HC Deb 19 March 1997 vol 292 c880
16. Mr. Robert G. Hughes

To ask the President of the Board of Trade what plans he has to alter the structure of utility regulation. [19456]

Mr. John M. Taylor

The Government's immediate priority is to enable the electricity and gas regulators to continue to drive forward the opening of these markets to full competition in 1998, for the benefit of consumers.

Mr. Hughes

Does my hon. Friend agree that the indicator of the regulators' success has been lower prices for consumers of gas and electricity and substantial infrastructure development and investment by the water industry? Would not all that be put at risk by the Labour party's so-called windfall tax? When water quality is particularly important to my constituents, who have experienced problems—fortunately now over—with Three Valleys Water, is not the election message to them that Labour's windfall tax would mean higher gas and electricity prices, but lower quality drinking water, less money for sewerage schemes and, what is more, no money for flood relief schemes? All those are vital to my constituents, and all would be put at risk by a so-called windfall tax.

Mr. Taylor

My hon. Friend is correct to lay out that litany of the dangers of electing Labour. Not only do we know nothing about the windfall tax; we do not know the basis on which the consumer would be charged. We have a policy called RPI minus x, which means less than inflation pricing policy. The Opposition Front Bench are divided on that; we have had one signal from Leeds, West and another from Pontypridd. Will Labour Members tell us about the windfall tax and their pricing policy? We are getting two messages at the moment—both bad.

Mrs. Dunwoody

Will the Minister address his own responsibilities for a change and tell us why, if those companies are so efficient, they have not considered abolishing standing charges, and why so many of their elderly pensioner customers are deeply disturbed, not by the excellence of the service that they receive, but by its expense?

Mr. Taylor

Charging policy is a matter for the industry. The hon. Lady should listen to the answer. In any computation of a fair return on capital, which is a matter of interest to the shareholders, one must consider the historic cost of installing the equipment, for which standing charges are a form of rental. It is an equitable policy.

Mrs. Dunwoody

Shareholders' interests always seem to come first.

Mr. Taylor

Shareholders have an interest, as do consumers. Consumers have benefited to the tune of 70 per cent. of efficiency gains; shareholders have benefited to the extent of 30 per cent. of efficiency gains.