Gas Bill

HL Deb 01 July 1986 vol 477 cc785-820

4.55 p.m.

Consideration of amendments on Report resumed.

Lord Diamond moved Amendment No. 2: Page 1, line 8, after ("shall") insert ("after consulting Parliament in whatever way he considers appropriate").

The noble Lord said: My Lords, if this amendment were coupled with Clause 1 the Bill would read: The Secretary of State shall, after consulting Parliament in whatever way he considers appropriate, appoint an officer to be known as the Director General of Gas Supply". This is clearly not as desirable an alternative as the previous amendment on which your Lordships' House showed a considerable measure of understanding and sympathy. It is not as satisfactory as that. But the duty of an Opposition is, if it cannot get its first proposal accepted, to put forward a fall-back position in the hope that the Government will at all events accept that lesser proposal. This is indeed a lesser proposal, but a very valuable one.

It is valuable for the reason indicated on an earlier occasion: that it is sensible for a Minister to regard Parliament as an ally rather than as an opponent and to consult where that would be helpful. Indeed, I see sitting on the other side of your Lordships' House a former Member of the other House whom I consulted in a sense when I was a Minister. I mentioned a very sensitive matter to him so that he should be aware of it and received a very encouraging and understanding reply from him. It would be inappropriate for me to identify the noble Lord in any way. I am saying it only to show that, immediately, wherever one moves, one is reminded of the fact that in the normal carrying out of his duties a Minister tries to consult his colleagues, Members of Parliament and Parliament generally wherever he reasonably can and regards Parliament as a possible ally in the event of future difficulties.

This is a positive and creative suggestion. There is really no alternative left. I hope the Minister is not going to say, "Ah, but Parliament is in a sense consulted because the Minister is responsible to Parliament for making the appointment". That has been put forward in the debate—I forget who put it forward. Perhaps I may deal with it for one second.

Just imagine that I am dissatisfied—I am not saying I am—with the proposed appointment that has already been made. We understand that an individual has been appointed as director subject to this Bill going through Parliament. The terms of his contract will have been worked out and written down. Of course nobody is going to appoint either the appointor or the appointee without going through all the terms. That is all that will have been done. Suppose I am dissatisfied and the appointment is ratified, what can I do about it under the system that is being suggested—that of Ministers who are responsible to Parliament? I can put down a Question. A Member in another place can put down a Question. One gets an answer. If there is disagreement, there is disagreement, and we pass on to the next Question and that is virtually the end of the matter unless it is one of such vital importance that there is a huge debate on it, which I cannot imagine. The Government will not be influenced in the slightest degree if they do not wish to be so influenced. They hear after the event. Whatever an MP or a Member of this House thinks about it, it is of no real value.

In terms of determining who should be appointed, it is of no value. It is of no value because Parliament in that sense has no opportunity of questioning the Minister until after the appointment has been made. We are talking here about consulting before the appointment is made. We are talking about the Government altering their pattern of behaviour and showing that, from time to time, they are prepared to consult Parliament in advance.

I am bound to describe the situation in those terms because one of the major difficulties about this Parliament, with the enormous majorities that the Conservatives have in both Houses, is that the Government have shown themselves to be completely unwilling to consult and have got themselves into trouble as a result, starting with Chelmsford and going on. I hope therefore that the Government will not rely upon that pattern of behaviour and will have regard to the fact that it is wise and helpful to consult Parliament from time to time, and that there is no alternative method by which Parliament can express an opinion before the appointment is made.

We tried to make an alternative suggestion and it was voted down. I do not complain. There was a fair vote and many Members of your Lordships' House took an interest and expressed their views. That amendment having been voted down, and that proposal having been voted against, we are left with this minimum proposal, that Parliament should be consulted in whatever way the Minister thinks appropriate. I could not have used lighter, less burdensome language than that, could I?

I have not suggested any particular method. Such methods as were suggested evoked a certain amount of criticism: "This would cause delay. That would create difficulties". I have not suggested anything at all. The Minister can consult to a minimum extent, totally informally, or he can consult to a maximum extent, completely formally. He can do whichever he chooses, and there is a whole range in between. He may consult in whatever way he considers appropriate". There is no burden being laid on the Minister.

There is an opportunity of doing something constructive before the appointment is made, to try to secure the good will of Parliament instead of ill will through lack of consultation and to improve, one hopes, the actual act of appointment. I hope that the Government will look upon this amendment very favourably. I beg to move.

Lord Boyd-Carpenter

My Lords, the noble Lord, Lord Diamond, seems to have put down this amendment, as he has put down a great many others, not for any clearly defined purpose. He certainly multiplies the proposals that he puts forward, no doubt as part of his determination to oppose the Government. This particular amendment is a very curious one because of its vagueness and imprecision. There is nothing whatever in the existing law or in the Bill to prevent the Secretary of State, when making an appointment of this kind, from consulting anyone he chooses. He may consult people who happen to be Members of either House, and it would be perfectly proper for him to do so. However, the amendment would lay on him a statutory duty, failure to comply with which would presumably either expose the Minister to penalties or give rise to the possibility that the courts might rule that the appointment was irregularly and improperly made.

What on earth is meant by the phrase "consulting Parliament"? It must mean a great deal more than consulting individuals. Let us take a purely fantastic example. Let us first have the fantasy that the noble Lord, Lord Diamond, is a Minister and that he desires to appoint to this vacancy Mr. Arthur Scargill, shall we say? If he discussed that matter with one or two selected Members of your Lordships' House, or still more likely Members of another place, he might receive an enthusiastic response. If he consulted some other noble Lords or other Members of another place, he might receive a different response. Therefore it is clear that individual discussion with individual Members, which seems to be the drift of the noble Lord's argument, would not comply with the terms of the amendment if it were put into the Bill.

One can consult Parliament only either through a Motion or by means of some procedure that involves fully both Houses and which involves taking the view of both Houses. The noble Lord did not suggest—and I am sure he is too sensible to suggest—that before making an appointment of this kind there should be a Motion moved by the Minister that Mr. X be appointed director general. On the other hand, unless some parliamentary procedure is evolved by which Parliament can express a view about a particular appointment, it does not seem from my reading of the amendment, and it may not seem so to other noble Lords, that the Secretary of State will have consulted Parliament.

There are in the amendment the words, in whatever ways he considers appropriate", but the essence of the proposal is that the Minister must consult Parliament. I know of no way of consulting Parliament other than by an Adjournment Motion or by various other procedural gambits. What is plainly involved when one wants to consult Parliament is some discussion in both Houses. That would seem a most unfortunate way of seeking to make an appointment of this nature.

Lord Somers

My Lords, I wholly support what has been said by the noble Lord, Lord Boyd-Carpenter. These days we are apt to think that everything we do must be the subject of consultation with Parliament. If the Secretary of State wishes to appoint a director general, then for goodness sake let him consult somebody who knows about the matter. In 99 cases out of 100, probably, Parliament as a whole will know nothing whatsoever about it. It is not necessary to consult Parliament over even a new appointment such as this.

For instance, does the Prime Minister consult Parliament before appointing a member of the Cabinet? I am not saying that she always makes the right choice, but she does not have to consult Parliament before doing so. Why should such consultation be required in a case such as this?

Lord Stoddart of Swindon

My Lords, I support this amendment. I suggested an amendment of my own, which has been rejected by the House. This amendment is even weaker. It has been proposed by the noble Lord, Lord Diamond, and provides another opportunity to the noble Lord, Lord Gray, to respond in any way that he likes. To give the House his own ideas as to how Parliament should be consulted.

I say to the noble Lord, Lord Somers, that many of us believe that at the present time Parliament is not consulted enough. It is a case not of Parliament being consulted too much but of it not being consulted enough. Were Parliament consulted rather more by the Government of the day, it may be that the Government would not slip up on so many banana skins. I would say also to the noble Lord that I believe it is true that when the Prime Minister appoints her Cabinet it will be subject to the approval of the House of Commons, one way or another. In fact, the Prime Minister has to get the approval of the House in the appointment of the Cabinet. If she does not get the approval, the Cabinet will not be formed in the way that she wishes.

The noble Lord, Lord Boyd-Carpenter, seemed to believe that the noble Lord, Lord Diamond, had tabled his amendment for no particularly defined purpose. I feel confident that the noble Lord, Lord Diamond, tabled his amendment because he believes, as I believe, that Parliament is increasingly being ignored by the present Government who are fast becoming the elected dictatorship that the noble and learned Lord the Lord Chancellor warned us against. Indeed, there is much evidence of this. The noble Lord, Lord Diamond, adduced such evidence when he spoke. Only yesterday in the House of Commons the attitude of this Government towards Parliament was very plainly shown in relation to the European Communities (Amendment) Act. It is a constitutional Bill which the Government sought to guillotine by a Motion allowing for only two hours debate on eight major groups of amendments. That would have left insufficient time to have voted on each amendment, let alone discuss them. Further, the guillotine Motion would have allowed only one hour for Report stage and Third Reading.

That is why we are worried. That is why we want more consultation with Parliament. That is why we believe, particularly in relation to matters affecting consumers and where, in fact, Parliament's role of protecting consumers is being lost, that there ought to be some way in which there is a parliamentary input into the appointment of the person who is to act as the surrogate for Parliament; namely, the Director General of Ofgas. So, there are very good reasons why we should do this. There are very good reasons because we are worried about parliamentary democracy and the way in which Parliament is being ridden over roughshod and its opinion not sought, or ignored, on so many issues. That is why the amendment has been tabled.

The noble Lord, Lord Boyd-Carpenter, mentioned Arthur Scargill. It is not very often—in fact, I have never heard him do so before—that the noble Lord, Lord Boyd-Carpenter, strays into the realms of fantasy. Clearly he did so in relation to the possibility of Mr. Arthur Scargill being appointed as the director general. I think the noble Lord was trying to move us away from the real point at issue. That point is that we believe we should make progress in ensuring that Parliament is properly consulted about this type of appointment.

We are not referring to the chairman of a nationalised industry. That is completely and utterly different. If that is raised, it is a red herring. We are talking about a director general of a regulatory authority which is supposed to act—indeed, we hope will act—on behalf of consumers. That is why I support this amendment. If the Minister will not accept the amendment—though I hope he does—and it is pressed to a Division, I trust that it will be carried.

Lord Gray of Contin

My Lords, we have yet again had an interesting and short debate on this subject. The noble Lord, Lord Diamond, will not be surprised to hear that I cannot accept his amendment. Some of the words are different—and I accept that—but his basic intention remains the same as that which he explained in Committee and we remain firmly and utterly opposed to it.

There have been a number of suggestions about parliamentary democracy. I think that parliamentary democracy is working extremely well at the moment, particularly as regards this Bill. We must look at what happened in another place on this Bill. Hours and hours of debate took place in Committee, both before and after the guillotine. When the Bill came to this House we had no less than seven days debating it in Committee. We now have Report stage and eventually we shall have Third Reading. There does not seem to be very much the matter with parliamentary democracy.

5.15 p.m.

Lord Stoddart of Swindon

My Lords, I must correct the noble Lord. He said that we had seven days debate on the Committee stage of this Bill, but he will recollect that it was not seven full days. We were interrupted on several occasions and were not able to reach the Bill until late in the afternoon on a number of days. On two occasions because the Government could not maintain a quorum we were unable to reach the stage we had hoped. Therefore, it is not true to say that we have had seven full days on this Bill. We have not had enough time on the Bill. Only this afternoon we lost at least an hour because of other business. I accept that that must happen. Nevertheless the Minister is slightly misleading the House in saying that we have had seven days when really we have had only six..

Lord Gray of Contin

My Lords, I do not think that I am misleading the House in the slightest. If my memory serves me correctly, we were here until half-past nine the following morning on one occasion. That made up for a fair amount of time that we may have lost during the day. I am not complaining about that. That is what Government Ministers are for. We are prepared to stand at the Dispatch Box and listen to the arguments put to us and answer them to the best of our ability until whatever hour the House decides to sit. I am not criticising that for one moment. I am merely pointing out that in the view of most people in this House parliamentary democracy is working pretty well on this Bill.

I was very interested in what the noble Lord, Lord Somers, had to say. He made a useful point. He asked whether Parliament is necessarily the right place or the right group of people to decide on an appointment of this sort. The noble Lord, Lord Diamond, rightly pointed out that the Secretary of State has a wide variety of people available who can advise him. I am not at all certain that it is either necessary or desirable that such an appointment should necessarily be the subject of deliberation by Parliament. Parliament's job is—I give way to the noble Lord.

Lord Grimond

My Lords, I am grateful to the noble Lord, I am much interested in what he said about the breadth of consultation. Some of us were a little puzzled and possibly perturbed about what he said earlier—that the Secretary of State had gone to head hunters. It was not very clear that many alternative names were put before the Secretary of State by either head hunters or anyone else. It may be difficult to consult Parliament, but many people would be unhappy if they thought that head hunters, who may be admirable people for finding executives for a particular purpose, were now looked to by the Government in order to appoint a person of totally different character whose job has a different aspect from that of an executive and which, indeed, involves political decisions.

Lord Gray of Contin

My Lords, I agree entirely with the noble Lord, Lord Grimond. He makes a very valid point. I merely suggested that that is one of the sources which are available to the Secretary of State. He does not have to accept a recommendation. He does not have to accept any of the names which are presented to him. He might decide that the names submitted from other sources of advice are more suitable. This is just another of the examples of those sources which are available to advise the Secretary of State.

The noble Lord, Lord Diamond, seeks to require consultation with Parliament before the director can be appointed. In my view he has not put forward convincing arguments on why the appointment of the Director General of Gas Supply should require the approval of Parliament when hundreds of other such appointees—such as the Director General of Fair Trading, and the Director General of Telecommunications—do not require such approval. What is so different about the post of director of gas supply? In my view it is not sufficiently different to merit any different method of selection. In my view the noble Lord, Lord Diamond, has certainly not identified any such difference.

The noble Lord, Lord Stoddart, really went over the same ground again—as he rightly said, he had moved an earlier amendment which the House rejected—but he is lending his support to this amendment as a fall-back position. That is a perfectly reasonable course for a member of the Opposition to take; but he did not produce any new arguments, and those arguments that he did produce certainly did not sound convincing to me. I think that my noble friend Lord Boyd-Carpenter, as he so often does, has highlighted many of the weaknesses of what is proposed by this amendment, and I do not think that I need take any further time in outlining the Government's position again. I merely reject the amendment and hope that perhaps the noble Lord will be prepared to withdraw it. If he insists on pressing it, I must advise my noble friends to vote against it.

Lord Diamond

My Lords, that is a very unhelpful answer. The noble Lord is quite wrong when he says that this amendment is the same as a previous one with just a few words left out. Obviously he has not taken it seriously at all. He has taken the view that he does not want this Bill to be altered, so whatever amendment comes forward he will reject. That is the situation.

The noble Lord, Lord Boyd-Carpenter, apparently does not understand the reason for my amendment and he tries to impute unhelpful motives to me in putting this amendment down, so I shall explain once more. Having gone through the matter at some length on a number of occasions during the Committee stage and having spoken on the earlier amendment, I had hoped that it was perhaps unnecessary to explain; but apparently it is necessary to do so. The Government are creating a private monopoly out of a public monopoly and therefore they are denying the protection of Parliament to the people of this country and the consumers of that particular service. That is what the Government are doing. One of the reasons given for it is that privatisation will stop government interference. That has been said time and again by Members of the Government—those who have apparently been doing the interfering.

What do those words really mean? They mean that nationalised industries are responsible for major policy through Ministers to Parliament, and Ministers have to exercise their responsibility because they administer the taxpayers' funds for running these nationalised industries and for adding to the capital. That is what has happened with nationalised industries. There is here a nationalised industry from which the protection to which I have just referred will be totally removed. It will become completely a plc, a public limited company, in the private sector. It will be removed from the public sector.

What therefore are the Government proposing? The Government themselves are proposing that the consumer should be protected as is proposed by this Bill and that there should be the additional protection of monitoring. That is the main answer of the Government to this vacancy—this absence—of parliamentary representation of the subject, who is the consumer. There will be monitoring and there will be a strong individual to do that monitoring who is duly supported by staff and funds. It is a very important apppointment and I think—and I hope that the House thinks—that a minimum provision would be to say, "As we have removed the protection of Parliament completely"—because as I have explained, the only opportunity that is left to a Member of either House is to ask a Question after the event (not before the event) and to receive an Answer, whatever it may be, which is the end of it—"so the only protection is to have some form of consultation with Parliament before the appointment is made".

I have specially provided for the minimum of consultation so that nobody on the Government side can allege that there is any delay or burden involved. The Minister can decide whatever he thinks is appropriate in the circumstances. That is the minimum protection, and if the Government are not prepared to help to that extent, then of course I must press the issue.

The Minister says that it is the same as with Oftel so what are we complaining about? We are complaining because it is the same as Oftel. From all sides of your Lordships' House and outside in the country at large there are continual complaints about Oftel—not against the individual in particular but against the lack of power which the director (and this office is comparable to the one we are now discussing) has to monitor that industry. For that to be quoted as an example of why we should not depart from the practice seems to me to be very extraordinary indeed. Questions are raised in the other place day after day about that very topic, and dissatisfaction is voiced from all sides of your Lordships' House.

It is because, as I indicated at Committee stage, the Oftel appointment shows that the director has inadequate power to protect the consumer that we think more ought to be done in this case. I repeat that I am suggesting something which is the very minimum and I hope that the House will support this view.

5.26 p.m.

On Question, Whether the said Amendment (No. 2). shall be agreed to?

Their Lordships divided: Contents, 104; Not-Contents, 121.

DIVISION NO.2
CONTENTS
Addington, L.	Lawrence, L.
Amherst, E.	Llewelyn-Davies of Hastoe, B.
Ardwick, L.	Lloyd of Kilgerran, L.
Attlee, E. [Teller.]	Lockwood, B.
Aylestone, L.	Longford, E.
Banks, L.	Lovell-Davis, L.
Barnett, L.	McIntosh of Haringey, L.
Birk, B.	Mackie of Benshie, L.
Blease, L.	McNair, L.
Blyton, L.	Mayhew, L.
Brockway, L.	Molloy, L.
Brooks of Tremorfa, L.	Monson, L.
Burton of Coventry, B.	Morton of Shuna, L.
Carmichael of Kelvingrove, L	Nicol, B.
Chitnis, L.	Northfield, L.
Cledwyn of Penrhos, L.	Oram, L.
Crawshaw of Aintree, L.	Pitt of Hampstead, L.
David, B.	Ponsonby of Shulbrede, L.
Davies of Penrhys, L.	[Teller.]
Dean of Beswick, L.	Prys-Davies, L.
Denington, B.	Rea, L.
Diamond, L.	Rhodes, L.
Elwyn-Jones, L.	Ritchie of Dundee, L.
Ennals, L.	Roberthall, L.
Evans of Claughton, L.	Robson of Kiddington, B.
Ewart-Biggs, B.	Ross of Marnock, L.
Ezra. L.	Seear, B.
Falkland, V.	Sefton of Garston, L.
Fisher of Rednal, B.	Serota, B.
Fitt, L.	Shepherd, L.
Foot, L.	Silkin of Dulwich, L.
Gallacher, L.	Stallard, L.
Gladwyn, L.	Stewart of Fulham, L.
Glenamara, L.	Stoddart of Swindon, L.
Graham of Edmonton, L.	Strabolgi, L.
Gregson, L.	Taylor of Blackburn, L.
Grey, E.	Taylor of Gryfe, L.
Grimond, L.	Taylor of Mansfield, L.
Hampton, L.	Tordoff, L.
Harris of Greenwich, L.	Underhill, L.
Hatch of Lusby, L.	Vernon, L.
Heycock, L.	Wallace of Coslany, L.
Houghton of Sowerby, L.	Walston, L.
Howie of Troon, L.	Wells-Pestell, L.
Jacques, L.	Whaddon, L.
Jeger, B.	White, B.
Jenkins of Putney, L.	Wigoder, L.
John-Mackie, L.	Williams of Elvel, L.
Kaldor, L.	Willis, L.
Kennet, L.	Wilson of Rievaulx, L.
Kilbracken, L.	Winstanley, L.
Kilmarnock, L.	Ypres, E.
Kirkhill, L.

NOT-CONTENTS
Abinger, L.	Kinnaird, L.
Alexander of Tunis, E.	Kintore, E.
Allerton, L.	Knollys, V.
Ashbourne, L.	Lane-Fox, B.
Auckland, L.	Lauderdale, E.
Bauer, L.	Layton, L.
Belhaven and Stenton, L.	Long- V.
Bellwin L.	Lucas of Chilworth, L.
Beloff L.	Macleod of Borve, B.
Belstead, L.	Mancroft, L.
Bessborough, E.	Manton, L.
Boyd-Carpenter, L.	Mar, C.
Brabazon of Tara, L.	Massereene and Ferrard, V.
Brougham and Vaux, L.	Maude of Stratford-upon-
Broxbourne, L.	Avon, L.
Bruce-Gardyne, L.	Merrivale, L.
Caccia, L.	Mersey, V.
Caithness, E.	Middleton, L.
Cameron of Lochbroom, L.	Milverton, L.
Campbell of Alloway, L.	Mowbray and Stourton, L.
Campbell of Cray, L.	Munster, E.
Carnegy of Lour, B.	Murton of Lindisfarne, L.
Carnock, L.	Norrie, L.
Cathcart, E.	Nugent of Guildford, L.
Colerame, L.	Orkney, E.
Craigavon, V.	Portland, D.
Cullen of Ashbourne, L.	Rankeillour, L.
Davidson, V.	Reay, L.
De La Warr, E.	Reigate, L.
Denham, L. [Teller.]	Renton, L.
Derwent, L.	Richardson, L.
Dilhorne, V.	Rochdale, V.
Drumalbyn, L.	Rugby. L.
Eccles, V.	Saint Brides, L.
Ellenborough, L.	St Davids, V.
Elliot of Harwood, B.	Sanderson of Bowden, L.
Elton, L.	Sandford, L.
Fanshawe of Richmond, L.	Sempill, Ly.
Fortescue, E.	Shannon, E.
Gardner of Parkes, B.	Skelmersdale, L.
Geddes, L.	Somers, L.
Gisborough, L.	Stodart of Leaston, L.
Glanusk, L.	Strathspey, L.
Glenarthur, L.	Sudeley, L.
Gray of Contin, L.	Swinfen, L.
Greenway, L.	Swinton, E. [Teller.]
Hailsham of Saint	Terrington, L.
Marylebone, L.	Teviot, L.
Halsbury, E.	Tranmire, L.
Hampden, V.	Trefgarne, L.
Henley, L.	Trenchard, V.
Hives, L.	Trumpington, B.
Home of the Hirsel, L.	Tryon, L.
Hood V.	Vaux of Harrowden, L.
Hooper, B.	Vickers, B.
Hunter of Newington, L.	Vivian, L.
Hylton-Foster, B.	Whitelaw, V.
Inglewood, L.	Wolfson, L.
Ingrow, L.	Wynford, L.
Kemsley, V.	Young, B.
Kimball, L.	Zouche of Haryngworth, L.
Kinloss, Ly.

Resolved in the negative, and amendment disagreed to accordingly.

5.36 p.m.

The Deputy Speaker (Lord Nugent of Guildford)

My Lords, before I call Amendment No. 3, I should explain that if it is agreed to, Amendments Nos. 4 and 5 cannot be called.

Lord Diamond moved Amendment No. 3: Page 1, line 8, leave out from ("appoint") to end of line 11, and insert— ("three officers to be known as the Commissioners of Gas Supply (in this Act referred to as "the Commissioners") for the purpose of performing the functions assigned to them by this Part.")

The noble Lord said: My Lords, I beg to move this amendment, which provides for the appointment of, three officers to be known as the Commissioners of Gas Supply…for the purpose of performing the functions assigned to them by this Part of the Bill. Those noble Lords who were good enough to be present at our Committee proceedings will know that an amendment embodying the essential point here, but including a number of others as well, was moved by my noble friend Lord Ezra, who shares my strong feelings on the matter, in order to put before your Lordships the possibility of protecting consumers in the way that the Government have undertaken that they should be protected. It would do that so as to meet their purpose but in a way that they have not provided for.

As your Lordships know, this is the regular practice in the United States. I think that I would be right in saying that it is the universal practice where such utilities have monopolies in the various states for a body of commissioners to be appointed to protect the consumer interest. That is vital when one has a private monopoly such as that which the Government are creating by the Bill. We think that that is a good precedent to follow. We know that the Government have tried to pour scorn on it several times by saying that it leads to shortages of supply. The short answer to that is, notwithstanding whatever difficulties and growing pains the Americans may have experienced, their view—indeed, I think that I am right in saying their unanimous view—in all the separate and independent states is that they should continue with the principle of having a body of commissioners to protect the consumer interest wherever a utility is being run as a private monopoly.

That happens in a country whose philosophy can only be described as one of making itself the apotheosis of private enterprise. Nothing that this Government can say in favour of private enterprise is half as strong as the belief that is accepted in the United States. There they believe that what we are doing now should be accompanied by the appointment of commissioners, as the amendment suggests. I repeat that I regard that as an excellent precedent. It has worked; it is not theoretical. The provision is to replace the protection of Parliament which this Bill is removing by turning gas supply from a public monopoly into a private monopoly. I repeat that the provision works. I hope that the Government will regard it with favour and realise that this is a sensible way to protect the consumer, whom they claim they wish to protect.

It is not an additional burden on the public gas supplier. It ensures that what the Act says should be done, will be done. Our point is that it will not be done. The terms of the Bill will not be carried out if we have one officer of the kind proposed in the Bill, because one such person cannot possibly have the weight to withstand all the commercial pressures that will come from this huge organisation. That might happen with a commission of an appropriate size.

When my noble friend moved an amendment of this kind previously, we put forward a number of suggestions to assist the director general. Those suggestions were not liked so they have been left out. The words of the amendment have been left as: for the purpose of performing the functions assigned to them by this Part". That makes the matter clear. It does not particularise. It does not make one commissioner responsible for one aspect and one for another, though we know in. practice that that is what would happen.

As at the moment Oftel is divided into branches, so would the commission divide its work into branches. There would be one commissioner at the head of one branch and one at the head of another. There is no need to put that in the Bill. They would do that of their own good sense. We hope that with that improvement which to that extent meets the Government's point, the Government will look kindly upon the proposal. There has been practical experience of it. There is solid precedent in support of it. It should therefore work well to achieve what the Government claim they want to achieve—the protection of the consumer in a private monopoly. I beg to move.

Baroness Macleod of Borve

My Lords, before the noble Lord sits down, on my list of groupings there are many amendments in the noble Lord's name. I think there are 12 or more. Was he talking to them all?

Lord Diamond

My Lords, I am as usual most grateful to the noble Baroness. I was talking to the following amendments, without straining your Lordships's patience: Amendments Nos. 6, 10, 20, 23, 25, 28, 30, 34, 35, 37, 38, 39, 43, 44 and 45. Why? To save time.

Lord Somers

My Lords, I am opposed to this Amendment. I apologise to the noble Lord, Lord Diamond. My experience is that the moment any concern has three directors it is practically impossible for them to agree on any subject. By all means let the director have as many assistants as he wants, but there should be one supreme director.

The noble Lord is anxious to maintain and preserve the voice of democracy. He seems to forget that the voice of democracy, in other words the voice of the people, includes every conceivable opinion in this country. I cannot think such a mixture would be an efficient guide for any concern.

Lord Sanderson of Bowden

My Lords, I do not suppose that any noble Lords opposite will be surprised that I oppose the amendment. We have almost been here before. I recall a great deal of discussion earlier. It was not about the wording of this amendment, but the noble Lord, Lord Stoddart, said at the last stage of the Bill that he had rolled such an amendment round in his mind. I have also done that. I see the suggestion coming up again. I could not agree more with what the noble Lord, Lord Somers, said.

We now know a little more about the director designate of Ofgas. If one man with such experience as the man in control will have cannot deal with the chairman of the newly-privatised British Gas plc, I do not know who can. If there is one thing about watchdogs (and we are talking about three watchdogs) it is that if they are all equal they usually bite one another's ankles. I am anxious that they should not bite one another's ankles because Sir Denis Rooke could then descend upon them from above and get the better of the argument. This amendment should be rejected by the House.

Lord Boyd-Carpenter

My Lords, we discussed the substance of the amendment at considerable length in Committee, as the noble Lord, Lord Diamond, admitted. I thought that we had sufficient discussion about it. It seems rather a pity that we should take up the time of the House to discuss it once again on Report. The only argument which emerged then and has perhaps emerged now is the sympathy felt by the noble Lord, Lord Diamond, for the director general, for a lone man put up against this enormous industry. Of course the noble Lord, Lord Diamond, knows as well as anyone that the director general would not be a lone man. He would have a proper staff which included properly qualified assistants. Some would be of considerable seniority, and there would be a proper organisation. I hope that on Report we shall not feel it necessary to go over again and again this idea of three commissioners. As I say, we discussed it at considerable length in Committee.

5.45 p.m.

Lord Shepherd

My Lords, I do not think that the noble Lord, Lord Diamond, has much alternative but to go over and over again the arguments, on this matter, because this is a revising Chamber. We are looking at a piece of important legislation. The difficulty that the noble Lord, Lord Diamond, and his colleagues face is that the Government are unable and unwilling to accept that there is genuine anxiety about the ability of the organisation that they propose, to meet the basic difficulties and problems of consumers in relation to a private monopoly.

For many years, I had the privilege of serving with the chairman of British Gas, Sir Denis Rooke. He is a man for whom I have considerable admiration. I know that he paid special attention to British Gas and its relationship with the consumers. Occasionally he had major battles with the Government, because the Government were seeking to impose upon him certain proposals which he felt were contrary to the interests of the industry and contrary to the interests of, and unfair to, the consumers. Sir Denis Rooke will not always be there. We are considering a piece of legislation that will have to see the passing of time.

The idea of three commissioners is no different from what they have in the United States. That has worked extraordinarily well there. Speaking from memory, I believe that even Australia has a similar system. I have all along shared the axieties of the noble Lords, Lord Diamond and Lord Stoddart, about the machinery which the Government have in mind to deal with this large and complex industry.

We need, to think about the position of the director general and his ability to be independent and achieve a fair hearing. We must remember that although British Gas will be privatised there will be no way in which the Secretary of State for Energy will not, in one way or another, be interested in the policy of British Gas, not on a day-to-day basis but in how reserves and investments are made. So there will be a developing relationship—a changed relationship—from now. But if the director general is to be appointed by that Secretary of State, he could well find himself under considerable pressure as to the line that he may be taking in fulfilling those duties that fall in Part 1.

The noble Lord, Lord Boyd-Carpenter, knows as well as I do that departments and particularly civil servants can exert considerable pressure upon those they have appointed. I give an example. I did not want to, but I shall. I had an executive director at the National Bus Company who had given a lifetime of service to the bus industry. He was a main board member, and he no longer had a service contract. He was appointed by the Secretary of State for five years. After that time, his appointment would be up for renewal. We were having some difficulties with the department.

That individual came to me, as chairman, in a state of considerable alarm and despondency. A senior official had said to him, "Look, your reappointment is coming up for consideration". All that the executive director was doing was fulfilling the wishes of the board. But, here, pressure was being put upon a person that if he did not become more amenable to the department he should bear in mind that his reappointment was up for consideration. I am not suggesting that this is usual. I have no doubt, however, that it does happen because departments wish to have their way. What the noble Lord, Lord Diamond, seeks, I believe, is not only the independence of the director general but also the independence of the employees of the director general. In my view, it is as necessary to establish that as the independence of the director general.

The Government have not so far been willing to go along the lines proposed in Committee. So the noble Lord, Lord Diamond, has come forward with what I consider a very practical and sensible solution. It is the appointment of three commissioners who, together, would be able to ensure their own independence more easily and more satisfactorily than if there was only one appointee; that is, a director general. The staff of the office, who will be involved in difficult and complex issues and who will be working under considerable pressure and constraints, will at least feel that there are three to whom they are answerable, three who have been able to establish together their independence with the department and with the new private monopoly.

This has worked in the United States. There, monopolies are dealt with in a much more radical way than is even now proposed in this country. I see no reason why we should not try it here. It seems that the Government are deeply entrenched, taking the view that if they were to make any changes to the Bill this would appear to be a reflection on what they had included in the Telecommunications Act. Whether they were right in that regard, only time will tell. I see no reason why we should not look for a new way to establish this new regulatory board. I recommend strongly that the suggestion moved with considerable skill by the noble Lord, Lord Diamond, should be accepted by the House.

Lord Ezra

My Lords, the noble Lord, Lord Shepherd, has made some telling points in support of the proposal moved by my noble friend Lord Diamond. I have been a little surprised to hear the views expressed by noble Lords on the othe side about the need to have a single person making all the decisions in organisations of this kind. I would remind them that under the Companies Act every single enterprise in this country has to have a board. Every single nationalised industry has a board. In this way, carefully selected persons between them can impart strength to one another. We are now venturing into a new order of things—the creation of regulatory bodies—that we have never had in this country before, for the purpose of regulating the activities of private monopolies. I do not see why, in doing that, we should depart entirely from previous practice in all other fields.

The United States has adopted the same principle of having a collegiate system. We run all enterprises in this country on a collegiate basis. Of course, that does not mean that they are all equal. In other words, one has to be appointed chairman. But it would enormously strengthen the body if we applied the same collegiate principle to the regulatory bodies that we are now having to introduce as a result of government legislation that we have applied to running the normal commercial, industrial affairs of the country. This needs to be examined carefully. The issue is very simple. We on this side of the House, and a large number of people in the country, I believe, are concerned about the way in which this new arrangement will work. One reassurance that the Government could give would be to strengthen the regulatory body.

Lord Belstead

My Lords, I find it difficult to accept that the number of people at the head of the Office of Gas Supply—I am sorry I have pre-empted the noble Lord, Lord Stoddart.

Lord Stoddart of Swindon

My Lords, that is quite all right.

Lord Belstead

My Lords, I shall continue then. I cannot accept that the sheer number of people at the head of the Office of Gas Supply is vital to regulation under the Bill. I should have thought that what really matters is the statutory powers and rights provided in the Bill. I have been interested, in listening to this short debate, to observe that none of the noble Lords—the noble Lord, Lord Diamond, the noble Lord, Lord Shepherd or the noble Lord, Lord Ezra—has said anything about the powers and duties of regulation in the Bill. None of those three noble Lords has even glanced at Clause 4, which sets out the general powers and duties on my right honourable friend and on the director from which flow the many other duties and powers in the Bill.

Lord Diamond

My Lords, will the noble Lord give way?

Lord Belstead

No, my Lords; I shall not give way for the moment. I agreed with the noble Lord, Lord Shepherd, when he talked about undue interference. All of us know that, over the years, governments have felt it necessary to give their views as to how a nationalised industry should conduct itself. I put it to your Lordships that one of the advantages of privatisation is that departments will no longer be able to exercise the kind of undue influence on the affairs of the gas industry to which the noble Lord, Lord Shepherd, referred.

With respect to noble Lords who have spoken to the amendment, I really believe that what is crucial is to look at what the powers and duties of regulation are, not the way in which the actual office is going to be organised. I should have thought that any director worth his salt—and certainly the director designate, subject to the agreement of Parliament to the Bill, is a very highly qualified man indeed—will not want to be told how he should organise his office. That is what this amendment is about. That is why the Government are opposing it.

6 p.m.

Lord Stoddart of Swindon

My Lords, I should like to say a brief word. I had hoped to intervene before the noble Lord got to his feet. I wish to say that the Opposition support the amendment. It is, we believe, a modest amendment. I am surprised that the noble Lord has not accepted it. The noble Lord says that the director would be a strong figure and would not want to be messed around by commissioners.

As we see it a single director would be a lonely figure carrying the whole burden of regulating this huge and complicated industry. There is absolutely no reason why a commission—as the noble Lord, Lord Diamond, explained when he moved this amendment—could not so organise itself as to be responsible for various areas of work. I reject the view which has been put forward on a number of sides of the House that commissioners never agree on anything.

We have a Monopolies and Mergers Commission. I understand that the Monopolies and Mergers Commission comprises about 50 commissioners. They agree on a lot. They were praised by the Government for their report on the gas industry. They were praised for their report on the coal industry. Quite clearly therefore they can do the job even though they have 50 commissioners. However, they organise themselves in such a way that they can do the job properly. That I think gives lie to the view that has been put forward that three commissioners could not agree on anything. If 50 commissioners can agree, I am quite sure that three commissioners can agree.

I merely want to say in conclusion that if we had a commission, it would show to the country, and indeed to the gas corporation, that the Government meant business on regulation. I believe that is the message which should go from the Government and from this House: that we mean business on regulation. By passing this amendment the House would show that that is exactly what we intended to do because we had set up a commission which had the power, the duty and the will to make a good job of regulation on behalf of the consumer.

Lord Diamond

My Lords, the noble Lord, Lord Belstead, is right in one matter. He identifies one of the differences between the two sides of the Committee as the belief on this side that one person acting on his own is no match for a huge organisation like British Gas plc will be with its great variety of board members all acting in unison and providing added strength to one another. The noble Lord, Lord Belstead, is right in identifying that as one of our differences. But he thinks that one such person will be able to protect the consumer. I do not think that he will. All those who have spoken on this side do not think that he will.

I am sorry that the noble Lord, Lord Belstead, not only misquoted me but was unwilling to give way when I sought to correct the misquotation. In the other place it is the golden rule that if anybody misquotes a Member then they have to give way immediately if that Member asks them to. The noble Lord, Lord Belstead, probably did not intentionally misquote me and he therefore did not think that I was merely seeking to correct a misquotation. The noble Lord suggested that I had not dealt with powers and duties. I made this special point that we were not talking about the powers and duties; we were talking about the inability of one man to carry out those powers and duties. That was the whole point.

We have been told by two members of your Lordships' House—one a well-known Member, an ex-director of a famous company, who spent most of his business life as a member of a board very competently and successfully—that it is impossible for a number of adult individuals with the same purpose in mind to work together in a group of three or in a group of members of the board. I find that such an absurd argument as not to be worth replying to. If the noble Lord will forgive me, his experience of his own life tells him how absurd that is.

Of course when one has three people working together for the same purpose they will have no difficulty in reaching conclusions. Every committee, group and board has that problem. They add to one another's wisdom and strength. Without that strength the powers and duties in this Bill will not be given effect. It is not only I who am saying this. I wish that the Government would realise that this is the general comment of non-City views throughout the country. I say "non-City views" because the City is very anxious to get this very profitable flotation—part of the business of the City—going as soon as it reasonably can. They are very anxious to support it.

But the views elsewhere are quite the reverse. I have already indicated that I have done a lot of reading. I do not want to trouble your Lordships with a number of extracts from various learned magazines all pointing to the same conclusion. I shall read a short part of the transcript of a programme on Channel 4 on 27th May of this year. There were a number of interviews with people concerned with British Telecom, and the way in which the watchdog Oftel was working. I read their conclusion: This is an unhealthy precedent, and bodes ill for consumers when British Gas, British Airways, and the Water Industry are privatised. When drawing up any final legislation, we hope the Government will ensure"— this is summing up the programme— that any consumer body created to monitor these newly privatised monopolies will have more teeth than Oftel, the telephone watchdog". "More teeth than Oftel"—in three words that is saying what I have been trying to say. We want here three commissioners to have the strength which they find necessary in every state of the United States of America where one has a private monopoly running a business of this kind.

If the Government are not prepared to meet us on this we must test the opinion of the House yet again.

Baroness Seear

My Lords, can I ask the noble Lord, Lord Belstead, why it is right to have a multi-member board to run the gas industry but wrong to have a multi-member commission to run the regulatory body?

Lord Belstead

My Lords, if one is running a plc one needs to bring together on the board different expertises to achieve success. One needs to bring together the technical, engineering, marketing and finance expertise on a board. If one has a regulatory authority, one needs a firm hand in which the industry and people generally will have confidence. One does not need to bring together the different expertise on the board. That is not to say that the director is not going to need to have, and want to have, skilful and well-qualified people in his office. But it is a matter for the director to decide how he deploys it.

Baroness Seear

My Lords, can he appoint other commissioners if he so wishes? If he finds, faced with a multi-member board of expert people working in a number of different fields, that he himself does not command the degree of expertise that is required to deal with this wide range of expertise with which he is confronted, will he be able then to appoint commissioners—people with power?

Lord Belstead

My Lords, may I refer the noble Baroness to the schedules? The noble Baroness will see that obviously there will be quite a free hand. On the other hand, the Treasury is written into the schedules. But I do not think I would depart from what I have said. If the House will give me leave to say this once again, I think that it will be for the director to decide how his office ought to be organised.

6.10 p.m.

On Question, Whether the said Amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents, 108.

DIVISION NO.3
CONTENTS
Amherst, E.	Ewart-Biggs, B.
Ardwick, L.	Ezra, L.
Attlee, E. [Teller.]	Falkland, V.
Aylestone, L.	Fisher of Rednal, B.
Banks, L.	Fitt, L.
Barnett, L.	Gallacher, L.
Birk, B.	Gladwyn, L.
Blease, L.	Graham of Edmonton, L.
Blyton, L.	Grey, E.
Brockway, L.	Grimond, L.
Burton of Coventry, B.	Hampton, L.
Chitnis, L.	Harris of Greenwich, L.
Crawshaw of Aintree, L.	Hatch of Lusby, L.
David, B.	Hooson, L.
Davies of Penrhys, L.	Houghton of Sowerby, L.
Dean of Beswick, L.	Jacques, L.
Denington, B.	Jegar, B.
Diamond, L.	Jenkins of Putney, L.
Donoughue, L.	John-Mackie, L.
Elwyn-Jones, L.	Kilbracken, L.
Evans of Claughton, L.	Kilmarnock, L.

Kirkhill, L.	Seear, B.
Llewelyn-Davies of Hastoe, B.	Sefton of Garston, L.
Lloyd of Kilgerran, L.	Serota, B.
Lockwood, B.	Shepherd, L.
Longford, E.	Silkin of Dulwich, L.
Lovell-Davis, L.	Stewart of Fulham, L.
McGregor of Durris, L.	Stoddart of Swindon, L.
McIntosh of Haringey, L.	Strabolgi, L.
Mackie of Benshie, L.	Taylor of Blackburn, L.
McNair, L.	Taylor of Gryfe, L.
Mayhew, L.	Tordoff, L.
Monson, L.	Underhill, L.
Morton of Shuna, L.	Vernon, L.
Nicol, B.	Wallace of Coslany, L.
Pitt of Hampstead, L.	Whaddon, L.
Ponsonby of Shulbrede, L.	White, B.
[Teller.]	Wigoder, L.
Raglan, L.	Williams of Elvel, L.
Rhodes, L.	Willis, L.
Ritchie of Dundee, L.	Wilson of Rievaulx, L.
Roberthall, L.	Ypres, E.
Robson of Kiddington, B.
NOT-CONTENTS
Abinger, L.	Ingrow, L.
Airey of Abingdon, B.	Kemsley, V.
Alexander of Tunis, E.	Killearn, L.
Allerton, L.	Kimball, L.
Annaly, L.	Kinnaird, L.
Ashbourne, L.	Knollys, V.
Auckland, L.	Lauderdale, E.
Bauer, L.	Layton, L.
Beloff, L.	Long, V. [Teller.]
Belstead, L.	Lucas of Chilworth, L.
Boyd-Carpenter, L.	Macleod of Borve, B.
Brabazon of Tara, L.	Mancroft, L.
Brougham and Vaux, L.	Mar, C.
Bruce-Gardyne, L.	Marshall of Leeds, L.
Caccia, L.	Maude of Stratford-upon-
Caithness, E.	Avon, L.
Cameron of Lochbroom, L.	Merrivale, L.
Campbell of Alloway, L.	Middleton, L.
Campbell of Cray, L.	Mowbray and Stourton, L.
Carnegy of Lour, B.	Munster, E.
Carnock, L.	Murton of Lindisfarne, L.
Cathcart, E.	Napier and Ettrick, L.
Coleraine, L.	Norrie, L.
Colville of Culross, V.	Nugent of Guildford, L.
Colwyn, L.	Orkney, E.
Cowley, E.	Peel, E.
Craigavon, V.	Peyton of Yeovil, L.
Davidson, V.	Rankeillour, L.
De La Warr, E.	Reay, L.
Denham, L.	Reigate, L.
Drumalbyn, L.	Renton, L.
Eccles, V.	Richardson, L.
Ellenborough,	Rugby, L.
Elliot of Harwood, B.	St. Davids, V.
Elton, L.	Sanderson of Bowden, L.
Faithfull, B.	Sandford, L.
Fanshawe of Richmond, L.	Sempill, Ly.
Fortescue, E.	Skelmersdale, L.
Gardner of Parkes, B.	Somers, L.
Gisborough, L.	Strathclyde, L.
Glanusk, L.	Sudeley, L.
Glenarthur, L.	Swinton, E. [Teller.]
Gray of Contin, L.	Teviot, L.
Grimston of Westbury, L.	Tranmire, L.
Hailsham of Saint	Trefgarne, L.
Marylebone, L.	Trenchard, V.
Harmar-Nicholls, L.	Trumpington, B.
Henley, L.	Vaux of Harrowden, L.
Hives, L.	Vickers, B.
Home of the Hirsel, L.	Vivian, L.
Hood, V.	Whitelaw, V.
Hooper, B.	Windlesham, L.
Hunter of Newington, L.	Wynford, L.
Hylton-Foster, B.	Young, B.
Inglewood, L.v	Zouche of Haryngworth, L.

Resolved in the negative, and Amendment disagreed to accordingly.

6. 18 p.m.

Lord Stoddart of Swindon moved Amendment No 4 Page 1, line 8, after ("officer") insert ("with intimate knowledge of the gas industry, of finance and consumer interests").

The noble Lord said My Lords, I beg to move No 4, which stands in my name on the Marshalled List The amendment seeks to ensure that the person appointed as the director general of Ofgas has intimate knowledge of the gas industry, of finance and of consumer interests As we said during the Committee stage, the director general of Ofgas will have to be an exceptional man, well-versed in the intricacies of the gas industry as well as in finance and consumer affairs He needs those qualities and to be a strong personality if he is to stand up to Sir Denis Rooke and his board of experts.

We have tried unsuccessfully this afternoon to strengthen the regulatory authority by the appointment of three commissioners rather than a single director general We are now seeking to ensure that the person appointed is the right man for the job and holds the relevant qualifications to perform his functions efficiently and to the benefit of the country and the customers.

I suppose that the Minister will tell me that it is a bit late in the day to be moving this amendment as the Secretary of State has already intimated that he intends to appoint Mr James McKinnon to the post of Director General of Gas Supply I must acknowledge that the Secretary of State had the courtesy to recognise that this House is still considering the Gas Bill because he said that the appointment was subject to Parliament approving the Gas Bill The fact that the Secretary of State acknowledges that is certainly a step forward The Secretary of State was also good enough to say that the appointment was full time—and that was something that we raised at Committee stage and to which we got no real answer—and would be for a period of three years So we really are making progress now We are getting some information out of the Secretary of State for a change.

What the Secretary of State did not mention was the salary attached to the post Nor did he give any indication of the extent of the short list of possible appointees from which Mr McKinnon was selected Again this afternoon when noble Lords on this side asked for that information, the Government refused to give it, although it is relevant to this debate and past debates.

Perhaps the noble Lord will inform the House of the salary that will be paid to Mr McKinnon As we pointed out at Committee stage, this is important information that we ought to have, because there is, or should be, a relationship between the salary for the post of director general and the salary that will be enjoyed by Sir Denis Rooke, who of course has also been appointed as the chairman of the new board when British Gas becomes a public limited company As we have seen in the case of the chairman of the Post Office Board, salaries of the chairmen tend to rise three-fold, or around three-fold, once the industry is privatised.

Under those circumstances it could well be that Sir Denis Rooke will be paid a salary in the region of £ 160,000 after a year, or perhaps a couple of years, in office as the chairman of the privatised British Gas plc. Therefore it is important that we know the salary relationship between the director general and the chairman of British Gas plc. I hope that we can have some information about that this evening. It was not forthcoming at Committee stage. I hope that the noble Lord, Lord Gray, who is going to reply will be able to give us that information. I cannot believe that the noble Lord is unable to give us it, because I cannot conceive that Mr. McKinnon would have been offered the job without also having been offered the salary attached to it.

Good, I understand that the noble Lord is going to give us that information. I shall not dwell on that any further. We look forward to having the information.

My amendment refers to three qualifications for this post. Mr. McKinnon certainly has one—that of considerable experience of finance. In its press release the Department of Energy described Mr. McKinnon thus: Mr. McKinnon is an accountant with considerable experience in commerce, and until recently was finance director of the Imperial Group. His background is ideally suited to assessing the financial information needed to carry out his duties in safeguarding the interests of consumers".

I must accept, and I think we would all accept, that Mr. McKinnon is an accountant of high calibre. Were he not so, he would not have been appointed as financial director of Imperial Group. There is no question about his qualifications in finance. Therefore, he meets one part of the criteria set out in this amendment. However, he has no background in the gas industry, which is a completely different industry from those controlled by the Imperial Group. I think that the noble Lord will accept that.

His experience with Imperial may perhaps have had more to do with protecting the interests of the shareholders rather than those of the customers. I imagine that is probably what the Imperial Group appointed him to do, and the Minister might like to comment on that particular aspect. It may well be that through his experience in private industry Mr. McKinnon will have learned a thing or two as to how customers are exploited by large organisations, and will bring his inside knowledge to bear on the gas industry; but of course that is to argue against myself and I do not want to do that.

The amendment is perhaps a little late; nevertheless I would welcome, as I feel sure the House would welcome the comments of the noble Lord, Lord Gray, on it, and we shall be much obliged if he gives us the information that I have requested. I beg to move.

Lord Grimond

My Lords, this is an attempt to specify the qualities of the winner after the race has been won. Nevertheless, I should like to support this amendment because it gives us an opportunity— which indeed we have had before—for discussing further this important post and its functions. I was unable to be present at some of the earlier debates on the Bill because I was in hospital, which may excuse me for repeating arguments that have probably been heard.

This amendment highlights the arguments for the previous amendment—that the Government are unlikely to get somebody who is an expert in the gas industry and finance and who can represent the consumer. I wish to concentrate on the representation of the consumer, because there the danger lies in this Bill. I would suggest that the ideal officer so far as the consumer is concerned is a woman—a bloody-minded woman, if one can find such a person; a woman who has been at the sharp end of paying the gas bills, arranging her cooking and so forth; and a woman who is not likely to be taken in by either the hierarchy of a big industry or the arguments about the technical difficulties, the finance, and so forth. After some experience in politics I have found that understanding is a splendid but rather dangerous thing. One begins to understand all the difficulties, one begins to sympathise with the head people, with Ministers and others. Every now and again it is necessary to have someone who says, "I do not pretend to be an expert about this, but I can tell you that it is all going wrong. Gas is too expensive, it is not supplied in the right way, and the consumers are getting a bad deal".

I know nothing about Mr. McKinnon, and he may well be capable of doing that, but it requires a different quality from that of an accountant, a tycoon, or even knowing about the gas industry, although I certainly accept that these things, too, are necessary. Even if the Government have made a decision, I hope that when it comes to appointing extra staff for Mr. McKinnon the points I have made will be taken into account.

I find it a little alarming that he should have emanated from a headhunters' office. I find it a little alarming, too, that he should be nominated now—admittedly subject to the passing of the Bill—because this seems to me to be jumping the gun. Parliament still has the right to amend this Bill and put into it all sorts of qualifications, and yet we are told that the decision about the man who is vital to the Bill has already been made. I believe that it is the consumer interest that is important, that women are the best representatives of consumers on the whole, and that it would have been much better to have had three commissioners who would have been expert in the different forms of expertise mentioned in this amendment.

6.30 p.m.

Lord Gray of Contin

My Lords, I hope that the noble Lord, Lord Grimond, did not in any way feel that my earlier remarks suggested that he should have been with us in Committee when he was not. I certainly had no intention of imputing that.

Lord Grimond

My Lords, I hope I detected a note of regret.

Lord Gray of Contin

My Lords, there was a genuine note of regret, but I am delighted that the noble Lord has made such a good recovery and is with us for Report.

There was no question of any sex discrimination in the selection of the appointee in this case—

Baroness Seear

My Lords, my noble friend's point is that there should have been.

Lord Gray of Contin

Yes, my Lords; he thinks that there should have been. I am not aware whether any ladies were on the short list, but there may have been some.

The noble Lord, Lord Stoddart of Swindon, moved this amendment, which has a striking resemblance to one tabled by him at Committee. As I said to him then, we fully accept the importance of the character-istics identified in the amendment. Such qualities are clearly important, but they are (I am sure he will agree) not the only important qualities. One of the most important will be the ability to make effective judgments on the basis of assessments of all the relevant factors in a particular case, be they technical, legal, economic or otherwise.

The person who has been selected, subject to Parliament approving the passing of this Bill, will meet those requirements aptly. In making judgments and decisions he will have the expert advice provided by his staff who will be working closely with the industry, consumer organisations and other bodies. The director will also need other skills if he is to be an effective protection for the interests of consumers. He will also of course have to manage his office effectively and ensure that all the tasks assigned to him by the Bill are properly carried out.

The noble Lord, Lord Stoddart, asked me about salary. I said I would be able to give him this informa-tion. During the Committee stage the noble Lord, Lord Diamond, suggested that somebody in this position would merit a salary somewhere around that of an Under-Secretary in government service. We have gone a little better than that and the salary is based at the level of a Deputy Secretary. The salary will be £47,000 per year. We are extremely fortunate to have found somebody of the calibre of Mr. McKinnon for that figure. It is an excellent salary, but it is nothing more than someone of the ability of Mr. McKinnon merits.

While I fully recognise the importance of the characteristics which are picked out in the amendment, I realise that there are also some other equally important characteristics, and to list them all is both inappropriate and unnecessary.

The noble Lord, Lord Grimond, had a useful point when he suggested his preference for a lady to fill this post, but as I explained earlier the Secretary of State had a wide range of advice available to him. Having considered the various suggestions put to him, he has decided that Mr. McKinnon is the most appropriate person to be appointed and, subject to Parliament approving the legislation, that will be his choice.

I return to the amendment moved by the noble Lord, Lord Stoddart. From his remarks and in view of the situation which has now developed in which there is an appointee, I do not think he expected me to accept his amendment. Therefore he will not be too disappointed if I suggest that perhaps it might be as well if he were to withdraw it.

Lord Diamond

My Lords, we on these Benches are very interested in this amendment and are anxious to ascertain in what direction it points. The noble Lord, Lord Stoddart, hopes to find somebody with intimate knowledge of the gas industry, of finance and consumer interests, and all for a salary of £47,500. Perhaps the figure I have given is £500 too much.

Lord Gray of Contin

My Lords, the sum is £47,000.

Lord Diamond

My Lords, my figure was too much; it is £47,000. As an ex-Chief Secretary, I approve of the reduction of £500. So we have a salary of £47,000, which the Minister will recollect is almost spot on what I suggested in Committee it would be. The salary of £47,000 is available for a man or woman who has intimate knowledge of the gas industry, intimate knowledge of finance and intimate knowledge of consumer interests. What a paragon; what a modest person; how very much he understates his own value! In particular, what chance has one person at that known salary level in standing up against a man who is known to have or will at that time have three times the salary level, supported by board members many of whom will have a greater salary than the director himself? What chance has a single individual of protecting the consumer, ensuring efficiency and, in certain cases, requiring British Gas to alter course? What chance has one man of doing that?

I am bound to say to the noble Lord, Lord Stoddart, that I have agreed with a great deal of what he said. I think he will agree that I have supported him on many occasions and been persuaded by his arguments. This only shows that it is quite impossible, in the strategy that the Government have, to find and appoint a person who will do the essential job without which the consumers will not be protected in the way the Conservatives stated in their manifesto would result from competition being introduced into this industry. It is that charge I level against them and I cannot see that we shall get much sense out of this.

It has been demonstrated already that the person who is likely to fill the job has one great qualification in his favour in that he is a chartered accountant. That is a very good start indeed. I say that with all the objectivity of which I am capable as a long-practising chartered accountant. That is in his favour, as is the knowledge of industry and finance, but I doubt very much whether he knows more about consumer affairs in practice in having to deal with them with sensitivity than does the woman who is the chairman of the Gas Consumers Council. We have at least one noble Baroness in office in this House at the moment, indicating how right my noble friend is in suggesting that women have special abilities in this area. But I doubt whether the individual in question can combine all those qualities. I do not know whether the noble Lord wishes to press this to a Division. He said that what the Government are doing is inadequate for the purpose.

Lord Stoddart of Swindon

Yes, my Lords. I agree absolutely with the noble Lord, Lord Diamond. It is impossible to get somebody of the calibre we need for the price that the Government are prepared to pay. If I may say so, there is only one man in this country who could do this job adequately, but he would not do it for £47,000 a year. I refer to Sir Denis Rooke. He is the chappie who knows the industry inside out. Nobody could fool him, but he is not available. He would certainly not be available at that salary, but he is not available because he is to be the chairman of British Gas plc. His salary will undoubtedly go up to about £160,000 a year. He would not accept this job at £47,000 a year.

There is one question I should like to ask the noble Lord, and perhaps the House will give him leave to answer. At the present time the salary of £47,000 is about two-thirds of the salary paid to Sir Denis Rooke. Will it keep its relationship? In other words, will it go up and keep the two-thirds relationship with the salary of the chairman of British Gas plc? I think that he might expect that and I think that the Government really ought to be expecting to pay it. Perhaps the noble Lord can give an answer. I am not going to press this amendment. I think it would be wrong for me to press the amendment; although I listened to the noble Lord, Lord Grimond, and he really put his finger on the point. Why not a woman? Why have we not considered a woman for this post? The noble Lord opposite did not tell us who had been considered. I should like very much to hear whether or not a woman was considered by the Secretary of State. I bet not. We should like to hear whether a woman was considered.

All this could have been avoided—and I say this for the noble Lord, Lord Grimond, for I so much agree with him—and without the positive discrimination that the noble Baroness, Lady Seear, apparently wanted or indicated that she might like. We could have solved the problem. If we had appointed three commissioners, then one of them could have been a woman. But all is not lost because the amendment following this one will give the opportunity to the House once again to appoint not commissioners but assistant directors so that the noble Lord, Lord Grimond, with his persuasive tongue may be able to persuade noble Lords opposite—and he does not have to persuade those on this side of the House—that the next amendment would give the opportunity to the Government to save themselves.

They would give themselves this opportunity of having much wider experience, including female experience, on the regulatory authority. I shall say no more for we really must get on. Does the noble Lord, Lord Gray, want to invervene to tell us whether a woman was considered?

Lord Gray of Contin

My Lords, by leave of the House—and I always try to be helpful to the noble Lord—he asked me about the salary in the future of the director. The director is remunerated at the level of a deputy-secretary and that salary will rise as the salary of a deputy-secretary rises in due course. So far as Sir Denis Rooke is concerned, that will be a matter for British Gas plc.

Lord Stoddart of Swindon

My Lords, there is no doubt that the director general is going to be the poor relation. There is no question about that. In those circumstances, I can do no more than to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Lord Stoddart of Swindon moved Amendment No. 5:

Page 1, line 10, after ("Director)") insert ("together with two Assistant Directors of Gas Supply").

The noble Lord said: My Lords, I beg leave to move Amendment No. 5 which stands in my name and in that of the noble Lord, Lord Diamond. It may be for the convenience of the House if, with this amendment, we discuss Amendments Nos. 7,9,21, 22, 24, 26, 27, 33, 36 and 40. I do not intend to speak for very long because we have had a debate on the question of commissioners. As was shown in the previous debate, there are great merits because of the possibility of diversity in having more than one director.

The noble Lord, Lord Gray, argued against the appointment of commissioners. He does not like a commission. He believes that it would be unwieldy. We do not accept the arguments that were put up. We believe, as we said on Amendment No. 3, that a commission would be a more relevant regulatory authority. But the House in its wisdom decided that we should not have a commission.

What this group of amendments does—and it does not seek to appoint commissioners—is to call for the appointment by the Secretary of State of assistant directors. They will have the status, having been appointed by the Secretary of State, of not being dismissed by anyone other than the Secretary of State. That gives them a particular status in relation to the job and in relation to the director general himself.

Assistant directors, because of their special position, would not be in the subordinate position of employees, but they would be part of a team where the director was (I suppose the right phrase would be) primus inter pares. That would be the situation. It is not the ideal position. The ideal position, as we have said already, is the commission and commissioners. But this gives the House the opportunity to consider the possibility of giving the director general more expert assistance and a wider view of the whole business of regulation. He would also be enabled to assign the roles to the assistant directors and therefore would still be able to maintain his overall control of the regulatory machinery and how he wanted the regulations to proceed.

It would be possible under this amendment to appoint a person who had intimate knowledge of the gas industry and another with experience of consumer interests (as was mentioned in the previous amendment) and the director, Mr. McKinnon, could concentrate his mind and main effort on finance and co-ordination. But the beauty of this amendment is that while it does not form a commission, it gives the government the opportunity of diversifying and it would give the opportunity to place a woman within the regulatory machinery.

She could be one of the assistant directors. I think this amendment really has merit. I said that I would not speak very long on it and I do not intend to do so; but it does have great merit. I think it gives the House probably the last opportunity to give the director general the assistance which he should have (and which he will need) to deal with the chairman of British Gas plc and the expert board that he will have.

Lord Grimond

My Lords, as no other noble Lord is going to address the House, I think that it would be highly discourteous of me to remain silent after the very kind invitation expressed by the noble Lord, Lord Stoddart, on the last amendment that I should support him on this matter. I am very glad to support him. He has eloquently moved his amendment and he has outlined the main arguments. I do not intend to go over them again. However, I should like once again to point out to the House that in my view we are asking for a director who has not only to have diverse qualities but actually contradictory qualities. He has to be experienced in big business, in accountancy and finance. That means that he looks at the world from that point of view. He is accustomed to a secretary; he is accustomed to a car; he is accustomed to a high salary and a share in the profits. And he is no doubt interested in the prestige of his post. We have heard already that he may consider £47,000 merely a pittance.

I suggest that most gas consumers do not consider it a pittance and nor are they accustomed to have a secretary. They have to pay their own gas bills and write out a cheque or put in the money themselves. The consumer's interest is quite different from that of the tycoon. I am not sure that we can get a director who is both a tycoon and an anti-tycoon. That is what we are asking for. But that is a very powerful argument for having two assistant directors. I do not deny for one moment that it is necessary to have either an assistant or a director who knows about the gas industry and about finance. But this amendment would give us the opportunity to divide the post to some extent and have, I suggest, a woman who has practical experience of consumer affairs and who is an acerbic personality, and not likely to give way simply because of the prestige of those who have been longer in the industry. Therefore, I am very happy to support this amendment, because it is our last chance to make a great deal more of this post than we have done up to now and to write in more protection for the consumer.

Baroness Carnegy of Lour

My Lords, after all this sexist talk, I wonder whether the noble Lord might think that we should also be racist. As we have the good news that the director-designate is a Scotsman, we might make sure that the assistant directors were English and Welsh.

Lord Belstead

My Lords, the Government agree with the noble Lords, Lord Stoddart and Lord Grimond, in wanting to see effective regulation, but I think we part company as to how best to achieve that aim. The noble Lord in moving the amendment saw beauty in it. They say that beauty is in the eye of the beholder, and all I can say is that I do not see how it can be right to spell out in this Bill the structure of the Office of Gas Supply. It is not something that Parliament thought it was right to do with the Office of Fair Trading, it is not something that Parliament thought it was right to do with the Office of Telecommunications, and I do not think it is right to do it with the new ofgas.

Lord Diamond

My Lords, if I may say so, that is a wholly inadequate answer. I am sorry that the noble Lord has once more shown that he is not prepared to take an amendment seriously. There is nothing at all here about an office. There is something here about assistant directors. There is already power in the Bill about an office and we have no need to say any more. I shall read it out to the noble Lord, in case he has forgotten the contents of the Bill. Paragraph 4 of Schedule 1 states: The Director may, with the approval of the Treasury as to numbers and terms and conditions of service, appoint such staff as he may determine. We are not talking about staff. We are talking about the lack of stature of a single person in trying to achieve the monitoring of the huge organisation which the Government have provided under this privatisation measure.

What the amendment refers to is two assistant directors, so that together you will get a triumvirate. I do not know the sexless word for triumvirate; I suppose it is triumpersonate. I do not know how it is dealt with today, but everybody knows that it means a group of three who would strengthen one another and be available, respectively, to take on major tasks. One of them could be a person who had vast experience in consumer affairs and, therefore, could handle problems with much more sensitivity than a person whose experience was purely as a high-level account-ant and director of a commercial company, who might know very little about the problems of consumers in the gas industry, which are very sensitive, as every Member of Parliament knows full well from his postbag.

So I am saying to the noble Lord, Lord Belstead, that I am sorry he has taken the attitude that none of these amendments is worth serious consideration— because that is what he has done. This is a very solid amendment. It enables us to do the minimum that we can do because the Government have rejected out of hand every other proposal for strengthening the monitoring to an adequate level and this is the last one that is left to us. I hope that the noble Lord, Lord Stoddart, will pursue his views on this amendment.

Lord Stoddart of Swindon

My Lords, I am very sorry that the noble Lord, Lord Belstead, should have been so dismissive of this amendment. I think I gave good reasons why the Government should think again, and I prefer to believe that the noble Lord himself was not being dismissive, because that is not his style. The noble Lord is much nicer than that. He does his best to consider things reasonably and rationally and I prefer to think that his reply to my amendment was so dismissive because he has had his orders from the Secretary of State and not because he listened to the argument and decided himself, with that good mind of his, that this was not a good amendment. The Secretary of State knows his own mind, but we do not agree with his mind and I feel obliged, particularly in view of the cavalier manner in which this amendment was treated, to pursue the matter and press the amendment to a Division.

6.56 p.m.

On Question, Whether the said Amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 78; Not-Contents, 95.

DIVISION NO.4
CONTENTS
Airedale, L.	Kirkhill, L.
Amherst, E.	Llewelyn-Davies of Hastoe, B.
Ardwick, L.	Lloyd of Kilgerran, L.
Attlee, E.	Lockwood, B.
Banks, L.	Longford, E.
Barnett, L.	Lovell-Davis, L.
Birk, B.	Mackie of Benshie, L.
Blease, L.	McNair, L.
Brockway, L.	Mayhew, L.
Burton of Coventry, B.	Morton of Shuna, L.
Carmichael of Kelvingrove, L.	Nicol, B.
Chitnis, L.	Pitt of Hampstead, L.
Crawshaw of Amtree, L.	Ponsonby of Shulbrede, L.
Dean of Beswick, L.	[Teller.]
Diamond, L.	Raglan, L.
Donoughue, L.	Ritchie of Dundee, L,
Elwyn-Jones, L.	Ross of Marnock, L.
Ennals, L.	Seear, B.
Evans of Claughton, L.	Serota, B.
Ewart-Biggs, B.	Shackleton, L.
Fitt, L.	Silkin of Dulwich, L.
Gallacher, L.	Simon, V.
Graham of Edmonton, L.	Stewart of Fulham, L.
Gregson, L.	Stoddart of Swindon, L.
Grey, E.	Taylor of Blackburn, L.
Grimond, L.	Taylor of Gryfe, L.
Hampton, L.	Taylor of Mansfield, L.
Hanworth, V.	Tordoff, L.
Harris of Greenwich, L.	Underhill, L.
Hatch of Lusby, L.	Vernon, L.
Heycock, L.	Wallace of Coslany, L.
Hooson, L.	Walston, L.
Houghton of Sowerby, L.	Whaddon, L. [Teller.]
Howie of Troon, L.	White, B.
Jeger, B.	Williams of Elvel, L.
Jenkins of Putney, L.	Willis, L.
John-Mackie, L.	Wilson of Rievaulx, L.
Kagan, L.	Winstanley, L.
Kilbracken, L.	Ypres, E.
Kilmarnock, L.
NOT-CONTENTS
Abinger, L.	Glenarthur, L.
Airey of Abingdon, B.	Gray of Contin, L.
Allerton, L.	Greenway, L.
Annaly, L.	Grimston of Westbury, L.
Ashbourne, L.	Hailsham of Saint
Auckland, L.	Marylebone, L.
Bauer, L.	Harmar-Nicholls, L.
Belhaven and Stenton, L.	Henley, L.
Beloff, L.	Hives, L.
Belstead, L.	Hooper, B.
Bessborough, E.	Hylton-Foster, B.
Brabazon of Tara, L.	Inglewood, L.
Broadbridge, L.	Ingrow, L.
Brougham and Vaux, L.	Kimball, L.
Bruce-Gardyne, L.	Kinloss, Ly.
Cameron of Lochbroom, L.	Kintore, E.
Campbell of Alloway, L.	Lane-Fox, B.
Campbell of Croy, L.	Lauderdale, E.
Carnegy of Lour, B.	Layton, L.
Coleraine, L.	Lindsey and Abingdon, E.
Colville of Culross, V.	Long, V. [Teller.]
Craigavon, V.	Lucas of Chilworth, L.
Davidson, V.	Macleod of Borve, B.
De La Warr, E.	Mancroft, L.
Denham, L. [Teller]	Mar, C.
Drumalbyn, L.	Marshall of Leeds, L.
Elliot of Harwood, B.	Massereene and Ferrard, V.
Elliott of Morpeth, L.	Maude of Stratford-upon-
Elton, L.	Avon, L.
Fortescue, E.	Merrivale, L.
Gardner of Parkes, B.	Mersey, V.
Glanusk, L.	Middleton, L.

Mowbray and Stourton, L.	Skelmersdale, L.
Munster, E.	Strathclyde, L.
Murton of Lindisfarne, L.	Sudeley, L.
Norrie, L.	Swinfen, L.
Nugent of Guildford, L.	Teynham, L.
Onslow, E.	Tranmire, L.
Pender, L.	Trefgarne, L.
Rankeillour, L.	Trenchard, V.
Reay, L.	Trumpington, B
Reigate, L.	Vaux of Harrowden, L.
Robertson of Oakridge, L.	Vickers, B.
Rochdale, V.	Vivian, L.
Sanderson of Bowden, L.	Whitelaw, V.
Sandford, L.	Windlesham, L.
Sempill, Ly.	Wynford, L.
Shannon, E.	Young, B.
Sharpies, B.

Resolved in the negative, and amendment disagreed to accordingly.

7.4 p.m.

[Amendments Nos. 6 and 7 not moved.]

The Deputy Speaker (Lord Murton of Lindisfarne)

My Lords, the next amendment is Amendment No. 8. I should point out that if this is agreed to, I shall not be able to call Amendments Nos. 9 to 15 inclusive.

Lord Diamond moved Amendment No. 8: Page 2, line 5, leave out from beginning to ("the") in line 7.

The noble Lord said: My Lords, I gather that it will be convenient to discuss at the same time Amendments Nos. 13, 14 and 15, although not all of them are in my name. This amendment refers to the resignation of the director, either voluntary or involuntary. At the Committee stage we drew attention to the fact that the director could resign his office by notice in writing without the period of notice he had to give being denned, and obviously he could create havoc by resigning at very short notice. Therefore, various amendments were put forward, of six months and so on. The Minister said that he would consider those amendments. He has been good enough to do so, and has down a proposal as Amendment No. 15. Therefore all I need do is, as it were, open the batting and leave it to the Minister to continue. 1 beg to move.

Lord Gray of Contin

My Lords, I am pleased to be able to come back to the House on the matter of the length of notice to be given by the director if he wishes to resign from office. Noble Lords may recall that we had a constructive debate on the issue under Amendment No. 9 on 29th April on the second sitting of the Committee stage. As my noble friend Lord Boyd-Carpenter pointed out, that amendment which sought to impose a time restriction of six months on the director when giving notice of resignation would have imposed an overly-rigid requirement which could have caused difficulty.

The noble Lord, Lord Diamond, expressed concern that the director could resign at extremely short notice and thus create difficulties in finding a suitable replace-ment. Both the noble Lord, Lord Diamond, and the noble Lord, Lord Stoddart, suggested a revision requiring reasonable notice to be given. We have studied this point carefully and we agree that the proposed revision would be an improvement to the Bill. Our amendment would therefore require that "reasonable notice" be given, and I hope therefore that the House will support it.

Lord Stoddart of Swindon

Yes, my Lords, of course I am tempted to support it, but I happen to think that my Amendment No. 13 is better than Amendment No. 15 of the noble Lord, Lord Belstead. In effect, my amendment would read that he would resign, "by reasonable notice in writing". But the amendment of the noble Lord, Lord Belstead, would merely allow him to resign with "reasonable notice". There is a difference, and I think it is an important difference.

In a post paying £47,000 a year I do not think we would expect the director general to pick up the telephone and say to the Secretary of State, "I say Peter, old boy, I think I don't like this job. I am going to resign in three months". I feel sure that that is a relevant point and that the noble Lord would expect notice to be in writing. Therefore I urge him to accept my amendment, No. 13, and drop his amendment, No. 15.

Lord Gray of Contin

My Lords, by leave of the House, I am not suggesting that the noble Lord is looking a gift horse in the mouth, but I can give him a perfectly reasonable answer to his query. The Government amendment removes the words "in writing" because the phrase is already defined in Clause 48 of the Bill. Line 22 on page 48 of the Bill states: 'notice' means notice in writing". It is therefore unnecessary to specify that the director's notice under Clause 1 should be in writing. I can assure the House that it is merely a technical drafting amendment.

Lord Diamond

My Lords, the Government have been good enough to meet the substance of the amendment moved by the noble Lord, Lord Stoddart, and the substance of the amendment moved by myself. All that remains for me to do is to thank the Government. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 9 to 14 not moved.]

Lord Belstead moved Amendment No. 15: Page 2, line 6, leave out ("notice in writing") and insert ("reasonable notice"). On Question, amendment agreed to.

Lord Diamond moved Amendment No. 16: Page 2, line 7, after ("may") insert ("after such consultation with Parliament as the Secretary of State considers appropriate").

The noble Lord said: My Lords, this amendment is in the context of subsection (3), which states that: the Secretary of State may remove any person from that office on the ground of incapacity or misbehaviour". When we last considered those lines, there was a good deal of discussion about the meaning of the phrase "incapacity or misbehaviour", about any legal precedents that there might be for such words, and about what the effect of those lines might be. There was a general feeling that the Secretary of State removing a person from an office of that magnitude, and of such public relevance and sensitivity, was something that should not be done lightly.

Therefore, we are proposing in this amendment that the Secretary of State, before removing any person on such ill-defined grounds, should first consult with Parliament to the extent that the Secretary of State considers appropriate.

I hope that we do not have to go over the argument all over again, as to how on earth one can consult Parliament in whatever way one considers appropri-ate. The power is given in the Bill to leave the matter entirely to the discretion of the Secretary of State. Secretaries of State are responsible individuals with wide experience. They are not expected, except on very rare occasions, when they immediately resign office, to act in an unusual and irresponsible way. Therefore, the Secretary of State knows how to consult Parliament as far as may be necessary.

It is wise that he should do so in advance of removing the director from office; very wise indeed, because there is bound to be a row afterwards, and it will be of great benefit to the Secretary of State to be able to say that he has consulted in some measure—in whatever measure he may consider appropriate. If the person who is to be removed is found guilty of a criminal offence, then obviously the Secretary of State will not need much consultation with Parliament to satisfy himself that the director ought to be removed from office. There may be other cases that are marginal and in a shadowy area, where the Secretary of State would be well advised to attempt to ascertain the feeling of Parliament in whatever way he considers necessary before taking the drastic action involved.

I hope that this amendment will be seen as a constructive and sensible suggestion. It probably merely puts into words that which the Secretary of State would anyway do. I beg to move.

Lord Stoddart of Swindon

My Lords, I support this amendment, which is really very mild, and one that the noble Lord would do well to consider. It asks that the director be removed, after such consultation with Parliament as the Secretary of State considers appropriate". It may be that the Secretary of State would read the word "consultation" as meaning information, but even that would be better than the situation we have at present. Usually when somebody is dismissed or resigns, the press get hold of the story and put their own construction on that dismissal or resignation. There is then a row in Parliament. I suggest that it ought to be the other way around. We had an example only this afternoon, at the beginning of our proceedings, when I quoted a news item from the Daily Telegraph which the Government were able to say had no truth in it at all.

As I have said, what happens is that there is a huge news story and the public and Members of Parliament get the wrong end of the stick. There is then a huge row about it that could be avoided if only the Government would take Parliament into their confidence, tell Parliament about it, and explain the reasons for it, before the story appears in the press and a great meal is made out of the incident, when perhaps there is no meal to be made out of it at all. That is why I support this amendment.

7.15 p.m.

Lord Belstead

My Lords. I understand why the amendment has been moved. The noble Lord, Lord Diamond, has made very clear the case for it, and the noble Lord, Lord Stoddart, has supported him. I will put two points to noble Lords. The first is that if the noble Lord, Lord Diamond, is concerned, as I believe he is, about Parliament having some oversight of such matters, then the Bill provides that the Secretary of State will have responsibility for the director, as well as having the power to remove him. He receives an annual report from the director on the director's activities. That report must be laid before Parliament. That ensures that the director is accountable through my right honourable friend to both Houses of Parliament.

The second point arises from the main reason for the amendment, which was shown when the noble Lord, Lord Diamond, stated it was very important that the director should not be removed lightly on grounds that might be frivolous. The grounds are incapacity or misbehaviour, and I suggest to your Lordships that those grounds are stringent.

In order that I might reply to this amendment, I examined statutory precedents. Going back 16 years, to 1970, it was easy to find 16 different examples in statute of cases where bodies had been set up under statute and where members of those bodies could be removed on the grounds of incapacity or misbehaviour. I was delighted that the last precedent I found was the Taxes Management Act 1970, which was passed at a time when the noble Lord, Lord Diamond, held high office as Chief Secretary to the Treasury. In that statute it was the Lord Chancellor who could, if he thought fit after consultation with the Lord Advocate, remove a special commissioner of income tax on the grounds of incapacity or misbehaviour.

I am simply saying that the grounds are not grounds that can be taken up lightly for the removal of a director. Parliament will have an oversight of what is happening because through the Secretary of State the director will, by laying his annual report before Parliament, be responsible to Parliament. And the Secretary of State is responsible, as all ministers are, to Parliament.

Therefore, I do not believe it is right to seek, as this amendment does, to set up a form of direct parliamentary oversight of the removal of the Director General of Gas Supply in a way that would not be the same as the precedents that I have discovered, nor the same as the precedents for the Director General of Fair Trading and the Director-General of Oftel, which are more recent examples. It is on those grounds that I resist this amendment. I quite see that there can be different points of view about the amendment, but I think that the grounds for removal in Clause 1 are the right ones.

Lord Diamond

My Lords, I am grateful to the Minister who on this occasion has given the matter careful thought and explained the reasons why the Government do not think that this is a happy amendment. He said that there was room for two points of view. I take a slightly different point of view

in the sense that it would cost the Government nothing to accept this amendment which provides the minimum kind of consultation—consultation only to the extent that the Secretary of State considers appropriate. He could gain medals and lose no time by carrying out a procedure of this kind, and I should have thought that the Government would have been well advised to accept it; but they prefer not to.

I am not going to speak about incapacity because that is dealt with in the next amendment, but I repeat my gratitude to the noble Lord, Lord Belstead, for having considered this matter carefully. If no other Lord wishes to contribute to the discussion, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 17: Page 2, line 8, leave out ("incapacity or").

The noble Lord said: My Lords, in moving this amendment I shall discuss at the same time Amendment No. 18. We are now dealing with the question of incapacity and I recognise immediately that there is considerable statutory precedence for the words in the Bill. Nevertheless, I am not all that happy about them. It is a great penalty to be removed from office and it carries obloquy as well as lack of salary. To remove a person from office on the ground of misbehaviour is something that one can understand; it has happened in the past. By his actions the individual in question, the director, is not in the view of the Secretary of State fit to continue to hold office because he has misbehaved.

But the ground of incapacity is a much more difficult concept. It is not on the ground of incapacity that it has taken place. Incapacity is an assessment of what the individual will be doing in the future. It is an assessment that he will show himself—continue to show himself, if you wish—incapable of carrying out his duties. "Incapacity" should be defined as "incapacity that has persisted" for some time. I have suggested three months, and if the Government want to suggest two months or four months, that is neither here nor there. At all events, it gives the Secretary of State the security of knowing that he has solid ground on which to move, whereas "incapacity" as it is shown at the moment could be subject to considerable difficulty and could well be a matter of opinion. My amendment introduces an element of certainty into the matter and is therefore helpful in legislation of all kinds. I beg to move.

Lord Marshall of Leeds

My Lords, I do not want to prolong this discussion, but surely the noble Lord, Lord Diamond, should take account of the strict meaning of the word "incapacity" which was not quite the meaning he was ascribing to it a few moments ago. The word "incapacity" refers to a series of happenings which incapacitate a person from carrying out a contract of employment. I do not want to recite them all because, frankly, I do not remember them; but three important ones are: first, that the person in question has been made a bankrupt; secondly, that he has become of unsound mind; and, thirdly, that he has been committed to prison for the commission of a felony.

It would be unhappy if this amendment were to find favour because one would then be in a position of having to tolerate a director who could come under one of the three instances I have just given. For those purposes of course it is preferable that the decision should be immediate and not delayed for three months.

Lord Diamond

My Lords, the noble Lord speaks on these matters with immense authority, as I recognise. He has given examples which are straightforward and the Secretary of State would have no difficulty in deciding on his action. However, I ask the noble Lord to turn his mind to the more marginal problem of where the individual has a physical incapacity and is for the time being incapable of carrying out his job. For example, he may be bed-ridden and cannot carry out his job but, as I mentioned on a previous occasion, he may have recovered in a fortnight's time or may consider that he will have recovered in that time.

If the Secretary of State removes him from office on the grounds of physical incapacity—and I assume "incapacity" includes, in law, physical incapacity as well as the other kinds of incapacity to which the noble Lord, Lord Marshall, referred—it would be much easier if this is defined in some way as to introduce more certainty than is in the Bill. Therefore, I ask the noble Lord whether he will help us by saying what he thinks would be the situation with regard to marginal physical incapacity.

Lord Marshall of Leeds

My Lords, with permission, the situation generally is that the question of ill-health is quite separate from the word "incapac-ity" and is dealt with in a separate clause in every contract of employment where one can find that the most generous leeway is given to someone who is ill. Certain periods are laid down which generally have nothing to do with the particular clause and have nothing to do with the word "incapacity".

Lord Belstead

My Lords, I recognise that in the second of these two amendments the noble Lord, Lord Diamond, is endeavouring to make more specific an amendment which he moved in Committee. However, for reasons which have been deployed by my noble friend Lord Marshall of Leeds I prefer to stick to the wording in the Bill.

My noble friend Lord Marshall was good enough to intervene on this point in Committee and he has done so again saying, as I understood him, that the expression "incapacity", and, indeed, "misbehaviour", are expressions well known in contracts of employment. The noble Lord, Lord Diamond, is worried as to where one draws the line. I hope that I am not going to be so foolish as to try to wade into what should be a matter for the courts if there is a disagreement, except to say that my understanding and advice is that if there were to be a case which is contested, the courts would take all the relevant circumstances into account.

Why am I worried about the second of the amendments tabled by the noble Lord, Lord Diamond? I am worried because if there were circumstances where a permanent incapacity suddenly arose, and the specific time limit which the noble Lord puts forward in his amendment of three months were included in the Bill, there could be a real impediment upon anything being done; and that would not serve the interests of the proper discharge of the functions of the director or, indeed, the interests of consumers of gas generally.

Therefore, if I may say so, I think that to leave the words "incapacity or misbehaviour" in the Bill is a reasonable thing to do, and it has of course appeared reasonable to governments of different political complexions for many years now, as I said when I spoke on the previous amendment.

Lord Diamond

My Lords, before the noble Lord sits down, I wonder whether he is able to tell us as a matter of fact if the present draft contract which is no doubt being prepared for the prospective holder of the office includes a separate clause dealing with the problem of physical incapacity.

Lord Belstead

My Lords, I cannot answer that question. All I can say to the noble Lord is that I have no doubt that the draft contract will mirror the provisions in Clause 1 of this Bill, provided that Parliament agrees with Clause 1.

Lord Diamond

My Lords, all I can say at this time of day is that I very much hope that the Minister will be good enough to bear in mind the reason why I thought fit to put forward this amendment for discussion and probing. I am very grateful for the helpful attitude of the noble Lord, Lord Marshall of Leeds. One expects anybody coming from Leeds to be very helpful, and I am very grateful to him. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 18 not moved.]

Lord Brabazon of Tara

My Lords, I think that we have reached a suitable moment to adjourn consideration of the Bill on Report. In doing so, I suggest that we do not return to this Bill until half-past eight. I beg to move.

Moved accordingly, and, on Question, Motion agreed to.