§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert G. Hughes.]
§ 10 pm
§ Mr. Alan Duncan (Rutland and Melton)
The reason I have asked for the debate is that the Gas (Exempt Supplies) Act 1993 was passed earlier this year by both Houses of Parliament to amend the law affecting the supply of gas, yet it has not been implemented, because the Health and Safety Executive has so far declined to draw up a new regulation to cover the new circumstances. Its failure to do so, and its unwillingness to show any intention of doing so in the near future, is in my view a breach of its obligations. Rather worse, its attitude strikes me as treating the will of Parliament with contempt.
The Act was the brainchild of my noble Friend Lord Cochrane of Cults. It was his creation. He started it as a private Member's Bill in another place and, after its completion there, asked me to pilot it through this House. It passed its remaining stages here in January, and promptly gained Royal Assent.
In a nutshell, the Act tidies up the labyrinthine series of regulations governing the supply of gas through pipes, and thereby makes it easier to supply gas from a propane storage tank to a series of proximate outlets such as caravans, chalets, self-contained housing estates, isolated communities or agricultural properties. It is a fairly simple deregulation exercise and, if only the HSE would realise it, a safety exercise as well. It is almost beyond belief that such a simple and straightforward amendment to the law should be subsequently thwarted by others.
In order to understand why a seemingly simple matter has become so bogged down, we need to take a few steps back. The origin of the problems which gave rise to the Act lies in the implementation of two earlier pieces of legislation, the Pipe-lines Act 1962 and the Gas Act 1986. Until the 1986 Act, there were three distinct gas markets in the United Kingdom: nationalised gas, industrial gas, and liquid petroleum gas. The 1986 Act granted British Gas a monopoly of the supply of gas throughout the United Kingdom. It allowed for competition, however, in that it permitted the regulator, Ofgas, to grant section 8 authorisations to other suppliers who succeeded in passing the stringent vetting procedures laid down by the Act.
The implication, though, of the 1986 Act was that any authorised competitor under section 8 was likely to be a substantial business supplying gas as its main commercial activity. The sort of parallel one might draw is that between Mercury and BT. The trouble was that most of the suppliers who suddenly found themselves subject to section 8 authorisation were small, even minute, enterprises in which the supply of gas was only a tiny incidental part of their business. They were hardly a threat to the commercial prosperity of British Gas, and certainly not the sort of supplier envisaged by those who drafted section 8 of the 1986 Act.
For historic reasons, most of them were found in the holiday park industry, the better parks having piped LPG into their caravans or chalets as part of improvement schemes for their customers. Those caravans, for instance, which have an individual bottle of gas for each unit are outside the scope of the 1986 Act and other legislation. At the same time as rigorously applying section 8 of the Gas Act 1986, Ofgas declared that these tiny piped LPG 1017 systems were pipelines under the Pipe-lines Act 1962. This was clearly not the intention of that Act, as a list of its exemptions shows.
Accordingly, small suppliers, all of whom are almost irrelevant to the sort of massive supply undertaken by British Gas and its putative competitors, were set a most intricate paper chase, involving numerous public bodies and no end of forms and approvals, all of which were designed to govern sizeable supplies of gas to consumer or corporate users. The forms might work for one or two applications a year, but certainly not for a host of tiddly suppliers, most of whom were in remote areas and whose supply was quite specific. It is hardly surprising that a large backlog of unfinished applications built up.
Complaints were rife among all parts of the LPG market about the complexity of the authorisation system and the sheer inefficiency of Ofgas's administration. To be fair, Ofgas was not designed to oversee such a regime. A few cosmetic changes were made, but the problem remained. It was subsequently pointed out at a meeting at the Department of Energy that the section 8 authorisation procedures had reached such a state of collapse that the Secretary of State was in fact breaking the terms of section 4 of the 1986 Act under which he was obliged to ensure that all reasonable demands for gas should be met.
This is where my noble Friend Lord Cochrane leaped into the breach. Once it became clear that the Department of Energy would not oppose a private Member's Bill, if it were properly designed to put things right, he engaged the co-operation of the various interested parties to support the drafting of a suitable Bill. The Gas (Exempt Supplies) Bill had its Second Reading in another place on 8 July last year.
The 1993 Act had two purposes, both of which were welcomed by the DTI. The first, under section 8 of the Gas Act, was to exempt the supply of propane through a pipe, and the second was to allow the Secretary of State to make other exemptions by negative order. The purpose of the first exemption was simply to allow suppliers of piped propane to continue much as they had always done before Ofgas began to hound them. They were, after all, governed by an industry code.
The purpose of the second section of the Act was to allow the Secretary of State to grant exemptions to cover other supplies which do not fit well in the 1986 Act, such as by-product gases which would otherwise be caught by Ofgas. This reflects the corresponding provision in the Electricity Act 1989.
British Gas had a few qualms about the Bill. I think that it is fair to say that these were largely commercial, and largely unfounded. The sectors affected by the Bill were hardly those which were liable to undermine the competitive position of British Gas. The whole of the independent gas industry supported it—that is to say, the producers of propane, by-product gas, landfill gas and coal gas—and so did Ofgas, the DTI, individual consumers and the small suppliers who were struggling with the hydra-headed monster created by the 1986 Act.
The Bill was enthusiastically supported by the three main trade associations in LPG supply, the Liquid Petroleum Gas Association, the National Caravan Council and the British Home and Holiday Parks Association. Given the DTI's blessing for the whole idea of 1018 a private Member's Bill, the latter two paid all the legal costs in the belief they were working on a means of solving the problem. The culprit in all this, however, is the Health and Safety Executive.
Ever since its earliest days, the regulator, Ofgas, has been at odds with the HSE over the administration of the safety requirements of the 1986 Act as they affect section 8 authorisations. It appears that Ofgas did not really want to become involved, but the HSE refused to undertake the necessary safety regulations itself.
Legally, Ofgas deals only with the "supply of gas through pipes", but in practice this means that it deals with the regulation of any gas which is sold directly or indirectly to a user. Any gas which is not a supply in these terms, or in other words is a self-supply, is the responsibility of the HSE, and always has been. This division into supply and self-supply under overlapping rules has been, and remains, a matter of great confusion to those involved.
Once exemption under the Act begins, this problem will disappear, as only one code of practice—that of the HSE—will apply, and supply will be treated the same as self-supply. Curiously, though, the HSE opposes the change of rules for supply, even though this would bring it into line with self-supply where HSE rules already apply. I hope that the House is following me on this increasingly complicated matter. What are the reasons for its objections? Has it researched the compliance costs? Has it made a risk analysis? I do not think so.
After the Gas (Exempt Supplies) Bill was published, there was, inevitably, a large drop in the number of section 8 applications, in expectation of the sensible regime to come. Indeed, the Ofgas report for 1992 even welcomed the Bill, and since its passing Ofgas—while acting quite legally—has been totally passive in this field, dealing only with a trickle of applications.
For this Act to be implemented, a commencement order has to be issued by the Secretary of State under section 4(2), but in practice I believe that the Minister is reluctant to issue a commencement order until the HSE has published its revised regulations for gas installation and use. Despite a ministerial assurance in another place that it might be ready by now, the latest indication is that the HSE has no intention of having these regulations ready before the middle of 1994. What can they possibly be waiting for?
Without a commencement order, the industry is in limbo, and what is more—this causes me great concern—the unauthorised supply of gas is a criminal offence on its own, even if no change is involved. To supply gas dangerously is a different offence. The Secretary of State has the power to make the necessary orders, yet it is hard to see a rational justification for not doing so when, for LPG self-supply, there is already an accepted set of regulations—which are deemed unsuitable for supply—considering that it is the terms or purpose of the delivery of gas which define which category is involved.
I cannot see what the HSE is waiting for, but as soon as the DTI takes steps to try to implement the Act, the cry of "safety" goes up from the HSE, and the commencement of the Act is further delayed. It is simply not true to say that, when we passed this Act, we all knew we would have to wait thereafter on the HSE to get its house in order. We were led to believe at the time that the HSE would actually accept a voluntary call-out code for exempt supplies. I feel that the Minister should hold it to that understanding.
1019 Piped gas is actually safer than having to place a cylinder beside every unit, because the fire loading is less. So what magic ingredient can the HSE possibly be about to put into new regulations which will make the supply of propane safer? Is it reasonable to take over one year to draw up the rules? Is it reasonable to talk about the statutory need for emergency telephones and call-out procedures when these are already provided for under a voluntary code which is working well, and has been for many years?
My hon. Friend the Minister, in conjunction with my noble Friend Lord Cochrane of Cults, who worked tirelessly on the Bill, has been tremendously supportive of this Act. He has guided, steered, nudged and helped to amend it. He has done everything he can to help to implement it.
I intend no criticism of the Minister; indeed, I am at pains to commend his efforts to solve a problem that many would not have bothered to consider in such detail. However, to devotees of "Yes Minister", it seems that Sir Humphrey is working overtime. The current regime is in utter chaos, the law is in place to rectify the problem, but those responsible are doing nothing to put the solution into practice.
The Health and Safety Executive has been so dilatory that, owing to its failure to give a fair wind to the implementation of the Act, there is even a risk that existing suppliers of propane—for whom the 1993 Act is designed to create an exemption from needless bureaucracy—may actually be subject to criminal prosecution under the Gas Act 1986. That is absurd; in my view, it is itself criminal. No industry can flourish when it is over-regulated; no industry can even breathe when the various regulatory bodies are quarrelling with each other. That is especially true when so many of the regulations seem utterly pointless anyway.
The current state of affairs is a disgrace. This small Act has been passed by both Houses, yet an outside body is defying the will of Parliament to solve a problem that directly affects the welfare of suppliers and customers. Those who have failed to put the Act into practice are not only failing in their duty, but acting in a manner that should make them directly answerable to the House for their behaviour.
I assure the Minister that he would have the full support of the House were he to address the matter boldly and knock some heads together. Will he, assure me that no one will be prosecuted for the criminal offence of supplying gas before this muddle has been resolved? May I invite him to announce a date on which the Act will be implemented—and may I ask him to confirm, without equivocation, that the HSE will not be allowed to continue to thwart the will of Parliament, to the detriment of those who have a legitimate right to go about their lawful business?
§ The Minister of Energy (Mr. Tim Eggar)
Let me begin in the traditional way by congratulating my hon. Friend the Member for Rutland and Melton (Mr. Duncan) on his success. He is probably unique in managing to put a Bill on to the statute book without saying a word, and then raising the same legislation on the Adjournment.
My hon. Friend kindly accorded some recognition to the role played by my Department and myself in the drafting of the Bill. Let me, in turn, pay tribute to both my 1020 hon. Friend and to my noble Friend Lord Cochrane. This is a relatively small but extremely important area of the law, and, as soon as I had the pleasure of meeting my noble Friend shortly after taking up my present post, it struck me that we should act as quickly as possible. I think it is fair to say that, together, the three of us have put the legislation on to the statute book.
As my noble Friend has pointed out, the purpose of the Act can be linked with our objective as a Government. It is deregulatory; and it increases competition in the gas market, albeit at the margin. I readily accept that the provisions of the original 1986 Act—particularly section 8—have proved a burdensome procedure, given that small amounts of gas are going to a very limited market. We have been very much aware of the industry's concern about the cost and the burdens that it will incur in complying with the authorisation procedure.
I think that I can give my hon. Friend some good news, although perhaps not quite as much as he and our noble Friend might wish.
The main purpose of section 8, and the provisions in earlier legislation on which it was based, was to control entry into the piped gas supply market. As my hon. Friend has pointed out, that applies in particular to caravan sites and holiday parks. It was almost by mistake that the small-scale systems have attracted the same degree of control as the much larger systems for which section 8 was designed. Those small businesses, as they mainly are, were not attempting to set themselves up as gas suppliers; the supply of gas was incidental to their main business. At the same time, as I am sure my hon. Friend recognises, all gas supplies, including LPG, are potentially hazardous, and it is right that the safety regime under which LPG is supplied is rigorous and enforceable and inspires public confidence.
In its 1990 annual report, Ofgas noted that concern had been expressed by the interested parties about section 8. As a result, it began an internal review of the section 8 procedures. Once the review had been completed, Ofgas immediately took action to implement the various administrative changes, which did much to streamline the then existing procedures. My hon. Friend fairly paid tribute to Ofgas for that.
However, those changes did not resolve all the problems. Ofgas and my noble Friend Lord Cochrane drew our attention to the legislative changes needed to make matters easier. In particular, in 1991 Ofgas drew our attention to the overlap of safety responsibilities between it and the HSE. The then Department of Energy studied its recommendations and concluded that they were sensible. It was largely as a result of that that we supported the Bill, which my hon. Friend the Member for Rutland and Melton piloted through the House.
I recognise—indeed, I share—my hon. Friend's frustration that the Act has not been brought into effect. During the Act's passage through the other House, the Government gave two assurances. The first was that in deregulating this aspect of the gas market there would be no diminution in safety standards. The second was that the Act would not come into force until the Health and Safety Executive had had sufficient time to put alternative arrangements in place.
I think it fair to point out to my hon. Friend that the Act was supported by the Government on that basis. However, it is also fair for him and for our noble Friend 1021 to point out that, at that time, it was expected that the HSE would come forward with those regulations in a rather more timely way than has been the case.
My hon. Friend is aware that the HSE answers to the Health and Safety Commission, which is an independent body. The commission has not declined to bring forward regulations, but it has been conducting a wide-ranging review of gas safety, including the Gas Safety (Installation and Use) Regulations 1984. At the urging of my Department, among others, that review has rightly taken account of the need to avoid adding any unnecessary burdens on industry. My officials and other interested parties have urged the HSC to press ahead with this important task.
I understand that the review has been completed and that the HSC will be considering proposals for revised regulations on 22 June. Those regulations have important implications for public safety, and the HSE must therefore allow adequate time for consultation. That is not a matter of choice; it is required to do under the Health and Safety at Work, etc. Act 1974. It hopes that the regulations can be put in place by June 1994. At that point, the Department intends to introduce an order bringing the Gas (Exempt Supplies) Act into force.
Safety, as I have said and as was made clear in the other place, is the key point. Section 8 authorisations include two important safety requirements—the requirement that suppliers have the right of entry into the premises supplied, and the requirement of the provision of a 24-hour telephone and emergency response service. It is important that those are maintained, and that they are capable of being enforced, and we must do that if we are to uphold the assurances that the Government were given that, as a result of the Act, there will be no reduction in safety standards.
Those two requirements may appear to be relatively minor, but we must not forget that gas is a hazardous substance, and there needs to be an appropriate response available should an incident occur. It is sometimes claimed that, because the Act applies to low-pressure gas coming from large LPG tanks, the hazard is not so great. We can argue about whether that is the case in practice, because we have large LPG tanks that are inherently dangerous but, given the assurances that we gave to another place, I feel obliged to stick by those undertakings.
I recognise the immense frustration of my hon. Friend 1022 and my noble Friend, and the holiday parks industry, which has been behind, and supportive of, the Act. Therefore, we have tried to introduce some interim arrangements to cover the next 12 months to June 1994. We have sought to devise those interim arrangements while ensuring that we take the necessary measures to ensure that safety remains paramount. We have been through, as my hon. Friend knows, a number of alternative ways to meet the requirement to have easy interim arrangements and to meet our safety obligations. We have investigated the possibility of the class authorisation, but that was not acceptable to the HSE, which felt that it would not be enforceable.
My hon. Friend's suggestion that there was a breach in the terms of section 4 is not the case. Section 4 requires the Secretary of State to secure that a person who already has an authorisation does not refuse to supply a customer who can economically be supplied by the person. Therefore, the relevant provision has nothing to do with the procedures for granting authorisation. I can set his mind at rest on that.
I have some, although only a little, good news. Spurred on by the pressure of the debate, my Department has been considering with Ofgas how the existing regime can be administered in as light-handed a manner as possible over the next 12 months. I am pleased to tell my hon. Friend and all my other hon. Friends who have been good enough to stay tonight that we have, literally just, reached agreement in principle with Ofgas on some arrangements that have been designed to achieve further streamlining.
I had hoped to be able to lay out the full details of that to the House, but so fierce and detailed have been the discussions that I am not yet able to do so. I can say that work will be continuing over the forthcoming holiday period—at least, for my hon. Friends, it will be a holiday period—and I am confident that we shall be able to go some considerable way to enforcing regulations over the coming 12 months in a rather more light-handed way than had been anticipated.
The HSE is independent. Under the terms of the Act, Ministers have no powers to tell the HSE, or the HSC, what to do, and that has readily been accepted by the House before. I shall make sure that my hon. Friend's views on the way in which the HSE has responded to his Act are drawn to the attention of the director, and I shall also comment to it on the number of my hon. Friends who have been here to listen to the debate.
§ Question put and agreed to.
§ Adjourned accordingly at half-past Ten o'clock.