HC Deb 16 January 1992 vol 201 cc1175-8

`After subsection (2) of Section 20 of the Gas Act 1986 there shall be inserted— (2A) The Director shall not allow such shorter period if in his opinion—

(1) The construction of this pipeline constitutes an anti-competitive practice or an abuse of a dominant position in the market.

(2) The public gas supplier has prior to giving notice under subsection (1) above made application to a local planning authority for planning permission for that pipeline and that application will inhibit potential competitors of this supplier from executing any works for the construction of a pipeline to serve a similar market.

(3) The intention of the public gas supplier in giving notice under subsection (I) above is to inhibit potential competitors of the supplier from executing any works for the construction of a pipeline to serve a similar market.

(4) The investment in the pipeline is inconsistent with the public gas supplier's duty under section 9(1)(a) above.".'.—[Mr. Tim Smith.]

Brought up, and read the First time.

8 pm

Mr. Tim Smith (Beaconsfield)

The term "level playing field" is much used, but it best describes what my new clause seeks to achieve. Until quite recently, British Gas was the monopoly constructor of pipelines. There are now other companies that wish to compete with British Gas in constructing pipelines and they are finding planning and other difficulties in their way. The object of the new clause is to give additional powers to the Director General of Gas Supply so that he can deal with the problem.

I do not want to delay the House by going into great detail. This is a technical matter, but the principle is simple enough. I am glad to say that the principle has the support of the Director General of Gas Supply, who I was glad to see was knighted in the new year's honours. I believe that he does an excellent job in combating the monopoly which is British Gas. He has written to my hon. Friend the Minister to say that he supports the principle behind the new clause.

Timing is important. The director general explains in his letter: There has been no competitive pipeline construction in the gas supply area for many years. There are ten new power stations on the planning path at this time … as a consequence pipelines will be required to carry the gas to the sites. That means that timing is critical. I believe that my hon. Friend the Minister may be waiting for agreement within the European Community on two important directives that will impact upon these matters. My plea to him is that the matter is more urgent than that, for the reasons that I have given. I hope, therefore, that he will give serious consideration to the principle behind my proposal.

Mr. Morgan

We were rather worried that the hon. Member for Beaconsfield (Mr. Smith) would not move the new clause, and we are pleased that he did. It raises some interesting considerations about the way that the Government, with the support of the Director General of Gas Supply, see the evolution of a competitive gas market. As we said in Committee, a competitive gas market could take two different forms. There could be one set of pipelines with different suppliers pushing gas through them. There could be two sets of pipelines. There could be two sets of long-distance tranmission lines and only one local distribution network. As the Minister agreed in Committee, there is a possibility under the Government's proposals that there could be two sets of local distribution pipes as well as two sets of long distance transmission pipes from the gas fields or the beachheads in East Anglia, Morecambe bay, north Wales or wherever.

I shall explain why the Opposition cannot support the new clause, even though we think that it contains some interesting ideas. We think that the ability to break ground, as it were, for long distance transmission and transmission pipes requires much more consultation with local authorities, which will have to give planning permission. We entirely agree, however, that it should not be possible for British Gas to abuse its monopoly position. That may or may not be covered adequately by article 85—I think that that is the relevant article—of the treaty of Rome. I believe that that provision deals with dominant position. We are not completely happy that enough work has yet been done with the local authorities.

We do not know what the reaction of the general public will be to the idea of two or possibly more companies having the right to break streets. We said in Committee that it has occurred only once in the context of the British gas industry, and that was in Edinburgh before the first world war. We think that residents would not be comforted if two entirely separate gas networks were to evolve.

There are some possible health and safety implications that we have not yet sufficiently explored. Gas is an extremely combustible commodity. If a public-spirited citizen is taking his dog for a walk and he smells gas, or thinks he does—it is often a badly cleaned sewer, and in both instances there is methane—and decides to telephone the gas supplier, he will look for "G" in the telephone book and make a call. To be fair, there is usually a response within 20 minutes and something is done. If there are two or three sets of gas suppliers or networkers, can we be sure how we would organise emergency services?

Mr. Tim Smith

I might he able to reassure the hon. Gentleman. As far as I am aware, the companies that are interested in competing in British Gas are not interested in competing to supply gas to domestic consumers by digging up the streets and having two or three lines running underneath the pavement. They are more interested in supplying the industrial market over long distances.

Mr. Morgan

Unfortunately, the implications of opening two ownerships of long-distance transmission gas pipelines and of owning, local distribution networks is that two gas companies will run lines down the middle of the street and compete for supply. That which happened in Edinburgh before the first world war was not excluded by the Minister in Committee, and I assume that he will not exclude it when he replies on behalf of the Government, unless he has had a change of heart. Therefore, there is the possibility of two separate street-breaking rights for local distribution gas suppliers. That is possible given the way that the Government envisage the long-term development of transmission. If the Minister wants to say that that is completely off, that it is out of court and that he has changed his mind since Committee, fair enough. If that is the position, we shall listen. We need to know, however, exactly how the health and safety requirements would be implemented, bearing in mind that gas is such a highly combustible and explosive commodity.

We do not think that the hon. Member for Beaconsfield has considered sufficiently how the emergency services would work if there were actual or suspected gas leaks or distribution leaks. The public respond extremely well if there is a whiff of gas, and we must ensure that they would be able to respond in the same way if there were two or more suppliers. We do not know what the reaction of local authorities and the general public would be if two or three additional gas suppliers had the right to break streets to provide a supply or repair a supply. Local authorities would have to be consulted before we could be sure of their reaction. We cannot give our support to the new clause at present.

Mr. Redwood

The Government are sympathetic to the concerns that have been raised by my hon. Friend the Member for Beaconsfield (Mr. Smith) about inequalities in the laying of gas pipelines. We remain firmly committed to the introduction of the level playing field that he is seeking. We need to take account of existing European Community legislation on the environment and the revised Seveso directive, when it is adopted.

My hon. Friend's new clause contains provisions on anti-competitive or predatory behaviour. That can already be tackled by the Director General of Fair Trading under existing competition legislation. Anyone with evidence of such behaviour should make a complaint to the DGFT. I encourage those who think that such practices may be taking place to do just that. I am not convinced that the Director General of Gas Supply requires new powers in this area in addition to the powers that already lie with the Director General of Fair Trading.

In the longer term, the best way forward is to ensure that a fully competitive market exists in the supply of gas. This objective is being actively pursued. I do not find myself in agreement with the defence of monopoly that comes from the Opposition Benches. The Bill introduces new powers to end the monopoly of British Gas, and it is welcome for that. We recognise that the new clause takes up a genuine concern. The Government are therefore considering what legislative changes—especially planning changes—may be needed to create a level playing field to ensure that competition develops in the construction of gas pipelines. I cannot accept my hon. Friend's new clause. I do not think that it is in the right form, and I think that he might agree with me.

Mr. Tim Smith

I am grateful to my hon. Friend for what he has said. I understand that he recognises the difficulty and that he is prepared to consider it further. In the light of that, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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