HC Deb 16 January 1992 vol 201 cc1198-206

Amendment made: No. 49, in line 13, after 'suppliers', insert `to make a minor correction in section 98 of the Water Industry Act 1991;'.—[ Mr. Redwood.]

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Redwood.]

9.23 pm
Mr. Henderson

I have the impression that the House is keen to make progress quickly. I do not know whether it is wise to speak for five minutes, which might encourage others to speak, or to proceed for a little longer.

May I make one or two quick points to sum up the Opposition's view of the Bill? The Government led the country to believe that privatisation would solve all the problems of our utilities. They led them to believe that with regard to telecommunications, gas, electricity and water. The country's experience in the past five or six years has—as the Government now admit—led them to different conclusions. They now realise that privatisation in itself does very little to change the level of service provision or the prices charged for those services by what are effectively monopoly utilities, and that the key test is the sensitivity of a utility to the needs and demands of the public.

There has been growing recognition during the Bill's progress that one of the best ways to ensure that public needs and demands are represented is through a regulator. The test of whether the Bill is effective is whether it is sufficiently tough to be able to achieve what all hon. Members have agreed is essential in relation to the provision of the utility services, whether it is tough enough to give the utilities the opportunity to develop along the correct lines for the country's needs and whether the regulation is tough enough to protect the consumer.

The Bill is an improvement on the current position, in that it covers the need to set standards of performance and to give information to consumers on the extent to which those performance standards have been met, the need to establish effective procedures for dealing with complaints, the need to examine procedures to prevent unnecessary disconnections of public utility services, the need to promote efficient use of gas and electricity and the need to guarantee water quality.

On the down side, in Committee and on Report, the Government have shown themselves to be short on positive action and many of the clauses appear more concerned with public relations than public protection. If the Government were serious about setting standards of performance in telecommunications, they would have accepted the amendments tabled in Committee and on Report which dealt with questions of telephone penetration across the country, of the balance of resources throughout the regions and of additional facilities for disabled and aged people in the provision of those services.

If the Government were serious about regulation, they would have accepted amendments relating to gas and electricity which link price regimes with performance in energy efficiency and amendments linking water prices to water quality.

As the Opposition have said during debates at all stages of the Bill, we support the need for tougher regulation and for the principle behind the Bill in that regard. We shall not deny the Bill a Third Reading, but I give notice that we shall pursue the aspects of the Bill with which we are unhappy this side of the general election and promise that we shall continue to pursue them beyond that.

9.28 pm
Mr. Ian Bruce (South Dorset)

I wish to ask the Minister whether he will reconsider a number of issues before the Bill goes to another place. I am a shareholder in British Telecom and in Cable and Wireless which is the owner of Mercury, and I advise the Telecommunication Managers Association, so I must declare an interest.

Mr. Bob Cryer (Bradford, South)

How much do you get?

Mr. Bruce

Would you like a cut?

I welcome the Bill and the way in which it fulfils many of the promises made in the citizens charter. However, I am concerned that it should include all customers. I should have thought that business customers were included in the requirement—or pledge—in the citizens charter that, where elements of monopoly remain, regulation protects the consumer. "The consumer" must mean the business consumer and the single line user. The inclusion of all customers would make it much easier for British Telecom to conform to all the requirements that will be placed on it by the regulator.

It is a little strange that BT should resist that idea, because it stressed in all the documents that it sent to Committee members that it already supplies all the statistics and levels of service that it expects to have to supply under the regulations. BT claims that, in the offer-for-sale document that the Government put out when selling their shares in BT, the additional requirements extended to multi-line users would affect profitability—but that does not add up. Indeed, BT's own briefing does not suggest that.

The very clause titles in the Bill—"Standards of performance", "Information with respect to levels of performance", "Information to be given to customers about overall performance"—show that BT cannot possibly say that it will not provide multi-line users with the same level of service as single-line users in these areas. It is foolish of BT to resist applying the same standards to everyone, because that will cost more—trying to differentiate between single and multi-line users in its statistics, for instance. I suspect that it will be a nightmare for the regulator to deal with statistical information that differentiates between single and multi-line users.

Such differentiation will also lead to a nightmare when trying to decide how to reach the standards required. The cost of reaching those standards is nil, because it is much better for shareholders if BT provides a service for 99 per cent. of the time, since it is then receiving revenue for that time. BT has already adopted a compensation code for larger users, so we might as well ensure, under this Bill, that small and large users are dealt with in the same way.

I know that my hon. Friend the Minister has asked BT whether all this will affect its profitability, but I believe that BT will be foolish if it continues to resist the idea of serving all its customers under the same set of regulations.

Telecommunications is different from other forms of monopoly because under this legislation we are setting up a real free market. In such a free market, I am sure that a self-regulating body and an ombudsman will have to be appointed by the industry itself. Given that we are establishing a statutory regulator and ombudsman for only part of the industry, Mercury, the cable operator and others who have entered the field will be at a marketing disadvantage because they will be able to claim that they are subject to regulations different from those that govern BT.

We should include all telecommunications operators in the same system. If it proves too onerous for an operator who is just starting up to reach the required market share for inclusion, perhaps such operators should be required to achieve only 5 per cent. or 10 per cent.—not 25 per cent—market share before being included.

We want a true citizens charter for all telecommunications users. Everyone should know that the Government are regulating his telephone service and what is happening in the marketplace. We know that cellular operators are excluded already. They have one of the worst records of providing the service that they promise to their customers.

If BT decided to use service retailers to sell communications in the high street, those retailers might find themselves insulated from the Act and find that BT, like them, was not covered by it.

I am sure that my hon. Friend will recall my mentioning that we should include data transmission services in the list of relevant services in new section 27L(a). Can they be included? Why should they be excluded?

BT needs to see the light. Quality regulation is good for it and good for its customers and shareholders. The Government should think again before taking the Bill to another place, because I rather suspect that, if these points are not picked up before then, their Lordships will want to press the Government further on them.

9.34 pm
Mr. Simon Hughes

The Bill is a step in the right direction, but it is also an example of the Government trying to tidy up their act after the dogma has bolted. They rushed into a series of Bills which, it was alleged, would open monopolies to competition, but in many cases they simply changed a state monopoly to a private monopoly. The philosophy has been entirely misconceived. It is perfectly proper to say that, as a natural resource, gas is a state asset and to allow as much competition as possible in its exploitation. We have argued for greater competition in the gas industry than the Government have ever sought to provide.

All the artificial constraints of maintaining a regulated monopoly mean that it is not in the best interests of the consumer. Greater competition would require less regulation, but that will have to wait until after the election. In the meantime it is better to have tough regulation than none at all, and the consumer must have someone who can intervene on his behalf more effectively than in the past. The best intervention is that which is facilitated by information which places the remedy in the customer's own hands.

As the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) said, the Bill has missed an opportunity by not allowing the customer to know more about the quality of services. We had a debate earlier about the quality of water. Information on that could have been supplied as part of the information on the accountability of the service. An opportunity has also been lost in telecommunications; if the hon. Member for Worsley (Mr. Lewis) speaks in this debate, I think that he will address that. The Government are still lily-livered in that respect.

The Government could have scored a few points and won some political friends. They lost the opportunity. The great grey army out there, the growing number of pensioners, saw the legislation as an opportunity to lower unfair standing charges. They also saw it as a chance to reduce the cost of the basic services on which they rely—the telephone, gas, electricity and water. If the Government had wanted to make the Bill an election winner, they would have seen that political advantage. They have lost that opportunity, and it will not come again this side of the election. Perhaps they will live to regret that. At best, the Bill is a marginal improvement. To suggest that it is in any way a radical new Tory revolution for the 1990s is far from the truth.

9.37 pm
Mr. Lewis

My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) and the hon. Member for Southwark and Bermondsey (Mr. Hughes) were dead right when they said that the Bill is a lost opportunity. That is certainly true in the context of telecommunications and, more specifically, in premium rate services. Six years of misery have been caused by these utilities. I have raised the matter many times and while Ministers agreed that legislation was needed, they said that there was no time for it.

The services should not operate under the present system, which is a blight on the industry. The Government have consistently wrung their hands and said that in the past the services were awful. Parliamentary time has been made for the Bill and for amendment of the 1984 legislation. Ministers have consistently related the Bill to the citizens charter. If any part of that charter could be addressed in that context, it would have to be the part that deals with choice and redress and various other such matters.

I have been sought redress for people damaged by the utilities, but over the years the Government have pushed my pleas to one side. Choice has not been considered in premium rate services. There are no more excuses for Ministers. By allowing the Bill to pass through the House unamended in respect of premium rate services, they are condoning everything that is being done by those who for the past six years have been offering pornographic "services".

These so-called services will continue. They will abate only slightly as a result of the recent rules that have been introduced by the Independent Committee for the Supervision of Telephone Information Services and by Oftel. Real opportunities have been missed by rejecting our suggestion that a supervisory statutory committee should be formed, rejecting the idea of choice to opt into these "services", rejecting the proposal that the worst of these "services" should be removed and by rejecting the simple principle of direct billing.

My hon. Friend the Member for Bradford, South (Mr. Cryer) got it right when he said yesterday that Ministers will be regarded as wearers of dirty raincoats before very long.

Since Second Reading, I have received 150 letters on pornographic telephone "services". They have been written by organisations and individuals including the Women's Institute and the soroptomists. I shall refer to one or two constituents, and the significance of them will not be lost on the Minister. From Bury, North, I received two letters from organisations and four from individuals. Two organisations and two individuals wrote from Bury, South. From Bolton, West I received letters from two organisations and 11 individuals. Two organisations and 17 individuals wrote from Bolton, North-East. From Bath, I received one letter from an organisation and one from an individual. From Oxford, West and Abingdon it was one and four. It was three and six from Stockport. One organisation wrote from Nottingham, South. It was three and one from Wallasey and one and 12 from Congleton. I hasten to say that the organisation was a Labour party branch.

The public recognise that there has been an opportunity to clean up what they regard as offensive and unnecessary "services". Blame for the continuation of the "services" will be pinned on the Minister and his colleagues. Organisations and individuals in the many Tory marginals to which I have referred will know by the end of next week exactly who is responsible and where responsibility lies. I shall ensure that their names are added to all the complaints that I have been making. As I say, they know exactly who is responsible.

9.42 pm
Mr. Morgan

It is always a privilege to speak from the Opposition Dispatch Box, especially towards the end of a Third Reading debate. Relative to the other opportunities that I have had to speak on such occasions, however, this is a lower grade privilege because the Bill has been extremely boring. It is one of those Bills about which it is said, "Where is the beef?" So many hon. Members, including Conservative Members, have told the Minister that the Bill is a great missed opportunity that he may, at last, have got the message. If the Bill is meant to be the beginning of a revolution in the standard of public services to embody the Prime Minister's so-called big idea of a citizens charter, it is a pretty poor start.

The Minister must realise that the public are not that interested in boring details about procedures—for example, about whether a public utility is supposed to take a maximum of two weeks or three weeks to reply to a letter of complaint. They are interested in why they are paying such a high price for a service and why the company or companies providing it are making enormous profits when they are in a protected monopoly. It is the one-sidedness of privatisation of the monopoly public utilities that has been so apparent since the process started with British Telecom in 1985 that so deeply offends ordinary people throughout the country.

The Government have created what could be called Frankenstein private monsters. They are not responsible to the general public. They are not bodies against which, through the regulator, members of the public feel that they can secure redress. If they dream up a bright profit-winning idea, even if it involves walking in the dirty waters of pornography as the 0898 service does, the Government are unable or unwilling to do anything about it, even over a six-year period. The Government believe that, if an idea will reduce the profits of a privatised company, it should not be carried out.

I am afraid that the Government do not have straight in their head the idea that the public will be determined, through a different Government, to obtain proper redress for their complaints against excessive prices or dirty little ideas such as the 0898 service, which was introduced six years ago after the privatisation of British Telecom.

This is a sad day for the final part of the Bill to be passing through the Houses of Parliament. It has been reported in the press today that gas regulation is in disarray. It involves one of the few regulators that have shown some teeth in standing up to the powers that have been conferred by the Government on privatised British Gas. That regulator, James McKinnon, was knighted on 1 January and kicked in the teeth on 15 January. The Secretary of State for Energy has allowed British Gas to appeal over the head of the regulator, to his fury, because of the difficulty in sorting out the conflict over whether freeing up the industrial market for British Gas will create higher prices for domestic consumers. Ofgas is furious about that, but the Secretary of State for Energy has said, "Oh, that's all right. If you have problems with Ofgas, come to me and I will sort them out." That is the atmosphere in which the Government are determined to work. In the end they will have to give way to a Government who will not work in that way.

The Government's beer orders were intended also to create extra competition for drinkers, a better standard of service in pubs, more choice and lower prices. They are now in disarray and landlords are being evicted, there is less choice, and beer prices are higher.

As my hon. Friend the Member for Bridgend (Mr. Griffiths) said, when Alaric the Goth attacked the Roman empire in 410 AD, he found that it was a piece of cake to sack Rome because the use of lead piping had softened the brains and determination of the Roman establishment. As a result of the problems of lead piping and the other problems mentioned by my hon. Friend relating to the privatisation of the public utilities, the Tory empire will shortly fall and will be replaced by a proper representative Government of the British people.

9.47 pm
Mr. Redwood

My hon. Friend the Member for Dorset, South (Mr. Bruce) spoke about British Telecom standards and service for business and other users. I am sure that those remarks will be read by British Telecom. I think that it was advice to BT, rather than to me.

My hon. Friend wanted to know about data transmission services. Some of those will be covered by the proposals in this legislation. Data sent by residential and very small businesses will normally be sent on the usual voice line. Therefore, standards set for the voice line will apply. Dedicated data circuits and private circuits, primarily used by large businesses, remain outside the scope of the Bill. They are subject to much more competitve pressure.

The main data service used by residential and small businesses is fax. That is already mentioned, and specific standards can be set for it. Integrated services data network—ISDN—which provides more than one channel of communication via the same line, can transmit voice and data simultaneously. It is still using a line that provides voice telephony, so standards set for the voice line will apply. I hope that that goes some way to meeting my hon. Friend's points.

I am glad that the hon. Member for Southwark and Bermondsey (Mr. Hughes) thinks that our legislation is a step in the right direction. I believe that it is entirely the right direction. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) asked whether the regulatory powers are tough enough. The answer is yes, they are. The regulatory powers can and will do the job. I give the House that assurance.

There is no shortage of measures in the legislation. The new proposals on water competition were introduced following our discussion in Committee, and they go a long way to improving competition in the water industry. There is also the response to our duopoly review, and many companies are now coming forward with sizeable investment projects and are seeking licences. When those licences are granted and the investments are made, competition will build up and we will see choice in the marketplace improving and the benefits of competition coming through.

Many of the amendments tabled by the Opposition fail to recognise the duties and regulatory powers in existing legislation and in the licences. Sometimes they even fail to recognise the powers proposed in the Bill.

I disagree with the hon. Member for Worsley (Mr. Lewis) that this is a lost opportunity on premium rate services—although I hear a rumour that one of the more questionable 0898 lines—the Labour party line—has been withdrawn. That may show that the new tougher regulation is biting. I shall give way if Opposition Members wish to deny that, but I believe that it has happened.

The hon. Member for Worsley knows that many improvements have been made to the regulatory system.

Mr. Lewis

I do not know a great deal about the Labour party 0898 line, but I know that the complaints that I have made for many years to the Minister and his predecessors have been not about Neil Kinnock but about the serious pornographic messages that I believe have contributed significantly to the crimes of violence against women that take place outside on the streets. I am convinced that the one-to-one services whereby perverts phone women at night have led to people going out and committing acts of sexual violence against women. The Minister should be taking note of those services.

I am also convinced that the 10 million abusive calls that BT now admits are made to women every year are the overspill from the 0898 numbers. The Minister should be dealing with that, not making cheap jibes about innocent telephone lines.

Mr. Redwood

The hon. Gentleman knows that hon. Members on both sides of the House share his concern about certain kinds of service. Some such services are illegal, and many are against the rules in the toughened regulation. What is needed is enforcement. I assure the hon. Gentleman that, as and when abuses are drawn to the attention of the regulator or the prosecuting authorities, the correct action will be taken, as has been happening in recent months.

I resent the implication that we do not care about those disgraceful services. We do care, and we have taken action. More action will be taken on enforcement under the rules and laws set out. If the hon. Member has more information about illegal services, he should pass it on to the proper enforcement authorities.

The hon. Member for Cardiff, West (Mr. Morgan) summed up the Opposition's position well. In Committee and on the Floor of the House, the Opposition have made a series of spending pledges with other people's money, and pledges to slash the profits of industries that need profits in order to invest.

The Opposition have made pledges on free phones and loft insulation—and only today we heard that they proposed to cut the profits of the electricity industry by 37.5 per cent.

Mr. Henderson

May I bring the Minister back to the discussion that took place in Committee? The Opposition have made absolutely no commitment to provide free phones or to increase public expenditure on telecommunications infrastructure in any way. Our argument was that British Telecom and the other operators should be negotiating with the regulator to make sure that the necessary infrastructure commitments are met.

Mr. Redwood

Either public money will be spent, so there is a different policy among Opposition Members, or it will not—in which case they agree with our policy. If the hon. Gentleman says that all the costs have to be borne by BT, that will simply mean an even bigger reduction in BT's profits and a bigger increase in its investment programme. It is always the same with Labour Members—down with profits and up with investment, with no comment on where the money is to come from. If they believe that by cutting the salaries of two or three people at the top of the operation they can pay for all those goodies they are living in cloud cuckoo land. They are talking about investment programmes costing hundreds of millions of pounds, compared with salaries in six figures, not seven or eight figures.

The Bill does the job that it was designed to do. It will deliver the promises made in the citizens charter to extend the powers of the four regulators of the privatised utilities. It is the individual customer who is most vulnerable when competition is lacking, and the Bill concentrates on improving his position and on giving the regulator more powers to stand up for him when he has disputes with the regulated utilities. The Bill puts the customer first by giving stronger powers to the regulators of telecommunications, gas, electricity and water. It provides for the setting of guaranteed service standards and for customers to know the service that they will receive. It provides for compensation where individual performance standards are not met. Would not Opposition Members like to have thought of that idea and put it through in legislation?

The Bill ensures that there is a clear complaints procedures should things go wrong. Fair competition offers the best guarantee of good services, low prices and choice. The ever-increasing competition in telecommunications is a good example of that process at work. The Bill builds on that by introducing greater competition in gas and water supply services. The combination of greater competition and better regulation will provide the benefits that customers need. The Bill is the right Bill for the job and I commend it to the House.

Question put and agreed to.

Bill read the Third time, and passed.

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