§ [2nd ALLOTTED DAY]
§ Order for Third Reading read.4.20 pm
§ The Secretary of State for Energy (Mr. Peter Walker)
I beg to move, That the Bill be now read the Third time.
I should like to express my gratitude to all those who worked over the years in preparing and drafting the Bill and in helping us to steer it through the Committee and Report stages. I should like to express my gratitude also to my right hon. Friend the Minister of State and to my hon. Friend the Parliamentary Under-Secretary of State who carried the great burden of the Bill through those stages. I hope that hon. Members will agree that they performed that task with skill, application and courtesy and in the best traditions of the House. It would be no help to the Opposition if I paid tribute to them, but I must say that they vigorously propounded their arguments against the various facets with which they disagreed. I think that hon. Members will agree that, irrespective of one's views for or against the legislation, in Committee the arguments were vigorously propounded and genuinely considered. The Bill at Third Reading is, one would hope, better than it was at Second Reading.
As I pointed out on Second Reading, irrespective of whether one agreed or disagreed with the policy, the Bill was carefully studied and examined before being presented to the House. It was given careful consideration from the time the Conservative party was returned to Government in 1983. International comparisons were made and alternative methods of privatisation were studied. Conclusions were reached after careful consideration.
The Bill was carefully drafted. It was not rushed past the parliamentary draftsmen. Committee members will have recognised that, according to the standards of a normal controversial Bill, the legislation did not require a great deal of Government amendment. There were 250 Government amendments to the Bill which nationalised the gas industry. That legislation was beaten by the Bill which nationalised the electricity industry, to which there were 353 Government amendments. There were large numbers of Government amendments to other privatisation measures. There were 63 Government amendments to the Gas Bill, most of which were consequential. The lesson to be learned is that greater care taken in drafting is of benefit in Committee and in the House.
When I moved the Second Reading, I argued that we wished to ensure that the legislation was to the benefit of gas consumers. Its aim was to improve competition, to cover safety elements and to improve the position of employees. On Third Reading, I recommend the Bill using those same arguments. A number of improvements and changes have been made since Second Reading.
On Second Reading, the Opposition pointed out on a number of occasions that the Bill as drafted looked after certain aspects of consumer interests but that there was a range of consumer interests at which the Gas Consumers Council would not be able to look. I assured hon. 803 Members that legally the council would be able to consider matters at which the National Gas Consumers Council had looked. Understandably, the National Gas Consumers Council and Committee members felt that it would be better to spell that out in the Bill rather than leave it open to dispute and hence arguments about validity. On Report, we spelled out the the range of activities which the consumers council of the denationalised gas industry would be able to consider.
The Government want the new Gas Consumers Council to be effective. It will be the responsibility not of my Department but of the Department of Trade and Industry, which has responsibility for consumer affairs. The Department of Trade and Industry has been having meetings in all the regions concerned to study the ways in which the new council can be effectively set up with approprate staffing and facilities to give good service to the consumer.
Not only the Government but British Gas are anxious to see a continuation of the benefits of a good consumer service. I believe that the improved drafting of certain clauses, the new clause and the provisions giving certain powers will make the council an effective organisation.
I do not greatly criticise the present consumers council which now operates under nationalisation but, over the years, I believe that it has become too involved in committees, in passing pieces of paper between groups, and so on. A change such as this gives us an opportunity to ensure that the Gas Consumers Council will use its powers and facilities to benefit consumers. I believe that, in practice, there will be no complaint about the manner in which the new Gas Consumers Council works, certainly with respect to the representation of industrial and domestic consumers.
One obvious objective of the Bill is to improve on the benefits of competition. For more than a century, certain aspects of competition were limited throughout the world, whether in the private or in the public sector. We have learnt from experience following the passage of the Oil and Gas (Enterprise) Bill, which was introduced by my predecessor. We have made a number of changes in this legislation which will enhance the aims of that legislation.
During the Bill's passage, we announced the way in which we would endeavour to deal with the problems of imports and exports. There is a potential for further competition. Governments have to continue to take a basic look at the overall national scene. Under our import-export regime, British Gas will have to consult the Government of the day on any major imports it has in mind.
Likewise, if the monopoly position of British Gas was being used in a way detrimental to the development of the North sea, we have made it clear that an application for an export licence would obtain the appropriate waiver providing that the security of national supplies was not put in jeopardy as a result. Judging by the reception of the oil industry and other gas producers, this has been genuinely welcomed as an improvement on the existing situation while retaining the important oversight to ensure that no monopolies on the oil companies' side or on the British Gas side can operate in that respect against the national interest.
One interesting factor about the Bill has been the manner in which our original proposals to ensure that the British Gas contract market did not come into the 804 regulation into which domestic gas will come has been clearly accepted by British commerce and industry as a whole. I remember that, when I argued on Second Reading that in my judgment it was to the benefit of competition and not to its detriment that this area remained free of detailed regulation, there was some anxiety on both sides of the House about that.
In Committee and on Report it was seen that not only major organisations like the CBI and the chambers of commerce, all of whom were carefully consulted before the Bill was drafted, but commerce and industry in general have remained well aware of the advantages that they enjoy from considerable competition in the industrial energy market. British Gas currently enjoys about 35 per cent. only of that market and is in fierce competition with electricity and oil. I believe that that competition is good, and the manner in which the Bill has been drafted means that, if ever British Gas moved to exploit some monopoly situation, it could be referred to the appropriate machinery and dealt with.
The expectation of British commerce and industry is very much that British Gas will find it in its vested interest to remain in a very competitive position in this respect. It remains true that the only strong representations that we have had in favour of regulating British Gas in this sphere of the market have been from its major competitors. On reflection, I think that we were right to include such a provision.
I think that the system of regulation that we have put in place will be effective and to the benefit of the domestic consumer. The consumer will benefit from reductions in the cost of raw materials, if they occur. The current expectation, looking at world oil markets, is that these will be taking place in years to come. I hasten to add that I do not necessarily share that prediction. One matter about which I have remained ardent in my time as Secretary of State for Energy is that I will never make any prediction of a future oil price. If any future Secretary of State for Energy decides to join in that game, I will consider that he has been badly advised. [HON. MEMBERS: "The Chancellor did."] The Chancellor made it clear that he was not making a prediction last week. He said that for the purpose of his figures he had to put in a price, but he made clear that that was in no way a prediction.
While many firms claim to be able to make such predictions, the only thing that they all have in common is that virtually always their forecasts are wrong. If the price of gas moves down, the formula that we have chosen will ensure that the consumer benefits therefrom.
The consumer will have a direct and immediate participation in the improved efficiency of British Gas over the years as new skills, technology and management techniques are applied. As a result, not only will the domestic consumer benefit in terms of price from the regulatory machinery mechanism but, under Governments of all persuasions, the formula will protect that market from Chancellors who have a desire to obtain revenue from that source, be they in a Labour Government, a Conservative Government or, maybe 100 years hence, even an alliance Government. It is a method of regulation that I think will be very much in the interests of the consumer. Therefore, from the point of view of consumer interest, improving competition and the industrial and domestic market, we argue that the Bill is well thought out and to the benefit of the nation.
805 We have recognised from the beginning of drafting the Bill the importance of maintaining high standards of safety. We not only examined the existing statutory requirements upon British Gas and ensured that they were all transferred to the new company but reviewed those requirements and made a certain number of amendments thereto. Although some mockery was made of changing the 24-hour rule to a l2-hour rule, this was never a gimmick. The management of British Gas, whoever are the managers, will know that nothing is more detrimental to its interests than suddenly acquiring a bad reputation on safety.
The reason why British Gas as a nationalised industry, for commercial motives as well as many others, has paid great attention to safety is that it has known that if, in competition with electricity, oil and other forms of energy, it ever obtained a reputation for being unsafe, it would lose its market share and its customers on a substantial scale.
In all the discussions with British Gas in drafting the Bill, we were at no time arguing with people who wanted either limitations or freedom on safety, we were arguing with people who had a long tradition of passion for safety, people who recognised that a reputation for safety in the private sector was in their commercial interests. Given the responsibilities of the Health and Safety Executive, the improvements that we have made and the quite important statutory improvement that in future British Gas will have a responsibility extending both sides of the meter, we have used the measure not to reduce safety but to improve it.
With regard to employees, I believe that the measure is in their interests in that at long last they can have a direct participation in their own industry. It is also in their interests that the industry will be free of the type of political and bureaucratic interferences from which nationalised industries of every description suffer from time to time. I sense that the employees of British Gas recognise that the measure will be to their advantage. I was pleased that the attempt of certain unions to get a ballot in favour of industrial action against privatisation did not succeed. This was because the employees of British Gas decided that it would not succeed. The ballot therefore went against those who were urging such a course. Irrespective of that, what is important is that the management of British Gas fully recognises that its future commercial success depends upon the actions and quality of the company's employees, and on the atmosphere and good team spirit that must continue in the industry.
I was amused to read recently the suggestion—I forget whether it was by a trade union leader or by a Labour party politician—that, if British Gas was privatised at some lower price and the assets revalued on a replacement cost basis, the result would be a loss to each British consumer of X hundred pounds. Neither consumers nor employees have received any great benefit from that valuation of the assets of British Gas. Now, for the first time, managers and employees of British Gas will have direct participation in the industry. To have direct participation in an industry to which one has devoted one's life is important. Neither employees nor consumers have ever felt a sense of participation.
I took my first faltering interest in politics in the 1945–50 period of the enthusiastic Labour Government nationalising everything and I think they genuinely felt that nationalisation would bring about consumer and employee participation. I am sure that in their quiet, silent moments, most members of the Labour party feel that their 806 genuine aspirations did not materialise. Consumers soon realised that, as is evident from the experience of a certain enthusiastic Socialist professor who travelled to Plymouth without a ticket after the nationalisation of the railways. When he was fined by magistrates at Plymouth for doing so, he genuinely pleaded that he only went without a ticket because he assumed that he did not need one as the railways had been nationalised.
Whatever the merits and advantages or disadvantages of nationalisation, no one could argue that employees or consumers have felt a great sense of participation. The manner in which we intend to privatise the company and to see that employees and consumers are given an opportunity of direct participation will be a major social and economic factor. That is why we intend to pursue that policy with enthusiasm.
I suppose that this measure brings about the most major shift from the public sector to the private sector that has taken place in this country, or perhaps in any country. The gas industry is fundamental and has a great record of service to the people. It will be enhanced by being freed from the detailed examination and interference applied to it by Governments of every complexion. I have been guilty of interference, as have my Labour counterparts, throughout the period of nationalisation. If Government are the sole shareholder, they are responsible for a detailed examination of the industry without actually having the expertise, the knowledge or the know-how to do it well. If they had the expertise, it should be employed in the industry and not in an office in Whitehall.
I am delighted that the House has seen the Bill through its Second Reading and through a Committee stage in which debates were cogent and well argued, but in which we had the strength of the argument in those areas in which we defended our position. I rejoice that the Bill went through Report. Now it is before the House for Third Reading. I plead with the House to give a Third Reading to a Bill which will not only be of benefit to the employees and consumers of British Gas, domestic and industrial, but will create a major industrial manufacturing and distributive concern with a role to play at home and abroad, which it will be able to do with greater enthusiasm with its new freedom than it has been able to do since nationalisation took place.
§ Mr. Stanley Orme (Salford, East)
We welcome the Secretary of State back to the fray after 157 hours of silence. I do not know whether 25 March has anything to do with it, but I understand it is the Secretary of State's birthday. I only hope that the House does not give him a birthday present of the Third Reading of the Bill at the end of the debate.
British Gas is one of the most successful of British industries. It is a public monopoly, highly efficient, profitable, and expanding. The Government intend to turn it into a private monopoly without major competition and without the regulation safeguards which we have been advocating throughout the passage of the Bill. There is only one reason for the Government's actions—to sell off the industry on a once-for-all basis purely to raise capital to meet their election strategy.
On Second Reading, I said that there was nothing in the Bill that would improve efficiency or produce cheaper gas. That remains the case. In fact, after 157 hours in Standing Committee we are even more concerned about the future 807 of the British gas industry, the service to consumers and the rights of employees than we were at the outset. In Committee we sought to enshrine in the legislation rights for consumers and for employees which would at least maintain the present position, and in many cases improve it. We argued continuously that we were not living in a perfect world with British Gas and that improvements could be made under public ownership and a public monopoly. Therefore, we advocated many changes which would be beneficial to the industry, to the people who work in it and to the consumers who depend upon it.
The Government have not accepted any real changes to the Bill. They continue to assure us that the current relationship with consumers and employees will stand, but they refuse to ensure that that will be the case by writing it into the legislation. Several issues discussed in Committee still give cause for concern and are not adequately dealt with by the Bill or the authorisation. I make no apology for returning to those arguments today.
The rights of consumers are still badly met by the Bill, particularly those consumers who already have problems in paying for their fuel. As we stated in Committee, and on Report, we are extremely concerned about the abolition of regional gas consumer councils. Consumers' access to redress needs to be strengthened, not weakened, in the face of a private monopoly. Despite the Government's oft-stated belief that the rights of consumers will not be weakened, we cannot accept that. Without the necessary statutory obligation to ensure lay representation at regional level, the consumer protection offered will be anything but cut price. Conditions during this winter have increased the awareness of both the public and the politicians about fuel policy.
In Committee, the Opposition attempted repeatedly to write into the legislation protection for the poorest consumers—those in most need of fuel and those with the least ability to pay the ever-increasing costs of the fuel. The present code of practice on payment of bills provides some safeguards for those in difficulty. Condition 12 of the authorisation merely states that gas suppliers shall publish codes. We have tried to establish a statutory code with strict but reasonable guidelines for a public gas supplier and safeguards for gas consumers. We are specially worried that a private gas corporation will have rights of entry and of disconnection that at present exist for a publicly owned company. We are moving from a publicly owned company which is answerable to the House under the present legislation to British Gas plc which will not be answerable to the House.
The Under-Secretary told us in Committee that British Gas will continue the present code of practice. For the long-term good of the consumer, this must be strengthened by statute.
A further worry is the price of gas and the standing charges. The authorisation says that the gas corporation must use its best endeavours. We had a legal interpretation of that from the Under-Secretary, who is a solicitor. He made great play of the words "best endeavours". We said then that to use "best endeavours" to keep increases and standing charges below the rate of inflation was not sufficient. We have given the Government two opportunities to clarify this by making it clear in the Bill that standing charges shall not rise by more than the rate of inflation. Both opportunities have been rejected.
808 According to the Under-Secretary, "best endeavours" amounts to a clear obligation to ensure that standing charges do not increase above the annual retail prices index. If the intention is clear, why do the Government refuse to make it clearer and to allay the fears of consumers, especially the elderly? We know from our correspondence that consumers are not reassured by the Government's statements. Evidence from Age Concern to the Select Committee on Energy made that plain. Age Concern said:Fuel costs and particularly the standing charge form a high proportion of the expenditure of elderly households, and unexpectedly high bills, service and repair charges are all a drain on the weekly income.We know that consumers are worried about gas prices. They know that gas charges have risen too fast because the Government have used them to raise extra income, and one of the ways they have done that is through the gas levy. We have gone through the whole of the Bill—Second Reading, Committee and Report, and we have heard the Secretary of State move the Third Reading—and nothing has been said about the continuation of the gas levy. Since its inception, the gas levy has cost consumers £2 billion. Last year alone it was £504 million. That amounts to a surcharge of 4p per therm on gas.
Despite the assertion that the privatisation of British Gas will free the corporation from Government interference, the Government are to maintain the gas levy. This regressive tax is paid by the poorest consumers. The Bill is an opportunity for the Government to make a real difference to the many people whose fuel bills are a source of anxiety, and they can make that difference by removing the tax levy and reducing the price of gas. Again, the Government have rejected that opportunity. It is astonishing that, while the Government are prepared to assert that consumers will be no worse off, they are not prepared to ensure that that will be the case.
The Government have asserted that the network of gas showrooms and the services offered by British Gas to elderly and disabled consumers—such as free safety checks and the provision of special appliances—will continue. They probably will for the time being, but in Committee we sought an assurance that they would continue in the long term.
§ Mr. Michael Portillo (Enfield, Southgate)
Is the right hon. Gentleman committing a future Labour Government to the abolition of the gas levy? Could he make that clear?
§ Mr. Orme
This Government introduced the gas levy. Without hesitation, we support the abolition of the gas levy. The only way to ensure the continuation of showrooms and services is to write into legislation obligations on the public gas supplier. Unfortunately, as on standing charges, we have been given only bland assurances, with nothing to back them up. The hon. Gentleman asked about the gas levy. It is odd that his right hon. Friend said nothing about it from beginning to end of this Bill, and he is not prepared to do so now. On every issue that we raised to strengthen consumers' rights—access to advice, information, redress and safety—the response from the Government has been the same. The Opposition remain unconvinced and so does the British public. It is still the case and nothing that has been said has contradicted it that the only people who will benefit from this massive sale will be the financial marketeers. Throughout the debates we have raised the issue of the market and what will happen.
809 It is unfortunate for this Government that the City has been under the spotlight in recent months. The public is increasingly aware that all is not well in the financial markets. While unemployment rises and poverty soars, people in the City are making vast profits from the sale of public assets. The Government's privatisation record is coming under heavy scrutiny and criticism.
The sale of British Telecom, the largest sale to date, must be our comparison for the proposed sale of British Gas. The Government have ignored the conclusions of the authoritative Public Accounts Committee report on the sale of BT. They have ignored criticism about their reliance on the advice of merchant bankers, and they have not said that the share price will not once again be undervalued. Despite the reservations of the Public Accounts Committee, the Government are going ahead with the appointment of overseas promoters for the sale of shares. In Japan, the United States and Switzerland, merchant banks are preparing to repeat the financial killing made in the BT flotation.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I hope the right hon. Gentleman will not pursue that analogy too far. I think he knows that it is out of order on Third Reading of the Gas Bill.
§ Mr. Deputy Speaker
On Third Reading of a Bill we are required to confine ourselves to what is in that Bill. References to another piece of legislation are not in order.
§ Mr. Orme
Obviously, I accept your ruling, Mr. Deputy Speaker, but I feel that we are putting forward a valid argument. No doubt we shall hear of the vast fees paid in commission to City firms. We shall hear about that after the event, and once again it will be the taxpayer who loses. We saw what happened in previous privatisations. For instance, £200 million was taken out by the City when BT was sold only a few months ago.
The Government have side-stepped the effect of the fall in oil prices on the flotation of British Gas. The Secretary of State referred to oil prices this afternoon, but we want to know what effect those falling oil prices might have on the sale. As we know, the Financial Times reports today that the oil price has now fallen to $12 a barrel. Many pundits believe that it will fall still further. With such a massive sale of public assets at stake, we have the right to know whether the Government have a strategy for dealing with that.
The public are becoming increasingly alarmed at the extent to which the Government are pursuing their privatisation programme. It has no theme or logic. The excuses for it keep changing. The latest is that it is an attempt to encourage people's capitalism. But only 6 per cent. of the population now own shares, and the responses to the Budget show that there will be no significant increase in that number.
The Secretary of State referred to safety, which he knows is a sensitive area. Throughout, we have raised no scare stories but have dealt with safety in a genuine manner because, in changing from a public to a private monopoly, we have a right to ensure that safety is up front in the industry. Throughout, we have sought crucial guarantees 810 and assurances on safety in the industry. It is not sufficient to alter the call-up time. We must ensure that properly trained staff are available and that the Health and Safety Executive will be properly equipped. We are particularly concerned that the Health and Safety Executive will not be adequately staffed and will be unable to devote crucial time and attention to the supervision of safety in the industry.
We want a specific statement from the Minister about the future staff levels for gas safety in the Health and Safety Executive. As a result of information that we have received, we are worried that the Health and Safety Executive will not necessarily have adequate staff, and it is essential that it should. We want an assurance from the Government that there will be the facilities and the finance to provide such staff.
The Labour party believes that the British Gas Corporation belongs to the nation. As I said or Second Reading, under a Labour Government it will be returned to the public sector. That will be achieved in a way that is consistent with our other economic aims and priorities. We have made it clear that this privatisation has nothing to do with efficiency, profitability or competition. It is a major part of the Government's strategy for the next general election. Without the sale of British Gas, they would not be able to carry it out. It is an outrage that the corporation, which serves 16 million households, is to be used in that way.
We are fundamentally opposed to the Bill, and the British people will come to understand the magnitude of the Government's action. I ask my right hon. and hon. Friends to vote against the Bill.
§ 5.3 pm
§ Mr. Spencer Batiste (Elmet)
As a former member of the Select Committee on Energy, I want to take this opportunity to welcome the privatisation of British Gas and to wish it well in the private sector. We have just heard all manner of accusations about the Government's motives in seeking this privatisation. But with the example of so many successful privatisations behind us, with so many industries prospering far more effectively in the private sector than ever they did under the control of the Civil Service, it is no longer theory but proven fact that industry does better in the private sector.
We are accused that this is part of our election strategy. Indeed it is part of our election strategy. This latest example of people's capitalism is an important step forward in developing a broadly based property-owning democracy in Britain upon which our future stability and prosperity as a nation depends.
The flotation of British Gas is a particularly important step because it will add sigificantly to the number of private shareholders, which, at 6 per cent. is far too small a proportion of our population compared not just to the United States but to other European countries, and it will add to the size, variety and vigour of the stock market.
The privatisation will be a splendid opportunity for the employees of British Gas to participate in a direct way in the success of their company. Their decision to vote down industrial action on the privatisation issue was in no small measure influenced by the fact this is a far more real and visible way for employees of enterprises to identify with those enterprises than the vague notions of national ownership which have long since been proved to be flawed and ineffective in practice.
811 I hope, although there is not much evidence of it today, that in time the Labour party will come to accept the policy of privatisation, just as it is now being forced, by the weight of public opinion, to accept our related policy on home ownership.
The debate has been distinguished particularly by the positive and constructive role played by the Select Committee on Energy in its proceedings. The Select Committee has the resources to explore the detailed ramifications of complex Bills in a way that hon. Members on their own cannot. When there is substantial cross-party support on the Energy Select Committee, it behoves the Government to take the points at issue seriously.
One such point at issue is whether there should be in the Bill an obligation to promote energy conservation measures. On balance—
§ Mr. Deputy Speaker
Order. The hon. Gentleman heard my earlier rebuke. I hope that he will take it into account and confine himself to what is in the Bill.
§ Mr. Batiste
I am in no way seeking to propose any amendment or to add to the Bill, Mr. Deputy Speaker. I merely wish to make the point that it was well expressed in Committee that the Bill should carry a clear message to the energy supply industry that energy conservation is important to the House and that if the warnings made during the Bill's passage through the House are not heeded, further legislation to promote the cause of energy efficiency will undoubtedly become necessary.
The major issues that we must now address are, first, those relating to the consumers' interest. The protection of the consumer is one of the most practically important issues that the Government have to face. In my area the North-Eastern gas consumers council has made many constructive suggestions. Inevitably there remain some matters that it and other councils will wish to see pressed in another place, but I congratulate the Government on listening to so many of the representations that have been made to them, and, most particularly, on broadening the remit and referral powers of the new Gas Consumers Council. That has been widely welcomed by all those who care about the gas industry's future, as compared to the Opposition, who seek only to make noise and to create spurious objection.
My next point is critically important. When a large organisation with such extensive market power as British Gas is moved into the private sector, there is the need to promote competition. Gas is competitive with other energy sources, but it is also important to encourage alternative gas suppliers if market forces are to operate effectively. I am delighted that the Government have accepted the amendment tabled in Committee to give the director general responsibility for promoting competition. There are those who would perhaps wish that we had gone further, but, in the final analysis, as we have seen with the privatisation of British Telecom, the vital factor is the calibre and the determination of the people chosen to operate the key watchdog roles.
This is a Third Reading debate as you have already reminded us on several occasions, Mr. Deputy Speaker, so I shall be brief. Any Bill of this size and complexity, whose central purpose is so inimical to Labour's concept of state ownership, is undoubtedly capable of indefinite debate and much contrived indignation when finally the 812 guillotine inevitably falls. The major issues have, I believe, been adequately aired and the Bill is in a reasonably acceptable form, though that need not preclude further adjustment in another place. This measure is a further important plank in our progress towards a property-owning democracy, and I commend the Bill to the House.
§ Mr. Malcolm Bruce (Gordon)
We have engaged in many hours of debate on the Bill, but we have not really arrived at a point very substantially different from that from which we set out. The Government have tried to justify the Bill as promoting greater efficiency and wider share ownership. Yet even the hon. Member for Elmet (Mr. Batiste), in spite of his eulogy of some abstract theory, acknowledged that there was not enough in the Bill on that issue. The Government have resisted amendments to promote energy efficiency on the spurious ground that it would be unfair to other energy suppliers. That was the basic argument used. I suggest now, as I did in Committee, that the easy way to resolve the matter is to charge all energy producers with responsibility to promote energy efficiency. I am sure that this is something that all parties would support.
Wider share ownership will be achieved, if it is achieved—there are some who feel that the widening of share ownership will be nothing like as great at the end as it looks at the beginning—at the expense of siphoning out of the financial institutions billions of pounds that could have been much better directed to stimulating new enterprise, wealth and jobs. It is really foolhardy of the Government to say that money cannot be taken out of the City for an enterprise such as this without taking it away from other enterprises which might need it more desperately.
Last week I challenged the Under-Secretary of State to say whether there were any market circumstances in which the Government would decide that it was sensible to postpone the flotation of British Gas. After all, they have done it with British Airways, presumably for commercial reasons. At that time, the Minister simply showed his discomforture in the normal way—by hurling a load of abuse at the alliance—but did not answer the question. I think that we are entitled to know whether the Government are determined to float British Gas this autumn, regardless of the market circumstances.
The Secretary of State acknowledged that in his Budget speech the Chancellor told us that he had assumed an oil price of $15. The Secretary of State said that this was not a forecast, but simply an assumption, and I accept that. But today, less than a full week since the Chancellor sat down, the oil price is under $12 and heading for less than $10. Leaving aside the fact that the fall in the oil price since this time last year and, indeed since six months ago, has wiped £5 billion off our net oil exports, will the Minister acknowledge that this has serious implications for the share price of British Gas, which had already been reduced by over £2 billion, according to analysts, even when the price of oil was $15?
I suggest that even if the Government were determined, in principle, to go ahead with privatisation, it would be irresponsible to do so in circumstances where the market is at the bottom of its price and the asset, which at the moment belongs to the nation, is likely to be substantially undervalued. We are entitled to know whether the Government have any views on that.
813 I shall press this point a little further by asking the Minister to say, when he replies, what valuation for British Gas is assumed in the Chancellor's forecast in the Budget statement that the receipts expected from privatisation in 1986–87 are £4.7 billion. What assumptions have been made about the percentage and value of British Gas included in that figure, and what implications does that have for the next Budget when coupled with the falling oil revenues?
Anyone who is buying shares will clearly have to consider these factors. If I were intending to buy shares in British Gas, which I am not, I would want to know what the future was. I would also want to know what scope there was under the Bill for British Gas, when privatised, to protect itself, as it will instinctively try to do. By protecting itself, I mean using its monopoly position to cushion itself against falling prices. The Government have not supported adequate measures to promote competition and, whatever their protests to the contrary, British Gas will continue to be to all intents and purposes the monopoly supplier of gas in this country. It will be able to abuse that monopoly to protect its position.
I shall give one or two examples. Will the price formula be flexible enough to allow the corporation to keep up prices, for example, to those domestic and commercial users who are committed to gas and have no alternative, while at the same time reducing prices to those industrial users who have made an investment by giving themselves flexibility and are therefore not so vulnerable to the British Gas monopoly? I suggest that private shareholders are likely to press a private gas corporation to take such action if it thinks it can get away with it. Will it be prepared to give incentives to new customers to come on to gas supply, to subsidise their capital investment and to charge that subsidy to existing users of gas? It is not clear from the legislation that the corporation would not be able to do that. Will the director general have the power that he needs to prevent such an appalling abuse?
Those questions have not, I believe, been answered, and I am certainly not satisfied that this is adequate consumer protection.
§ Mr. Walter Harrison (Wakefield)
I am concerned about consumer protection. In fact, I implored my right hon. Friend the Member for Bristol, South (Mr. Cocks) who worked with me for years, to put a question for me in Committee about consumer protection. I should like to ask what protection there will be for the consumer, not on the tariff to be charged, but on the way in which tariff will be collected. Estimation is going on under the present gas boards. What protection will there be for the consumer in connection with estimated bills if the new gas authority refuses to read the meter and simply makes an estimate?
§ Mr. Bruce
In Committee we pressed for a code of practice, but were not successful in securing it. The Minister will no doubt answer the hon. Gentleman's question more fully.
Consumers and shareholders should be in no doubt that a future Government would be prepared to introduce amending legislation to prevent the sort of abuses that I have outlined. We would certainly be prepared to do so and to strengthen the powers of the director general to acquire the information needed to control such abuses. We would ensure that any information he acquired was published, that hearings were held in public, and that 814 consumers or their representatives had the right to cross-examine. That is the kind of control, accountability and regulation for which we are looking but which the Government have denied us.
In these circumstances, Mr. Deputy Speaker, you will not be surprised to hear that I and my colleagues are not satisfied with this legislatior, even if we were not opposed to the principle in the first place, which we are. The import-export regime which the Government announced very late in Committee is something which shareholders need to take on board. I am not sure that they are really any the wiser about what the Government will do. I do not quarrel with what the Government have said. My only quarrel is over the fact that what was at the end of the day such a sensible decision could not be announced on Second Reading, but was left so late in the deliberations on the Bill.
We would be prepared, since it would be impossible, in my view, to renationalise British Gas even if the Labour party wished to do so, to introduce measures which would expose British Gas to more effective competition. In spite of statements from Labour Members, the Government have not taken the necessary measures to do this, and have not supported initiatives from their Benches either. We would be prepared to consider legislation to break British Gas up into regional companies, and we regret that this has not been properly debated, although the hon. Member for Dundee, East (Mr. Wilson), and I put the argument on a number of occasions. The Labour party is intent on keeping British Gas as a central institution, because it hopes to be able to renationalise it and has refused to support us, and the Government have denounced the idea without intelligently arguing against its merits.
We shall make sure that the privilege of owning shares—it is a privilege—in a major utility, which will still be the monopoly supplier of gas, is not a licence to print money. It is reasonable for people to get a fair return. A fair return is one thing, but exploitation is another. None of these questions have been answered by the Government, and none of the assurances that we want have been given. In the light of that, my right hon. Friends and hon. Friends and I will join the Labour party in the Lobby against the Bill.
§ Mr. Deputy Speaker
Order. I understand that we have at the most 80 minutes left before the Front Bench speakers reply to the debate, and at least 10 right hon. and hon. Members are seeking to catch my eye. The arithmetic will be very obvious.
§ Mr. Michael Portillo (Enfield, Southgate)
The hon. Member for Gordon (Mr. Bruce) said that if funds were taken from the City for investment in British Gas, they would not be available for investment elsewhere in British industry. The hon. Gentleman showed that he had entirely missed the point of what is going on with the privatisation programme, which is that in the big issues like British Gas, and British Telecom before it, the Government have appealed to a source of finance that has never before been tapped—the ordinary man in the street investing in shares for the first time. The argument of the hon. Member for Gordon therefore falls flat on its face.
On Second Reading I welcomed the Bill in principle because I thought that privatisation would be good for 815 British Gas, good for its customers and employers and for the nation. However, I expressed some reservations about the Bill. Today, I have fewer reservations than I did, but I confess that some of them linger. At heart, my reservations are to do with whether the Bill establishes sufficient competition, and my thesis is that it is better to rely on competition to ensure the good of the customer than to rely on any kind of regulation, because competition would always do the job better for the customer.
I have three main concerns. The first is the competition that British Gas will face in obtaining gas supplies from the sources at which they are produced, in particular from the North sea. I wish to see British Gas having to bid against the competitors to win gas in the first place. Towards the end of the Committee, the Government made a statement about imports and exports of gas that clarified the position and gave us the basis that we needed to judge the Bill as a whole.
The Government statement was not exactly the statement for which I had been hoping, because I had hoped for an entirely free regime of imports and exports. Nevertheless, the statement was widely welcomed and was held to be a marked improvement on the previous position. In particular, it allows the Government to judge applications for the export of gas on a case-by-case basis. I wait to see how this will work out in practice.
I have two suggestions for the Government. First, will they make it clear that any company is as free as is British Gas to import gas, so that any other company can apply for imports? My second suggestion is that the Government should soon authorise an export of gas to demonstrate to British Gas that this is more than a theoretical possibility and that it can be carried out in practice, as that would have a dramatic effect on the way in which British Gas conducts its business.
My second concern was that the regulator should have a specific duty to promote competition in the supply of gas. Here, I am delighted to say that the Government graciously accepted my amendment, and I am pleased about that. It could prove crucial. I agree heartily with my hon. Friend the Member for Elmet (Mr. Batiste) that the important thing is the choice of person who will be the regulator. If the right person is chosen, as I am sure he will be, he will bear this duty in mind when applying it to a whole range of decisions—for example, in judging disputes that occur over the common carriage of gas by British Gas for third parties and on the supply of back-up gas from British Gas to private suppliers.
My third concern is about the prohibition of anticompetitive practices by British Gas. In Committee, I suggested specific prohibitions of anti-competitive practice—that was my first line of defence. My second line of defence was to oblige British Gas more clearly to spell out from where it derived its profits and where its costs would be spread among the various regional activities so that we can judge more accurately whether cross-subsidy was occurring. I failed to convince the Government or the Committee on this point, and my right hon. Friend the Minister in particular sought to rely on the Competition Act and the Fair Trading Act. He believed that there are sufficient powers available for all these concerns to be taken care of. I still have some doubts, but I hope that, in the fulness of time, I shall be proved wrong, and the Government right.
816 My right hon. Friend the Secretary of State often says that nationalisation requires Ministers and civil servants to run businesses, and they are unqualified to do so. That is the best shorthand reason for privatisation. Even where, after privatisation, the extent of competition is limited, pressure from shareholders, bankers and customers can be exerted much more effectively. One cannot mimic those forces while the company remains in the state sector.
I have a feeling that, in its heart of hearts, the Labour party is not as far from us on this as it would have us believe. I have a feeling that the Morrisonian ideals of nationalisation have, in practice, disappointed all of us. People do not feel that they own the British Gas Corporation, nor do the customers of British Gas feel that they are getting a high level of service because the employees in the industry feel that they are serving their fellow man and that they all own the industry in common. The employees of British Gas have lacked the incentive of competition, and it is that element that the Bill seeks to introduce.
I welcome the Bill now because I believe that it will help the customers of British Gas, its employees and the nation. To a large extent, some of these virtues have been recognised by the Labour party, although the Opposition spokesman, who spoke so charmingly in the Standing Committee, the right hon. Member for Salford, East (Mr. Orme), went through the motions of opposing privatisation root and branch. In practice, Labour Members went through those lines rather as though they were speaking lines in a play, and not giving them tremendous conviction. It is a tremendous tribute to my right hon. Friend and the Government that they have argued and won the case for privatisation, and even convinced a number of Labour Members.
§ Mr. Michael Cocks (Bristol, South)
I apologise to the Secretary of State for not being here for his opening speech. The decision not to come into the Chamber was not inadvertent. I felt that, had I been here, my parliamentary courtesy would have been overridden, and I would have pointed out to him that his Third Reading speech was longer than his contributions in Committee.
I was surprised at the speech made by the hon. Member for Elmet (Mr. Batiste), because he branded himself as a parliamentary scavenger picking up fag ends. He was not even on the Committee, but he had to be here to speak before those of his colleagues who had served on the Committee had spoken, to make his Central Office points, which were hardly worth the occasion.
In Committee, I christened the hon. Member for Enfield, Southgate (Mr. Portillo) the hon. Member for Enfield, Cold Feet. I did not intend to propagate that title, but, once again, he has shown himself to be running for cover, trying to play both ends against the middle and managing to ensure for himself some future reincarnation as an Opposition Front Bench spokesman.
The Bill puts me in mind of the old-style Western films where the main street, which is the subject of the film, was made up of elaborate sets—banks, hotels, and so on. There may have been an elaborate front, but behind it there were just a few props holding the whole edifice up, and there was no substance to the buildings. The Bill has been produced without the thorough-going research which was in hand and had borne fruit when the industry was nationalised.
817 The main point of reference in Committee was the Heyworth report, which is an analysis of the state of the gas industry at the end of the war with details of the number of undertakings throughout the country, their distribution, and the great pockets where there was no gas supply whatsoever. That was only one of several major studies which led to the nationalisation of the industry. However, the industry is being dismantled and put out to privatisation without any corresponding research.
Time and again in Committee we asked what estimates had been made by the Government and the Civil Service over various aspects of the Bill. Each time, when the verbiage was stripped away from the reply, the answer was nothing. Therefore, the Bill is based on inadequate research and thought and is really a doctrinaire measure to try to widen the base of the Government's appeal. It is the fulfilment of an election promise made without propper research. Indeed, when I pressed him, the Under-Secretary of State for Energy, although a former candidate for Bristol, South, did not realise that the Conservative party headquarters had been moved from Merrywood road to North street in Bedminster, the premises which were converted into Regal Amusements.
When we look at the provisions of the Bill, we are concerned about the inadequate guarantees about safety. It is important that during the debate we put it on record that we are by no means satisfied that the bland assurances that have been given about the privatised company will hold water in reality.
On Report I referred to the flexibility and quick response we now enjoy when we contact chairmen of the respective gas boards, and I gave a particular example. I am happy to tell the House that my confidence was reinforced when the matter that I had raised was dealt with within 24 hours. That is the sort of service that the Government are placing in jeopardy.
Therefore, while at this stage we cannot make any changes to the Bill before it goes to another place, I think it is important for us to place on record our fears and reservations about what might happen. God forbid that there should be a major disaster when the industry is privatised. If there is, I hope it will be recognised that the Opposition placed their reservations on record and that, if anybody is found wanting in the scrutiny and preparation of the Bill, it is the Government.
In view of your comments earlier, Mr. Deputy Speaker, I shall conclude my remarks. I hope that in another place the reservations we now have about the provisions in the Bill concerning safety will receive further scrutiny, and that possibly, even at that late stage, the Government will make a concession which could give us at least some reassurance that note has been taken of all the representations.
I should like to make a short contribution taking account of the statistics you gave us, Mr. Deputy Speaker, about time and the number of people wanting to speak.
I wish to welcome the Bill on Third Reading, having been through a long and contentious Committee. I agree with my hon. Friend the Member for Elmet (Mr. Batiste) in endorsing the principle of privatisation and I believe that this Bill is an important step along that road. I should like to congratulate my right hon. Friend the Secretary of State on introducing the Bill and his colleagues for steering it 818 through Committee. If it is proper, I should like to say a few words of congratulation to the Opposition on the way in which they showed us in Committee the knowledge they have of the Bill. They fought it hard, but in so doing, they showed that the Bill had been well thought out. The majority of points they were criticising were incorporated into the Bill in any case.
The two major points I should like to make are about competition and regulation. My hon. Friend the Member for Enfield, Southgate (Mr. Portillo) has already said that, if the competition were stronger, perhaps we would not have to have so much regulation. The Bill has been prepared in such a way that, wherever possible, notice has been taken of the need to encourage competition. The Bill is written to allow for competition from other gas companies should other companies ever be formed which could provide gas at domestic house level rather than just providing large tranches of gas through the common carrier. We know that the gas industry has been subject to competition for many years from other fuels, but that competition is always subject to price, the technology available in the industry using the other fuels and the availability of other fuels.
Gas is not the easiest commodity to bring into industry or domestic houses. Despite that, over the years the gas industry has been able to obtain 85 per cent. of the heating market in this country. That shows that the gas industry has been competitive in the past, and there is no reason to doubt that it will continue to be competitive in the future.
The Bill provides for other gas suppliers to use the common carrier system to supply gas to customers throughout the country. I expressed some reservations in Committee about how often the common carrier would be used, bearing in mind the fact that British Gas may be inclined to over-price the use of that facility. Even now, if there is surplus capacity on the common carrier, I believe that the charge for using it should be on a short-run, marginal cost basis.
We know that the gas industry was investigated by Deloitte, Haskins and Sells in June, 1983, and the achievements of the gas industry, which are recognised in this Bill, were stated in that report. It congratulated British Gas on the conversion from town gas to natural gas and the way in which British Gas has increased its market share over the years.
I should like to come to a point made by the right hon. Member for Bristol, South (Mr. Cocks). Deloitte, Haskins and Sells also mentioned the fine safety record of British Gas and its proud industrial relations record. In my experience, the safety record in private industry is second to none. I do not think that the right hon. Gentleman has any need to fear that, because British Gas will be privatised, the safety record will in any way be less than it achieved as a nationalised industry.
The record of the industry is a credit to the executives who have run it in the past, the work force and the people throughout the whole of British Gas who have been involved—from connecting pipes and digging holes through to setting prices, marketing and running the whole organisation. It is also a credit to the sponsoring Department, the Department of Energy. I am sure that all those things will continue when British Gas is privatised.
The Director General of Gas Supply will be primarily responsible for regulation. From time to time, he will have to use the Monopolies and Mergers Commission, but in practice regulation will be his responsibility. He will, of 819 course, work in conjunction with the Secretary of State for Energy. Indeed, I thank the Government for accepting in Committee an amendment that I and my hon. Friends put forward, whereby the relationship between the Director General of Gas Supply and the Secretary of State would be brought out into the open, so that we could know of the instructions and communications that passed between them when regulating that large privatised gas concern.
In the Bill, the Director General of Gas Supply is required to encourage competition, to be unbiased towards British Gas—it must ensure that it is fair in its dealings with all gas suppliers—and be customer-oriented. Moreover, under clause 33, the director general must ensure that gas is continuously available to gas users. There is a danger that there will be a gap in the supply of gas in the early 1990s, but I am sure that the director general will take that into account.
The main regulator used by the Director General of Gas Supply will be price. The price is being fixed by a formula which is now well known. It seems complicated, but careful study reveals it to be not too bad at all—[Interruption]. The formula is (RPI-X)+Y+K. It is not too difficult at all. But price control alone will not encourage profit levels to be kept at the low level required if the consumer is to get a fair deal. Therefore, I feel that the director general, working within the Bill's terms of reference, will want to consider publishing the profits made by British Gas. The information could be used for control of the organisation. It could also be used to judge how the formula should be reviewed in 1992, and could show that there was not excess cross-subsidisation between the various parts of a privatised British Gas.
When price alone is used as the regulator, we must ensure that it does not hide windfall profits that might arise through the price of other energy sources rising faster than the price of gas, causing gas to be used more than those other energy sources. That can only be checked by having some knowledge of the profits made. I am confident that, in the short term, the director general will control and regulate effectively. In the longer term, regulation will be reviewed by the Secretary of State. However, I am sure that we shall have a thriving and most acceptable privatised gas industry, and I and my constituents look forward to the issue of British Gas shares later this year. Indeed, many of my constituents have told me that they want to buy those shares. This whole venture represents one more step in the promotion of popular capitalism which has so caught the imagination of this country.
§ Mr. Allan Rogers (Rhondda)
We have just heard two very convoluted speeches from Conservatives Members. On the one hand they ask for market forces and competition to be allowed their head, and on the other they want the regulator to have more powers to regulate the industry, once privatised. I am not sure what they really want, or what they are pursuing in their dream of privatisation.
But it is certain that the Secretary of State did not come clean today about the real reasons for privatisation. We have not heard from Conservative Members, including the hon. Member for Elmet (Mr. Batiste) who is just about to leave the Chamber, what those reasons are. Indeed, during 820 the hon. Gentleman's flight of fantasy, he paid tribute to the fact that the Government had paid attention to the Select Committee's views. I am sorry to disappoint him, but the Government ignored the Select Committee's views to the extent that they introduced the Bill and put it into Committee when they know that the Select Committee's report would be published. The Government completely ignored that report. I am sorry to deflate the hon. Gentleman's ego over his membership of that Select Committee, but the Government clearly do not think much of the Select Committee's recommendations. They even ignore the Public Accounts Committee, of which I am a member, when it tells them, time and again, that they are ripping off the public by privatising our state industries.
The Secretary of State did not give the real reasons for privatisation because he will not stand up publicly and admit that it is a rip-off. The fact that privatisation is a rip-off can be demonstrated quite easily by considering the seven main industries that have been privatised. It is clear that they could have been sold for almost £2 billion more than was achieved in their flotations. However, we shall return to that point later.
I am amazed by the hypocrisy of Conservative Members. They pay tribute to British Gas as it now exists, to the workers and its organisation, and then say that they want to sell it. Why do they want to sell such a large industry, which is very profitable? It provides about £500 million a year through the gas levy and makes profits of about £1.5 billion. Why do Conservative Members want to sell it? It needs to be sold solely to line the pockets of their City friends. For example, their stockbroker friends will gain about £300 million.
The hon. Member for Enfield, Southgate (Mr. Portillo) is yawning. Perhaps he does not want to be party to this charade. Oddly enough, he opposed the Government at certain points in Committee. He did not have the courage to vote against the Government. At some stage, the Minister would say that he would look at the matter, and the hon. Gentleman would back off. Indeed, the hon. Member for Rochford (Dr. Clark) and other hon. Members were told by Government Whips to back off in Committee, although they knew that certain parts of the Bill were nonsense.
The hon. Member for Elmet said that private industry was better than public industry. I wish that that was so, and that the history of nationalisation in Britain showed that Labour Governments had taken profitable industries into public ownership. But the history of nationalisation in this country shows that the Labour party has had to take into public ownership corrupt and badly run private industries in order to protect jobs and our economic structure. That is why we had to nationalise the coal, car and aerospace industries. We did so not because of any blind dogma or ideology—unlike the Conservative Government—but because those industries were bankrupt, and we wanted to protect the many jobs involved.
The Government do not care about the jobs of those involved. They will talk about them, but when it comes to the crunch, they do not care. Their justification for provisions affecting consumers and safety is always that market forces and competition will right any wrongs. I believe that the Government are wrong. Throughout the Committee stage the Government argued that all would be the same after vesting day. The argument is that British Gas plc will be a marvellous private company because the public corporation is a good and profitable company.
821 That does not follow. British Gas exists to provide this country with cheap, clean fuel and to contribute to the general economy of the country in the public interest. The motive of British Gas plc—the reason for its existence as a private company—will be to make a profit. The possibility of the public interest being a major feature in any decision made by the company will go by the hoard. In no private company in this country, when decisions are being made in the board room, does anyone ask, "Do we make a profit, or do we act in the public interest?" With relatively small companies that is OK, although I do not think that we can afford them. Many decisions are made in private companies on the basis of the pursuit of profit rather than the public interest. We can swallow that.
However, we are now talking about a major industry. The present-day value of the industry is about £17,000 million. Last year there was a profit of well over £1 billion, and there was also the gas levy of £504 million. The rate of return on assets was 25 per cent. Ninety three thousand people work for the company and over a quarter of a million are employed in providing services and equipment. British Gas is not a little back-street operation in which private interest can be permitted to be the dominant feature and the money boys to make their cash; it is a major enterprise. If this major industry is badly handled in the private sector, the effect will be enormous.
I am quite sure that British Gas plc will not deliberately break safety standards. However, neither did Union Carbide in Bhopal, and neither did the private coal companies, when under private enterprise they killed 53,000 people.
§ The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt)
Disgraceful. We are talking about British Gas.
§ Mr. Rogers
It is all very well for the Minister to scoff at what I say, but that is what happened in the pursuit of profits. Many decisions were made in coal mines that caused the death of miners. I can provide chapter and verse. One need only to go to the Library to see how many of my constituents—and indeed some members of my family—suffered as a result of the mindless pursuit of profit in the coal mines.
It will not happen deliberately, but if there is a sin of omission rather than a sin of commission, it will be a great sin. The Government had the opportunity to put some statutory safety requirements in the Bill. They could have tightened up on safety. It is no good the Government saying that the matter has been covered in the same way as it was in the case of British Telecom. As I said in Committee, telephones do not blow up but gas installations can. Unless the highest standards are maintained there may be tragedies, as there have been in the past. No one will have designed those tragedies—accidents are accidents—but it is incumbent on us as legislators to ensure that the possibilities of accidents are restricted.
Constraints of time prevent us from taking up some major issues that were not fully developed in Committee. Great problems will arise. There is the issue of competition. What will happen to an organisation with a built-in infrastructure? There are pricing policies, market development, tarrification and resource development. What is to stop British Gas plc investing in villas in Spain or north Africa rather than ensuring adequate future 822 resources and development in the North sea, or in the development of liquefaction and gasification processes so that we can import from other parts of the world when North sea gas runs out? Those are all aspects of a big unknown. With the privatisation of the gas industry, we are taking an awful step into the unknown.
§ Mr. Peter Rost (Erewash)
The Bill has been improved since Second Reading, although not as much as I would have liked. My hon. Friends the Members for Elmer (Mr. Batiste), for Enfield, Southgate (Mr. Portillo) and for Rochford (Dr. Clark) have eloquently outlined some of the matters that still concern us. However, I believe that the Bill has improved enough to be given a Third Reading tonight and a fair wind. I hope that when the Bill reaches another place the Government will be obliged to reconsider some of those important matters, especially those to which the Select Committee drew attention. The Bill may then be improved still further.
Part II covers the sale of shares to the public. I am very concerned that the Government's privatisation programme should not be discredited. I believe that it is fundamental to our future, to the economic strategy and to the improvement of our performance that the privatisation programme should succeed and that it should not be damaged by criticisms such as were made by the Public Accounts Committee of some of the previous public sales.
We might as well be honest and admit that in the Government's eagerness to sell other nationalised industries, miscalculations and misjudgments were made. We want to avoid any criticisms in connection with this sale. We must ensure that there is no repetition of what took place when, during the speculation, some in the City made far too easy profits.
I hope that when part II is applied and the shares are sold, the Government will provide a genuine opportunity for the small investors, and especially the employees of British Gas, to have not just the first but the juiciest bite. I believe that many of my colleagues would, like me, be most disappointed if there were to be a undignified stampede of speculative stags, as with some previous privatisations. That would seriously damage the whole concept of wider share ownership and the privatisation programme.
Every sale—especially a large one—must provide a tempting discount on what experts regard as the market price. It is therefore especially important that if there is to be a discount on the market price that discount should go primarily to the employees of the company and to the small shareholders—in other words, the customers—rather than to underwriters and to overseas institutions, as has happened in the past. It is most important that the offer for sale should be organised on such a basis that the majority of the shares go to employees and to small shareholders rather than the larger investors.
I have one suggestion which I hope my right hon. Friend will consider. I hope that this proposal will enable the Government to overcome the embarrassments of previous sales, which had to be priced on an arbitrary basis—always difficult if not impossible—with the result that there was a large premium and the taxpayer was deprived of a fair proportion of the revenue. A different form of pricing was required.
Is it really necessary that all the shares should be sold on the same day? Why cannot the offer for sale be on a 823 open-ended basis, in the same way as the Government sell gilt edged on tap and in the same way as the Govenment sold their BP shares in tranches? Why cannot the first tranche be worth only £1 billion—10 per cent. or 20 per cent. of British Gas shares—in order to establish a market price?
The first tranche could be allocated primarily to small applicants, in the same way as British Telecom shares were allocated to small applicants and employees. If a premium developed, as it is bound to develop, the bulk of the benefit would still be in the hands of the Government. The rest of the stock could then be sold on a tap basis, on rising prices. As demand developed, the Government's nominated brokers for the sale could subsequently sell, on rising prices, to the large investors and to the institutions the bulk of the issue, once a market price had been established from which the small investors would benefit.
What is the rationale of obliging all the stock to be sold in one indigestible gulp? If it were sold in tranches, would it not make the huge cost of the underwriting unnecessary and would it not provide a fairer total value for the taxpayer without depriving the small shareholder of a fair investment?
Furthermore, would it not reduce the risk of having to price the issue at the wrong price? Only a small proportion of the issue would be offered for sale at the initial launch. If the price of the 10 per cent. or 20 per cent. that was offered for sale was too low, at least the Government would not be subjected to the sort of criticisms to which they would be subjected if the price were too low and everything was sold on that day.
As the initial tranche that was offered for sale would be allocated primarily to small applicants and to employees, because they would be given priority, it would ensure the Government's objective of promoting wider share ownership. The first tranche at the lowest price would go to those who ought to have the shares—employees and small shareholders. Subsequent sales on a tap basis would mean that whatever stock was then available would be sold at the genuine market price, which would probably be a higher price, to the larger investor.
I urge my right hon. Friend the Secretary of State for Energy to consider this type of package if he wants to avoid further criticism of a privatisation issue on a large scale depriving the taxpayer of the full benefit of the sale and not ensuring that the small investor gets a fair deal.
§ 6.2 pm
§ Mrs. Ann Clwyd (Cynon Valley)
My right hon. Friend the Member for Salford, East (Mr. Orme) raised a very important issue at the beginning of the debate. He referred to the fact that several issues have not been dealt with adequately during the proceedings on the Bill. The Opposition are still concerned about health and safety. We are not sure that the Health and Safety Executive will be able to police this private monopoly with the care that is needed.
The factory inspectorate is 35 per cent. below the recommended staffing levels that were accepted by this Government in 1979. If the safety aspects of the Bill are to be enforced, the Government must provide the resources to back them up. My right hon. Friend today asked for those assurances, and we shall not be satisfied if they are not given this evening. We have not been 824 persuaded by Ministers that the Health and Safety Executive will be able, with its present staffing levels, to carry out the increased responsibilities that are being laid upon it by the Government. In fact, the opposite is the case.
Since 1979 the Health and Safety Executive has been given more work to do but has been provided with fewer resources with which to do it. Its field force has been cut by over 25 per cent. However, since 1979 it has been given additional responsibilities. It has to enforce new regulations which are more time-consuming to enforce than the old regulations. In 1974, the inspectors were expected to carry out the inspection of 240,000 premises. By 1984, they were expected to carry out the inspection of 800,000 premises, although their numbers had decreased. They are able to visit some premises only once a year. They are able to visit other premises only once every 10 years. How will the Government ensure, therefore, that the Health and Safety at Work etc. Act 1974 is extended in order further to protect the public unless the strength of the Health and Safety Executive is greatly increased?
Those who work for the Health and Safety Executive are at the end of their tether. They cannot cope now with basic inspections and they have to abandon potential risks that would have been a very high priority only a few years ago. In 1981, when gas safety was the responsibility of the Department of Energy, there were 30 prosecutions. Since the Health and Safety Executive has taken over that responsibility, there have been only two prosecutions. That is not an indictment of the inspectors. They cannot accept further responsibilities without an increase in their numbers.
The Chief Inspector of Factories has issued guidance to the inspectors. He tells them not to keep a low profile but he expects his instructions to be maintained. They are to minimise the heavy burdens that could be placed on the resources of the Health and Safety Executive. The 530 factory inspectors operating in the field will have all these new responsibilities placed upon them. The Government want to give them even more responsibilities. Is that a responsible approach to a difficult problem? Any objective observer would say that it is not.
The answer is not to abolish the laws on health and safety, as Lord Young of Graffham has promised. We have yet to receive an assurance that that proposal is not to be taken seriously. At the very least, the staff of the Health and Safety Executive should be increased by about 50 per cent. That was promised by a Conservative Government. In the light of the anxiety about safety that we have expressed throughout the proceedings on the Bill, we hope that the Government will initiate moves that will ensure such an increase.
The Secretary of State for Energy told us this afternoon that the employees are being promised direct participation in their industry. However, according to a TUC report that was published this week, privatisation has led to fewer jobs and worse terms and conditions of employment. How can the Government claim, therefore, that the employees will be better off? The TUC says that there has been significant job shedding in companies that have been privatised or in companies that are candidates for privatisation. Associated British Ports has cut its work force by about one fifth. British Aerospace has lost 10,000 jobs since privatisation. Cable and Wireless shed one fifth of its United Kingdom staff in the year after privatisation. 825 British Telecom has embarked on a staff cutback. The report shows that industrial relations and union facilities have become worse.
This provides a warning to employees in the gas industry and in other industries where privatisation is threatened. Free shares and other inducements are no substitute for adequate rights and conditions of work or, indeed, for the loss of jobs.
§ 6.8 pm
§ Mr. Tom Sackville (Bolton, West)
When I spoke during the Second Reading debate on the Bill I acknowledged that this could put me at the mercy of the Chairman of the Committee of Selection. By that time it had begun to leak out that members of the Opposition were, for some reason better known to themselves, affecting ignorance of the many virtues of the Bill and that the Committee stage could last longer than the piece of legislation which I was invited to consider this morning, The Professions Supplementary to Medicine (Winding up of Remedial Gymnasts Board) Order of Council 1986, the proceedings on which lasted from 10.30 am to 10.31 am. The reason I exposed myself to these dangers was the fact that the Bill is one of a limited number of Bills dealt with by this House since I entered in 1983 on which I can express unreserved approval.
I sought to catch your eye, Mr Deputy Speaker, not only for the opportunity to wish the Secretary of State and the Opposition Whip a happy birthday but to express to the House that, during the past few weeks since the Second Reading debate, it has become clear to me that there are no reasons why British Gas should stay in public ownership—whether on the grounds of safety or the interests of the employees or the consumer.
When one considers the history of British industry one cannot pretend that there are any benefits flowing from public ownership, especially within our economy. Rather than benefits we have witnessed a long series of cases of decay, inefficiency, lack of positive management, terrible industrial relations, subsidies and interference from politicians. No one is criticising the current management of British Gas or indeed, criticising the work force, 500 of whom work in my constituency. No one will claim that there will be a sudden, overnight transformation in the fortunes of British Gas.
We believe, however, that British Gas, in private hands, will attract new dynamic management—it will be controlled by people who are qualified to control major commercial enterprises and not by politicians or civil servants who are clearly not qualified to do so—and it will offer wide employee participation with its attendant benefits.
The Bill is not about lining the pockets of the City as has been claimed, nor is it about adding lustre to the Chancellor's Budget. The Bill is meant to ensure that gas continues to be supplied to British industry and to the British people as efficiently as possible and at the most competitive price. We shall, therefore be able to take the fullest advantage of the energy resources available to us.
§ Mr. Gordon Wilson (Dundee, East)
I am rather flabbergasted by that last contribution to our proceedings. I am sorry that the hon. Member for Bolton, West (Mr. Sackville) did not grace our Committee with speeches of 826 a similar nature. I think that he found some difficulty in putting to the House reasons why the Bill will be acceptable.
The Bill is not paltry, as it represents the privatisation of a huge corporation. The arguments which must be addressed to the Bill go further than the simple issue of privatisation. I take up the challenge which the hon. Member for Erewash (Mr. Rost) made to the Minister and the Government when he said that they should look carefully at the way in which British Gas is to be put on to the market. Frankly, it is a scandal that over the past couple of years huge amounts of public cash have been virtually given away by the lack of adequate pricing of shares.
The hon. Member for Erewash made his contribution and quite wisely departed, but I think that he failed to take into account the reason why British Gas is being privatised in one unit and a huge dollop of shares will be put on the market at the same time. The answer is simple, and I do not think the Government will honestly try to deny it. The Government need the £5 billion, or whatever will be achieved, by the sale of the shares for the next Budget and for the general election. That political priority has blinded the Government to some of the other changes which were necessary in the legislation.
One of the serious failings of the legislation is the lack of provision for proper tight and tough regulations and a competition policy. We should have had one or the other, but, during the course of the Bill, we have achieved neither. The regulations are weak, and, as the hon. Member for Gordon (Mr. Bruce) rightly said, must be tightened up. There is no prospect of any competition from other supply companies.
One has only to consider the way in which the oil companies have slammed the door in the Chancellor's face to understand the lack of influence that the Government will have once the ownership of this huge monopoly passes into the private sector. I am concerned about pricing and the supply of gas, because overall production is not sound. We will lose along the way on the purchase of equipment.
My main objection to the legislation is the centralisation that it entails. The Scottish Council Development and Industry has sent all Scottish Members—the remarks are especially addressed to their Lordships in another place—a further document in which it draws attention to the need to tackle the centralisation issue. It states:
privatisation plans should involve efficient service to consumers and management of resources in Scotland. The Council believes that the optimum development of the business is best achieved with devolved management. Even the existing level of devolved management is not secured by the Bill.I find it interesting that hon. Members and members of the Select Committee who have addressed us this evening have bypassed or even debased their position as elected Members of this House. They have said that there are serious defects but that they are prepared to give the Bill a Third Reading so that the unelected House—the one which exists by patronage of succession—will be able to do a job which they do not have the political courage to carry out. That is a commentary on the way in which we run our affairs.
The Government have made serious mistakes with the Bill. They have been driven to this measure on a timetable that has been far too fast. They have adopted a structure that will be dangerous and damaging because of the level 827 of centralisation, and they have failed to look after the interests and safety of consumers. They have done this for party political reasons—to win, or in the hope of winning, the next election. Over the past four months we have been debating privatisation. I venture to suggest that once this huge private monopoly is in force, within four or five years we will be debating the need to break it up, in the same way as the American telephone system was broken up.
The Labour party has made a mistake in assuming that it is better to keep the private monopoly in one unit for the purpose of nationalisation. The Labour party is taking a gamble—whether it will be able to afford to take over the monopoly, or indeed whether it will be in government at the next election. I had hoped that the Labour party would recognise the need for adequate decentralisation. Unfortunately, the Government have refused to admit that basic principle. At the end of the day, Conservative Members, who at one time were dedicated to competition, will feel that they have betrayed the interests and longstanding philosophy of their own party.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
The House and the country are fully aware of what the Bill is all about. It is not about efficiency and consumer protection; it is about political dogma. It is concerned with attracting finance for the Government and winning votes at the next election. The Government hope to achieve that by using this vast amount of money to reduce taxes and to kid the electorate that they have fulfilled their election manifesto. It is purely and simply political dogma.
The Government are selling off the nation's assets, as has been said time and again, at a price well below market value. To use a popular cliché, they are selling £10 notes for £5. That is what will happen. It is an absolute scandal that the nation's assets can be sold off in this way.
All hon. Members are aware that the Bill allows 15 per cent. of the total assets to be purchased by people abroad. That may not appear to be a large percentage. Although I would not care to put a specific figure on it, it could amount to £1,000 million. Therefore, British Gas could be owned by people abroad to the extent of £1,000 million. If the Conservative Government are prepared to do that purely and simply to fulfil their political dogma, the British public will undoubtedly have taken note of it.
The Bill has proceeded with indecent haste in Committee and on Report. We all know what happened in the early days, but I am concerned about the Government's complete disregard of the Select Committee's recommendations. The Select Committee considered the Bill at length and in depth and made unanimous recommendations, although it has a built-in Conservative majority. That has proved to me that the Government have no regard for the work of Select Committees.
Conservative members of that Select Committee must face the biggest embarrassment. On 13 March a headline in The Guardian declared that the report stage would be unique because every member bar one of the Select Committee had signed amendments which would embarrass the Government. Indeed, we all looked forward to that unique occasion. It was the first time that a Select Committee had tabled amendments to a major Bill. We looked forward to the courage of those hon. Members who 828 signed the amendments, but what did we find? The evening when the Chairman of the Select Committee moved the amendments, only one Conservative member of the Select Committee, the hon. Member for Erewash (Mr. Rost), had the courage to vote. Apart from the hon. Gentleman and the Chairman, none of the other Select Committee members had even the decency to come to the Chamber and listen. They have done a great disservice to Select Committees.
We have always been aware of the Government's attitude. Indeed, the Secretary of State went on record a few weeks ago saying what he thinks about Back-Bench interference in Select Committees. He is shaking his head now, but that was widely reported. Those Conservative Members who supported the Select Committee's recommendations and signed the amendments have done a great disservice to Select Committee procedures. They have become a myth. If "hypocrisy" were not an unparliamentary word, I would probably use it.
I fully concede that the amendment about competition by the director general is welcome, although it could have gone further. The name of the organisation was changed to the Gas Consumers Council, but other amendments have been only minor. Indeed, the Bill remains almost as it began, and obviously that was the Committee's intention.
Many outstanding aspects are still to be dealt with, and we can only hope that they will be dealt with in another place. There is the problem of standing charges. We have heard constantly about "best endeavours". The Secretary of State and the Minister have given us assurances about that phrase. If "best endeavours" is legally binding, why do they not make it a statutory responsibility under the Bill? That would not be a hardship. People are not confident that that phrase is legally binding. The Secretary of State in his evidence to the Select Committee said that he was worried about that aspect, and that, as far as he understood it, as a layman, it was hard lines if one could not cope. For the life of me, I cannot understand why the Government will not accept that "best endeavours" should be a statutory responsibility. I hope that the Government will also give further consideration to codes of practice.
The Government continue their programme of selling the nation's assets. It means wealth for their supporters, and many of their supporters had better support the Tory party with contributions during the election campaign.
§ Mr. Peter Pike (Burnley)
I am pleased to have this final opportunity on Third Reading to speak against the Bill. Some Conservative Members seem to be under the illusion that we in the Labour party are not fully opposed to the privatisation of British Gas. We must make it clear that they are 100 per cent. wrong, that we are 100 per cent. committed to the public ownership of British Gas, and 100 per cent. opposed to the Bill.
However, I agree with one statement made by the Secretary of State in his opening speech. He referred to the present form of public ownership perhaps not having lived up to what some people expected it to achieve in 1945. I accept that in 1986 we may well need to consider certain differences when the Labour Government take organisations back into public ownership. We need to ensure, for example, that the industry is far more involved in and better serves both consumers and employees, as well as the nation, than it may have appeared to do in the past.
829 We must convince the electorate that we are not in favour of public ownership and opposed to privatisation, such as this, purely because of dogma, but because it is in the nation's best interests as we can use the industry to the nation's best advantage through public ownership.
The Bill is not in the nation's interest. The nation will suffer when the Bill receives its Third Reading, approval in the other place and, ultimately, Royal Assent. The Government are selling the industry to fulfil their political dogma and because they need money to finance either public expenditure before the general election or tax cuts. Whichever they choose, they can use the proceeds from British Gas only once. One can use an asset only once. The Government have repeatedly failed to tell the nation and the House that, and to say what they will do to close the gap of the £1.5 billion profit which British Gas at present makes for the nation. It is perfectly proper, fair and reasonable that a profitable public industry should be allowed to use that profit to subsidise some aspect of public service that can never run at a profit. I have no objection to that type of cross-subsidy. If that is Socialism and public ownership, I am proud to stand for it. I look forward to the day when we have a Government which will take this important industry back into public ownership.
It is true that the Government's policy on gas nationalisation is aimed at short-term financial gain and that that policy is long-term financial folly and nonsense. This Government, who pride themselves on being the economists and financiers of the world, should recognise that their policy is nonsense and not in the interests of the nation.
The Government gave no account to the Standing Committee of the amount that they expected to receive from this biggest ever sale of a publicly owned industry. It is almost certain that we will not get the true value for it. If recent privatisations are anything to go by, the people who will make the money will be the financiers in the City and the friends of the Conservative Government. The people whom the Government represent will not benefit.
The Bill is not in the national energy interests of this country. Energy is so important and fundamental to the nation that it should be controlled by the Government. It should therefore remain under public control and should not be in private hands. A publicly owned energy industry should pursue policies of conservation and develop new fields. These policies will suffer once the Bill receives the Royal Assent. British Gas has a vital role to play in developing substitute natural gas supplies which will be essential in the next century when the natural gas in the North sea and the Irish sea runs out. We will need substitute sources of supply, and they should be provided by an organisation under public control, not in the private sector.
The Government have said several times that they need to remove the shackles from the industry. They believe that the Bill will do that. However, this Government have actually imposed more shackles on publicly owned industries than any other Government. The Government have said that British Gas must sell the Wytch Farm oilfield and that British Gas could not buy Sleipner gas. There are many other examples of how the Government have shackled the industry—for example, through the gas levy.
If the Government believed that management and the control of British Gas had been too restrictive and that there had been too much interference by the Government 830 —if one accepts that that argument is true—they could have removed the restrictions. They could have done that without having a Bill for privatisation and by giving more freedom to British Gas.
In Committee, the Government repeatedly praised the record of British Gas. However, one wonders why they now need to put that industry into private ownership, especially if the industry has served the nation so well. I would certainly support 100 per cent. the idea that the industry has served the nation well.
The Bill is detrimental to the consumer. Although an important amendment was moved by the Government on Report, in the face of considerable pressure by my hon. Friends in Committee, we are still very anxious about the Bill. We believe that profit will become more important than service, that showrooms will be under threat and that corners will be cut. The Secretary of State said in his opening speech that he believed that commercial judgments would force the new owners of British Gas to conform to the levels of safety to which I have referred. Although I accept that that is likely to be true, there is no reason why amendments on safety aspects should not be in the Bill, to ensure that such measures are carried out.
We have ended up with a bad Bill, and I hope that hon. Members will vote against it. I look forward to the day when British Gas is taken back into public ownership.
§ Mr. Peter Hardy (Wentworth)
I agree with my hon. Friend the Member for Burnley (Mr. Pike) over the way in which he disposed of the charge that the Opposition were not 100 per cent. opposed to this deplorable Bill. The Secretary of State tried to launch that idea at the beginning of the debate when he offered the House his contribution, which was a mixture of urbanity and arrogance. He seemed, in his birthday euphoria, to be enjoying not having the discomfiture of his right hon. Friend the Chancellor of the Exchequer and the problems that that right hon. Gentleman faces.
The Secretary of State suggested that the Bill had been thoroughly prepared and carefully worked out. He proved that this was the case by his claim that there were so few amendments. He may find that some of the amendments that my right hon. and hon. Friends and I tabled might have improved the Bill. Had the hon. Member for Erewash (Mr. Rost) been a member of the Standing Committee, he might well have supported some of the Opposition amendments. I believe that in some mild way his was the only sane and sensible contribution that we have heard from the Government Benches today.
As I have said, there was only a very minor word of sanity from the Tory Benches in the contribution from the hon. Member for Erewash. Quite frankly, some of the speeches from Tory Members this evening have been deplorable. They have clearly overlooked a number of points that Opposition Members made in Committee. Tory Members seemed to imagine that the Opposition will be somewhere in the queue behind them when privatisation takes place.
We know why Tory Members are here today and interested in the Bill. I am only sorry that the hon. Member for Bolton, North-East (Mr. Thurnham) received a shock to his system when he discovered on joining the Standing Committee that the Committee was not going to last for only a minute or so.
831 In the short time that I have available, my task is to summarise the main objections to the Bill and the principal points that my hon. Friends have made. Basically, the Opposition regard the Bill, whatever view one may take of the quality of our opposition to it, as a dogmatic assertion of irresponsibility and a profligate approach to a great public asset.
The Secretary of State suggested that, because people were not joining in fervent opposition to the Bill and because people had not become passionately attached to the idea of community involvement, somehow the Morrisonian concept had failed. However, if one looks at the way in which British Gas has become perhaps the greatest single industry or commercial organisation in Britain and one of the most successful in Europe if not in the world, it is evident that with good management and proper industrial relations public ownership can make an enormous contribution to the national good. The Opposition have real reservations as to whether the privatised British Gas will make the same contribution to the British economy or to our record of commercial success—a success that is rapidly eluding the Government.
My hon. Friends have offered detailed criticism of the Bill. My hon. Friend the Member for Rhondda (Mr. Rogers) showed how the profit motive, without adequate control, can lead to appalling risk. In the debate we have stressed on several occasions that we are anxious about safety. We have not, as my right hon. Friend the Member for Salford, East (Mr. Orme) said, tried to start scare stories about safety. However, we are entitled to express reservations about the safety factor.
I know that from time to time the Secretary of State became somewhat restive when we stressed our concern about safety, but that concern remains. My hon. Friend the Member for Cynon Valley (Mrs. Clwyd) pursued that matter in Standing Committee and stressed that if the Health and Safety Executive is to fulfil its responsibilities with regard to gas safety, it will have to receive a greater commitment and larger resources. We were not reassured when the Minister of State said that there had been a substantial upsurge and growth in the Health and Safety Executive, as it transphed that that "upsurge" was from 1,266 people to 1,242. That arithmetical presentation did not give us much confidence about the Government's commitment to safety.
We remain concerned about inadequate provision for the consumer. One representative per region is not enough. I hope that our anxieties about this aspect will be firmly expressed in the other place. I imagine that some Members of the other place who are worried about the regions will not give great joy to the Government.
The hon. Member for Rochford (Dr. Clark) offered us a reassurance about the formula. We were not reassured when the Government produced that appalling, complicated numerical gobbledegook. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) had to explain it to the Committee. He is a historian. The hon. Member for Rochford had to wait until Third Reading to tell us that it was all clear and concise. How many gas consumers are seriously impressed by the formula that the hon. Member for Rochford now finds so attractive?
The regulator does not have sufficient powers, esteem or standing. I believe that, during this debate, some 832 Conservative Members began to move towards that view. There is certainly cause for concern that the director general may not have adequate powers either to interfere in prices or to ensure that there are sensible policies to guarantee supply.
We must be suspicious of the Government's attitude to supply. The Secretary of State was the Treasury's willing tool in blocking Sleipner's contract, but he now suggests that British Gas can return to that field for supply. I wonder whether, despite the fall in oil prices, gas consumers will pay heavily for that political interference. The Secretary of State offered British Gas the attractive prospect of freedom from political interference but British Gas probably well remembers that political interference by a Conservative Government has greatly damaged the industry and been of great disadvantage to the consumer.
We do not believe that the British consumer will benefit from this privatisation. I have asked the Minister of State to tell us whether people from overseas have already been employed to assist in the disposal of British Gas under part II. The House should be aware, although the press has appeared to ignore this fact, that Goldman Sachs of New York, Wood Gundy, Nomura of Tokyo and the Swiss Bank Corporation International of Zurich are all involved in assisting the Government to develop this vista of wider and democratic share ownership in Britain. We do not need the Swiss Bank Corporation International to assist in getting shares for the workers.
Presumably workers with shares will not be allowed to be influential. The quorum at the annual meeting will be two shareholders, which gives meaning to the Conservative party's attachment to democratic and wider share ownership! Those two shareholders will presumably be Sir Denis Rooke and some other friend who has a fair number of votes. The quorum will probably not include the workers. Perhaps the hon. Member for Rochford or, perhaps even more likely, the hon. Member for Enfield, Southgate (Mr. Portillo) will be involved.
§ Mr. Hardy
The hon. Gentleman was particularly keen to see a structure which would allow the piracy in terms of economic theory to which he has long been attached. That is why I offered that prospect.
My hon. Friend the Member for Pcntefact and Castleford (Mr. Lofthouse) reminded the House that the Government believed that they had served Britain's interests well by suggesting that no single foreign holding would be allowed to have more than 15 per cent. of the shares. The Government expected us to fall down in gratitude and satisfaction when that national protection was offered. We cannot guess what 15 per cent. will be because we do not know for how much British Gas will be sold. I hope that the other place will insist on the Department of Energy providing information on the character of the privatisation which will follow.
The Secretary of State said that the Committee considered the matter in detail. However, some key aspects of the flotation were not considered. The Government would not tell us how much British Gas was worth. It is all right for the Secretary of State to say that some Labour Members suggested that the asset value should be a guide to the sale price—the Government may not expect to receive £18 billion from the sale, which is the net asset value at present—but the right hon. 833 Gentleman cannot then protest if, on selling British Gas for £6 billion or £7 billion, we complain that the national interest has been badly served and that a public asset has been disposed of in a profligate manner.
We are not relieved when, having expressed concern about the people who might own British Gas, we are told that Companies Act protection will apply, which means that anyone who owns more than 5 per cent. of the shares will have to be known to British Gas. That means that Conservative Members or, more likely, some of their more disreputable friends will have to declare a holding when it gets to a £300 million or £400 million level. We gain no great comfort from the thought that people like Conservative Members—or like President Marcos of the Philippines, Baby Doc of Haiti or any other of the assorted people who are viewed more favourably by Conservative Members than they are by us—could be secret holders of British Gas shares. What a picture of a measure which is supposed to assist the United Kingdom but which is a contemptible attempt by the Government to ensure that they get enough money to bribe the electorate at the next general election. That fact was not mentioned by the Secretary of State, but it was mentioned several times by my colleagues. It will he mentioned many more times between now and the next general election.
§ The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith)
We have had a good debate in the final stages of the Gas Bill. Although there are obviously deep differences and divisions between the two sides of the House on what is best for the future of British Gas, all the speeches have been marked by an appreciation of the achievements of the gas industry.
Gas is a great, important and well-managed industry, which is a tribute to those who have taken part in it and built it up over many years. Both sides of the House are united in their desire for the gas industry to continue to be a great industry and to serve Britain. Obviously, it is disappointing that we differ about the need for change. That background has resulted in a marked constructiveness and public-spiritedness in our debates. I should like to thank those hon. Members who have contributed to our debates.
My right hon. Friend the Secretary of State and I appreciated the contributions made by the Select Committee on Energy.
§ Mr. Buchanan-Smith
I believe that we have shown it. The Select Committee's work, the evidence that it took and the report that it submitted to the House are all signs of that. The Government, including my right hon. Friend the Secretary of State and I, have made a direct response to the Select Committee's recommendations. For example, we have responded with respect to competition, to which my hon. Friend the Member for Enfield, Southgate (Mr. Portillo) referred. I am afraid that I always think of the way in which the right hon. Member for Bristol, South (Mr. Cocks) used to refer to my hon. Friend the Member for Enfield, Southgate. I am glad that I did not fall into the mixture of words used by the right hon. Gentleman. The competition measures in the Bill have been improved.
With regard to energy efficiency, the hon. Member for Pontefract and Castleford (Mr. Lofthouse) tried to poke a 834 certain amount of fun. My hon. Friends the Members for Elmet (Mr. Batiste) and for Erewash (Mr. Rost) were right to stress the importance of energy efficiency and conservation, and on Report we had a good debate on it. Clause 4 incorporates an obligation on the Secretary of State and on the director general to ensure efficient and economic gas supplies and use. That responsibility cannot lightly be discarded. It has been in the Bill from the beginning and, although it may not be as specific as my hon. Friends might have liked, we are committed to it, and the director will be committed to it when the Bill is enacted.
If I may deal with the question of transparency in the accounts—the second debate on Report in regard to the Select Committee report—I remind the hon. Member for Pontefract and Castleford that my hon. Friend the Member for Havant (Mr. Lloyd) withdrew his amendment because I was able to give the reassurance that this was a matter to which the Government had paid attention. Although it was not in the Bill in the way that my hon. Friend might ideally have desired, the point was covered in the authorisation that comes under the Bill.
§ Mr. Lofthouse
Does the Minister agree that his hon. Friend the Member for Havant (Mr. Lloyd), before he withdrew his amendment, made it clear that he thought that some parts of the Select Committee report were falling on deaf ears?
§ Mr. Buchanan-Smith
They certainly did not fall on deaf ears. I have given a number of examples of where direct action has been taken. I pay tribute to the work of the Select Committee.
Many speakers today have concentrated on the two important areas of competition and regulation. I make no apology for the fact that one of the major purposes of the Bill, in areas where British Gas obviously has a monopoly, has been to write in strong, clear and firm regulations. We have seen no need—indeed, we think it is undesirable—to extend the area of regulation beyond that which is absolutely necessary.
With regard to the contract market—something that the Opposition have never come to accept—increasingly, as the debate has gone on outside the House, those who have asked for more regulation have clearly demonstrated, if demonstration were ever needed, that there is competition in the industrial market, and that we were right to limit regulation to those areas where it was needed. In that regard, we have made sure that it will be strong.
By writing into the Bill an obligation on the director general to promote competition, we have given him a role in that respect as in other areas relating to pipelines and the common carrier. The director general will also have control over the tariff and its greater transparency.
Perhaps most notable—this we introduced on Report—are the new provisions relating to the obligation on British Gas to provide back-up supplies. This, I believe, makes the common carrier provisions more important and gives them more force than ever before. In a number of important areas where competition needs enforcement, we have made certain that these form a major part of the Bill, together with the authorisation under which the director general will have certain responsibilities.
As to regulation, the director general has real powers of enforcement in respect of some of the matters that I have 835 mentioned. If the public gas supplier does not comply with its obligations, the director general has power to enforce it to do so. He also has the power to modify the authorisation to ensure that the powers and authorisation provided in the Bill are effective.
I believe that the Government have been responsive at all stages of the Bill to the importance that the House attaches to the need to protect and promote the interests of the consumer. We made a major amendment to the Bill on Report to ensure that it is explicit about what the Gas Consumers Council is able to do. We have made sure that in all areas—in the matter of contracts, appliances and goods imported from abroad—the council will be able to act, and any consumer who feels aggrieved in any way will be able to take his complaints to the council.
Contrary to what the right hon. Member for Salford, East (Mr. Orme) said, there will be regional representation on the Gas Consumers Council. We are giving the council the freedom to set up the kind of structure and organisation that, in the light of its experience under other legislation, it judges best able to represent the needs of consumers throughout the country. I certainly trust the new Gas Consumers Council to carry on the work of the old Gas Users Council. I believe it is right to give the new council a degree of freedom to run its own affairs and to operate in the interests of consumers. I am confident that it will be as effective as the old council.
On the question of safety, once again we have witnessed a certain amount of scare-mongering to the effect that, in privatising British Gas, we are in some way weakening safety provisions. That is not true. We have taken the opportunity in the Bill and in other related measures to strengthen the safety provisions so that the new gas industry under private ownership will have greater obligations than hitherto.
We are continuing the 24-hour emergency service, and British Gas will continue to carry out free safety checks for the elderly and disabled. There will be a stronger Health and Safety Executive regulation which in future will be backed by the power of custodial sentences rather than just fines. We are increasing the number of Health and Safety Executive inspectors, contrary to the impression that the hon. Member for Cynon Valley (Mrs. Clwyd) has constantly tried to give to the House. More inspectors are being recruited. The Health and Safety Executive is devoting 60 per cent. more of its time to gas safety measures than hitherto. It is sheer scaremongering to say what the hon. Member for Cynon Valley and other Opposition Members have been saying. There will be new codes of practice for gas installers. My right hon. Friend the Secretary of State for Trade and Industry will introduce new regulations on safety standards for appliances, including imported appliances.
The Bill is good for the industry, for consumers and for the nation. As a result of the Bill we shall see a continuation of the Government's policy of returning the assets of the nation to the people. The number of shareholders in this country has doubled since 1979 because of the policies of the Government. The Bill takes wider share ownership another great step forward. I ask the House to support the Third Reading of the Bill.
§ Question put, That the Bill be now read the Third time:—
§ The House divided: Ayes 287, Noes 201.839
|Division No.115]||[7.00 pm|
|Adley, Robert||Eyre, Sir Reginald|
|Alexander, Richard||Fairbairn, Nicholas|
|Amess, David||Fallon, Michael|
|Ancram, Michael||Farr, Sir John|
|Arnold, Tom||Favell, Anthony|
|Ashby, David||Fenner, Mrs Peggy|
|Aspinwall, Jack||Finsberg, Sir Geoffrey|
|Atkins, Rt Hon Sir H.||Fletcher, Alexander|
|Atkins, Robert (South Ribble)||Fookes, Miss Janet|
|Atkinson, David (B'm'th E)||Forman, Nigel|
|Baker, Rt Hon K. (Mole Vall'y)||Forsyth, Michael (Stirling)|
|Baker, Nicholas (Dorset N)||Fowler, Rt Hon Norman|
|Baldry, Tony||Fox, Marcus|
|Banks, Robert (Harrogate)||Franks, Cecil|
|Batiste, Spencer||Fraser, Peter (Angus East)|
|Beaumont-Dark, Anthony||Freeman, Roger|
|Bellingnam, Henry||Fry, Peter|
|Bennett, Rt Hon Sir Frederic||Gale, Roger|
|Benyon, William||Galley, Roy|
|Best, Keith||Gilmour, Rt Hon Sir Ian|
|Bevan, David Gilroy||Glyn, Dr Alan|
|Biffen, Rt Hon John||Goodlad, Alastair|
|Blackburn, John||Gorst, John|
|Body, Sir Richard||Gow, Ian|
|Bonsor, Sir Nicholas||Gower, Sir Raymond|
|Boscawen, Hon Robert||Grant, Sir Anthony|
|Bottomley, Peter||Greenway, Harry|
|Bottomley, Mrs Virginia||Gregory, Conal|
|Bowden, A. (Brighton K'to'n)||Griffiths, Sir Eldon|
|Bowden, Gerald (Dulwich)||Grist, Ian|
|Brandon-Bravo, Martin||Ground, Patrick|
|Bright, Graham||Grylls, Michael|
|Brinton, Tim||Hampson, Dr Keith|
|Brittan, Rt Hon Leon||Hanley, Jeremy|
|Brown, M. (Brigg & Cl'thpes)||Harvey, Robert|
|Browne, John||Haselhurst, Alan|
|Bruinvels, Peter||Hawkins, C. (High Peak)|
|Buchanan-Smith, Rt Hon A.||Hawkins, Sir Paul (N'folk SW)|
|Buck, Sir Antony||Hawksley, Warren|
|Budgen, Nick||Hayes, J.|
|Burt, Alistair||Hayhoe, Rt Hon Barney|
|Butcher, John||Hayward, Robert|
|Butler, Rt Hon Sir Adam||Heathcoat-Amory, David|
|Butterfill, John||Heddle, John|
|Carlisle, John (Luton N)||Heseltine, Rt Hon Michael|
|Carlisle, Kenneth (Lincoln)||Hickmet, Richard|
|Carlisle, Rt Hon M. (W'ton S)||Higgins, Rt Hon Terence L.|
|Carttiss, Michael||Hill, James|
|Cash, William||Hind, Kenneth|
|Chalker, Mrs Lynda||Hirst, Michael|
|Channon, Rt Hon Paul||Hogg, Hon Douglas (Gr'th'm)|
|Chapman, Sydney||Holland, Sir Philip (Gedling)|
|Chope, Christopher||Holt, Richard|
|Clark, Hon A. (Plym'th S'n)||Hordern, Sir Peter|
|Clark, Dr Michael (Rochford)||Howard, Michael|
|Clark, Sir W. (Croydon S)||Howarth, Alan (Stratf'd-on-A)|
|Cockeram, Eric||Howarth, Gerald (Cannock)|
|Colvin, Michael||Howell, Rt Hon D. (G'ldford)|
|Conway, Derek||Howell, Ralph (Norfolk, N)|
|Coombs, Simon||Hubbard-Miles, Peter|
|Cope, John||Hunt, David (Wirral W)|
|Corrie, John||Hunt, John (Ravensbourne)|
|Couchman, James||Hunter, Andrew|
|Cranborne, Viscount||Jackson, Robert|
|Critchley, Julian||Jenkin, Rt Hon Patrick|
|Crouch, David||Jessel, Toby|
|Currie, Mrs Edwina||Johnson Smith, Sir Geoffrey|
|Dickens, Geoffrey||Jones, Gwilym (Cardiff N)|
|Dorrell, Stephen||Jones, Robert (Herts W)|
|Douglas-Hamilton, Lord J.||Joseph, Rt Hon Sir Keith|
|Dover, Den||Kellett-Bowman, Mrs Elaine|
|Dunn, Robert||Kershaw, Sir Anthony|
|Durant, Tony||Key, Robert|
|Dykes, Hugh||King, Roger (B'ham N'field)|
|Edwards, Rt Hon N. (P'broke)||Knight, Greg (Derby N)|
|Eggar, Tim||Knowles, Michael|
|Emery, Sir Peter||Knox, David|
|Evennett, David||Lamont, Norman|
|Lang, Ian||Raison, Rt Hon Timothy|
|Latham, Michael||Rathbone, Tim|
|Lawler, Geoffrey||Renton, Tim|
|Lawrence, Ivan||Rhodes James, Robert|
|Lee, John (Pendle)||Rhys Williams, Sir Brandon|
|Lennox-Boyd, Hon Mark||Ridley, Rt Hon Nicholas|
|Lester, Jim||Ridsdale, Sir Julian|
|Lewis, Sir Kenneth (Stamf'd)||Rifkind, Rt Hon Malcolm|
|Lightbown, David||Rippon, Rt Hon Geoffrey|
|Lloyd, Ian (Havant)||Roe, Mrs Marion|
|Lloyd, Peter (Fareham)||Rost, Peter|
|Lord, Michael||Rowe, Andrew|
|Luce, Rt Hon Richard||Rumbold, Mrs Angela|
|Lyell, Nicholas||Ryder, Richard|
|McCrindle, Robert||Sackville, Hon Thomas|
|McCurley, Mrs Anna||Sainsbury, Hon Timothy|
|Macfarlane, Neil||St. John-Stevas, Rt Hon N.|
|MacGregor, Rt Hon John||Sayeed, Jonathan|
|MacKay, John (Argyll & Bute)||Shaw, Giles (Pudsey)|
|McNair-Wilson, M. (N'bury)||Shepherd, Colin (Hereford)|
|McNair-Wilson, P. (New F'st)||Silvester, Fred|
|McQuarrie, Albert||Skeet, Sir Trevor|
|Major, John||Smith, Sir Dudley (Warwick)|
|Malins, Humfrey||Smith, Tim (Beaconsfield)|
|Maples, John||Speller, Tony|
|Marland, Paul||Spencer, Derek|
|Marshall, Michael (Arundel)||Spicer, Michael (S Worcs)|
|Mates, Michael||Steen, Anthony|
|Mather, Carol||Stern, Michael|
|Maude, Hon Francis||Stevens, Lewis (Nuneaton)|
|Mawhinney, Dr Brian||Stewart, Allan (Eastwood)|
|Maxwell-Hyslop, Robin||Stewart, Andrew (Sherwood)|
|Mayhew, Sir Patrick||Stokes, John|
|Meyer, Sir Anthony||Sumberg, David|
|Miller, Hal (B'grove)||Tapsell, Sir Peter|
|Mills, Iain (Meriden)||Temple-Morris, Peter|
|Mills, Sir Peter (West Devon)||Thomas, Rt Hon Peter|
|Miscampbell, Norman||Thompson, Donald (Calder V)|
|Moate, Roger||Thompson, Patrick (N'ich N)|
|Monro, Sir Hector||Thornton, Malcolm|
|Moore, Rt Hon John||Thurnham, Peter|
|Morris, M. (N'hampton S)||Townsend, Cyril D. (B'heath)|
|Morrison, Hon C. (Devizes)||Tracey, Richard|
|Morrison, Hon P. (Chester)||Trippier, David|
|Moynihan, Hon C.||Twinn, Dr Ian|
|Mudd, David||Vaughan, Sir Gerard|
|Neale, Gerrard||Viggers, Peter|
|Nelson, Anthony||Wakeham, Rt Hon John|
|Neubert, Michael||Walker, Bill (T'side N)|
|Newton, Tony||Walker, Rt Hon P. (W'cester)|
|Nicholls, Patrick||Waller, Gary|
|Normanton, Tom||Wardle, C. (Bexhill)|
|Norris, Steven||Warren, Kenneth|
|Onslow, Cranley||Watson, John|
|Oppenheim, Phillip||Watts, John|
|Oppenheim, Rt Hon Mrs S.||Wells, Bowen (Hertford)|
|Osborn, Sir John||Wheeler, John|
|Page, Richard (Herts SW)||Wiggin, Jerry|
|Patten, J. (Oxf W & Abgdn)||Winterton, Nicholas|
|Peacock, Mrs Elizabeth||Wolfson, Mark|
|Porter, Barry||Wood, Timothy|
|Portillo, Michael||Yeo, Tim|
|Powell, William (Corby)||Young, Sir George (Acton)|
|Prentice, Rt Hon Reg||Tellers for the Ayes:|
|Price, Sir David||Mr. Archie Hamilton and|
|Pym, Rt Hon Francis||Mr. Gerald Malone.|
|Adams, Allen (Paisley N)||Beckett, Mrs Margaret|
|Alton, David||Beith, A. J.|
|Anderson, Donald||Bell, Stuart|
|Archer, Rt Hon Peter||Benn, Rt Hon Tony|
|Ashley, Rt Hon Jack||Bennett, A. (Dent'n & Red'sh)|
|Ashton, Joe||Bermingham, Gerald|
|Atkinson, N. (Tottenham)||Bidwell, Sydney|
|Bagier, Gordon A. T.||Blair, Anthony|
|Barnett, Guy||Boyes, Roland|
|Barron, Kevin||Bray, Dr Jeremy|
|Brown, Gordon (D'f'mline E)||Hughes, Robert (Aberdeen N)|
|Brown, Hugh D. (Provan)||Hughes, Roy (Newport East)|
|Brown, N. (N'c'tle-u-Tyne E)||Hughes, Sean (Knowsley S)|
|Brown, Ron (E'burgh, Leith)||Janner, Hon Greville|
|Bruce, Malcolm||Jenkins, Rt Hon Roy (Hillh'd)|
|Buchan, Norman||John, Brynmor|
|Caborn, Richard||Jones, Barry (Alyn & Deeside)|
|Callaghan, Rt Hon J.||Kaufman, Rt Hon Gerald|
|Callaghan, Jim (Heyw'd & M)||Kennedy, Charles|
|Campbell, Ian||Kilroy-Silk, Robert|
|Campbell-Savours, Dale||Kinnock, Rt Hon Neil|
|Canavan, Dennis||Kirkwood, Archy|
|Carlile, Alexander (Montg'y)||Lambie, David|
|Carter-Jones, Lewis||Lamond, James|
|Cartwright, John||Leadbitter, Ted|
|Clark, Dr David (S Shields)||Leighton, Ronald|
|Clarke, Thomas||Litherland, Robert|
|Clay, Robert||Livsey, Richard|
|Clelland, David Gordon||Lloyd, Tony (Stretford)|
|Clwyd, Mrs Ann||Lofthouse, Geoffrey|
|Cocks, Rt Hon M. (Bristol S)||Loyden, Edward|
|Cohen, Harry||McCartney, Hugh|
|Conlan, Bernard||McDonald, Dr Oonagh|
|Cook, Frank (Stockton North)||McKay, Allen (Penistone)|
|Corbett, Robin||McKelvey, William|
|Corbyn, Jeremy||MacKenzie, Rt Hon Gregor|
|Craigen, J. M.||Maclennan, Robert|
|Crowther, Stan||McNamara, Kevin|
|Cunliffe, Lawrence||McTaggart, Robert|
|Cunningham, Dr John||Madden, Max|
|Dalyell, Tam||Marek, Dr John|
|Davies, Rt Hon Denzil (L'lli)||Marshall, David (Shettleston)|
|Davis, Terry (B'ham, H'ge H'l)||Martin, Michael|
|Deakins, Eric||Mason, Rt Hon Roy|
|Dewar, Donald||Maxton, John|
|Dixon, Donald||Maynard, Miss Joan|
|Dormand, Jack||Meacher, Michael|
|Douglas, Dick||Michie, William|
|Dubs, Alfred||Mikardo, Ian|
|Duffy, A. E. P.||Millan, Rt Hon Bruce|
|Dunwoody, Hon Mrs G.||Miller, Dr M. S. (E Kilbride)|
|Eadie, Alex||Mitchell, Austin (G't Grimsby)|
|Eastham, Ken||Morris, Rt Hon A. (W'shawe)|
|Edwards, Bob (W'h'mpt'n SE)||Morris, Rt Hon J. (Aberavon)|
|Ellis, Raymond||Nellist, David|
|Evans, John (St. Helens N)||Oakes, Rt Hon Gordon|
|Ewing, Harry||O'Brien, William|
|Faulds, Andrew||O'Neill, Martin|
|Field, Frank (Birkenhead)||Orme, Rt Hon Stanley|
|Fields, T. (L'pool Broad Gn)||Park, George|
|Fisher, Mark||Parry, Robert|
|Flannery, Martin||Patchett, Terry|
|Foot, Rt Hon Michael||Pavitt, Laurie|
|Forrester, John||Penhaligon, David|
|Foster, Derek||Pike, Peter|
|Foulkes, George||Powell, Raymond (Ogmore)|
|Fraser, J. (Norwood)||Prescott, John|
|Freeson, Rt Hon Reginald||Radice, Giles|
|Freud, Clement||Redmond, Martin|
|Garrett, W. E.||Richardson, Ms Jo|
|Godman, Dr Norman||Robertson, George|
|Golding, John||Robinson, G. (Coventry NW)|
|Gould, Bryan||Rogers, Allan|
|Gourlay, Harry||Rooker, J. W.|
|Hamilton, James (M'well N)||Ross, Ernest (Dundee W)|
|Hamilton, W. W. (Fife Central)||Ross, Stephen (lsle of Wight)|
|Hancock, Michael||Rowlands, Ted|
|Hardy, Peter||Sedgemore, Brian|
|Harman, Ms Harriet||Sheerman, Barry|
|Harrison, Rt Hon Walter||Sheldon, Rt Hon R.|
|Hart, Rt Hon Dame Judith||Shore, Rt Hon Peter|
|Haynes, Frank||Short, Mrs R.(W'hampt'n NE)|
|Healey, Rt Hon Denis||Silkin, Rt Hon J.|
|Heffer, Eric S.||Skinner, Dennis|
|Hogg, N. (C'nauld & Kilsyth)||Smith, C.(Isl'ton S & F'bury)|
|Holland, Stuart (Vauxhall)||Smith, Rt Hon J. (M'ds E)|
|Home Robertson, John||Snape, Peter|
|Howells, Geraint||Soley, Clive|
|Hoyle, Douglas||Spearing, Nigel|
|Hughes, Dr Mark (Durham)||Stewart, Rt Hon D. (W Isles)|
|Stott, Roger||Welsh, Michael|
|Strang, Gavin||White, James|
|Straw, Jack||Wigley, Dafydd|
|Thomas, Dafydd (Merioneth)||Williams, Rt Hon A.|
|Thomas, Dr R. (Carmarthen)||Wilson, Gordon|
|Thompson, J. (Wansbeck)||Winnick, David|
|Thorne, Stan (Preston)||Wrigglesworth, Ian|
|Tinn, James||Young, David (Bolton SE)|
|Wainwright, R.||Tellers for the Noes:|
|Wallace, James||Mr. John McWilliam and|
|Wardell, Gareth (Gower)||Mr. Ron Davies.|
§ Bill read the Third time, and passed.