rural consumers that electrification of the countryside was carried through after the nationalisation of electricity supplies under the 1947 Act. If Mr. Frith is suggesting that every supply has to pay in its own right, this goes back on every good principle of national ownership. When he talks about the conflict with statutory requirements, Mr. Frith is simply saying that the Corporation is taking advantage of the statutory requirements that were intended to meet another risk—that of being compelled to give a supply in a remote rural area. That consideration does not arise within a city boundary.

Will the Minister undertake to discuss with Sir Denis Rooke, chairman of the Gas Corporation—the fact that it is the British Gas Corporation presumably means that British people are entitled to use gas supplies—the position of my constituents in The Chippings who desire a gas supply from a public utility—a supply that has been refused? I am told by the chairman of South-Western Gas that they are not alone in their loss. I can well believe that, but if it is so the scandal of the Corporation's attitude is compounded.

Secondly, is it not anomalous that one utility that is in direct competition with another should have legislative advantage over the other? Under the Electric Lighting Act of 1899, which still governs the position of electricity boards, a board must give a supply, although a reasonable connection charge may be made.

The Minister was once a member of the Select Committee on Science and Technology, under my chairmanship, when we recommended that the Government should establish a small independent expert energy commission, to advise the Secretary of State on energy questions, including pricing policy. This advice has been disregarded. Instead, we have to endure this mass Energy Commission—a loose convention of conflicting interests which will never agree. But apart from my personal objection to the present Energy Commission and my reference to the Select Committee's proposals that any such commission should be genuinely independent, I ask the Minister whether the present Commission has been able, as yet, to propose a pricing policy that would right the present imbalance in secondary fuel prices, which the Gas Corporation exploits in those areas where it can apparently pick and choose its customers.

10.29 pm
The Under-Secretary of State for Energy (Dr. John Cunningham)

It is unusual for me to be replying to my hon. Friend the Member for Bristol, North-East (Mr. Palmer), because, as he has said, I was a member of the Select Committee on Science and Technology under his chairmanship. It feels rather like the apprentice replying to the sorcerer. I appreciate the courtesy of my hon. Friend and I know of his understanding and frankness in dealing with these problems. I have worked with him for a number of years. However, I cannot agree with a number of his remarks, particularly those about the activities of the British Gas Corporation. I shall try to deal with the important points that he raised on behalf of his constituents.

I should also like to correct one or two general misconceptions about the responsibilities of the British Gas Corporation. Section 2 of the Gas Act 1972 states: It shall be the duty of the Corporation to develop and maintain an efficient, co-ordinated and economical system of gas supply for Great Britain, and to satisfy, so far as it is economical to do so, all reasonable demands for gas in Great Britain. The physical extent of this obligation is laid down in schedule 4 to the Act, which provides that the Corporation must, if required, supply gas to any premises situated within 25 yds. of a gas main currently in use, unless that main is either a bulk transmission line or used only for supply to industrial premises. However, schedule 4 further provides that the cost of laying a supply pipe beyond the distance of 30 ft. from the Corporation's main and of any such pipe on the customer's property shall, if the Corporation requires, be defrayed by the person requiring the supply. Whether my hon. Friend likes it or not, that places a statutory obligation upon the Corporation. There is normally no difficulty in these circumstances—nor does the Corporation seek to create difficulties. If what my hon. Friend says about the rapacious attitude of the Corporation towards the energy market is true, it would hardly wish to deny itself customers.

Within a reasonable distance, British Gas lays the connecting pipes free of charge. I should like to clear up a common misconception. It has to be made clear that the cost of internal pipework—pipework in the house from the meter—is borne by the customer, regardless of whether charges are made for external work. Depending on the size of the house and the kind and number of appliances, the cost of internal pipework can be considerable.

Mr. Palmer

I did not suggest that the Corporation did not want to help customers. I suggested that it sought profitable customers only.

Dr. Cunningham

I hesitate to apologise for public corporations wishing to be profitable.

My hon. Friend has raised what might be called the abnormal case. It is a situation which does not fall within schedule 4, and the British Gas Corporation has no statutory obligation to provide a supply—it is discretionary. These cases may include isolated individual houses, new estates or existing houses which are more than 25 yds. from a gas main.

In such cases, where request for connection is made, the Corporation, taking account of its obligations under section 2. calculates the capital cost and offsets the revenue likely to be earned before such sales are made. If the estimated revenue does not justify what it regards as the legitimate capital costs, it may seek a contribution from the prospective customer in order to make the connection economic.

In certain circumstances, particularly the ones described by my hon. Friend, it is not surprising that people would like to have gas. If one takes the year 1970 as 100 in comparing costs, by last year the real price of gas had fallen to 76, the real price of electricity had risen to 123 and the real price of oil had risen to 144.

The estate to which my hon. Friend has referred had the option of a gas supply, but it was declined by the developers and the heating systems are based on solid fuel, oil and electricity, all of which have subsequently become much more expensive than gas. I am not surprised that my hon. Friend's constituents would like gas heating.

However, the connection charge in such cases can be considerable since the cost of laying gas mains and the subsequent reinstatement work is much higher than would have been the case if gas had been provided when the development first took place. We cannot blame the British Gas Corporation for that.

That is the background against which we must look at the case raised by my hon. Friend. I agree with him that it is not an isolated problem. I have had several similar instances in my constituency, and my constituents react with disbelief that I, as their Member and the Minister responsible for the gas industry, cannot solve their problems.

My hon. Friend is talking of 31 prospective customers on an estate of between 180 and 190 houses. He said that the Corporation was effectively refusing a gas supply. That is not the case, but the high capital costs involved mean that the Corporation has been obliged to propose a significant contribution from the householders. Those who want a supply are not in one area of the development. They are spread throughout the development. It is not a question of one small installation. There would have to be a series of installations.

Mr. Bernard Conlan (Gateshead, East)

My hon. Friend says that the Corporation is not denying residents a gas supply, but in areas that he knows well—Marian Drive and Wardley Park estate in Gates-head—the costs are so prohibitive—as much as £390 per household in some cases—that the Corporation is effectively denying those residents a gas supply.

Dr. Cunningham

Perhaps I can return to that later. The contribution can be substantial for several reasons. I have mentioned the costs of excavation and reinstatement, and they would certainly be higher in existing developments than in new developments. In the case to which my hon. Friend the Member for Bristol, North-East has referred, the problems are made worse by the fact that only a small number of residents on the development want a gas supply. The circumstances would clearly change if more people wanted a supply. It is a matter of high costs being spread over relatively few people—with a considerable charge to each one.

I do not know the circumstances of the case which my hon. Friend the Member for Gateshead, East (Mr. Conlan) has raised, but he is right when he says I know the area. I went to school there. I cannot claim to be totally ignorant of the circumstances. If he would like to refer the matter to me, I shall look at it in more detail.

It has been the practice for all regions of the British Gas Corporation to maintain close liaison with local authorities and private developers over these matters for many years. The situation in the South-West, in the Bristol area, which is the region to which my hon. Friend refers, was that significant numbers of developers rejected the opportunity to have a supply in the first place. One cannot blame the British Gas Corporation for that. In succeeding years, largely because of the introduction of natural gas and its virtues, not least its increasingly competitive price, there has been a substantial increase in the number of inquiries. By and large, these have been met.

There has been a 23 per cent. increase in the number of domestic gas consumers in the South-West since 1975. I do not know whether my hon. Friend likes this, because of his association with the electricity industry, but 95 per cent. of houses planned during 1978 will have gas as a fuel. This is clearly because of the competitive situation and the attractions of gas.

Mr. Palmer

Is not some of the difficulty to which my hon. Friend refers on the part of the electricity boards the fact that they are obliged, unlike the Gas Corporation, to give a supply?

Dr. Cunningham

Yes. There are some differences between the obligations, but the general position is the same. If costs are significant, the electricity industry can make a charge. It does not have to provide the service free. The practical result is very similar. I cannot give my hon. Friend the definitive reply that he would like tonight, but I would like to deal in order with the questions that he put to me.

He asked whether I would undertake to discuss the position of his constituents with the British Gas Corporation. The answers is, of course, "Yes". I shall do that with pleasure and write to him. I cannot give any guarantee about the outcome, but if anything can be done to improve the prospects of his constituents I am sure that we shall do it. If I had been asked whether I would instruct British Gas to provide the supply regardless of the economics of the situation, the answer would have had to be "No". I do not have the authority to do that, nor do I believe that it would be right to make that kind of decision. We have to realise that there is a statutory obligation on the Gas Corporation. In other circumstances, we might be raising questions if it was not carrying out that obligation.

My hon. Friend said that his constituents were not alone in this. I have dealt with that by saying that I know from my own constituents, from my hon. Friend and from other quarters that this is the case. He also raised the question of pricing policy. British Gas itself is not in total control of this situation. It has a number of take or pay obligations in terms of gas, and there is the problem of associated gas. These matters are discussed in the Energy Commission. I agree that we have not solved the problem.

I gave the figures earlier deliberately to emphasise what has happened in this area. But the Government are seeking to deal with the problem. One of the reasons why we have given British Gas sole licences is to give it more control over the situation. I hope that my hon. Friend will be able to say to his constituents that this matter will be looked into in greater detail and that when I have had discussions with British Gas I shall write to him.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Eleven o'clock.