HC Deb 15 May 1995 vol 260 cc22-39

'Schedule 4 to the 1986 Act (Power of Public Gas Suppliers to break up streets, bridges etc.) shall be amended in paragraph (3) by inserting after the second word "shall" the words "as promptly as possible" and by inserting after the word "any" the words "loss caused or".'.—[Mr. Thurnham.]

Brought up, and read the First time.

3.33 pm
Mr. Peter Thurnham (Bolton, North-East)

I beg to move, That the clause be read a Second time.

I am grateful for this opportunity to move new clause 1, which stands in my name and that of a number of hon. Friends and Opposition Members. It deals with the need to provide compensation for small shopkeepers, garage owners and others whose trade is disrupted when the street is dug up in front of their premises.

Under the Water Act 1989, compensation is already provided for water works and this new clause will simply bring the Gas Act 1986 into line with the Water Act to provide compensation in exactly the same way. We are not dealing with compensation for all the other utilities.

It seems surprising that that anomaly should exist—but perhaps not, when we consider the bad old days when the old nationalised industries lost money hand over fist and had to be bailed out by the Treasury. No wonder the Government resisted the making of claims by traders who were losing profit. All that has now changed and the privatised industries are making substantial profits. Instead of losing £50 million a week, they pay more than £50 million a week to the Treasury in corporation tax on the profits that they make. British Gas makes nearly £1 billion profit, and the chief executive is being handsomely rewarded for his duties.

My right hon. Friend the Minister for Industry and Energy has not only duties to ensure that the gas industry and other utilities operate efficiently but much wider duties to ensure that a fair balance is struck between the needs of the industry and those of the community at large. On the one hand, we have privatised industries with their directors and shareholders, and on the other we have the customers and the wider community.

In seeking to achieve that balance, my right hon. Friend has been kind enough to see me on two occasions. I saw him first on my own and secondly with a delegation that included my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) and my constituent, Mr. Cyril Eaton. We had with us representatives from the Forum of Private Business and the Federation of Small Businesses, from which I won a "Helping Hands" award in 1991 for providing more help to small businesses than any other hon. Member. We were also accompanied by representatives of the Association of British Chambers of Commerce.

I note that the Leader of the Opposition was in Aberdeen on Saturday, making all sorts of statements to that organisation. I am not sure whether the old or the new Labour party is here today. To judge from the Standing Committee report, I would say that it is the old Labour party. The delegation also included representatives of North West Water, including its insurance claims manager, Mr. Aldridge, and Jonathan Rogers, formerly of Hamptons but now of Highfield Consultants.

At that meeting, my right hon. Friend the Minister was good enough to listen to the strength of the representations and say that he would keep an open mind in considering the issue further. He will recall that I raised the matter in an intervention on Second Reading on 13 March and, on 25 April in Standing Committee, my hon. Friend the Member for Rutland and Melton (Mr. Duncan) kindly raised the issue on an amendment. I could not be there as I was on the Standing Committee that considered the Child Support Bill.

When I read the Standing Committee report, it is apparent to me that the gas industry representatives have been lobbying hard. The speech of the Opposition spokesman suggests that he was quoting from them rather than representing the wider interests of small businesses. For instance, the Association of British Chambers of Commerce says that it has been trying to change the law for 20 years, and it is supported by the British Retail Consortium and others.

This matter first came to my attention through my constituent, Mr. Cyril Eaton. He is the proprietor of a greetings cards stationery business, and he suffered a great loss in trade when North West Water dug up the street in front of his shop in Kearsley. Under the Water Act 1989, however, he was able to claim compensation under paragraph 1(2) of schedule 12, which calls for compensation to be paid for any loss caused or damage done. That was confirmed in a law case in 1979 between Thames Water and Leonidis, which determined that the "losses" covered economic losses and therefore losses of profit.

North West Water says that that legislation is good legislation. It regards it as only fair that, if it causes disruption to small traders through no fault of their own, it should pay compensation for the loss of that trade. It feels that it is not only equitable but necessary to maintain good community relations. Without the legislation, it would be uncertain of its obligations. With that legislation in place, North West Water naturally tries to schedule its work to cause the minimum disruption to trade; without it, it would be under no such specific obligation.

My right hon. Friend the Minister may remember that Mr. David Aldridge, the insurance claims manager of North West Water, said that 95 per cent. of claims are satisfactorily settled and that the company does not suffer from a mass of small claims. In his letter to me of 28 February he said: The requirement to pay compensation has, to some degree, facilitated better scheme planning and the use of less invasive construction techniques. The clarity and certainty which the statutory duty to pay compensation has also brought has reduced friction and disputes about compensation with the business community. I should emphasise that compensation is not paid when the works are of short duration. That avoids the situation where compensation is being sought each time we carry out a small excavation in the street. My right hon. Friend will remember that Mr. Aldridge was strongly in favour of the legislation governing the water industry and felt that it should be the rule for other utilities, certainly for British Gas.

My constituent, Mr. Eaton, was able to recover £7,000 in compensation from North West Water. However, he was amazed to find that when his trade was disrupted once again, this time by British Gas, it was under no such obligation to pay such compensation. The Gas Act 1986 allows for compensation only for "damage done" and does not include the three words "or loss caused".

If my constituent is entitled to compensation for the loss caused when North West Water dug up the street in front of his shop, it seems inexplicable that he should not be equally eligible for compensation when British Gas did exactly the same. Both events were totally outside his control. He has invested his hard-earned savings in a business, the rewards from which are limited by competition, only to have his livelihood threatened by a monopoly business, or near monopoly business, which does not face the rigours of keen competition. Why should he have to bear such an unforeseeable, unpredictable and uncontrollable cost when British Gas could so easily budget for such compensation claims on a nationwide basis? Where is the fairness, when the livelihood of my constituent is damaged while the directors of British Gas make handsome earnings, which are 50 times or more greater than my constituent can reasonably earn?

I appeal to my right hon. Friend's sense of good British justice. He spoke in Committee about a possible letter of comfort from the chairman of British Gas, about ex gratia payments, but I propose that proper statutory payments should be made, so that the matter can be dealt with properly. That is how the Department of the Environment approached the matter with the Water Act. I hope that my right hon. Friend is not tempted to listen to a "not invented here" argument from officials in his Department, who may argue that line just because the precedent was set by another Department. We are talking just about the gas industry, not about the rest of the utilities industry. The gas industry should follow the example of the water industry.

I know that my hon. Friend the Member for Southport (Mr. Banks) has already been in touch with my right hon. Friend about a particularly vicious case involving his constituents, Mr. and Mrs. Irwin. The trade of their small shop was savagely disrupted in the 13 weeks running up to Christmas and has not yet recovered, but British Gas has arrogantly dismissed all their claims. I have seen a copy of the letter sent to Mr. and Mrs. Irwin on 22 June from the chairman of British Gas, who said: I do not, therefore, consider that there is a case for compensation. Unless British Gas is subject to a statutory requirement, I believe that it will continue to adopt such an arrogant attitude.

Four other cases have been brought to my attention by Mr. Jonathan Rogers of Highfield Consultants, which specialises in such claims. Johnsons garage of Gainsborough lost £2,200 profits because of water works, but it was fully compensated by Anglian Water under the terms of the Water Act. Mr. Patel of Bristol and Cairneyhill garage of Dunfermline, however, have claimed compensation for substantial losses due to disruption, but both have been dismissed by British Gas, which said that it was not interested in making any payments in either case. The letters that I have read simply repeated time and again: British Gas in common with other utilities and authorities should adopt a consistent approach to these matters within the framework of the law. Therefore I am unable in this case to agree any form of compensation". That is the line that British Gas takes every time.

Further cases have been brought to my attention by the Forum of Private Business. I have three recent cases before me, including two in Hampshire. In the constituency of my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), G. Dowling and Son of Whitchurch had access prevented for seven weeks, and claimed £2,400. In east Hampshire, work took place for three months, disrupting the business of Morgan Automation. In the constituency of my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery), who has supported me in that case, Lucas Bookshop has lost £12,000 as a result of eight months of disruption from the laying of gas pipes followed by sewerage works, and £12,000 is claimed.

3.45 pm
Mr. Iain Duncan Smith (Chingford)

For the guidance of our right hon. Friend the Minister, does my hon. Friend agree that, when British Gas produces its end-of-year profit figures, a chunk of the profit is transferred profit—that is to say, the small businesses that have been adversely affected have had their profit curtailed and transferred essentially to the gas company, which then declares it as its own? Therefore, in a sense, the gas company is declaring unfair profit—excess profit, which we could deal with today.

Mr. Thurnham

I am grateful to my hon. Friend for making the argument as clearly as he does. There is a straight trade-off between the profits of British Gas and the profits of small traders. There would be no cost to the Treasury; at least, I do not envisage any. We are simply considering the need for fairness and equity. That already exists in the law, with the Water Act 1989, so we are asking only for the Gas Bill to come into line with the Water Act.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

Has my hon. Friend thought of another aspect? If the gas industry is not required to pay proper compensation for loss of business, it will have no incentive to expedite works to minimise that loss.

Mr. Thurnham

In the correspondence that I have read, British Gas admits that it might have a liability if it were negligent, but it does not admit any liability otherwise to plan its work.

North West Water, during its representations to my right hon. Friend the Minister, did say that it did everything in its power to minimise those disruptions. It said that it regarded the payment of that compensation as part of good community relations, which it needs.

I am amazed that British Gas should take the attitude that it will not pay that compensation, which is only fair, when it is able to report substantial profits and its directors are able to make substantial earnings. They draw earnings that are considerably greater than those of Ministers, who bear far greater responsibilities, not only for the industries concerned, but for the wider interests of the community. I should have thought that it would be in the interests of those executives of the utilities to ensure that they conduct their business in a thoroughly honourable way, bearing in mind the needs of the communities affected.

I have with me letters from the Association of British Chambers of Commerce, which tells me that it has been trying to change that law for 20 years. It wrote to me in October, saying: we would certainly wish to lend our support to any measures which might close this loophole". It wrote to me further on 15 March: We welcome the opportunity to discuss possible amendments to the Gas Bill with a view…to pay compensation to traders for losses sustained for work on the public highway. The Country Landowners Association has also written to say that it believes that The only way in which British Gas and other utility companies can be obliged to respect the legitimate interests of those who are affected by their works, is to impose a liability of this nature. There is therefore very broad support for the new clause.

I am surprised that, in Committee, the hon. Member for Clackmannan (Mr. O'Neill), the spokesman for the official Opposition, was unable to support the amendment that was tabled at that stage, and that, in considering that, all he could refer to was the Society of British Gas Industries, Electricity Association Services Ltd. and British Gas. What has the hon. Gentleman done about all the other interests that I mentioned? Is he not interested in small business? Obviously, the old Labour party, with its corporatist interests, is not paying any regard to small business, which the Conservative party has always strongly supported.

I trust that I shall have substantial support, not only from Conservative Members, but from Opposition Members. I look forward to hearing what my right hon. Friend the Minister has to say.

Mr. Martin O'Neill (Clackmannan)

The Opposition have no major objections to the new clause, but we wonder whether it is the right way to deal with the problem. We do not deny that there is a problem, but the general election will have to come and go before we are in a position to do much about it. By that time, the hon. Member for Bolton, North-East (Mr. Thurnham) will not be with us, given the size of his majority and, as far as I recall, his unwillingness to defend his seat.

The new clause, understandably, deals with the only utility that it can deal with—British Gas; it does not take on the electricity companies. The hon. Gentleman was not altogether fulsome in his presentation of the situation. As I understand it, the Water Act 1989 emanated from the Department of the Environment, which has no responsibility for business and can impose on it whatever obligations it likes.

I can only imagine that when the Water Act was passed, the Department of Trade and Industry was not consulted, or if it was, it felt that the burdens imposed on businesses by water boards' activities were greater than those imposed by gas companies. We believe that other utilities could be involved. The cable companies certainly have some obligations under the New Roads and Street Works Act 1991, but the electricity utilities are as yet unscathed. The lobby that seems to be working away in the undergrowth of British business appears to have been strangely silent at the time of the privatisation of the electricity companies. Perhaps the hon. Member for Bolton, North-East could let us know whether representations were made about the electricity companies. I should have thought that they presented just as much of a problem.

Mr. Thurnham

The hon. Gentleman said that he thought that electricity companies represented just as much of a problem. Does he not accept that the scale of disruption is generally greatest with water or sewerage works, and, secondly, with gas works? Cable laying is a quick matter, which is here today and gone tomorrow, and is unlikely to give rise to such claims.

Mr. O'Neill

I am not competent to pass quite as swingeing a judgment as the hon. Gentleman, who may well have greater experience of the electricity industry than me. I am under the impression that the regional electricity companies and others spend a great deal of time digging up roads. If their stories are to be believed—I have no reason to doubt them—they invest a great deal of money and effort in improving the quality of electricity connections. One would have thought that they would be engaged in such activities, especially in built-up, urban areas.

There is a legitimate case for legislation, but it would be wrong to deal with only one utility. It would be far more sensible to deal with them all at once so that they could be treated fairly and with due weight.

Mr. Richard Shepherd (Aldridge-Brownhills)

The Water Act has done that.

Does not the hon. Gentleman feel for the small businesses and other businesses affected by a statutory undertaking with monopoly powers? Businesses are damaged—what is his remedy while we have the Bill before us?

Mr. O'Neill

We should deal with the problem in the context of all the utilities; it is not appropriate to take one at a time. We clearly did not take one at a time in the case of water—the Water Act came from the Department of the Environment, not the Department of Trade and Industry. I suspect that the DTI was not consulted at the time. As yet, the voluminous correspondence of the hon. Member for Bolton, North-East with everybody and anybody has uncovered nothing. I discovered that with some simple research.

The Labour party is not prepared to go into the Lobby in support of the new clause, if it reaches a vote. If any of my colleagues wish to do so, that is their decision, but the Opposition do not consider that it is the right time for such a new clause.

It would be more appropriate to deal with a number of cases together. Indeed, there is relevant legislation. The New Roads and Street Works Act 1991 covers certain aspects of the issue. I do not know whether the hon. Member for Bolton, North-East, who claims credit for being the most helpful person on those matters, was involved in that legislation. That would have been the obvious time not just to take into account the important matters of the individual safety of pedestrians or of road safety, but to protect the interests of businesses.

We are not in government—that is a pity—and the hon. Gentleman claims credit for having influence elsewhere and being able to speak to Ministers, but it seems that Ministers are influenced by him about as much as I am. That is regrettable; perhaps it is due to the manner in which he advocates the case that he puts forward.

The Opposition recognise that there is a problem, but we do not consider that it will be resolved to any extent by the new clause, because other industries are just as important and should be dealt with just as expeditiously. Unless they can be dealt with at one time, we not consider it necessary to deal with them at all.

This evening, we want the Government to say something far more conclusive than what they said in Committee. Frankly, I am not prepared to advocate that my hon. Friends support the new clause, if there is a vote. It is up to the hon. Gentleman to make his own judgment as to whether he wishes to put it to a vote.

Mr. Duncan Smith

I have been listening carefully to the hon. Gentleman. In principle, he agrees with the logic of the new clause, but he cannot support it in respect of the Gas Bill. Surely the Opposition should take a position on the issue if they agree in principle, as they allege. They must seize the initiative whenever it arises, as all legislators must do, and surely this is the moment to do so. I do not understand how the hon. Gentleman can agree with something and then say that the Opposition do not support it. It makes no sense.

Mr. O'Neill

I repeat our position. As far as we are concerned, the role of public utilities in interfering with people's businesses and the damage that that can cause businesses, especially when they dig up roads, should not be dealt with on a utility-by-utility basis. The Water Act dealt with it in that way primarily because the measure came from a different Department. Since then, there has been other legislation that the Government have singularly failed to utilise.

It is possible that an incoming Labour Government would re-examine the matter on a comprehensive basis, but the approach of Conservative Members, in seeking to use such a narrow issue to deal with a far broader problem, is quite understandable in view of the general campaign that utilities which cause damage to businesses should be subject to the law, as they are not at present. However, we are not prepared to take one utility alone. We would want the cable industry, electricity and gas to be taken together as the three utilities that are, as yet, outside the law. Until they can all be handled at once, this is the wrong way to go about it, so we are not prepared to support the new clause.

Mr. Richard Shepherd

I am truly confused by the speech of the hon. Member for Clackmannan (Mr. O'Neill). Presumably, on the basis that there was not a universal all-industry approach to the problem, we would not even have had the relevant clause in the Water Act, which is important to many small businesses.

I must declare an interest in the debate. I was a small grocer before I came to the House, and my brother now runs the company that I founded. The Water Act saved part of our business by allowing compensation to be paid to one of our shops for the lengthy barricading of its premises.

The public utilities—which are very much in the Opposition's searchlight as to their management, pay and the way in which dividends and shares are handed over to directors—have enormous powers. They are common-or-garden utility companies that serve local areas as monopolies. The prices they fix, subject to the regulator, are effectively monopoly prices. They can demand all their costs back through the price mechanism, and very few competitive businesses in the world can demand the return of any level of costs through that method.

4 pm

We have seen how the utility monopolies look after themselves—through the boards that overpay themselves, share deals and so on. I commend my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for proposing the new clause and I commend those across the country who support it; it seems to be a case of the little people against the monopolies. Under the new clause, public utilities are asked to have regard for the way in which they conduct their business.

In the case of the shop that I mentioned, the southern end of a major thoroughfare—Sloane street in London—was dug up in order to improve the supply of water to London. No one disputes that that action was necessary, and the water board acted in an exemplary fashion. Therefore, should there not be like treatment across the board for all statutory undertakings that have monopolies in local service provision? Why should the water industry quite rightly pay compensation for loss of business and damage done to small employers—who are often sole employers—but the gas industry be saved that expense?

I do not believe that the Opposition are fundamentally opposed to such a payment. I did not understand the comment by the hon. Member for Clackmannan about the curious way in which the measure should be bundled up to apply across the spectrum. The House has a means of addressing the second most important issue—after water, as my hon. Friend pointed out—confronting business people in this regard. Digging up roads in front of business premises can make people bankrupt; that is the essence of the matter.

I do not honestly believe that the Government can oppose the payment of compensation. It seems to me that it is a typical case of a monopoly utility company effectively writing a large section of its own legislation in a trade-off between Whitehall and the monopoly interests involved. That has occurred in the past. For example, British Telecom had a duopoly policy in the old days. In the early stages of the policy's development—which is all that I am alluding to—British Telecom had to fight a fierce battle for the British market. There was a secret agreement about that duopoly, whereby the second company was limited to only 3 per cent. of British Telecom's revenue. That was nonsense, so the Government developed that policy until we reached a more satisfactory arrangement.

I cannot conceive of an argument that requires the Government to treat the new clause in any but the most sympathetic manner. I suggest that the Government do so, as millions of small business men and women and their employees are fed up to the teeth with the arrogance of the utility companies and the often incomprehensible manner in which local utility companies that provide the necessities of life treat businesses and consumers.

There will be no cost to the Treasury. In writing legislation, the Government have the opportunity to consider very carefully whom they represent and to take amendments on board. The vitality of small businesses is crucial to the nation's vitality. That is why the Government should listen very carefully to my hon. Friend's argument in proposing the new clause and should not pay any heed to the Opposition spokesman, who wants to postpone a remedy that can be effected immediately in the Bill.

Mr. Peter Hain (Neath)

The Conservative Members who have spoken have both made strong cases on behalf of small businesses. All of us who have experienced the difficulties faced by small businesses when confronted with works outside their premises will have a lot of sympathy with them, and I think that that sympathy crosses the House, but I want to address some specific points to those hon. Gentlemen and to ask the Minister whether the new clause is the best way to handle the matter.

From reading the new clause, it seems that its consequences would be to impose unquantifiable risk, not so much on TransCo, which could simply pass the risk on to customers through pricing flow-throughs, but on subcontractors, who often are also, if not small businesses, at least medium-sized businesses. They would have to carry the liability, which may well be reflected in the ultimate price that we pay for gas through the pipeline.

The way in which the new clause is phrased and its impact will impose that unquantifiable burden of risk on subcontractors in particular, who are now the norm in the competitive, deregulated regime to which the gas industry is subjected. A technical problem therefore exists in relation to the way in which the new clause has been phrased.

Mr. Thurnham

Perhaps the hon. Gentleman could just clarify his point? I am not aware that water companies, which of course use contractors, as every other utility does, face the difficulties to which he has alluded.

Mr. Hain

The water industry legislation, as the hon. Gentleman will find when he reads it, applies somewhat differently. That underlines the point, which I repeat, made by my hon. Friend the Member for Clackmannan (Mr. O'Neill). The issue needs addressing in relation to all the privatised utilities, local authorities, and highways agencies. The impact on small businesses of such street works is significant. The problem is best dealt with in a comprehensive rather than piecemeal fashion, which could create knock-on effects that are technically flawed. We have here, as it were, a backlash from Conservative Members against the very privatised utilities for which they were responsible. They privatised gas and they are backing this flawed and fundamentally wrong competition Bill. They are the ones who initially created privatised monopolies; now they are screaming at the consequences.

Mr. Richard Shepherd

I shall not go into the hon. Gentleman's exegesis of the Gas Bill. He makes some assumptions or hypotheses. Is he aware of any problems over the same sort of clause in the Water Act 1989?

Mr. Hain

I am not aware of any such problems in the Water Act. I have had many experiences such as those referred to by the hon. Gentlemen in relation to the Water Act. I am simply saying that, in relation to the Gas Bill, the way in which the new clause applies will impose unquantifiable risk on subcontractors in particular. The matter should not be handled in this way. It should be addressed on a comprehensive basis. If the hon.

Gentleman and his hon. Friend persuaded the Minister to introduce legislation to deal with the problem, we would all be sympathetic to it.

The question of cable companies should not be tossed lightly aside. They are also responsible for a great deal of disruption. Where franchises are held by cable companies—they are making great strides in the city of Birmingham, for example—there is considerable unease and impact on small businesses in particular. The issue needs to be addressed, therefore, on a general, not piecemeal basis.

Mr. Matthew Banks (Southport)

I shall speak briefly to the new clause. I listened carefully to the remarks of the hon. Member for Neath (Mr. Hain), but he did not satisfactorily explain why the burden would fall on subcontractors. My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) referred to a case in my constituency, mentioning Duke street and my constituent Mr. Irwin. If British Gas had a duty placed upon it to compensate for loss of earnings in that case, I have no doubt that instead of weeks and weeks going by—during which time the British Gas contractor involved was seen spending time in the local pub—there would have been a greater sense of urgency on the part of British Gas to tackle the subcontractor, to tell him to get on with the work. The Berlin wall created around that particular business, which prevented access by the public, would have been done away with and life would have returned to normal.

Mr. Bernard Jenkin (Colchester, North)

The hon. Member for Neath (Mr. Hain) felt there was some irony in Conservative Members proposing this amendment. Is not it much more ironic that Labour Members are blocking an amendment to serve the consumer—perhaps against the interests of a nationalised industry? Conservative Members are following a long and honourable tradition of making public services responsive to the public.

Mr. Banks

My hon. Friend makes a perfectly pertinent point in a satisfactory way. We are concerned about the individual, and those of us who put our names to new clause 1 are addressing that concern now.

Mr. Kevin Hughes (Doncaster, North)


Mr. Banks

I will not give way because I am developing my theme, and I want to speak briefly.

The hon. Member for Clackmannan (Mr. O'Neill) was ahead of his party when he replied to Royal Navy debates as Labour's defence spokesman. Labour got itself into a bit of a pickle over Trident and nuclear policy. I do not believe that the hon. Gentleman, in his heart, entirely agrees with everything that he said at the Dispatch Box this afternoon. How long will we have to wait for a Labour Government? A long time, I suspect. We heard nothing from the hon. Member for Neath about his concerns for the individual and small businesses.

In the case to which I am referring, which has endured for many months if not years, the business has virtually gone bust. The individual has almost lost his business and he may lose his home. I will briefly describe the circumstances of that case, on which my hon. Friend the Member for Bolton, North-East touched. A major gas main needed work and the British Gas subcontractor built what I can only describe as a Berlin wall around the business in question. I observed that over weeks because I happen to live nearby, in Duke street. The work started in the summer of 1993 and it was still continuing after a lengthy recess. When the House returned in the autumn of 1993, I took up the question of compensation with British Gas but did not get anywhere. I met yet another brick wall. Constructively, I arranged a meeting at my home across the street between representatives of British Gas, my constituent Mr. Irwin, and his accountant and legal adviser. After lengthy correspondence, I received a letter from British Gas saying that it had considered even an ex gratia payment, but the answer was firmly no.

To cut the story even shorter, I took the matter up with head office. I was told all too often about the rights of British Gas, but there was never much mention of its responsibilities. All too little attention was paid to the rights of my constituent, who had suffered so badly. I was told clearly by British Gas that it had no liability to make reparations. In financial terms—I choose my words carefully because the last thing that I wish to do is embarrass a constituent of mine—the amount of money of which we were talking was absolutely tiny in the big swim of things. It would not matter, however, if it were £5. If somebody has not got much and is trying to keep his business together, £5—or £10,000—is everything.

I was still not satisfied at that stage so I sought a meeting with the chairman of British Gas. Four weeks after I first contacted him, I received a reply. There would be no meeting. My hon. Friend the Member for Bolton, North-East quoted from a letter of 22 June, in which Mr. Giordano told me: I do not, therefore, consider that there is a case for compensation. Yet the subcontractor working on behalf of British Gas had ring-fenced, with the Berlin wall that I mentioned, his entire business. Nobody could get to it. None of the passing trade could stop, even though there was a large area nearby where cars could pull in. It was a disgrace.

That is but one example in my constituency. My hon. Friends have referred to other examples and there are many other such instances in the country. The case to which I have referred is—I think—one of the worst, and I regret that it has happened in Southport.

4.15 pm

Even though, as Member of the House, I believe that very often we try to legislate too much—I often take the view that we should legislate a little less rather than a little more—I have no doubt whatever that at the very least a proper code of practice should be developed by British Gas to deal properly with the case to which I have referred and other such instances. At the moment, there is no statutory obligation on British Gas. It has taken a line from which it will not waver. I very much hope that my right hon. Friend the Minister will accept the broad thrust of my argument. If we cannot legislate today, we need a proper, effective code of practice to help the little man in the street, my constituent, small business men and women and individuals in their homes who have suffered.

Mr. Nick Harvey (North Devon)

I shall not detain the House long because the hon. Members who have put their names to new clause 1 have made their case well. Indeed, it is clear from the comments of hon. Members of all parties that there is much sympathy for the underlying point that the new clause tries to make. I think that all hon. Members have seen people at their constituency surgeries or have been contacted through the post in connection with the sort of circumstances about which we have heard.

I listened with interest to the comments of the hon. Member for Clackmannan (Mr. O'Neill), the Opposition spokesman. I agree that such obligation would be ideal across all the utilities, but I am surprised that he extrapolates from that the need to oppose the new clause. His argument suggests an element of two wrongs making a right. Whichever party wins the next election, legislative opportunities to address such a point will not present themselves every day. There is an opportunity here and now to do something about the wrongs that will occur in the gas industry.

In my constituency a great deal of trade is seasonal. On occasions, the gas board has not been as sensitive as it should have been and has carried out work throughout the summer season that could have been dealt with equally well during the winter. If the Bill contained new clause 1, it would be more sensitive to such considerations in future.

The hon. Member for Neath (Mr. Hain), who suggested that resultant additional costs might end up being passed to us in our gas bills. I do not believe that, in the current circumstances, that is particularly likely, because there seems to be plenty of profit to pay for such costs. But that might not always be so. If costs were to end up on our gas bills, however, it would probably be right and just. If gas is being supplied at a price that involves small businesses being disadvantaged unfairly, it would probably be better, even if costs were passed on to the gas consumer, that consideration for small businesses ended up on our bills. In the current circumstances, however, I do not believe that that would happen.

If the hon. Gentleman decides to press the new clause to a Division, I hope that Opposition Members will support it. As five Conservative Members have added their names to the new clause, and bearing in mind the parliamentary arithmetic as it is at the moment, we might have a very interesting vote on the new clause. I wait with interest to see whether the hon. Gentleman will press his new clause to a Division.

Ms Ann Coffey (Stockport)

If the hon. Member for Bolton, North-East (Mr. Thurnham) presses his new clause to a vote, I would be happy to vote for it. I hope that he does press for a Division, because there are probably a sufficient number of Conservative Members who have added their names to the new clause for him to win.

We could legislate today and ensure that the proposal is accepted if the hon. Gentleman presses his new clause to a vote. I would be interested in his explanation to the people on whose behalf he has campaigned if he does not press the new clause to a vote. At the end of the day, whether the proposal is enacted depends on the attitudes and votes of hon. Members. The hon. Gentleman has an opportunity today to test that. I assure him that I would support his new clause and I look forward to his pressing it to a vote.

The hon. Member for Bolton, North-East represents a north-west constituency, as I do. I am aware, as he is, of the problems that public utilities cause in pursuing their improvements. Part of the problem is that the gas board can dig up a pavement or the frontage of a small shop and then be closely followed by the electricity board, British Telecom and, to finish it off, the cable companies. The argument that the proposal should be comprehensive is very good, because small shops obviously do not suffer from the problems caused by just one utility.

I agree that a great deal of the problem relates to the supervision of subcontractors, for whom British Gas must bear the responsibility. A problem that has been raised with me in my constituency relates to subcontractors beginning work at the crack of dawn and disturbing a client's access to a shop with very little warning.

Another problem that has been raised with me is that of reinstatement of work. Although the utility has six months in which properly to reinstate a frontage, which is the responsibility of the shop owner to maintain and not the responsibility of the highways authority, the frontage is sometimes left in a mess, which particularly deters old people from visiting the shop, and that may result in a loss of business. If British Gas had a statutory responsibility to make recompense in those circumstances, it would be a great deal more careful in organising that work and supervising its subcontractors. That would be helpful for everyone concerned.

The hon. Member for Bolton, North-East said that the issue was backing small business against big business. I hope that the Minister for Industry and Energy has noted the hon. Gentleman's comments. I wait with interest to see whether the Minister will back small business against big business and whether, after the Minister has replied to the debate, the hon. Member for Bolton, North-East will be able to back small business against big business. I hope that he will press his new clause, because it would be very welcome in the north-west.

The Minister for Industry and Energy (Mr. Tim Eggar)

I thank my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for bringing this issue to the attention of the House. As he made clear, he has had two formal meetings with me and several less formal meetings. In addition, my hon. Friend the Member for Southport (Mr. Banks) brought a particularly serious constituency case to my attention. I am grateful for that.

We all recognise that the role of the utilities is extremely important. We all rely, in one way or another, on their work and we recognise that, from time to time, it will inevitably involve disruption to streets and common services. It was because of that that the Government introduced the New Roads and Street Works Act 1991 which resulted in the adoption by British Gas of detailed service standards.

It might be helpful if I describe those service standards. There should be notification of major works 20 working days in advance; pedestrian access to all premises while work is in progress; signing and guarding of the works with details of a telephone contact number should problems arise; leaving the site safe and tidy at the end of each working day; and reinstating any excavations promptly when the works are finished.

When we considered the 1991 Act, we specifically looked at the case for a general right to compensation for economic loss which arose from street works, and we came to the conclusion that such a provision would be wrong. The main reason for that was the general principle which underlies the use of streets. Successive Governments have taken the view that businesses should not have a right in law to any particular given level of passing trade, and that traders must take the risk of loss due to temporary disruption of traffic flows along with all the other various risks of running a business.

That is an important principle. If one did not have that enshrined in law, where would it stop? Streets must be resurfaced from time to time, they can be made one-way and they may have to be closed. The emergency services can affect traffic also. I stand by the basic principle that the risk of disruption to access along streets must be a risk which a business runs on a normal day-to-day basis.

Mr. Richard Shepherd

Does not the Water Act 1989 confound the very principle which my hon. Friend is enunciating? We are trying to address the present piecemeal circumstances, and the Bill will place consequential losses upon traders through loss of trade. All that the House is asking is that the Government remedy that. To talk about a general principle on street works related to an earlier Act may be an interesting sideline, but we are confronted with a real problem. How are we to address it? We think the principle adopted by my hon. Friend the Minister is wrong.

Mr. Eggar

I understand my hon. Friend's passion. With regard to the provisions of the Water Act 1989, that is a different case which relates not just to street works but to general economic loss on land not associated with streets. It is the provisions affecting the water industry which are anomalous. My hon. Friend should know the dangers of arguing from the particular to the general.

I stick by the principle. Nonetheless, my hon. Friends the Members for Southport (Mr. Banks) and for Aldridge-Brownhills (Mr. Shepherd) have said that we have a practical problem. The issue is how we address that problem. I have been prompted by the initiative set up by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham), and I have been particularly influenced by the constituency case raised by my hon. Friend the Member for Southport.

I have been in active discussion with the chairman of British Gas to see whether we can develop a way forward which deals with the cases that bear unreasonably upon small businesses. Mr. Giordano has suggested to me in a letter—which I shall place on record through the means of a written reply—that British Gas is going to revise the existing procedures of its transportation arm with a view to improving communication and co-operation with the owners of commercial premises. British Gas will discuss with individual business owners issues such as vehicular access, customer access, special notification and any special requirements which a particular business may have.

Beyond that, and subject to certain conditions which are laid out in the letter, British Gas has given an undertaking with regard to exceptional cases affecting businesses with a turnover of less than £500,000. That is British Gas's definition of a small business, which covers about 90 per cent. of businesses in the United Kingdom. Where such small businesses have a severe and clearly established loss of business for more than a month as a direct result of stre6t works carried out by British Gas or its agents, British Gas will sympathetically consider claims in respect of financial loss on an ex gratia basis.

4.30 pm

Having listened to the particular cases that concern my hon. Friends the Member for Bolton, North-East and for Southport, and also taking into account cases that have been brought to my attention through other means, in particular following my discussions in a formal meeting with my hon. Friend the Member for Bolton, North-East, it seems to me that the undertaking from British Gas, to which the Government expect it to adhere in an appropriate way, will meet almost all the cases of which we are aware have caused concern on a constituency basis.

Mr. O'Neill

From what I can gather, there will be no admission by British Gas of any liability of an ex gratia character or the rest. Will the Minister look at the draft standard conditions as they apply to public gas transporters' licences? Condition 14 of the standards of performance provides for compensation for consumers. If, in the course of the extension of the distribution system, standards are not adhered to there will be compensation.

Will the Minister consider the licence as a means of securing an obligation? If he is not prepared to accept the "blunt instrument" of an amendment to the primary legislation, he might want to do so through the fine-tuning facility that is afforded within the conditions of the licence. That would impose an obligation upon the licensee, in this case TransCo, which is most likely to be digging up a road. The licence already contains a reference to compensation when standards are not met. I think that that is what hon. Members are talking about.

Mr. Eggar

Without studying that condition with care, I think that I am right in saying that it does not cover that set of circumstances. This Government and previous Governments have believed that the basic principle that underlies the 1991 Act is appropriate. None the less, we recognise—this is why I have entered into discussions with the chairman of British Gas—that, in a small number of instances, the cost of those works, despite the 1991 Act and all the additional undertakings that TransCo has given, may bear unreasonably on small businesses.

We think that the best way of dealing with that—this is why we have discussed it with British Rail—is on a case-by-case basis. In practice, the undertakings that have now been given by the chairman of British Gas, to which we expect British Gas to adhere, will deal with almost all the cases that have been brought to my attention by my hon. Friends and through other means.

For those reasons, I cannot go along with my hon. Friends and accept the new clause. I pay tribute to my hon. Friend the Member for Bolton, North-East for the enthusiasm and dedication with which he has—

Mr. Duncan Smith

Will my right hon. Friend give way?

Mr. Eggar

If my hon. Friend really wants me to give way.

Mr. Duncan Smith

I am grateful to my right hon. Friend. I know that he wishes to wind up the debate, and I understand the reasons for that. However, there is a serious problem with the note from British Gas. If it has defined the size of business that it will compensate, are we not now in grave danger of shuffling off the responsibility to legislate and make that a fact, and passing it across to the courts of law? Should somebody who has a business worth more than £500,000 turnover now wish to be compensated, he will have to take redress through the courts to say that British Gas has no right to define him out of such compensation because his loss is no less great than that of a business below £500,000. We could resolve that today by making that a certain fact in legislation.

Mr. Eggar

I thought that I had made it clear that the Government were not prepared to move away from the basic principle behind the 1991 Act. I have sought to deal with the specific nature of the problems brought to my attention by my hon. Friends and others. I am confident that the letter from British Gas deals with almost all the practical cases that have been brought to my attention, and I am sure that British Gas will seek to live up to the spirit as well as the letter of the chairman's communication to me.

Mr. Thurnham

I have listened carefully to my right hon. Friend and thank him for the great attention that he has clearly given to the issues presented to him. I am a little disappointed that he is not able to accept the new clause, but it was always apparent that there were difficulties in his Department about accepting legislation affecting one utility which some people might then feel should be extended to further utilities.

I have not yet had an opportunity to read the letter from the chairman of British Gas. Clearly, I should like to see it before coming to a conclusion about how the proposals would work, but I welcome my right hon. Friend's reassurance to the effect that he feels that they would deal with most of the problems that might arise. I shall, however, reserve my opinion until I have seen the letter and perhaps discussed it with those who are anxious that the new clause should be accepted. Perhaps there will be an opportunity for the matter to be discussed in the other place if it is felt that the letter does not go far enough in responding to our legitimate concerns.

I listened with amazement to the speech of the hon. Member for Clackmannan (Mr. O'Neill). He seems to think that, because his party was asleep during the passage of the New Roads and Street Works Act 1991, he can pretend that there is nothing he can do now. He might have missed his opportunity then, but he has a perfectly good opportunity now. However, he seems to have chosen not to use it. The hon. Gentleman was followed by my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) who made an excellent speech. He spoke with great feeling as someone whose small business had been affected by street works. I am sure that the whole House sympathises with his position.

Mr. Richard Shepherd

As I have already said, I am grateful to my hon. Friend for tabling this important new clause. I do not think that the problem has been dealt with by a letter from Mr. Giordano or see how it places a statutory requirement on British Gas. Nor do I understand how it will lead to compensation. The House itself has wrestled with the definition of a small business, but it seems that British Gas deems it appropriate to define it as one with a turnover of £500,000, or whatever the figure was. I did not hear the figures given for the water companies or what level of compensation they have had to pay, but, if we wait on crystal mountains or behind ministerial doors for bad news from small businesses, we shall be in some difficulty. Truthfully, I do not think that a letter from Mr. Giordano is sufficient in this instance.

Mr. Thurnham

My hon. Friend makes it clear that there are still doubts. Until I have seen the letter, it is difficult to comment further.

I think that, having listened to the speech of the hon. Member for Clackmannan, British Gas shareholders will be delighted with the work done by its directors and other representatives. The hon. Gentleman could not have done better had he spoken as a representative of British Gas.

I could make little sense of the speech of the hon. Member for Neath (Mr. Hain), who seems blind to the benefits of competition. No doubt if he had his way, the gas industry would still be nationalised and there would be no money with which to pay compensation anyway.

Mr. Hain


Mr. Thurnham

I think that we have heard enough from the hon. Gentleman.

I thank my hon. Friend the Member for Southport (Mr. Banks) for his truly excellent speech. He put his constituent's case very well. Clearly, the case that he outlined today had struck home as my right hon. Friend the Minister had earlier considered it personally and brought it to the attention of the chairman of British Gas for a second time. Obviously, this code of practice would be one important way of dealing with the issues if we do not have legislation.

I was pleased to hear the speech of the hon. Member for North Devon (Mr. Harvey), which again illustrated the benefits of competition. Clearly, the other Opposition party made a better case of addressing the issues than the official Opposition. To that extent, I wish the Liberal Democrats well and hope that they will continue to compete and to stir up some more realistic attitudes on the Opposition Benches.

I listened carefully to the hon. Member for Stockport (Ms Coffey) and thank her for her offer of support for the new clause if it comes to a Division. I am tempted to go to that point, so that we can illustrate the extent of the support for the new clause, but in considering whether to beg leave to withdraw it, I bear in mind the need not to over-embarrass Labour Members, as it is clear that early on a Monday afternoon not many of the colleagues of the hon. Member for Stockport would be around—

Mr. Kevin Hughes

About half an hour ago, the hon. Gentleman was championing the cause of small businesses, only to dump them and let them down 40 minutes on. He has chickened out and he will not push the matter to a vote. It is the hon. Gentleman's side that is opposing the new clause, not the Opposition.

Mr. Thurnham

I can only assume that the hon. Gentleman's remarks were addressed to his Front-Bench colleagues and that they will listen to him. It is interesting that there are considerably more Conservative Members than Labour Members in the Chamber this afternoon. Obviously, the former are concerned about the gas industry and the position of small businesses when compensation is called for, whereas I can see only half a dozen Labour Members and a sole representative of the Liberal Democrats in the Chamber.

Mr. Hain


Mr. Thurnham

We have already heard enough.

I thank the House for the opportunity to debate the issue at some length. It is now clearly on the record and there will be an opportunity for us to study the letter from the chairman of British Gas. If the concerns that we have aired still exist, I have no doubt that many people will press Members of another place to raise the matter when the Bill passes from this House.

The Bill as a whole is excellent and in principle I wish it all possible success. I thank my right hon. Friend the Minister for Industry and Energy for going as far as he did in addressing my concerns and seek your leave, Madam Deputy Speaker, to withdraw the new clause.

Madam Deputy Speaker (Dame Janet Fookes)

The hon. Member does not need my leave; he needs that of the House. Is it the House's pleasure that the new clause be withdrawn?

Hon. Members


Motion and clause, by leave, withdrawn.

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