HL Deb 01 July 1986 vol 477 cc762-71

3.18 p.m.

Report received.

Clause 1 [The Director General of Gas Supply]:

Lord Stoddart of Swindon moved Amendment No. 1: Page 1, line 8, after ("shall") insert ("after seeking and receiving the comments of the Select Committees on Energy and Trade and Industry as to the suitability and qualifications of the appointee").

The noble Lord said: My Lords, I beg to move Amendment No. 1 standing in my name on the Marshalled List. Before I speak to the amendment, perhaps I may just refer to a report in today's Daily Telegraph on page 2 which is headlined "Inflation Curb on British Gas". In the report there is an item which reads: The Government has struck a deal agreeing to introduce changes demanded in the Gas Bill in return for dropping amendments when the Bill enters its Report stage in the Lords today. I was rather suprised to see that. So far as I am concerned, no deals have been done. I certainly have not done a deal; indeed, if it got abroad that I had, that might be misunderstood. I do not know whether the noble Lords, Lord Diamond and Lord Ezra, have made any deals, but I doubt it. I feel sure that they would have said something to me about that. I can only assume that a deal has been done with the government supporters. But bearing in mind that they have only a few amendments down, I doubt even that. I think that the noble Lord, Lord Belstead, should be allowed to comment on such a report. It may be misunderstood so far as he is concerned. It is a strange report. If he wishes to intervene, I shall gladly sit down and let him deal with what I have said. Perhaps the noble Lord, Lord Gray, is dealing with the amendment.

The Minister of State, Scottish Office (Lord Gray of Contin)

My Lords, I am happy to respond to the noble Lord and add my surprise to his at the article that appeared. I know of no such deal, although during and since the Committee stage the Government have been particularly receptive to the arguments placed before them. As we go through the Report stage the Government will be making a few useful concessions. Together with my noble friend Lord Belstead, I shall be speaking to those in due course. We hope that such a forthcoming attitude by the Government will lead to the co-operation of the House and the speedy passage of the Bill through its remaining stages.

Lord Stoddart of Swindon

My Lords, I am most obliged to the noble Lord for his remarks. As I suspected, it seems that the suggestion is a figment of some reporter's imagination. I had noticed, as other noble Lords will have done, that a few government admendments have been put down. I notice too that there are also some alterations to the new draft authorisation, which I saw only this morning. The noble Lord will understand that we have not yet had an opportunity to assess the importance of the amendments and the concessions which have been made, but we shall do so as the Bill progresses through this stage. It will progress with as much expedition as can be arranged, commensurate with our duty to examine amendments properly and thoroughly.

Let me now turn to Amendment No. 1. The noble Lord will remember that during the Committee stage a number of attempts were made to write into the Bill a parliamentary input to the appointment of the Director General of Ofgas. I am afraid that they were to no avail. The noble Lord was not even prepared to take the matter away and look at it before this stage of the Bill. He may say that the amendment is irrelevant as the appointment of a director general has virtually taken place or at least has been indicated. I shall be coming back to that on Amendment No. 4. But although the appointment of Mr. McKinnon has been made, there is still time to seek and receive the comments of both Select Committees mentioned in the amendment; and so it is still relevant and in time.

At Committee stage the amendments referred to consultation. I accept that that could imply a joint decision of the House of Commons through its Select Committees and the Minister regarding the appointment. That may be something which the noble Lord feared and was not prepared to accept. I do not believe that there was any such implication, but he may have thought so and that may have been the reason for his obduracy. In case that was his view, I have put down this amendment, which does not seek consultation between the Secretary of State and Parliament, but merely to provide that the Secretary of State should seek and receive the comments of the appropriate Select Committees as to the suitability and qualifications of the appointee.

I am sure that noble Lords will agree that this is a mild amendment, which would only slightly extend the role of the parliamentary Select Committees. I see no reason why the Government should not accept it, although I am afraid I am not very hopeful. But if they will not, I hope that the House will. Parliament needs strengthening in relation to the Bill. We must not forget that the gas industry is at present responsible to Parliament and therefore subject ultimately to complete parliamentary control. After the Bill is passed there will be literally no parliamentary control and the consumer organisations will also have been weakened and centralised. I hope therefore that your Lordships will support this mild amendment. It would do good to our parliamentary system and it would do no harm to the Bill or to the Secretary of State's prerogatives. I beg to move.

Lord Boyd-Carpenter

My Lords, I assume that the amendment refers to the Select Committees in both Houses; it is not specific on that point. How the system would operate if in either House there were no Select Committees also raises a considerable doubt. The noble Lord did not tell us which House of Parliament's Select Committees were to be involved, nor did he deal with the rather entertaining situation if, as is perfectly possible, they took a different view from each other. By whom then should the Secretary of State be guided?

My unhappiness about the amendment is on broader grounds. It seems to be an attempt—admittedly a fairly mild one—to introduce the American practice under which, as your Lordships know, holders of all kinds of appointments have to be approved by the appropriate committee of the Senate. That is quite contrary to our practice and I think to some extent conflicts with our normal and proper policy of such appointments being made on the responsibility of the Minister concerned.

The noble Lord said that there was no parliamentary control. Of course there is. If he appoints someone who is manifestly unsuitable, the Secretary of State can be called to account in this House or in another place. Indeed, I go further; he pretty certainly would be. I agree with the noble Lord that it is an important appointment. If the Secretary of State made a manifestly improper or unsuitable choice, he would have to answer for it. That seems to me to be the proper parliamentary attitude, and not that the Secretary of State should have his responsibility blurred; not that he should be able to say, "I did not think much of the chap but the Select Committee on Energy in the upper House thought he was terribly good and so I did not like to disagree".

I think that such appointments should be made on the clear, unquestioned responsibility of the Minister of the Crown concerned and that Minister should be answerable to Parliament for the making of the appointment. I hope that this amendment will not be accepted.

3.30 p.m.

Lord Ezra

My Lords, the amendment moved by the noble Lord, Lord Stoddart, and the other amendments to Clause 1 relate to a fundamental concern which we on this side of the House have; namely, that the regulatory body proposed by the Government is inadequate for the important task which it faces under the Bill. We believe that there should be a stronger regulatory body to ensure that this new privatised organisation shall, in all respects, do things which are consistent with the interests of consumers and of the public.

We have a number of amendments following this one which return to that point. The ways in which that regulatory body can be improved and strengthened will remain to be seen. It is important at this stage to make it clear to the Government that there are many who are concerned at how the regulation of a privatised monopoly is being introduced. We feel that in the interests of the body itself, the public and the consumer, much greater attention should be paid to how the regulatory body is set up. Whether it be set up on the basis of parliamentary accord or the proposals introduced in later amendments remains to be seen. I should like to emphasise that we are worried by the relative weakness of the regulatory body now proposed.

Lord Diamond

My Lords, my noble friend Lord Ezra and other noble Lords who have spoken on this side of the House are not the only people concerned at the inadequacy of the regulatory body. Everything that I have read (and I have read a good deal since the Committee stage) confirms the same point—the deep anxiety which exists among various bodies, including those which are totally unpolitical and objective and concerned with good administration and nothing else. Their anxiety is that the proposals contained in the Bill for regulating this enormous private monopoly will not be strong enough.

I shall not go over the ground that was covered previously. Your Lordships will be good enough to remember our views on this matter. We feel strongly that we must enable the Government to carry out their undertaking that when they privatise gas they will do two things to protect the consumer. First, they will strengthen consumer councils, and, secondly and more particularly, they will monitor the operation of the Act. It is that monitoring with which we are concerned now.

The amendment relates to the qualifications of the appointee, a single person. It contemplates one modestly-paid individual with the responsibility of holding at bay all the commercial drive of a huge commercial organisation which has a monopoly of sales to 16.5 million consumers. That individual must maintain a reasonable balance. All that we are asking for on these Benches is that there should be a reasonable balance between the interests of the shareholder, introduced for the first time, and the interests of the consumer.

It is impossible, in our view, for one person to achieve that. If it is to be one person, as the amendment contemplates, let the Minister have the good sense not to listen to the noble Lord, Lord Boyd-Carpenter, but to behave as any Minister would—the noble Lord, Lord Boyd-Carpenter, no doubt did so when he was a Minister but he forgets all that in his desire to support the Government through thick and thin—and take the responsibility of consulting everybody who can help him make that vitally important appointment.

A Minister does not do that off his own bat. He does not toss up a coin and say that he will appoint the first person whose photograph and recommendation he sees. He consults his colleagues, and various distinguished and authoritative Members of Parliament privately. He consults widely. All we are asking is that something be put into the Bill to enable the Minister to avail himself of the help which is available to choose the right man. We know that such help is available.

The people manning the Select Committees have a great deal of knowledge and experience of this matter. They have something more which is not so readily available outside politics. As every Member of this House and of the other place knows, a constituency Member meets thousands of people while representing a constituency. He learns quickly—this is one of the arts of a politician—to assess a man in a way in which no technical selection committee ever works. He has a political feel for how that man will react under political pressures and so on. There is no other body of which I know that can supply that valuable selective technique. It is enormously valuable where one individual must relate to the public, to Parliament (in a limited way), to the industry and to the consumer. He must have a very sensitive feel.

I am sure that the opinion of the Select Committees mentioned in the amendment would be of great help. It would be sheer obstinacy by the Minister not to do something along those lines. I hope that if the Government do not accept the precise words—if they feel that they should be sharpened to indicate which House, both Houses, or whatever—they will enable the Minister to do what any good Minister would want to do: avail himself of the best help he can obtain to make an immensely important appointment.

Lord Grimond

My Lords, I wish to speak only briefly in support of the amendment and of the speeches made by my noble friends. There are two points which I think should be made. First, this is a Bill which sets up, as has been said many times, a private monopoly. Many of us who are by no means opposed to privatisation believe that some competition is the best guarantee for the public, and that that is absent in the Bill. Secondly, we have some experience of British Telecom, and as the Government will have noticed from the criticisms made on all sides of the House, our experience of that private monopoly has not so far been entirely reassuring.

It has been said that the appointment of this important official should be placed fairly and squarely upon the shoulders of the Secretary of State. That is a proposition with which in a nationalised industry, for instance, I would generally agree. But I am not at all happy that the Secretary of State will be able to take responsibility for the behaviour of this private monopoly.

I am not clear that Parliament, representing the public, who are vitally affected by the supply of gas, will be able to represent the public point of view. The whole onus, as stated by my noble friends, rests upon one man. It is absolutely vital not only that his appointment should be widely accepted but also that he should be without question the right person for the job. The Government may have other ways of meeting the very obvious anxiety that exists over this whole matter. I would ask them to consider this further step which, to my mind, is justified in the peculiar circumstances of a very powerful private monopoly. It will give some extra power to Parliament and might also ensure that the proper person is appointed to this vital job.

Lord Gray of Contin

My Lords, I listened very carefully to the noble Lord, Lord Stoddart of Swindon, who, as always, carefully outlined his ideas as to how this amendment might operate. I listened also with great care to the contributions made by the noble Lords, Lord Diamond and Lord Ezra, and also by the noble Lord, Lord Grimond, whom I am delighted to see joining our deliberations at Report stage. It is always a great pleasure to have the noble Lord, Lord Grimond, participating in our debates.

None of them, however, was able to produce anything new or anything more than matters with which we dealt at Committee stage when we had a discussion of some considerable length. Indeed. 1 am grateful to my noble friend Lord Boyd-Carpenter, not only for highlighting the deficiences of the amendment in detail but also for pointing out the limitations of the amendment in principle. Of course, it is in principle that I disagree basically with noble Lords opposite in their desire to involve outside bodies—in this case, Select Committees—in the selection process.

The noble Lord, Lord Stoddart, rehearsed yet again the same arguments involving those outside organisations and the appointment of the director. I have already explained at Committee stage, and I would not wish to weary your Lordships by going over the same ground again, our fundamental objections to such a procedure. There is, I am afraid, nothing new. I can only repeat what I said at Committee stage. The Bill sets out provisions for strong and effective regulation of a privatised gas industry under a director general who will be fully equipped with the necessary powers to ensure that the industry continues to operate properly and efficiently in the best interest of gas consumers.

Indeed, my right honourable friend the Secretary of State for Energy announced on 24th June that, subject to Parliament approving the Gas Bill, he intends to appoint Mr. James McKinnon as Director General of Gas Supply. Mr. McKinnon was chosen by the Secretary of State after a careful survey of suitable candidates by a well-known firm of executive search consultants. His training as an accountant and his last 10 years spent as group finance director of an organisation with a turnover approaching that of the British Gas Corporation provides an exceptionally good background for the issues that will need attention. Moreover, his personal qualities are admirably suited to the role of regulator.

The noble Lord, Lord Diamond, and others rightly pointed out that the Secretary of State has a wide range of advice available to him. I believe that with that advice he is well able to make a selection that will provide a highly suitable and competent person to carry out the role of this very important officer. I believe that the way that we are proceeding is in accordance with precedent. It is a way that we have followed in the past. Indeed, successive governments have always decided that these appointments should be made by the Secretary of State.

I accept that this is slightly different. This is an industry that is being privatised. The noble Lord, Lord Grimond, or perhaps it was the noble Lord, Lord Ezra, expressed satisfaction with this method of selection for a nationalised industry but felt that something different was needed for a privatised one. I believe that the way we are proceeding is the right way. I have listened carefully to the arguments, none of which has been new and none of which has persuaded me that we should act differently. I must therefore ask my noble friends to reject the amendment unless the noble Lord, Lord Stoddart, is prepared to withdraw it.

Lord Diamond

My Lords, before the noble Lord sits down, can he clarify and explain this point? Is it the case that one candidate was selected by this particular body—

Lord Stoddart of Swindon

A firm, my Lords.

Lord Diamond

My Lords, a firm, a private firm.

Lord Molloy

My Lords, answerable to no one.

Lord Diamond

My Lords, is it the case that one such candidate was selected by that firm and submitted to the Secretary of State, which is what the noble Lord indicated? Or is it the case that a number of candidates were put before the Secretary of State for his guidance?

3.45 p.m.

Lord Gray of Contin

My Lords, the Secretary of State had available to him a great deal of advice. He asked a well-known consultancy firm to submit names to him. I cannot answer in detail what the noble Lord asks. I have little doubt that if I keep talking for a minute or two that doubt will be removed. Indeed, it has been removed. I am told that a full procedure was gone through and that a number of possibilities were identified. The best choice was then made by the Secretary of State.

Lord Ezra

My Lords, before the noble Lord sits down, may I add one further point and ask whether he does not feel that the appointment of persons to regulate privatised bodies of this sort does not raise entirely different issues from all public appointments hitherto; and whether he does not agree that Parliament has a special role in such appointments?

Lord Gray of Contin

My Lords, with great respect, may I remind the noble Lord that we are now at the Report stage of the Bill? It is a quite separate point that he has raised. In any event, I do not accept it. I am making the point that I think I am right in saying that at Report stage I have indeed violated the ales myself because I should have sought the leave of the House before even giving a reply to either noble Lord who has spoken. Noble Lords are not allowed at Report stage to behave as though we were dealing with the Committee stage of the Bill. I shall not read out the rules of order. I am sure that noble Lords are equally as acquainted with them as I am. I think, however, that at this early stage of our proceedings it is right that I should draw the attention of noble Lords to the fact that we are at Report stage.

Lord Stoddart of Swindon

My Lords, the noble Lord, Lord Gray, said that the amendment was not necessary because there were provisions in the Bill for strong and effective regulation. That, of course, is the point. It is the whole point made by the noble Lords, Lord Ezra, Lord Diamond and Lord Grimond. We do not believe, and no other commentator so far as I can see believes, that there are within the Bill arrangements for strong and effective regulation. That is why we are so concerned about the appointment and the personality of the appointee to the post of director general.

The noble Lord, Lord Boyd-Carpenter—whom I thank for his very helpful contribution—raised a number of points. First, he asked which Select Committee did I mean? Clearly I meant the Select Committees of the House of Commons because we have no Select Committee for Energy in this House, which I think is regrettable. Nor do we have a Select Committee for Trade and Industry. However, I think that the noble Lord has raised an important point. It would be as well, because of the wide and massive experience of Members of this House, that they too should be consulted. It might very well be that if this amendment were carried—because I intend to put it to the vote—we could move an amendment at Third Reading to include the House of Lords Select Committee on Science and Technology as a Select Committee of the House of Lords whose opinions could be sought. I therefore thank the noble Lord very much for that suggestion, which I shall certainly take into account.

The noble Lord also asked this question. What if there is a disagreement? If there is a disagreement it might tend to show that the candidate was not the right candidate. As the noble Lord, Lord Boyd-Carpenter, knows—he knows it better than me because he has had more experience in the other place and served longer and in a much more senior capacity than I did—the Select Committees of the House of Commons do not disagree and do not come to decisions just for the hell of it. They examine matters very closely indeed. Therefore any disagreement they had with the Minister would be of a serious nature, and their views would be taken very much into account by a wise Secretary of State. That would be the value of the whole system.

With regard to the Secretary of State being answerable to Parliament, yes, I accept that point. But the system which we are proposing through this amendment would ensure that the Secretary of State did not make a mistake in the appointment because he would have additional advice and assistance from the Select Committees.

Time is now getting on. I want to reply to one further point which was raised by the noble Lord, Lord Gray of Contin. He said that there were no new arguments since Committee stage. With respect to him I must say that this amendment was not moved at Committee stage. It is a different and much milder amendment. We must understand that it does far less than the amendments which were proposed at Committee stage sought to do. This is a milder, different amendment.

I shall leave it at that but I fear that I must press this amendment to a Division because it involves important principles and the House ought to be given the opportunity to decide. I beg to move.

3.54 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 100; Not-Contents, 117.

Amherst, E. Blyton, L.
Ardwick, L. Brockway, L.
Aylestone, L. Carmichael of Kelvingrove, L.
Banks, L. Cledwyn of Penrhos, L.
Barnett, L. Crawshaw of Aintree, L.
Beswick, L. David, B.
Birk, B. Davies of Penrhys, L.
Blease, L. Dean of Beswick, L.
Denington, B. Northfield, L.
Diamond, L. Oram, L.
Donaldson of Kingsbridge, L. Parry, L.
[Teller.] Phillips, B.
Elwyn-Jones, L. Pitt of Hampstead, L.
Ennals, L. Plant, L.
Ewart-Biggs, B. Ponsonby of Shulbrede, L.
Ezra, L. [Teller.]
Fisher of Rednal, B. Prys-Davies, L.
Foot, L. Raglan, L.
Gallacher, L. Rathcreedan, L.
Gladwyn, L. Rea, L.
Glenamara, L. Reilly, L.
Graham of Edmonton, L. Ritchie of Dundee, L.
Grey, E. Roberthall, L.
Grimond, L. Robson of Kiddington, B.
Hampton, L. Ross of Marnock, L.
Hanworth, V. Sainsbury, L.
Hatch of Lusby, L. Seear, B.
Heycock, L. Serota, B.
Hirshfield, L. Shaughnessy, L.
Houghton of Sowerby, L. Shepherd, L.
Jacques, L. Silkin of Dulwich, L.
Jenkins of Putney, L. Simon, V.
John-Mackie, L. Stallard, L.
Kennet, L. Stewart of Fulham, L.
Kilbracken, L. Stoddart of Swindon, L.
Kilmarnock, L. Strabolgi, L.
Leatherland, L. Taylor of Blackburn, L.
Listowel, E. Taylor of Gryfe, L.
Llewelyn-Davies of Hastoe, B. Taylor of Mansfield, L.
Lloyd of Kilgerran, L. Tordoff, L.
Lockwood, B. Underhill, L.
McIntosh of Haringey, L. Vernon, L.
Mackie of Benshie, L. Wallace of Coslany, L.
McNair, L. Walston, L.
Mayhew, L. Warnock, B.
Melchett, L. Wells-Pestell, L.
Mishcon, L. Whaddon, L.
Molloy, L. White, B.
Morton of Shuna, L. Williams of Elvel, L.
Mulley, L. Willis, L.
Nicol, B. Ypres, E.
Alexander of Tunis, E. Fortescue, E.
Allerton, L. Gainford, L.
Annan, L. Geddes, L.
Bauer, L. Gisborough, L.
Belhaven and Stenton, L. Glanusk, L.
Bellwin, L. Glenarthur, L.
Beloff, L. Gray of Contin, L.
Belstead, L. Gridley, L.
Bessborough, E. Hailsham of Saint
Boyd-Carpenter, L. Marylebone, L.
Brabazon of Tara, L. Halsbury, E.
Brougham and Vaux, L. Henley, L.
Broxbourne, L. Hives, L.
Bruce-Gardyne, L. Home of the Hirsel, L.
Caccia, L. Hood, V.
Caithness, E. Hooper, B.
Campbell of Alloway, L. Hunter of Newington, L.
Campbell of Croy, L. Ilchester, E.
Carnegy of Lour, B. Kemsley, V.
Carnock, L. Killeara, L.
Cathcart, E. Kimball, L.
Cullen of Ashbourne, L. Kinloss, Ly.
Davidson, V. Kinnaird, L.
De Freyne, L. Kintore, E.
De La Warr, E. Knollys, V.
Denham, L. [Teller.] Lane-Fox, B.
Denning, L. Lauderdale, E.
Drumalbyn, L. Layton, L.
Duncan-Sandys, L. Leathers, V.
Ebbisham, L. Long, V.
Eccles, V. Lucas of Chilworth, L.
Effingham, E. Lurgan, L.
Ellenborough, L. Macleod of Borve, B.
Elliot of Harwood, B. Mancroft, L.
Elton, L. Manton, L.
Marsh, L. Sanderson of Bowden, L.
Maude of Stratford-upon- Sandford, L.
Avon, L. Sandys, L.
Merrivale, L. Sempill, Ly.
Mersey, V. Shannon, E.
Middleton, L. Skelmersdale, L.
Milverton, L. Stodart of Leaston, L.
Monson, L. Strathspey, L.
Moran, L. Sudeley, L.
Morris, L. Swansea, L.
Mountevans, L. Swinton, E. [Teller.]
Mowbray and Stourton, L. Terrington, L.
Munster, E. Teviot, L.
Murton of Lindisfarne, L. Thorneycroft, L.
Newall, L. Tranmire, L.
Norrie, L. Trumpington, B.
Nugent of Guildford, L. Vaux of Harrowden, L.
Porritt, L. Vivian, L.
Portland, D. Westbury, L.
Reigate, L. Whitelaw, V.
Renton, L. Wolfson, L.
Rochdale, V. Wynford, L.
Rugby, L. Young, B.
Saint Brides, L. Young of Graffham, L.
St. Davids, V.

Resolved in the negative, and amendment disagreed to accordingly.