Consumer Councils and Tariff Changes (Hansard, 15 November 1984)

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

§ The Minister of State, Scottish Office (Lord Gray of Contin)
My Lords, the Government believe it an important part of the consultation process that the statutory consumer councils should be given information about proposed new tariffs as early as circumstances allow and do not propose to change the statutory requirement that the councils must be consulted before tariff changes are implemented.

§ Baroness Burton of Coventry
My Lords, while I am glad that no changes are contemplated, may I ask the Minister two questions on his reply? Does he recall that relatively recently we have had examples of non-consultation? Can he tell the House what redress is possible for a consumer council when those statutory obligations are not carried out? Does a consumer council have direct access to the Minister concerned? The second point that I should like to ask him is this. Can he say whether it is true that gas consumers will be asked to pay a larger percentage increase than electricity consumers in the new charges, on the grounds that gas should not absorb a larger part of the energy market? If so, will the Gas Consumers' Council be consulted on the matter?

§ Lord Gray of Contin
My Lords, to deal with the first question that the noble Baroness put to me, I would mention to her that revised guidelines, based on the original proposals, have been put to the consumer councils and these are now the subject of discussions between the councils and the electricity and gas industries. She asked me whether in the event of the consumer councils being dissatisfied they had redress to the Minister. Of course, as a final resort, they can appeal to the Secretary of State if decisions are taken with which they do not agree.
I can answer the second point that the noble Baroness raised by advising her that I understand that the electricity and gas industries have not taken any decisions on tariffs for the next year. They will be considering that question in the light of all the relevant factors, including the external financing limits announced by my right honourable friend on 12th November; and they will announce any price changes in the normal way. Consultation with their respective consumer councils will of course take place.

§ Lord Shinwell
My Lords, as one who has always advocated public ownership, otherwise known as nationalisation, may I ask the Minister whether he is aware that experience has demonstrated that there is one principal defect in public ownership as it operates at present and as it has operated for some time past? Its principal defect is a complete failure to consult and inform, as it should do, the consumers. The consumers are entitled to much more information than is provided through the medium of what is a façade—the consumer councils. Is it not time that the consumers were better informed on price increases and the general operation of the nationalised boards, and in particular the two under discussion? Should not the matter be corrected?

§ Lord Gray of Contin
My Lords, I am very interested indeed to hear the noble Lord's comments. I hesitate to take issue with anyone of his experience, particularly in relation to the nationalised industries. But there is a consumer council for each of the industries to which we have referred. It is my belief that they do a valuable job. Indeed, I think that they represent the public to a considerable extent in these matters. I pay tribute to them for the contribution that they make.

§ Lord Molloy
My Lords, would the noble Minister be prepared to consider whether, in the various items of correspondence, like bills and so on and so forth, 415 that both these boards send to all their customers, they could indicate the address and telephone numbers of their own local complaints centre, if they have one, or of the local consumer council's representative, so that the customer could get in touch with either if he had an issue which he wanted to refer to them?

§ Lord Gray of Contin
My Lords, I sympathise with the noble Lord and with the point which he makes. I should be reluctant to advise the industries concerned that they must follow to the letter the suggestion which he has made. But I believe that the more contact which the general public have with the consumer councils representing the industries, the better.

§ Lord Stoddart of Swindon
My Lords, is the noble Lord aware that there are many people who are concerned that the consumer councils in fact have no power at all over prices and no say, and indeed are not even being consulted? Is the noble Lord further aware that we were very concerned—I was certainly very concerned—that the announcement was contained in the newspapers that prices in the electricity industry would go up by 4½ per cent. and in the gas industry by 5 per cent. before the Chancellor's Statement last Monday? Where does that leave the consultative councils? Indeed, where does it leave the boards themselves if such announcements are to be made in advance of a Statement? Do the consultative councils—indeed do the boards themselves—have any real power over prices, in the light of Government policy?

§ Lord Gray of Contin
My Lords, I should say that the consumer councils have a very important input to make. Perhaps I may remind the noble Lord that, in their response to the First Report of the Select Committee on Energy of the 1983–84 Session, on electricity and gas prices, the Government made clear that they agreed with the Select Committee that consumer councils should not have statutory powers to veto or delay tariff increases. I go along with the noble Lord in his suggestion that of course they should be consulted. Indeed, in the vast majority of cases they are and should be consulted.

§ Baroness Burton of Coventry
My Lords, while being grateful to the Minister for the sympathetic reply he gave—which, if I may say so, I feel is more sympathetic than is usually the case from the Government Benches on this matter—may I ask him whether he could possibly answer the second supplementary that I asked him? That was not on the actual amount, but whether it was true that gas consumers are to be asked to face a higher percentage increase in the new charges than electricity consumers, simply on the grounds that gas should not be allowed to make further inroads into the energy market?

§ Lord Gray of Contin
My Lords, I am sorry if I did not make it clear enough for the noble Baroness, but I thought I made it clear that decisions have not finally been taken on future tariffs.

§ Lord Maude of Stratford-upon-Avon
My Lords, could my noble friend say whether it would not be 416 much easier to represent the interests of consumers if the representatives knew whether the policy of the Government is that these industries should operate on normal, commercial, competitive lines, or whether they were being pressured by Her Majesty's Government to charge simply what the traffic will bear? If it is the latter, is this really helpful to the competitiveness of British industry?

§ Lord Gray of Contin
My Lords, I think that my noble friends and I have always made it clear, or tried to make it clear, that the energy industries are designed, in our view, to run on long-term marginal cost. This is simply the cost of supply on a continuing basis, including replacement capital cost and a satisfactory return on capital employed. That is the basis on which we endeavour to run our energy industries.

§ Lord Harmar-Nicholls
My Lords, yes; but is my noble friend aware that in relation to the question that the noble Baroness has just put, although he says no decision has been taken, a general indication seems to have been given that gas is to be expected to hang back in order to help the other authorities? His answer has not cleared a way.

§ Lord Gray of Contin
My Lords, I know that my noble friend is very penetrating in his questions to Ministers but I really cannot be held responsible for speculative journalism.

Lord Bruce of Donington
My Lords, in his reply to an earlier supplementary question, the noble Lord referred to the fixing of external financial limits, in so far as the two corporations were concerned. Is he aware that if the Government fix these limits at a very strict low level, they automatically then result in the corporations being compelled to raise their prices? Will the noble Lord give the House an assurance that this means—which is an under-the-counter way of forcing the corporations to raise their prices—is not being used by the Government to secure that end?

§ Lord Gray of Contin
My Lords, the policy which the Government have followed is to fix the EFLs with the rate of inflation in mind. That is a policy which they will continue to follow.