HC Deb 19 April 2000 vol 348 cc993-1002

'.—(l) In this Act—

(2) Expressions used in this Act, as regards matters relating to gas, and in Part I of the 1986 Act have, unless the context otherwise requires, the same meaning as in that Part of that Act. (3) Expressions used in this Act, as regards matters relating to electricity, and in Part I of the 1989 Act have, unless the context otherwise requires, the same meaning as in that Part of that Act.'.—[Mrs. Liddell.]

Brought up, and read the First time.

Mrs. Liddell

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

Madam Speaker

With this it will be convenient to discuss the following: Government amendments Nos. 1, 2 and 4.

  • Motion to transfer clause 107.
  • Government amendment No. 6.
  • Motion to transfer clause 108.
  • Government amendments Nos. 8 to 21.

Mrs. Liddell

As I have already made clear, the Bill is an important one for the Government; it provides the basis for pushing ahead with further and more effective competition in energy markets, while ensuring that all consumers, including the disadvantaged, enjoy the benefits of competition in gas and electricity. The Bill also modernises the regulatory framework to accommodate converging gas and electricity markets. It underlines the importance that we attach to improving the transparency, consistency and predictability of regulation as the foundation for better decisions and greater regulatory stability.

Thanks to the efforts of the Committee, nearly all the substantive work is complete. That is why the Government are tabling only two groups of amendments. In each case, we informed the Committee well in advance of our intention to table these amendments on Report.

The first group is technical in nature. As the House is aware, the Government said on 2 March that we were removing from the Bill the provisions relating to water and telecommunications. Soon afterwards, the Committee amended the Bill to remove most of those provisions. We now seek to remove the remaining provisions relating to telecommunications, which were considered by the Committee.

4.15 pm
Mr. Ian Bruce

A fairly limited number of amendments have been tabled on Report. We noticed in Committee that amendments were appearing more slowly than usual because the officials appeared not to be able to keep up. When we have considered the Bill on Report, does the Minister intend to introduce another raft of amendments in the other place? Will she indicate which areas of the Bill the Government still intend to amend before it returns for final consideration in this place?

Mrs. Liddell

It is not the Government's intention to introduce substantive issues in another place. Inevitably there will be other amendments, but we do not intend to table a substantial number on substantive issues. I cannot be more precise than that. The hon. Gentleman is an experienced Member, and he knows that the Bill will be examined and that some technical and drafting amendments may have to be tabled in the other place.

Mr. John Bercow (Buckingham)

What proportion of the new clauses and Government amendments will require the introduction of additional and previously unforeseen regulations? Will the right hon. Lady tell the House whether those regulations, in whole or in part, will be subject to the negative or to the affirmative procedure?

Mrs. Liddell

I am not in a position to tell the hon. Gentleman. I wish to make some progress in the areas covered by the amendments that we have tabled for discussion today. The hon. Gentleman was not a member of the Committee, so I am being more generous to him than I would be to those who attended the Committee's sittings. I shall now move on to the amendments, which are very important.

Amendments Nos. 4, 9 and 11 to 21 remove the remaining provisions relating to telecommunications. Amendment No. 4 deletes clauses 101 to 104, which among other things would have established the Telecommunications Authority and the Telecommunications Consumer Council. Amendments Nos. 9 and 11 to 21 delete consequential references to the authority and the council. The remaining Government amendments all follow from the removal of telecoms provisions and serve to improve the coherence of the Bill after those provisions are removed.

Amendment No. 4, new clause 3 and amendments Nos. 8 and 10 bring together the separate extent and interpretation provisions in clauses 100 and 109.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

In response to the intervention of my hon. Friend the Member for South Dorset (Mr. Bruce), the right hon. Lady said that there were no substantive new clauses to be tabled in another place. Will she say when she intends to table the amendments referred to in the explanatory notes, which refer to measures consequential on the separation of electricity distribution and supply, including provision for transfer schemes for public electricity supplies? When will those amendments be tabled?

Mrs. Liddell

Consequential amendments will be tabled in another place under the normal arrangements and through the usual channels.

Amendment No. 10 inserts a single provision stating the extent of the Bill in the final clause. New clause 3 gathers together provisions relating to interpretation, which will be inserted in the final part of the Bill.

Removing telecommunications clauses removes the rationale for separating provisions amending the Gas Act 1986 and the Electricity Act 1989 to give the Competition Commission a veto power following licence modification references in other clauses amending those Acts.

Amendments Nos. 1, 2 and 6, which are linked to the two Government motions, reinsert these provisions unchanged in the appropriate places in chapter IV, which provides for amendment of the Electricity Act 1989, and in chapter V, which provides for amendment of the Gas Act 1986.

Mr. Gibb

I am astonished by the Minister. Is she not embarrassed to introduce this group of amendments when the vast majority of them will remove the remaining telecommunications clauses from the Bill? The question that Conservative Members are asking is why the Government did not know when the Bill was published that the telecommunications industry would be unhappy about being regulated. A White Paper to be published in the autumn will deal with the possibility of regulating the telecommunications industry, and communications and broadcasting in general. Why did Ministers not know about the White Paper before the Bill was published?

Mrs. Liddell

I take it that the hon. Gentleman has a defective memory. He perhaps forgets his offer to assist the Government to remove the telecommunications clauses. He did that specifically because, following changes in the industry, a second White Paper was likely to consider overall telecommunications issues. Can he confirm whether he remembers his offer to help?

Mr. Gibb

The Minister is very tetchy today. She fails to realise that there is a difference between supporting the Government in their attempt to remove the clauses on telecommunications and asking questions about their policy and approach. She should not be so sensitive to criticisms from Members of Parliament. We supported the Government in removing those clauses in Committee.

Mr. Ian Bruce

My hon. Friend will know that my first speech in Committee, and others that I made before the Government removed the telecommunications clauses, urged them to do just that. Before they removed the clauses, Ministers explained why they were necessary— but the House and the telecommunications and water industries have not had a proper answer to the questions that my hon. Friend asks. Our memories are certainly not defective.

Mr. Gibb

I am grateful to my hon. Friend. Those are important questions, because Ministers must have known that a White Paper on telecommunications and broadcasting would be published this autumn. Why, then, did they include in the Bill all the measures about regulating the telecommunications industry, when the regulatory framework will have to be revamped in a couple of years' time? If they say that they did not know about the White Paper, it is disgraceful that Ministers do not know what is going on in other parts of the Government.

When the clauses were removed, the Minister said that the Government did not think that the telecommunications industry was concerned, but the industry did not know that a White Paper was forthcoming. That was announced in a press release on 4 February. The Government could not have known that the industry was concerned, because the industry did not know about the White Paper. That argument is nonsense. It was incumbent on the Government to inform the industry about the White Paper. Apart from that, the representations made before 4 February made it clear that the Government envisaged re-regulation of broadcasting in due course.

In response to my intervention, the Minister said that the proposals for the transfer scheme for public electricity suppliers were mere consequential amendments. That is a new definition of the term "consequential amendment". I thought that it meant changing references to sections and to the repeals set out in schedules. However, a substantive set of clauses will be required to cover the tax consequences of having to split up the companies that supply and distribute electricity, and we would have liked the opportunity to amend them in Committee. All the subsidiaries involved in the distribution of electricity will have to be separate from those involved in its supply. That means that there will be substantial changes to the ownership of contracts. Taxation consequences will also flow from the split, so the provisions are important. If the Minister claims that they will involve mere consequential amendments, will she spell out in more detail what she means by the other so-called consequential amendments that will be tabled in the other place?

Dr. Vincent Cable (Twickenham)

I appreciate the fact that the Government intend Report to be a tidying-up exercise to follow on from the work of the Standing Committee, of which I was not a member. However, we have an opportunity to revisit some of the basic issues about whether it was wise to decapitate the Bill and remove some of its key elements.

I take a view opposite to that of Conservative Members. I believe that the original structure had much to commend it. There was a good reason for treating the telecommunications, water and energy sectors together. The underlying economic principles for all those industries are the same. In each case, there was an understandable wish to move from monopoly regulation to competition, which is encroaching on all those industries. It is being encouraged, and rightly so. However, in each sector, there was a natural monopoly deriving from the electricity and gas grid, the water mains system—the backbone system—and the telecommunications system. It seemed eminently sensible to apply a common set of regulatory principles to them all.

The integrated Bill was welcome at the time because it made two significant advances, one of which was to introduce a higher level of social and environmental protection. Consumer groups and those concerned about the environment widely welcomed that. The second advance provided more statutory consumer protection. In the integrated Bill as originally conceived, all those sectors enjoyed additional levels of regulatory protection.

We do not know what will happen now, especially to telecommunications. A White Paper and a Green Paper will be issued, and there will be a new regulatory structure dealing with communications as a whole—probably in two years, although that is not certain. Will the Minister reassure us that the genuine advances in social and environmental obligations and consumer protection in the original Bill will remain in any new communications and water Bills? It is important not to go backwards as a result of the withdrawal of those key elements of the Bill.

I am sure that the answer to my question is yes. However, I am slightly sceptical because I have dealt with other areas of regulation, especially in connection with the Financial Services and Markets Bill, and another Department strongly resisted incorporating social obligations such as those in the Utilities Bill. As an advance has been made, it is important to consolidate it.

I wish to raise a further point about the method of reaching such a decision. Consumer groups have bruised feelings—as Ministers, I am sure, are aware—because when the Bill was originally introduced, they were assured that telecommunications would henceforth enjoy a much stronger system of consumer protection. Many of them were delighted to hear that. Indeed, they issued enthusiastic press releases saying how much they welcomed it—having been encouraged to do so, I believe, by the Department of Trade and Industry. They were then told, without being consulted, that telecommunications were being withdrawn from the Bill. No reason was given for that, but of course the consumer groups were well aware of the pressures from the mobile telephone operators that led to the withdrawal.

Consumer groups are extremely anxious about the way in which the decision was made over their heads. I hope that the Government will give an assurance that the next stage in dealing with telecommunications and water will bring those groups back into the fold, and that they will consult them properly, as they have been overridden and treated rather shoddily.

Mr. Ian Bruce

I shall begin with a declaration of interest. During the passage of the Bill, I have had to give fewer and fewer such declarations as the Government remove more and more from the measure. However, the Bill still makes provision for telecommunications, in which I have some major interests. I am a professional adviser to the Telecommunication Managers Association and my family and I have shares in the gas, water, electricity and telecommunications industries.

In debating this group of amendments, we have an opportunity to probe the Government on the direction in which telecommunications and water are going. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) and the hon. Member for Twickenham (Dr. Cable) discussed telecommunications, as did the Minister to a certain extent.

However, little has been said about water. I do not quite share the view of Conservative Front Benchers on the necessity or desirability of having a lot of consumer bodies included in a measure that concerns the electricity and gas industries, as I believe that the market is working extremely well. There have been dramatic examples of companies that do not respond to their customers and, in such cases, consumers can go elsewhere. Certainly, the consumer is starting to become king in telecommunications.

By the time that the Bill is enacted, that market will be working even better. The fixed line—the thing that allowed BT to have a virtual monopoly—is increasingly being replaced by mobile telecommunications equipment. Increasingly, in the gas, electricity and telecommunications markets, consumers have a real ability to exercise the ultimate sanction against a supplier—telling the company that they will not use it any more, because they can go to another and get a better deal.

4.30 pm

We have never received a proper explanation of why water was removed from the Bill. The Government were, from the start, reticent about discussing the relevant clauses and they are now having to remove all record of water from the Bill. We understand that there was a turf war with the Department of the Environment, Transport and the Regions, but the House is entitled to know what the Government intend to do. We understand that Government do not intend to introduce new legislation during the lifetime of the current Government, but intend only to produce a draft proposal at some point in the future, and a Conservative Government will have to decide whether or not to proceed with it. The water industry and water consumers want to know what the Government have in mind. Ministers must share with the House the reasons why it was so difficult to manage those matters and give consumers proper protection.

The Minister for Energy and Competitiveness in Europe says that the Conservatives are the friends of the fat cats. Currently, the water industry has a regulator who decides prices after negotiations in which the water companies all say that the new prices will be impossible. Afterwards, they come back and say that, even though the pricing structure was impossible, they have made massively increased profits. Having promised the electorate that they would do something about it, the Government have failed to tackle that problem.

It is strange that the right hon. Lady says that the Opposition are trying to delay matters; in fact, two days were originally set aside for Report, but we are having only a half-day debate on the subject. At no time during proceedings on the Bill have the Opposition attempted to filibuster or delay matters. We want only to get on to the real issues, but the real issues have at no time been addressed.

Mr. Gibb

My hon. Friend will be aware that any delays in Committee occurred because the Committee had to wait for amendments to be drafted by the Government draftsmen.

Mr. Bruce

Yes, indeed—I am grateful to my hon. Friend for that intervention. I see the Government Whip, the hon. Member for Hyndburn (Mr. Pope), who was assiduous in his duties throughout the passage of the Bill through Committee. Perhaps I should put on record how pleased I was by the number of early afternoons I was given. Often, when I expected to be in Committee from 4.30 to 7 pm and to return after dinner, we were told after an hour or so that we would be sent home early because yet another set of Government amendments was not ready.

We did a workmanlike job. I rarely bestow praise on the Liberal Democrats, but I have to say that, occasionally, they turned up. A whole group of amendments was lost because no Liberal Democrat Member was there to move it, however. Perhaps more spectacular was the fact that, when only one Liberal Democrat was there to call "Aye" on a certain group of amendments, the Government allowed the amendments to go through, which shows that they had lost control. Of course, tonight, when we consider a later group of amendments, we will be asked to overturn the Liberal Democrats' victory, and I hope that they intend to protest loudly when that happens.

I digress, however, and I must not. We are in a strange position. The telecommunications industry, the provisions relating to which are about to be deleted from the Bill, has just experienced the highest stealth taxation endured by any industry or body anywhere. In the current round, bidding has reached £25 billion, and that money will come from telecommunication consumers and industry. We can all delight that the Treasury will be stuffed with such money, but the clauses that we are about to delete might have enabled that money to be used to encourage telecommunications and to ensure that the United Kingdom is the best place in which to do e-business. That issue should have been addressed.

Sir Robert Smith (West Aberdeenshire and Kincardine)

I rise to speak briefly, on the back of the remarks made by the hon. Member for South Dorset (Mr. Bruce), about the future for telecommunications users in the event that the new clause and the amendments are agreed to, and particularly on the £25 billion going out of the telecommunications sector. That affects not only consumers, but the future development of the infrastructure and technology, as well as how quickly and universally the industry develops.

That brings me to an earlier point that the hon. Gentleman made about relying on competition to protect consumers of telecommunications. As a lay consumer of telecommunications, I do not find the market that clear in terms of providing effective protection and an easy choice of suppliers. Competition has not yet reached rural areas. The cellular communications network is quite well developed in urban areas, but areas such as mine have only the land line. The worry is that the free flow of unregulated competition in the early days of mobile communications may have undermined the infrastructure throughout the network. If the Bill is amended, how will the telecommunications consumer be protected in future?

Mrs. Liddell

It is interesting that the official Opposition are much more interested in procedural matters than in the Bill. I suspect that that is because the Bill concentrates on the protection of the consumer, and, in certain parts, on the most disadvantaged consumers.

We have debated on a number of occasions the Government's reasons for dropping telecommunications and water from the Bill. I shall not rehearse in their entirety today because that would take up the time of the House unnecessarily. On Second Reading and in Committee we discussed how the telecommunications industry is one of rapid change.

A few weeks ago, I was told that there are three speeds in modern life. There is political speed, which is slow; commercial speed, which we always used to think of as fast; and there is internet speed, where a year can be reduced to a few weeks. In this House we do not operate at internet speed, but the telecommunications industry does.

On Second Reading and in Committee we also debated the changes in the industry, and the fact that it would be necessary to revisit telecom regulations to ensure that changes in the industry, some of which we cannot foretell at the moment, are taken into account.

After the Bill's publication, the industry, no doubt having reflected on the issues raised in the debate, came to the Department to express its concern about the prospect of two separate sets of regulations over a short period, and one can understand that. There would have been one set of changes now and another set when further communications legislation was implemented. Removing telecommunications from the Bill was perceived as a common-sense move, especially as a communications White Paper was on the stocks. That White Paper involves not only the Department of Trade and Industry but the Department for Culture, Media and Sport.

Mr. Gibb

What is the Government's intention for the regulation of the telecommunications sector, which will be outlined in the White Paper to be published in the autumn? Will the Minister take the same approach to telecommunications as she took to electricity, or will she bring a lighter touch to bear on the regulation of a fast-moving sector?

Mrs. Liddell

I shall deal with that later, because it relates to points that the hon. Member for Twickenham (Dr. Cable) made. I shall wait until I tackle those points rather than giving a disjointed response.

The water industry expressed anxieties about the possibility of further regulatory changes in the Water Bill. The Queen's Speech stated that a Water Bill would be introduced, and that its changes would be additional to those in the Utilities Bill. It is common sense to make sure that the industry does not have to change the regulatory structure twice.

Hon. Members have asked about our commitment to the future shape of telecommunications. The Government remain committed to the proposals in the Bill. In all the utility sectors, we want to secure a more transparent regulatory framework, an independent voice for consumers and a stronger focus on protecting their interests. Those principles will apply in the separate water and telecommunications measures. Some modification is possible. That is logical—I am sure that hon. Members would not wish us to ignore the views of consumers and the industry in the consultation process. However, we intend the principles of the Utilities Bill to apply to future legislation.

We intend to publish a communications White Paper later this year. It is too early to say when legislation will follow, not least because of the pressures on the House. It is not for me or anybody in the Chamber to dictate the contents of the forward programme for the next Session.

Mr. Gibb

Far be it for me to make a suggestion—but I shall do so anyway. Perhaps the Government could present a slightly less burdensome legislative programme. They might then discover that their Bills did not require 300 or 400 Government amendments.

Mrs. Liddell

When a Government take over after 18 years of incompetence, a heavy legislative programme is inevitable. We went to the country with specific commitments; the country responded, and we have to undo the mistakes of 18 years of Conservative rule. We therefore have a heavy legislative programme.

The prize for removing telecommunications and water from the Bill is that the industries will be subject to only one set of legislative changes. We all acknowledge that that is important. The hon. Member for South Dorset (Mr. Bruce) referred to the auction in mobile telecommunications. That is a matter for other Departments, and I would therefore prefer to leave it to them to respond. However, it emphasises the significance of the changes in mobile telephony. It is vital that we respond in legislation to the changes in the marketplace.

Mr. Ian Bruce

I am a little confused, because I served on the Committee that considered the Bill, which provided for the Government to auction their radio spectrum. The Bill was a Department of Trade and Industry measure. Although the Treasury collects the money, surely we are considering a Department of Trade and Industry matter. We would therefore expect a senior DTI Minister to have an opinion about what should happen to the money.

4.45 pm
Mrs. Liddell

Given that those matters are being discussed, I am surprised that someone as experienced as the hon. Gentleman suggests that we might care to discuss them in detail this afternoon.

The hon. Member for Twickenham asked about a statutory consumer council for telecoms. The Government's view is that a statutory consumer council would be the most appropriate mechanism to meet the central aim of giving consumers an effective voice in the telecoms sector. The White Paper, which will be published in the autumn, will have a much wider ambit and will consider issues such as broadcasting. It will introduce different matters such as the interface with content regulation. Although the central aim remains the same, its manifestation may be different, as I am sure he recognises.

The hon. Gentleman said that the consumer groups feel aggrieved that the first remarks that they heard about telecoms and water being removed were made in the Chamber, but I am sure that, on reflection, he will appreciate that that is the appropriate way in which to deal with such matters. Given that the Bill had already been committed to a Standing Committee, it would not have been appropriate for any announcement to be made outside the House or for any consultation on those matters to take place. We acted as expeditiously as possible to inform the House after the decision had be taken.

The new clause is important. To an extent, it will tidy the Bill and enhance it because people, especially the public, will find it easier to use. At the beginning of the debate, it was suggested that more substantial changes might be proposed in another place. The Government do not intend to introduce further substantial changes. Amendments will be tabled in the other place, but they will all be based on issues that have been raised already.

Mr. Gibb

Will the Minister confirm that provision will be made for transfer schemes for public electricity suppliers?

Mrs. Liddell


These measures represent the remaining stages of the Government's preparation of the Bill. My anxiety—I hope that it is shared by Members across the House—is to ensure that consumers gain the benefits of the Bill as quickly as possible.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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