HC Deb 01 November 1995 vol 265 cc293-5
9. Ms Coffey

To ask the President of the Board of Trade when he last met the electricity regulator to discuss regulation policy. [38657]

Mr. Eggar

I hold discussions with the Director-General of Electricity Supply on a regular basis.

Ms Coffey

Does the Minister agree that the proposed acquisition of Norweb by North West Water raises certain issues about the current regulatory system? Clearly, neither the water regulator nor the electricity regulator has in the past been able to anticipate the massive profits generated by those industries. The benefits have not been passed on to customers—shareholders have been the major beneficiaries. Does the Minister agree that it is now time to look again at the regulatory framework, to ensure that, in any future mergers, customers and employees as well as shareholders get a much better deal?

Mr. Eggar

As the hon. Lady knows, that matter is shortly to be considered by my right hon. Friend the Secretary of State, so it would be wrong for me to comment on it at this stage.

Mr. Riddick

Will my right hon. Friend confirm that, since privatisation, the price of electricity in Yorkshire has fallen by 16 per cent? Will he further confirm that my constituents will enjoy the benefits of a £50 rebate next year as a result of the demerger of the National Grid, and that the regulator has stipulated that the distribution prices charged by Yorkshire Electricity should be reduced by 3 per cent. per year for the next four years? Does the Minister agree that that is excellent news for consumers of electricity—our constituents—and that the Labour party is desperately trying to divert attention from it?

Mr. Eggar

Privatisation has brought enormous benefits to electricity consumers. Prices have fallen by 9 per cent. in real terms over the past two years, and next year prices for the average electricity consumer will be £90 lower than they were last year. My hon. Friend is right to say that further reductions beyond next year are in the pipeline.

Mr. McWilliam

If electricity companies are so successful, why do I have to pay so much for my electricity from Northern Electric while it keeps being the subject of predatory takeover bids from friends and bankers of the Conservative party or from American multinationals? Why can I not get my electricity at a fair price?

Mr. Eggar

Assuming that the hon. Gentleman has lived in the Northern area of electricity provision for many years, I might point out that for the first time he will already have had, and will have in future, a real reduction in the price of his electricity—a feat never achieved before, and certainly not under nationalisation.

Mr. Allason

Will my right hon. Friend confirm that the electricity regulator has a role to play not just in protecting the interests of the consumer but in protecting those of the shareholders? Is he aware that during the recent merger involving South Western Electricity, some shareholders were denied the right to retain their shares in the company? Would it not be right for the regulator to take up that matter?

Mr. Eggar

My hon. Friend is right to say that the electricity regulator must, under statute, take account of the interests both of consumers and of the financial situation of the companies that he regulates. It is a matter of company law, not peculiar to the electricity industry, that, once 90 per cent. acceptances have been received, there is effectively a compulsory right for the acquiring company to purchase the additional shares. That does not apply only to the utility companies; it is a general rule which has been on the statute book for a number of years.

10. Mr. Ashton

To ask the President of the Board of Trade what steps he has taken to increase competition in the electricity industry. [38658]

Mr. Jonathan Evans

Privatisation has opened the electricity industry to the disciplines of the market, and it has provided for increasing competition where previously there was none.

Mr. Ashton

Is the Minister aware that that increasing competition has meant that the East Midlands electricity board closed 60 shops last year, putting hundreds out of work and providing a far worse service for pensioners and others who want to pay their bills? The money from that has gone to increase earnings per share from 12p to 78p and the chief executive has paid himself a bonus of £120,000. Is the Minister further aware that, when the National Grid is sold off, households will receive £50 each, while shareholders will be given £2 billion and the chief executive who handles this legalised theft will receive a bonus of £200,000? Is that competition?

Mr. Evans

It is curious that Labour Members all spend their time deriding the regional electricity companies but then write to me saying that every proposed merger application should be referred to the Monopolies and Mergers Commission and that the companies should remain in the hands of those now in charge of them.

Mr. Stephen

Does my hon. Friend agree that the electricity industry exists to provide electricity for consumers, not jobs for employees? Does he think that the electricity consumer would like to return to the old days of nationalisation, when a chief executive was paid rather less and electricity cost much more?

Mr. Evans

As my hon. Friend has made clear, privatisation has ensured that the consumer's interest has been to the fore. That is illustrated by the powers exercised by the Director General of Electricity Supply. I endorse my hon. Friend's remarks. Consumers would not have obtained the present deal under the old 100 per cent. state monopoly which Labour Members fought in the trenches to retain.

Ms Eagle

Does the Minister not appreciate the anxiety in the north-west with the takeover of MANWEB by Scottish Power and the proposed merger between North West Water and NORWEB, with the possible loss of thousands of jobs, fat cat salaries for those who run the industries and poorer services for customers? There is no good deal, merely a privatised monopoly.

Mr. Evans

With regard to the Scottish Power-MANWEB deal, the hon. Lady should know that the Director General of Fair Trading advised my right hon. Friend the President of the Board of Trade that there were neither competition nor public interest grounds to warrant a reference to the Monopolies and Mergers Commission.

The hon. Lady referred to the proposed merger between North-West Water and NORWEB. Had she been listening earlier, she would have heard my right hon. Friend the Minister of State say that the matter is on my right hon. Friend the Secretary of State's desk. It is therefore inappropriate for Ministers to comment.