§ 3.32 p.m.
§ The Minister of State, Scottish Office (Lord Gray of Contin)My Lords, I beg to move that this Bill be now read a second time.
The Bill represents a major step forward in the Government's programme of transferring state business into private ownership, a programme which has proved highly popular with the public at large and with the employees of the businesses concerned. 313 Indeed, noble Lords may be aware that attempts to stir up the employees of British Gas to take industrial action against privatisation have been defeated by the good sense of those employees who voted the proposals down.
The Government believe that their proposals offer the prospects of a better and more efficient gas industry. These proposals will free management from unnecessary bureaucratic intervention, change attitudes, and offer new opportunities for innovation and growth. They will allow employees to take a direct stake in the company through share ownership. They will offer special opportunities for the small investor to buy shares and to enjoy real ownership in place of the nominal ownership of today. They will lead to increased efficiency to the benefit of gas consumers and shareholders alike.
The Government's proposals before us represent the outcome of long and careful study of the questions of regulation, consumer protection and safety in the gas industry by my right honourable friend the Secretary of State. Detailed work has been in progress since the last election, including studies of gas industries and of regulation overseas. The Bill has been drafted most carefully by the parliamentary draftsman, and there are real and good reasons for adopting the approach to the regulatory structure which we have proposed. Our proposals will fully protect the consumer after privatisation.
Competition provides the best protection, and every opportunity has been taken to open up and reinforce competition between fuels and within the gas market. Where this is not possible, we propose strong and effective regulation to be enforced by the director of a new regulatory body, Ofgas. He or she will be advised by an independent consumer body—a strengthened and streamlined gas consumers council, which will take up consumer complaints. British Gas will be obliged for the first time to make public the basis on which it prices gas to industrial customers, and publish a schedule of maximum contract prices. This is an important step towards greater market transparency in industrial energy prices which will help industrial consumers in negotiating contracts.
British Gas has negotiated individual contracts with its larger customers for many years. This has suited both British Gas and its customers very well, and the CBI, representing both large and small consumers, and those representing specialist sectors have made it clear that they want this to continue. Our approach gives British Gas the ability to respond flexibly to customers' needs and to take proper account of market forces. For smaller domestic and commercial consumers the system of published tariff prices will of course continue.
The arrangements set out in the Oil and Gas (Enterprise) Act to allow direct supplies of gas to consumers by others than BGC will continue. The only restrictions which will be placed on such supplies will be safety ones. A new provision is that other companies will be allowed to become public gas suppliers in areas where British Gas does not operate.
The common carriage provisions in the Oil and Gas (Enterprise) Act which allow others to convey gas through the British Gas pipeline network have been 314 strengthened. Again to increase market transparency, British Gas will be obliged to publish information for potential users of its supply system, including examples of typical prices. There are new provisions to require British Gas to provide back-up supplies if a third party's supply is temporarily interrupted. This will enable other suppliers to achieve greater security of supply for their customers. To strengthen these competition provisions, and in response to the views of the Energy Select Committee, a competition duty has been added to the Bill to guide the Secretary of State and the director. The duty is directed at the contract sector—supplies above 25,000 therms a year—where the Bill ensures that there can be competition.
Competition begins upstream, and I would remind the House that the Government have recently announced a new policy offering new freedom in gas imports and exports. British Gas will be able to import gas and gas producers will be able to apply for waivers of the landing requirement. The Government will continue to look after the national interest, particularly so far as security of supply is concerned. Regulation is primarily directed at the tariff market where there can be no competition in gas supply to the individual consumer. It would clearly be absurd to allow two or more gas pipes down every street. Here, prices will be controlled by a price formula which will set a maximum price which can be charged, policed by the Ofgas director.
I would at the outset like to stress that, while privatisation will open new opportunities for the industry as a whole, it will not of itself lead to any changes in the way in which local gas supplies are managed by the British Gas regions. British Gas has no plans to change its present structure with separate regional managements, including those in Scotland and Wales, so there is no reason to fear that privatisation will mean less local autonomy or that all problems will have to be referred to some remote centralised authority.
I now turn to the detail of the Bill. The regulatory system is contained in Part I based on a system of authorisation of gas suppliers. The Director General of Gas Supply appointed under Clause 1, supported by the Office of Gas Supply (Ofgas), will monitor and enforce authorisation conditions and other requirements laid on gas utilities called public gas suppliers in the Bill. The director will also have powers to initiate changes to the authorisation which affect tariff consumers.
Clause 2 sets up the independent Gas Consumers Council. The council will act as the consumers' voice and will contain representatives from each of the British Gas regions. These representatives will work with council staff located in the regions near to consumers, dealing with complaints on a local basis and keeping in close touch with consumers' views. Clause 3 abolishes British Gas's special position as a gas utility under the present Gas Act 1972.
Clause 4 is an important clause which sets out the general duties of the Secretary of State and the Ofgas director. It requires them both to exercise their functions so as to ensure that authorised gas suppliers satisfy all reasonable demands for gas in Great Britain so long as it is economical to do so. This clause also làys duties on the Secretary of State and the director to 315 protect consumer interests, to promote efficiency and economy on the part of authorised suppliers and to promote efficiency in gas use. This last duty will enable the director to support British Gas in its considerable energy efficiency initiatives and programmes.
Many noble Lords will, I am sure, be aware of the commitment of British Gas to improving the efficiency with which gas is used, which they see as vital to the long-term future of the gas industry in the ever-growing competition with other fuels. The activities of British Gas in this area include full participation in the monergy campaign organised by the Department of Energy in this energy efficiency year and the annual gas energy management awards which last year celebrated their tenth anniversary. These awards are given for the most outstanding examples of improvements in the efficient use of gas in industry and serve to publicise what can be done in this important area.
A further important duty is to protect the public from dangers arising from gas transmission and use. This is essential to ensure that the director carries out his functions with safety foremost in his mind. Finally, there is the competition duty I have already mentioned.
Clauses 5 to 8 set out the arrangements for authorising gas suppliers under the general oversight of the director of Ofgas.
My noble friend has made available to those intending to speak in the debate and in the Library of the House copies of the draft authorisation for British Gas, published by the Government, which will be granted for an initial period of 25 years. Among other matters it requires British Gas to draw up and publish proper accounts covering the gas supply business separate from any other activities it undertakes. It sets out the price formula for tariff customers and an additional requirement that standing charges should not rise faster than the rate of inflation, an important protection for the elderly and others who consume only small amounts of gas. It contains provisions to improve transparency in the contract market and for carriage of gas for others.
The authorisation requires British Gas to give the director and the Gas Consumers Council the information they need to carry out their jobs effectively. For the gas consumers council it is an important new power given to a consumer body for the first time, which will allow it to get to the bottom of complaints about gas supply. Also to help consumers British Gas will have to publish codes of practice describing the gas supply services it offers tariff customers and advice to those who have difficulty paying their bills—the so-called "disconnection code"—which British Gas will continue to publish jointly with the electricity industry. For the protection of the public in general, the 24-hour emergency service for escapes will continue.
These are not the only obligations laid on British Gas. Returning to the Bill, Clauses 9 to 15 set out the terms under which public gas suppliers supply gas. These are carried over more or less intact from the current Gas Act of 1972. Public gas suppliers are given a general duty to meet any reasonable demands in 316 their authorised area for gas supply provided it is economical to do so. Also carried over from current legislation is the obligation to supply any customer within 25 yards of a main or already connected to the supply system as long as they take less than 25,000 therms a year, and generally to charge on a published tariff. These duties will be enforced by the Ofgas director. Clause 15 brings into effect the gas supply code set out in Schedule 5 which covers, among other matters, the limited cases where a public gas supplier can disconnect a supply and the very narrow circumstances in which a public gas supplier has rights of entry. Right of entry cannot be exercised, except in an emergency, without a magistrate's warrant.
Clauses 16 and 17 cover the quality of gas supplied and the testing of meters, the latter a responsibility which will remain with the Department of Energy's oil and gas measurement branch. Gas safety regulations are strengthened by Clause 18 by bringing them under the Health and Safety at Work Act, so that the Health and Safety Executive can use its full and wide range of powers and so that the gas industry can be treated consistently with other industries. Other safety points covered in the Bill worth mentioning at this stage are that the maximum response time for reports of escaping gas has been halved from 24 to 12 hours, and that for the first time public gas suppliers will be obliged to make safe gas leaks on the customer's side of the meter.
The provisions of the Oil and Gas (Enterprise) Act on common carriage, which I have already mentioned, are set out and strengthened in Clauses 19 to 22. Where British Gas and a prospective user of its pipeline grid cannot agree in negotiations, the director will have the power to step in and set a fair charge for the conveyance of gas. This is a power which has been transferred from the Secretary of State in line with our general objective of removing gas regulation from the political field.
Clauses 23 to 26 empower the director to amend public gas suppliers' authorisation conditions. He can do this by agreement with the public gas supplier or, in the case of matters affecting tariff consumers, by referring the matter to the Monopolies and Mergers Commission. The director must modify the authorisation to include the substance of any recommendations by the MMC.
If British Gas is apparently abusing its market position in the contract market, it will be for the Director General of Fair Trading to make anticompetitive or monopoly references to the MMC under competition legislation. Clause 27 allows for MMC recommendations made under this right to be incorporated in the authorisation. This is an important sanction which can bring price regulations into the contract market if British Gas behaves unfairly either towards its contract consumers or in competition with other energy suppliers.
We believe we have the right split of responsibilities between Ofgas and the Office of Fair Trading. In the contract market, where gas is in strong competition with other fuels, the OFT is the appropriate body to investigate any malpractice by British Gas as it has the experience of competitive practices across the whole of industry to draw on. The Ofgas director's knowledge, 317 on the other hand, will clearly be concentrated on gas matters, and he will have the greater expertise in the tariff market to protect domestic and other small consumers of gas. Using enforcement powers given under Clauses 28 to 30, the director can take swift and effective action to require the public gas supplier to comply with the terms of the authorisation and other matters in the Bill, including the obligation to supply.
Clauses 31 to 33 cover the investigation of complaints both by the director and the gas consumers council. The director will investigate any complaints which relate to enforcement matters. The new clause introduced in another place makes it explicit that, as well as complaints on gas supply matters, the council can investigate all complaints relating to the use of gas, including the sale, installation, servicing and safety of appliances. We believe that the Bill now gives the council full powers to protect gas consumers. Other functions of the director and the council set out in the remaining clauses of Part I of the Bill include a power for the director to publish information and advice to tariff consumers and a duty on the council to advise the director.
I make no apology for concentrating on this part of the Bill as it covers the regulatory structure which will be in place for many years to come. We believe it is an effective structure which provides for strong regulation where it is necessary, but which gives British Gas and other gas suppliers proper commercial freedom in other areas. It removes regulation from the political arena, and places it in the hands of an independent Director General.
Part II of the Bill contains the necessary powers to enable British Gas to be transferred to the private sector and are similar to those in the Telecommunications Act 1984. I do not think I need describe these in detail.
Finally, I would draw attention to one clause in Part III. Clause 63 allows the Secretary of State to give directions to British Gas and other public gas suppliers on the granting of an authorisation to secure that, where gas producers have provided geological and other information in gas purchase negotiations, public gas suppliers will not be able to use that information in their exploration and production business to acquire an interest in gas or oil production licences or in applying for such licences.
This is a Bill of major importance. It encourages competition where possible. It offers full and effective protection to the consumer. It represents a further major step in the Government's privatisation programme, rolling back the frontiers of the public sector and returning businesses to the private sector where they belong. It will lead to a real and positive participation by the public and the industry's own employees in the ownership of one of our major industries. It will enable British Gas to build on its already successful operations for the benefit of employees, consumers and the nation as a whole. I commend this Bill to your Lordships.
§ Moved, That the Bill be now read a second time.—(Lord Gray of Contin.)
§ 3.53 p.m.
§ Lord Stoddart of SwindonMy Lords, I should like first to thank the noble Lord, Lord Gray of Contin, for 318 explaining the Bill to us in detail. I was rather surprised to hear him say that this was an industry which was being returned to the private sector, because the gas industry has never been entirely in the private sector. It has always been partly in public ownership since its inception. He painted a rosy picture of the Bill, and during its subsequent stages through this House we shall seek to show that it is not such a rosy picture at all and that the control mechanisms which he described are not as they were described.
We all know that the Bill before us today has nothing to do with making the gas industry more efficient; nothing to do with giving the consumer a cheaper and better service; little, if anything, to do with the profitability of the industry or providing a more secure gas supply; and not even anything to do with competition, which is the Government's ark of the covenant, as we heard again from the noble Lord this afternoon. I know that noble Lords on all sides of the House and the public know that this Bill is to transform a public monopoly into a private one. It is about selling off assets owned collectively by all the people of this country and held in trust by Her Majesty's Government simply to provide the money to fuel the Chancellor's promised tax bonanza next year, in time to bribe the electorate into voting the Conservative Party a third term of office. Of course the noble Lord, Lord Gray, and his colleagues in the Government deny publicly that this is the main reason for gas privatisation, but in the privacy of their consciences they know perfectly well that what I have said is true and that the facts are on my side.
Indeed, we should examine the facts. First. we should ask whether British Gas under public ownership is efficient. The answer to that must be a resounding "Yes", not because I say so but because the Secretary of State, by his great praise of British Gas, its chairman and its board and of the way the industry is run and its achievements over the years, by implication, says it. Even more important, the management consultants Deloitte Haskins and Sells, which the Department of Energy appointed to study the efficiency of British Gas, underlines that in its report.
This is what the report said:
British Gas management and employees can look back at many excellent achievements, the principal being the conversion from town to natural gas and the substantially increased share of the energy market. These have been combined with a good safety record, a significant improvement in customer service and good industrial relations. Finally, the BGC has generated sufficient profit and cash flow to meet financial targets and to self-finance its investment programmes. 'We consider that the management and employees of any commercial organisation could be proud of such a record, and also that it reflects well on the sponsoring Department of Energy'.In the light of that, it is certain that there is no basis on the grounds of efficiency for privatisation. I underline this by reminding noble Lords that in the 1950s and 1960s the gas industry was very much in the doldrums and near the point of collapse. But as a result of being in public ownership, and through near miraculous organisation, the industry was able quickly to seize the opportunity provided by the discovery of North Sea gas and haul itself up by its bootstraps. In 10 years it not only constructed the gas grid but converted 319 13 million consumers, with 30 million appliances, to take North Sea gas. By comparison, the Dutch took four and a half years to convert 2 million customers and the Japanese, those paragons of efficiency, took 12 years to convert 5 million consumers to gas. Thus the efficiency record of British Gas cannot in any way be criticised.But if there is no basis for privatisation on the grounds of efficiency, what about profitability? Have the Government grounds for complaint on that score? The answer must surely be that they have no such grounds.
In 1984–85 British Gas turned in a profit on a current cost basis of £736 million, including interest receivable. On an historic cost basis that figure rises to no less than £1,003 million. That is a lot of money by any standards. In addition, as the noble Lord knows, £500 million was paid directly to the Government through the gas levy. The corporation is financing the whole of its capital expenditure from internal sources, and in terms of productivity British Gas staff have performed well above the average and are unequalled in this achievement, except perhaps by workers in the electricity supply industry.
In terms of percentage return on capital employed, on an historic cost basis British Gas stands comparison with any other major industry in the private sector, including well known blue chip companies such as ICI. So, if the pretence of low efficiency and bad profitability cannot be sustained, can the Government argue that the performance of British Gas, however good at present, might be improved by opening up the industry to competition? Personally, I believe that in some circumstances competition can be a spur to greater efficiency, but in spite of what the noble Lord has said—and he knows it—this Bill does not, indeed cannot, introduce real competition in the supply of gas.
After privatisation, British Gas will remain as it is now, the only gas undertaking which can supply and deliver to people's homes and businesses throughout the country a supply of gas; so that there will be no greater competition now and we shall have transferred enormous monopoly power to a private organisation and will have done so without the stringent controls which should accompany such a transfer of power. Your Lordships do not have to believe me alone about monopolies. Indeed, the Conservative manifesto of 1983 pledged that a Conservative Government would most certainly not merely replace state monopolies with private ones, as that would waste an historic opportunity to ensure that they do not exploit their positions to the detriment of their customers.
That was what the Conservative Party said in 1983. Today, they are in this House breaking that promise because they are converting a public monopoly into a private one. When this Government privatised British Telecom noble Lords from all Benches agreed that it was not in the best interests of customers and the nation to transfer what was a natural monopoly from public to private hands. But gas is even more a natural monopoly than telecommunications and perhaps even more vital to our national life and economy. Those noble Lords who expressed doubts about the 320 privatisation of British Telecom must have even deeper doubts about the privatisation of British Gas, particularly since in the case of British Telecom the Government at least had the figleaf of competition from Mercury, albeit only on the restricted trunk network, to hide their nakedness. But in the case of British Gas there is not even a figleaf to hide behind and the Government are exposed starkly to the charge that competition cannot and will not result from privatisation.
Since that is the case, it surely would be reasonable to expect that the Government would come forward with proposals for a really strong regulatory regime that would safeguard not only the interests of all gas consumers but also the national interest, bearing in mind the extreme importance of this valuable energy source to our economic and social well being. But that is not the case. I repeat: that is not the case. The new regulatory body, Ofgas, given very narrow powers of control and hedged around by all sorts of impediments on its scope for action, will be able to keep the new company only on the lightest of reins. That was what the Secretary of State wanted and what Sir Denis Rooke wanted, because they said so to the Select Committee. And that is what in fact they have got.
The House of Lords Select Committee's report on the regulation of the gas industry emphasised the need for strong regulation of an industry which is a natural monopoly, but the Government took scant heed of the recommendations produced unanimously by the Select Committee. Indeed, so incensed were the committee at being brushed off by the Secretary of State that they took the unprecendented step of tabling their own amendments at Report stage in another place. Those amendments, as the noble Lord knows, were not carried but will undoubtedly be returned to during the later stages of the Bill in this House.
As I have said, the regulation is to be of the lightest sort and, in spite of what the noble Lord said in opening, so far as I can see Ofgas will not have the same sort of powers and opportunities for intervention as Oftel. As we saw recently when British Telecom decided to increase domestic tariffs well above the rate of inflation, in spite of the retail price index minus X factor, the director of Oftel stood by hopelessly and could not intervene because his powers did not enable him to do so.
Those who took part on the Telecommunications Bill will remember that this was not our understanding during the Committee stage of that Bill. Indeed, Ministers gave us assurances when the Telecommunications Bill proceeded through this House. The Ministers consistently sought to reassure us that all consumers, including domestic consumers, would be treated fairly and would be protected by the RPI-X formula. So much for ministerial assurances! Certainly British Telecom customers have not yet seen any benefit from privatisation, unless the "Dial-a-Dirty-Joke" service can be said to add anything other than disrepute to the telephone service.
What domestic customers have suffered is swingeing price increases, reduced maintenance service, an increase in the purchase of foreign equipment and unemployment, or the threat of it, for many of those employed by British Telecom. I would remind the House, if it needs reminding, that it is the workers of 321 all kinds in British Telecom and British Gas who deserve a large measure of credit for the successes that they have achieved.
If that is what has happened in British Telecom, what are we to expect of a privatised British Gas which will be under lighter control and with virtually no competition except in the case of appliances sales? In the matter of prices, for example, I wonder how the customer will fare. The price control system which is included in the draft authorisation provides a formula related to the retail price index minus X (which is the efficiency factor) plus Y (which represents the future cost of gas factor). The director of Ofgas will have some control over the X factor, which is the efficiency factor, but none at all over the Y factor, which is the future price of gas. Thus, he will be able to intervene only in relation to costs other than the costs of gas itself and British Gas therefore will be in complete control, without let or hindrance, of the gas costs.
Since the gas cost represents 50 per cent. of the retail price, that is a very big power indeed. And, bearing in mind the experience of British Telecom, it does not bode well for the tariff customers of British Gas, let alone business customers who will have no protection at all. Furthermore, there is no firm provision relating to standing charges, again despite what the noble Lord has said. Those have caused much vexation and dispute and even hardship over the years.
The new privatised organisation is charged only with using its best endeavours to prevent standing charges from exceeding the rate of inflation. Whatever the Government's legal interpretation of the words "best endeavours", the public will see them as a let-out for privatised British Gas; and in Committee we shall certainly use our best endeavours to impose a duty on British Gas not to increase standing charges above the rate of inflation. But even though the authorisaton makes some provision, however defective, for price control it does not take account of the risk that British Gas could use its monopoly position to reduce standards of service as an alternative to raising prices.
Certainly, theoretically the director of Ofgas could intervene in service provision, but neither he nor the gas consumers council will be sufficiently resourced to allow them to monitor performance. The figure of £3 million to finance both bodies—and that is the figure that was mentioned in another place—is derisory. That, in itself, will ensure that British Gas plc will be able to exploit its monopoly position with the minimum of public control. We shall certainly, during later stages, wish to ensure that Ofgas and the gas consumers council are properly resourced in order that they can collect, publish and monitor their own performance indicators and are given a real say in the preparation of the codes of practice, including the code on disconnections, and not merely consulted on their presentation to the public.
Then there are the showrooms, a vital contact point between the supplier and the customer. There is no safeguard at all for their retention and nothing in the Bill or authorisation can stop British Gas plc from embarking upon wholesale showroom closures as an asset-stripping exercise to benefit the shareholders at the expense of the customers.
Safety is another matter which will concern the House. While acknowledging the good safety record of 322 British Gas, I believe the opportunity exists to write into this Bill safeguards in a number of areas including the safety of appliances and the training and standards of installers and contractors. I will not elaborate further on this aspect because I know that the noble Baroness, Lady Macleod of Borve, whose experience and knowledge we all respect, has taken a special interest in this subject of gas safety and will undoubtedly deal with safety—I hope she will—in her speech later on.
As I said earlier, gas is a prime fuel and a vital national resource. It should not be wasted; its conservation is essential to the long-term good of this country. It will be all too easy for privatised British Gas to exploit gas reserves to the full, to maximise profits in the short term while ignoring the long-term interests of the nation. Yet there really is no provision in this Bill or in the authorisation to put a duty on British Gas plc to conserve gas. Consequently, depletion policy and a large part of energy policy will be in private hands and left to the exigencies of market forces. That is a prospect which certainly worries the Opposition and should concern noble Lords in every part of the House. It would be useful if the noble Lord, Lord Belstead, who is to reply to this debate, could comment particularly on this aspect of the Bill.
There is one final point on regulation. The authorisation does not form part of the Bill, and as far as I can see it can be modified without proper reference to Parliament. We believe that the authorisation, suitably strengthened and amended, of course, should be included as a schedule to the Bill, thus needing parliamentary consent to any alteration in its terms. If the Government were agreeable to this course of action, some of our fears at least would be alleviated, and, again, perhaps the noble Lord, Lord Belstead, would let us know in his winding up whether he would be receptive to such a proposal.
I should like now to turn to Part II of the Bill, dealing with the transfer of British Gas to the private sector. I must make the point that, due to the imposition of the guillotine in the House of Commons, this part of the Bill did not receive all the attention there that it deserved; nor, indeed, did the noble Lord in his opening remarks pay much attention to it, either. However, it is a very important part of the Bill. We shall therefore wish to examine it closely at Committee stage; and, indeed, my noble friend Lord Bruce, who is an expert on this matter, may very well wish to deal with some part of it in his winding-up speech. But there are some comments that I would like to make at this point.
First of all, can we be told what arrangements will be made for the flotation? What price is to be set for the shares, and what is the total amount of money that the Government expect to get from the sale? A glance at the accounts of British Gas shows that the total value of assets exceeds £16,000 million. When privatisation was announced, all the indications were that the Government expected to reap £8,000 million from the sale of the assets. Is that still the Government's view in the light of the sharp drop in oil prices from 28 dollars a barrel at the time of the announcement to around 12 dollars a barrel at the present time? I should like an answer to that from the noble Lord.
323 Could he also say something about the costs of flotation? I understand that the costs of floating British Telecom amounted to £200 million. That was a much smaller flotation. What are the costs going to be in the case of British Gas—£300 million, £400 million, £500 million or what? The House is entitled to have that information, and I hope that the noble Lord will give it to us when he winds up.
The House is entitled to have this information (it is entitled to have a lot more, but it is particularly entitled to have this financial information) especially bearing in mind the gross underpricing of the British Telecom share issue and the consequent loss to the taxpayer of £1,500 million immediately following the flotation and of £3,000 million if the peak market price is taken as the measure of the loss. The British Telecom issue was a disgrace and a national financial scandal, the extent of which was revealed, certainly in part, by ITV's "World in Action" programme on 3rd March this year. One participant in that programme described the British Telecom issue as tantamount to selling £10 notes for £5, while another made the point that the loss to the taxpayer on the BT sale, represented more than the cost of building the Channel tunnel or providing 60 new hospitals. That was the extent of the loss.
What is certain is that the issue price was set far too low, allowing large speculators, many of them foreigners, to make huge fortunes overnight at the expense of the taxpayer. While ordinary people were limited to purchasing 800 shares, the City slickers set about getting round the limit, and many of them did so—some by means unknown to me, but other individuals were simply able to make a killing by personally acquiring shares allocated to merchant banks. "World in Action" named one individual who had acquired 50,000 BT shares in this way and another who had acquired no less than 237,000 shares by a similar device. So much for wider share ownership, which the noble Lord mentioned in his opening remarks.
How on earth can this happen, one may ask? Again, "World in Action" put it succinctly. It was asking for trouble, they said, to ask the City to price the shares when it was the City itself which would be buying most of the shares. That was like asking an estate agent to value your house when he himself was the buyer. Nobody in their right mind would do that—I would not, noble Lords on this side would not, most noble Lords on that side would not, and I am sure the noble Minister would not. But that is precisely what the Government did, and it was, as I say, a disgrace.
We are entitled to ask what the Government propose for the British Gas issue to prevent a recurrence of the British Telecom scandal. Do they intend to obtain independent advice as to the issue price? Will they test the market? What will they do to safeguard the taxpayers from being ripped off yet again? What notice do they intend to take of the Public Accounts Committee on the arrangements for the sale of public assets?
There is one further point that I wish to make about Part II, and that concerns the purchase of shares by 324 foreign nationals. As I understand the Bill, there is to be a limit of 15 per cent. of the total stock that can be owned by a single foreign national. If I am correct in my reading of that figure, I find that very worrying. There seems to be nothing to prevent three or four energy firms in Holland from getting together and taking control of British Gas plc, and with it a substantial part of energy policy. This surely cannot be right, and unless there are substantial assurances on this matter by the noble Lord when he winds up this debate we shall certainly put down amendments to limit foreign holdings and ensure that British Gas remains under the control of the British people.
Could the noble Lord also confirm that the Government intend the flotation to be handled in foreign financial centres as well as London, including New York, Hong Kong, Tokyo and Zurich? Will this in itself not encourage foreign ownership of British Gas; and is not the reason for this polyglot flotation the fact that the Government know that the issue is too big and too concentrated to be absorbed by British people and by British institutions alone?
To sensible people who have a care for the country's the consumers' and the taxpayers' interest, who are concerned about the delivery of monopoly power to private control, who wish to see the energy future of our country safeguarded and conserved, and therefore believe that the public must have a strong and broadly-based stake in the energy industries, the Government's decision through this Bill to sell off British Gas will be seen as lacking any logical or sensible basis and will regard it as it should be regarded—as a sordid, cynical, financial exercise designed to save the Tory Party from disaster at the next general election.
We have heard a great deal from the Benches opposite just lately about propaganda on the rates, but anything they have been able to allege against Labour councils pales into the palest insignificance when set beside this blatant multi-million pound attempt to grease the electorate's palm just before a general election. I sincerely trust that the good sense of this House will be able at least to write some essential safeguards into the Bill. I also believe the electorate will realise that this Bill has no relevance to the industrial, economic and social problems we face as a country and will also see that their long-term good, and that of the nation, is being sacrificed to short-term party political expediency.
Let me say in conclusion that this Bill has no friends, apart from the Government and Sir Denis Rooke. It is a bad Bill, produced for the most disreputable of reasons and brought for enactment at a most inauspicious time in the energy industry. The Labour Party opposes the Bill. It will continue to abhor the measure and will in due course take steps to bring this great industry back under proper public control, where it rightly belongs.