Gas and Electricity Consumers' Councils: Guidelines (Hansard, 18 December 1984)

§ Baroness Burton of Coventry
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, both the Electricity and Gas Consumers' Councils discussed the draft guidelines in July of this year. After seeking clarification of certain points with the Department of Trade and Industry, the councils sent copies of the guidelines to the industries concerned for their reactions. Discussions between the councils and their respective industries have now begun.

§ Baroness Burton of Coventry
My Lords, is the Minister as disappointed as I am that it seems to have taken as long to get a reply from the councils as it took us to get the Government to send the councils these relevant guidelines? Does the Minister feel that he could hurry matters along, or is he just prepared to wait? Secondly, may I ask whether these guidelines were sent to consumer councils other than those for the electricity and gas industries, and, if so, which they were?

§ Lord Lucas of Chilworth
My Lords, I can understand the noble Baroness's feelings with regard to the timescale in these matters. Perhaps, to an extent, I share them. But, of course, it is important that the councils and the industries reach agreement, because their "togetherness", as it were, will enable the councils to work more profitably. To that extent I can tell the noble Baroness that we shall be urging both the councils and the industries to bring their discussions to an early conclusion.
There are further discussions going on with the Domestic Coal Consumers' Council and draft guidelines were sent to it on 19th November. I therefore do not anticipate too long a wait in that regard. In so far as the other consumer councils are concerned, the noble Baroness will recall that the Government, in the strategy for reform paper published in 1982, said that they would take an early 534 opportunity in the legislative programme to bring the guidelines into the statutory framework.

§ Baroness Burton of Coventry
My Lords, may I ask the Minister one further question? It concerns the announcement to be made tomorrow by British Gas about the 5 per cent. increase in tariffs from next February. Can the noble Lord say whether the National Gas Consumers' Council was consulted on this increase in charges, as is its statutory right?

§ Lord Lucas of Chilworth
My Lords, the noble Baroness is perhaps under a misapprehension in that the gas board has not yet announced any price changes. I think the noble Baroness is perhaps referring to newspaper reports both yesterday and today. Certainly the consumer councils will have been consulted with regard to price increases.

Lord Bruce of Donington
My Lords, can the noble Lord give the House the grounds of justification for any increases in gas prices at all?

§ Lord Lucas of Chilworth
Yes, my Lords, the grounds are quite simple: the need to bring all prices, particularly of public sector utilities, into line with contemporary pricing—and contemporary pricing is lying at about 4.5 per cent. of an inflation element. That is the justification that I give the noble Lord, Lord Bruce of Donington.

§ Lord Harmar-Nicholls
My Lords, will my noble friend agree that keeping in line is not a very attractive argument to people who believe that competition is the way to help everyone in bringing prices to a level that can be afforded? Keeping in line is not in keeping with the privatisation theory, as I understand it.

§ Lord Lucas of Chilworth
My Lords, were we having a debate on this matter I could, of course, go further into it. In fact, the Government's policies for containing subsidy and Government expenditure recognise that prices in the public utilities, which are in the public sector, have to keep pace with other and general expenditures.

Lord Bruce of Donington
My Lords, is the noble Lord aware that a colleague of his on his own Front Bench has specifically disclaimed any power by the Government to alter power prices? Is he also aware that when the Government seek to bring pressure to bear on the authorities by restricting their borrowing powers and by restricting their capital expenditure, which is dependent upon those funds, no-one is deceived and, in fact, the Government themselves are responsible for the increases, which are completely contrary to their own professed philosophy?

§ Lord Lucas of Chilworth
My Lords, I think the noble Lord, Lord Bruce of Donington, rather stretches the imagination of most of your Lordships. The Government do have a responsibility in respect of public sector companies in relation to general expenditure and to the levels of taxation that can be made. As a result, the Government do fix rates of return, borrowing limits, and other matters which are in the public interest. Those matters are only one of 535 the ingredients that go to make up the pricing structure. There are other matters which the various nationalised industries also have to take into account.

§ The Earl of Lauderdale
My Lords, would not my noble friend agree that it has been common ground for many years between Governments of both sides of the House that most of our gas is natural gas that comes from the continental shelf, and this has to be priced according to the long-term marginal cost of replacement?

§ Lord Lucas of Chilworth
My Lords, I am grateful to my noble friend Lord Lauderdale for his question. I agree with him, because that is one of the factors that have to be taken into consideration when fixing prices.

§ Baroness Burton of Coventry
My Lords, on a simple matter, may I ask the noble Lord—it may have been that I misheard him; I might have been in error, but I do not think I made a mistake—whether he is aware that I was not referring to past increases but to a statement which I understood was to be made tomorrow concerning an increase of 5 per cent. in tariffs as from February? That is what I asked him about, not the past.

§ Lord Lucas of Chilworth
My Lords, I do not think I misunderstood the noble Baroness on that matter. I understand the gas board are to make an announcement tomorrow. But no announcement has so far been made, so that any figure which may be in either the noble Baroness's mind or noble Lords' minds is possibly derived from press reports. I am not able to comment upon what announcement the board may make tomorrow.

§ Baroness Burton of Coventry
My Lords, I am sorry, but I am not on a figure. I asked the Minister whether the National Gas Consumers' Council were consulted on the matters which are to be raised tomorrow, as they have every statutory right to be.

§ Lord Lucas of Chilworth
My Lords, I think I answered that specific point in one of my earlier answers to the noble Baroness's supplementary questions when I said that the council would have been consulted in regard to this matter, as is normal for the consumers' councils of these two industries.

§ Lord Glenamara
My Lords, is it not a fact that these increases, induced by the Government, are entirely in line with their philosophy of shifting the burden of taxation from direct taxation, where it falls where it can best be borne, to indirect taxation, particularly in relation to the prices of fuel, where it hits the poorer sections of the community much harder than anybody else?

§ Lord Lucas of Chilworth
My Lords, I think the noble Lord is moving quite a long way from the noble Baroness's original Question.

Lord Winstanley
My Lords—

§ Lord Denham
My Lords, if the noble Lord, Lord Winstanley, will forgive me, I know that he has been trying to intervene to ask a question, but we have been on this particular Question for nine minutes. I would suggest that if the noble Lord asks his question and my noble friend answers it, then we might move on to the next Question.

Lord Winstanley
My Lords, since the noble Lord made it clear in an earlier answer that he would welcome a debate on this important subject, will he arrange for us to have one?

§ Lord Lucas of Chilworth
My Lords, I think the noble Lord, Lord Winstanley, has quite mis-interpreted what I said. But, as the noble Lord knows only too well, any matter for debate is a matter for the usual channels, not for myself.