§ 3.2 p.m.
§ Lord Young of DartingtonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what action they are taking to deal with the monopolistic practices of the British Oxygen Company as a supplier to the National Health Service in the light of the Government's commitment to extend competition.
§ Lord LyellMy Lords, in recognition of BOC's position as a major supplier of medical gases to the 1142 National Health Service, any price increases for medical gases must be approved by the Department of Health and Social Security. Prices are controlled by a formula based on the recommendations of the Review Board for Government Contracts. The Director General of Fair Trading has received representations about the supply of medical gases by BOC and is considering whether to take action.
§ Lord Young of DartingtonMy Lords, I should like to thank the noble Lord the Minister for that reply, but may I press him a little further about it? I take it he is aware that not only are BOC a major supplier but they in fact supply nearly 100 per cent. of the medical gases which are supplied to the National Health Service. In view of that, and in view of the information which has come to light recently, would the noble Lord be prepared to go further and actively encourage the Office of Fair Trading to make sure that the undertakings given by the British Oxygen Company after the 1956 Monopolies Commission inquiry are taken up? Does he agree that every care should in fact be taken to ensure that those undertakings are being honoured? Further to that, would it not be better to encourage active competition with the British Oxygen Company?
§ Lord LyellMy Lords, I understand that the Director General of Fair Trading has received representations alleging anti-competitive behavour by the British Oxygen Company. Details of such representations are confidential, but if there have been breaches of any undertakings which were given in 1958 that would be a matter for the Director General of Fair Trading to determine.
§ Lord ShinwellMy Lords, is the noble Lord aware that I have no special interest, and certainly no shares, in the British Oxygen Company? Are we to understand from the Minister's reply to my noble friend's Question that there is a definitive and established principle associated with this subject; namely, that the Government rely on competition, although apparently not in this instance? Are we to accept this definitive, final and established principle of competition even when a monopoly is satisfactory? Surely the central principle should be that, whether it is a monopoly or whether it is based on competition, the supply should be satisfactory?
§ Lord LyellMy Lords, certainly we believe that the supply is satisfactory. This is the message that the Department of Health receives from the hospitals. As regards competition, this Government are in favour of it; but any breaches, or any anti-competitive policy, are matters for the Director General of Fair Trading, and this Government believe in allowing a referee to take the decision.
§ Baroness Hornsby-SmithMy Lords, would my noble friend not agree that, regardless of the supplies they may provide to industry, in their supplies to the National Health Service the British Oxygen Company are dealing with life and death and it is therefore essential that supplies should be regular, available, correct and of the highest quality? Although I am a great advocate of competition, as my noble friend may 1143 be aware, in a service where the supply of oxygen is a matter of life and death is it not vital that we should be assured of supplies? I speak now from six years' experience in the Ministry—
§ Baroness Hornsby-SmithMy Lords, is my noble friend aware that I was involved in the aftermath of certain disasters, that the result of such disasters were such that it was vital that we should get supplies 24 hours a day, and that they were provided by the company concerned?
§ Lord LyellMy Lords, of course we are grateful for the support and the experience of my noble friend in this matter. She is quite right; of course the supply of oxygen is a matter of life, and occasionally death, to the patients. Care of the patients comes first, and the whole of this Question arises from improvements in technology which have arisen. These have been carried out by the British Oxygen Company.
§ Lord EnnalsMy Lords, may I ask the noble Lord three questions? First, what is the profit margin accepted as appropriate for the British Oxygen Company in the light of the fact that the National Health Service pays about £35 million a year to BOC? Secondly, will the Minister confirm that the company charge the National Health Service an even higher price for medical gases than the guidelines set out by the Review Board for Government Contracts? Thirdly, is it not deplorable that last year the executive director of the British Oxygen Company, who is the highest-paid executive in the country, received a £579,000 bonus because of the company's financial success very substantially at the expense of the National Health Service? Is the noble Lord satisfied with that?
§ Lord LyellMy Lords, so far as the noble Lord's third question is concerned, this is, as he will know, a matter for the British Oxygen Company itself. So far as his second question is concerned, I am sure he will be aware, and that your Lordships will also be aware, that all prices charged by the BOC to the Department of Health are controlled by the formulae based upon the recommendations of the Review Board for Government Contracts.
As regards the profit which the British Oxygen Company hope to achieve on plant and on the cost of production, I am afraid I do not have those figures ready to hand but they are in the region of 16 to 18 per cent. I shall endeavour to find the precise figures to the nearest decimal point and write to the noble Lord.
§ Baroness Burton of CoventryMy Lords, may I ask the Minister whether he is aware that we are glad the Government approve of a referee in these matters? Arising from that, may I ask him when the Director General of Fair Trading received these complaints? Secondly, can he give us any idea as to when we may have a reply from the Director General of Fair Trading as to whether or not he is conducting an inquiry? Also, could the noble Lord possibly write to me on that matter? He is usually good at writing letters.
§ Lord LyellMy Lords, I am afraid I did not hear the noble Baroness's third supplementary question, or little sally. I am afraid I am not aware when the Director General received these complaints. I shall find out when they arrived in his office. I shall write to the noble Baroness and, if I can obtain any estimate as to when a report might be forthcoming, I shall let her know. But I am afraid that I am unable to give her much hope on her second supplementary question, since I understand that these will be fairly detailed inquiries which may take quite a long time.