Gas Industry Privatisation Policy (Hansard, 13 May 1985)

§ Lord Bruce-Gardyne
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, as was announced in another place on 7th May, the Government intend to introduce legislation at the earliest opportunity to privatise the British Gas Corporation. The opportunities for competition introduced by the Oil and Gas (Enterprise) Act 1982 for supplies to industrial consumers will be continued. It is also the Government's intention that competitors should be able to supply smaller domestic and commercial consumers in areas not already supplied by the British Gas Corporation.

§ Lord Bruce-Gardyne
My Lords, I am grateful to my noble friend for that reply. Does he recall not so long ago, according to Sir Denis Rooke, he was given a public rebuke by my right honourable friend the Chancellor of the Exchequer for calling for a private regulated monopoly company? Why was the public rebuke justified then, but apparently erased today?

§ Lord Gray of Contin
My Lords, in any decision of this kind the Government consider a variety of solutions. I remind my noble friend that that was the case in this instance. It would, however, be rather unwise to put at risk a distribution system which has evolved over many years to split up what has proved to be a successful method of distributing gas. Therefore the Government took the view that it was more sensible to privatise the British Gas Corporation in its entirety. I think that my noble friend will agree in due course that this was probably the best solution.

§ Lord Stoddart of Swindon
My Lords, is the noble Lord aware that what he has said makes the case for the continued public ownership of British Gas? Is he not aware that the British Gas Corporation has been the most successful nationalised industry of all time and is making large profits, part of which go to Her Majesty's Government? Is it not a fact that the only reason the Government intend to privatise British Gas is not to introduce competition but simply to get additional money—about £8 billion—to finance their pre-election tax bonanza?

§ Lord Gray of Contin
My Lords, I am afraid that the noble Lord has it absolutely wrong. Far from making his case, it makes my case. It removes from the British Gas Corporation the inhibition of Government interference and control. The noble Lord was a member of the party forming the Government between 1974 and 1979 when Chancellor Healey increased the price of gas through his interference by 12.3 per cent. in one year and 9.6 per cent. in another year. That was direct interference by Government. It has happened with a number of different Governments and this will remove this inhibition from the British Gas Corporation. It will give it the incentive that can only be achieved in the private sector, and if the management is as good as everyone maintains it is then those employed in the industry will have a chance to benefit from it.

§ Lord Stoddart of Swindon
My Lords, the noble Lord will be aware that his Government increased the price of gas by 10 per cent. over three years above the retail price. But is he now saying that the privatisation of gas will result in much cheaper prices for the gas consumer? Is he giving that promise now?

§ Lord Gray of Contin
I am giving no such promise, my Lords, because it is not in my gift to give a promise. The noble Lord made my point when he suggested that this Government increased gas prices. That is further Government interference which should be removed and will be removed.

§ Lord Diamond
My Lords, is not this a very complex and extremely expensive way of doing what the Government could do so easily by keeping their mouths shut?

Lord Bruce of Donington
My Lords, on the basis that the noble Lord admits that the interference by his own Government inhibits private enterprise, would not the noble Lord advise his Government to get off the country's back and get out?

§ Lord Gray of Contin
My Lords, I feel that that comment is not of the usual sophisticated class that we expect from the noble Lord. I think he could do better if he would like to try again.

Lord Bruce of Donington
My Lords, I find it difficult not to respond to an invitation of that kind. Is the noble Lord aware that the activities of his own Government are hampering not only British industry but are a gross infliction on the country as a whole? Will they now resign? I hope that puts it more moderately.

§ Lord Gray of Contin
No, my Lords: I thought that the noble Lord could do better but I see he cannot. The answer obviously is no. The policies of this Government are working and will be seen to work. The noble Lord and some of his friends talk about the next election. His former leader once said that in politics a week was a long time; but two and a half years in politics is an eternity.

The Earl of Halsbury
My Lords, can the noble Lord confirm that the best way of coupling free enterprise to a public monopoly is to require it to raise its capital borrowings on the open market? Is that provided for in future plans?

§ Lord Gray of Contin
My Lords, we shall have to wait to see the future legislation. I am sure the noble Earl would not wish me to anticipate it; but it is the intention, as I said when I repeated the Statement the other day, that private capital should be introduced in as large a measure as possible.

§ Lord Ironside
My Lords, in view of the importance of gas now to domestic consumers as a service, similar to the telephone, water and electricity services, perhaps I may ask this question. Does my noble friend not think that is important to consider, among other things, under the new privatisation arrangements for the gas corporation, a much wider distribution of gas to domestic consumers in the countryside?

§ Lord Gray of Contin
My Lords, I am grateful to my noble friend for his suggestion. I have no doubt that in due course the new company will look at this. Of course the legislation which we introduced in 1982 enables there to be competition as far as the supply of gas is concerned in areas which do not already possess gas. I have no doubt that the new company will build upon this.

§ Lord Leatherland
My Lords, when the noble Lord the Minister says that the policies of the Government are working, does he include in that broad statement the fact that unemployment has increased very considerably in the last few months?

§ Lord Gray of Contin
My Lords, I really should not be tempted along these lines because this has nothing to do with the Question. But I will say to the noble Lord that the policies in regard to unemployment will be seen to be effective in due course. But nobody can imagine that the problem of unemployment can be solved at a stroke. It will take time.

§ Lord Leatherland
My Lords, is the noble Lord saying that the increase in unemployment of recent times is to be continued?

§ Lord Bruce-Gardyne
My Lords, if I may bring my noble friend back to my original Question for a moment, does it not concern him a bit that Sir Denis Rooke should have indicated over the weekend that he has not made up his mind what sort of regulatory agency he will be prepared to have to supervise his activities? And does it not concern him a bit that Sir Denis Rooke should be 'indicating his intention of seizing the earliest possible opportunity to cross-subsidise competition with the private sector out of the proceeds of his monopoly operations?

§ Lord Gray of Contin
My Lords, I have no doubt that my right honourable friend the Secretary of State for Energy is keeping the closest contact with Sir Denis Rooke. I have little doubt that they will reach an amicable decision in due time. But at the end of the day, as my noble friend will appreciate, it is for the 888 Government and not Sir Denis Rooke to make these decisions; and the Government will make them.

§ Lord Denham
Next Question, my Lords!

§ Lord Diamond
My Lords, the noble Lord has completely avoided answering my supplementary question. I apologise for upsetting the Chief Whip, but I have to ask it again. Will the noble Lord the Minister say whether or not he considers it a very complex and expensive method of doing what it is within the Government's power to do; namely, simply to stop interfering—if that is what he said was the main argument fror privatising the gas industry?

§ Lord Gray of Contin
My Lords, I do not think the noble Lord is being completely fair. What I would suggest is that he has put forward only one of a host of reasons for privatising the gas industry.