HC Deb 01 November 1995 vol 265 cc327-31

Lords amendment: No. 179, in page 53, line 15, at end insert— ("Duty of Director to investigate certain matters

.—(1) In subsections (1) and (2) of section 31 of the 1986 Act (duty of Director to investigate certain matters), for the words "an enforcement matter" there shall be substituted the words "a reserved matter".

(2) For subsection (3) of that section there shall be substituted the following subsections—

"(3) In this section and section 32 below "reserved matter" means any matter—

  1. (a) in respect of which any functions of the Director under section 28 above are or may be exercisable; and
  2. (b) which has not been designated by the Director as a matter which is to be investigated by the Council.

(4) A designation under subsection (3) above may be made—

  1. (a) either generally or in relation to matters of a particular class or a particular matter; and
  2. (b) either unconditionally or subject to such conditions as may be specified in the designation.

(5) Conditions specified in a designation under subsection (3) above may contain provision for the designation to cease to have effect, either generally or in relation to matters of a particular class or a particular matter, in such circumstances as may be determined by or under the conditions." ")

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment.—[Mr. Eggar.]

Mr. Deputy Speaker

With this, it will be convenient to take Lords amendments Nos. 180 to 185 and 293.

5 pm

Mr. Nigel Griffiths (Edinburgh, South)

The amendments relate to the duties of the Director General of Gas Supply and the additional duties that we would like her and the Gas Consumers Council to take on.

Since the Committee's and their Lordships' deliberations on the Bill, figures are available to show that, sadly, and contrary to the predictions from Ministers, the number of complaints from gas consumers has reached record levels. In the first half of this year the number of complaints to the Gas Consumers Council totalled the same as those recorded for the whole of last year. I understand that the rate of complaints is such that in the first nine months of this year the Gas Consumers Council has received a record number of complaints—more than in any other year, even its peak year of 1988.

The amendments are designed to give greater powers to the director and the Gas Consumers Council to track down the source of some of those complaints. There is no doubt that the deterioration in services of which we are aware and which has been evinced in a number of services offered by British Gas has led to an increase in complaints. The closure of 160 gas showrooms has led to a deterioration in the services on offer in the high street. Those showrooms used to offer a number of services, including the important one of offering advice on the payment of bills. The Post Office cannot offer such advice. Because of those cuts in services, gas showrooms have been merely left to sell appliances. Those closures have led to an increase in reported complaints.

Consumers have also complained because of poorer services to homes: 50 home service advisers have been axed, which must have had an effect on the speedy and essential help to which elderly and disabled gas users had become accustomed.

At present I do not believe that the regulator has made any connection between those poor levels of service and the behaviour of British Gas, especially in the boardroom. Since our Committee concluded its deliberations, the Greenbury recommendations have been published on boardroom pay and the way in which salaries and share options should be handled. I am sorry to say that British Gas does not seem to be at the forefront of companies implementing those recommendations to the letter.

At the same time as we have heard of bonuses of £1 million given to a few British Gas directors and record levels of complaints against it, the regulator does not have the power to make a connection between those facts, nor does she have the power to ask the Gas Consumers Council to investigate those problems and make the necessary recommendations. The amendments are designed to bring those functions together so that the director general herself has a duty to consider boardroom remuneration and evaluate the services offered by British Gas.

British Gas has received a record number of complaints against it. Despite the threat that it may lose the charter mark issued by Ministers at the beginning of the year because of that, things have gone from bad to worse. I should be sorry to see it lose its charter mark. It has given us no pleasure to see a company that was a byword for safety, efficiency and helpfulness, and which had one of the best records on customer help, become in such a short time the subject of universal criticism. That criticism has been expressed by hon. Members on both sides of the House, although it has been voiced by just one or two Conservative Back Benchers.

Unless British Gas improves its customer services, it will, I am afraid, go from bad to worse and lose customers. Its ability to respond to the needs of its 18 million domestic consumers and several million industrial consumers will therefore deteriorate.

Through the amendments, we want to send a clear message to the Director General of Gas Supply. She must take a greater interest in the concerns of gas consumers. She must not, as she has told Members at recent meetings, concentrate on fostering the competitive aspects of the industry.

People in houses who feel that their gas service is deteriorating do not look to competition to solve those problems, but to British Gas. They want that company to ensure that it provides the services that it has always provided. People are particularly critical of the resources that those in the boardroom of British Gas have devoted to boosting share option schemes and salaries rather than getting down to running the core business and keeping British Gas customers satisfied.

Mr. Rowlands

I agree with the comments of my hon. Friend the Member for Edinburgh, South (Mr. Griffiths).

I should like to know about the function of amendment No. 179. According to the useful note from the Government it is intended to revise section 31 of the Gas Act 1986 so as to empower the director to designate matters to be investigated by the council either generally or specifically and either unconditionally or subject to conditions. That is plain enough language and it suggests that the Gas Consumers Council could become the creature of the director general. According to the amendment, it appears that the terms of reference of the Gas Consumers Council's work will be defined and designated by the director general. That is how I read it and, if so, should we be in favour of the amendment?

As my hon. Friend has already said, the director general has made it clear that she sees her remit to be the development of competition. The Gas Consumers Council may find that the character of the competition that is being encouraged by the director general is having adverse affects in other respects on the interests of consumers. The roles of the director general and the Gas Consumers Council are not necessarily compatible or consistent. I have always assumed that those roles were separate. If they have the same function, why have both? We have always assumed that the Gas Consumers Council, as a representative body with regional presence and, therefore, with feedback from the grass roots consumer movement, has a role different from that of the director general. It is a different animal.

It is not clear whether the amendment is inclusive or exclusive. Does it mean that the director general can limit, determine or define the investigative function of the Gas Consumers Council? That is what is suggested by the layman's language of the notes provided by the Government to accompany the amendment. The amendment talks of general or particular matters and of designations being unconditional or subject to conditions. What sort of conditions is it envisaged that the director general could impose on the Gas Consumers Council?

Could the director general say to the Gas Consumers Council, "Thou shalt not investigate an activity," or forbid it to investigate her decisions? If the Gas Consumers Council found an activity it wanted to investigate or if gas consumers felt that the director general was letting consumers down in some way, would the council be able to investigate in an independent, free spirit? If the amendment does not make the Gas Consumers Council a creature of the director general, it certainly gives the director general power to investigate and define the work of the Gas Consumers Council. I do not like the sound of it and I do not know whether we should accept it.

As my hon. Friend the Member for Edinburgh, South said, British. Gas in recent years has suffered one of the saddest declines in consumer confidence. One reason for that is that all the changes and convulsions that have happened have meant that the sense of identity that we had with, for example, Wales Gas, has been broken up. The regional structure of British Gas was significant. I know that the Bill and the Minister are not responsible for that. It stemmed from reports of the Monopolies and Mergers Commission. One consequence of that upheaval has been that British Gas's feel and touch for consumer matters has declined.

My hon. Friend the Member for Edinburgh, South mentioned gas showrooms. The most vivid—dare I say, amusing—debate on the Gas Act 1986 was on what was called the Merthyr gas showroom amendment, with which I stoutly sought to defend my local showroom against what I saw would be the impact of that Bill. After all these years, my worst fears have come true, and the Merthyr gas showroom has been closed. Indeed, showrooms all over the country have been closed. That is a withdrawal from the community and from the important close contact points that British Gas had with consumers. The use of those showrooms as advice centres and contact points—not only for paying bills—was important. The staff who worked in those showrooms—this was certainly true of the Merthyr showroom—enjoyed respect and were highly regarded.

The withdrawal of important contact points with consumers has led to the sad saga, vividly described by my hon. Friend the Member for Edinburgh, South, of the rise in the number of complaints. Regionally, Wales Gas was an important part of the institutional framework of life in Wales and the capital. A remnant of it is still there, ably led by the local manager, but it is not the same. The result of the changes and convulsions is to be found in the figures that my hon. Friend quoted.

5.15 pm

I should like to know a bit more about the role that the Gas Consumers Council will have and its relationship with the director general. I hope that my worst fears about the wording of the amendment are not justified and that the role of the Gas Consumers Council will not in some way be restricted by conditions or definitions suggested by the director general. Those are serious points, but behind them lies the much more serious point made by my hon. Friend the Member for Edinburgh, South about the sad way in which British Gas has lost touch with many consumers as a result of the convulsive changes that have taken place in the industry.

Mr. Eggar

I shall deal first with the point made by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands)

. When we were originally consulting on the Bill's structure, we had to decide whether the Gas Consumers Council would be amalgamated with Ofgas. That had been the formula we had followed for Offer. We decided against that. It was a fundamental policy decision.

The amendments were suggested jointly by the Gas Consumers Council and Ofgas to introduce an element of flexibility. The amendment deals with complaints and only with complaints. Under the Gas Act 1986, the Gas Consumers Council has to pass complaints about enforcement matters to the director general. There is no option under the terms of the Act. The amendment gives some flexibility.

The Gas Consumers Council might very well decide that it thought that it could deal with a matter and the director general would say, "Fine, go ahead and investigate it." However—this deals with the point about the conditions that the director general might set—she might then say, "If there is a breach of the licence, for which I am responsible, please refer it back to me." That was only an example. The amendment is designed to provide a better practical working relationship and is supported by both the director general and the Gas Consumers Council.

Mr. Rowlands

I am grateful to the Minister for that example. It is reassuring that it is a joint suggestion. The Gas Consumers Council, then, can proceed to investigate what it wants but where that would infringe on the specific duties of the director general it would refer the matter to the director general. It will be a free agent in every other sense. Is that the assurance that the Minister is giving?

Mr. Eggar

Not in the precise terms in which the hon. Gentleman puts it. He is talking about very wide-ranging powers. We are talking about keeping the existing division between Ofgas and the Gas Consumers Council but allowing some of what I would call practical flexibility. In other words, where there are matters which clearly fall to the Gas Consumers Council to be investigated, which it has a desire to investigate and which do not conflict with the overriding powers of Ofgas, the council can go ahead. It is a practical working relationship. The strict division originally imposed by the Gas Act 1986 has proved to be a hindrance in responding to reasonable complaints from the average consumer. This is therefore a significant step forward on behalf of consumers.

The hon. Member for Edinburgh, South (Mr. Griffiths) made the same speech as I have heard from him several times before. There was the odd wry smile among hon. Members on both sides of the House as they heard more or less the same phrases tripping out as tripped out on the first day of the Committee.

Mr. Nigel Griffiths

What about September's results?

Mr. Eggar

Garbage stays garbage, however often it is repeated. The hon. Gentleman seems incapable of understanding that, from the consumer's point of view, the advent of competition will be the ultimate spur for British Gas. If consumers are dissatisfied with the standard of service provided by British Gas, they will be able to go elsewhere. Nothing will concentrate the mind of British Gas or any other gas supplier more than consumer choice.

I cannot comment on the hon. Gentleman's remarks about the charter mark. A review is being conducted involving British Gas, the Gas Consumers Council and other interested parties, and I expect that the results will be announced later this year. While it is true that the absolute number of complaints is at an historic high, we should also examine the way in which British Gas is meeting its service standards in the regulated market. Last year, British Gas met 36 of the 39 service standards agreed with Ofgas and came very close to achieving the other three. That performance matched the performance of British Gas in 1993, which the GCC had described as "excellent". I do not wish to dismiss the rise in the number of complaints, but if one examines the level of performance one can see that British Gas has met 36 of its 39 service standards.

Lords amendments Nos. 179 to 192 agreed to, some with special entry.

Forward to