Gas Bill

HL Deb 07 July 1986 vol 478 cc74-158

Consideration of amendments on Report resumed.

Lord Diamond moved Amendment No. 79: Page 3, line 28, at end insert— (e) to enable persons to compete effectively in the supply of gas'").

The noble Lord said: My Lords, this amendment was coupled with a previous amendment, but that amendment was not moved. That is why I am moving this amendment instead of merely speaking to it.

We are considering the end of the important Clause 4 in which the general duties of the Secretary of State and of the director are set out. There is nothing in the clause to deal with the problem of competition generally and competition effectively in the supply of gas—that means throughout from beginning to end. I know the Government take the view that one ought to consider competition only as Clause 4(2)(d) indicates in relation to persons who take a supply of gas in excess of 25,000 therms a year; the larger contract customers. We see no reason why the attitude of the Secretary of State and the director, and their thoughts, should not also be concerned with effective competition as a whole.

Indeed I remind noble Lords opposite of the Conservative manifesto at the last general election. What that manifesto undertook, if it undertook anything, was to promote competition. I am doing no more than trying to make an honourable lady of the Prime Minister—I should have said an "honourable woman"—in relation to the promise given in the Conservative manifesto. I do not think there is need for me to say any more at this stage. I beg to move.

Lord Belstead

My Lords, the amendment that the noble Lord is moving, Amendment No. 79, is about promoting competition between fuels. All I can say is that we believe there is already strong and effective competition and that this Bill is not the place to encourage competition between different fuels. Competition is achieved by the stimulus of market forces and needs no bureaucratic intervention from government. There is the duty in Clause 4(2)(d) to enable competition in the contract area of the gas market. In our view no such duty is necessary or appropriate to stimulate competition between fuels.

I recognise the concern which has been expressed in the House on more than one occasion about the electricity industry as a nationalised body in competition with the privatised gas industry. However, it is simply not possible to provide in this Bill for orderly competition without regulation since a duty on the Secretary of State and the director without any means of enforcement would be pointless.

I do not think there is all that much between the noble Lord, Lord Diamond, and the Government. But this is a question of how to achieve it. The noble Lord wishes to put in a specific statutory provision in Amendment No. 79, adding a new duty to enable the suppliers of gas to compete effectively. I am saying that the duty in Clause 4(2)(d) is there to deal with the contract area of the market, but otherwise I think that the market generally provides strong and effective competition.

Lord Ezra

My Lords, it is difficult to follow why the competition should be restricted to the contract area where it already exists. The Bill itself implies by the regulatory system and by the pricing system that the contract area is a competitive area. It is difficult in all logic to see why the competition should implicitly be eliminated from the tariff or domestic area. In practice it exists there anyway as the noble Lord has said, so why does not the Bill allow it to proceed as it now is? This implication that there can be competition in the contract area but not in the tariff or domestic areas seems rather surprising.

8.15 p.m.

Lord Diamond

My Lords, I am grateful to my noble friend Lord Ezra for the support that he has given. I add to that that the intention of the amendment was really not to talk about competition between fuels generally, but about competing effectively in the supply of gas: this is Amendment No. 79.

I am delighted to hear from the Government that they feel there is not a great deal of difference between the Government's point of view and our point of view. If one includes a provision such as Clause 4(2)(d) which talks about competing in a certain market, one is inevitably led to the conclusion that there is no intention to compete in the other huge market, the tied market, under which 16 million consumers are tied to the one supplier. I do not wish to detain the House by repeating my argument, but I have already referred to the possibility of circumstances changing in the same way that they have changed over the past 25 years in such a way that there would need to be a policy relating to competition in the tariff market, for reasons that we are not necessarily able to see at present but which will emerge as circumstances change.

There is both that situation and the present position under which the Government have to have regard to their undertakings, their manifesto and to the essence of their policy that privatisation is justifiable because it leads to competition in the private sector. So far that is totally absent. Although I suppose it is too early after a meal to disturb people by a further Division, I am very unhappy that the Government have not seen fit to accept this very modest amendment. In the circumstances, all I feel I can do is to ask—

Lord Belstead

My Lords, before the noble Lord either presses or withdraws his amendment, may I reply to the noble Lord, Lord Ezra, and also to the noble Lord, Lord Diamond? The Government's position, although noble Lords may not agree with it, is very simple. I apologise if my explanation was not very good. There is the whole history and practicability in the tariff sector of the laying of pipes in the streets, and the commonsense gained over the past 100 years or more about not having pipe networks being laid alongside one another. We felt when the Bill was originally drafted that it was not possible to put a competition duty in at all. As noble Lords know, Clause 4(2)(d) was inserted in another place; but it was confined to the contract market for the reason that I have given. The noble Lord, Lord Diamond, may feel that he does not agree with my explanation, but that is the reason that has guided us.

Lord Diamond

My Lords, I am grateful to the Minister. I am glad he intervened and I am sorry I did not see his first attempts at intervention. No, that is not our position. Our position is that you should search for competition if you are introducing a privatised monopoly. You should go out of your way to search for it. I agree that there are not many evident areas where you can compete. I agree with the whole problem that you cannot put down two sets of pipes next to each other. That is why we on these Benches maintain (and, indeed, the whole of the Opposition maintains) that this is a natural monopoly. Therefore, it has to be run in the only way that a monopoly can be run; that is, for the protection of the consumer—which only the state can provide. That is the whole argument for not moving at the present time until you can find real competition.

But I have suggested (and it will be for consideration again at this Report stage) how the Government, if they were willing to do so, could provide an area, at all events, of comparison, which is very near to competition. In a later amendment I will spell this out in more detail. So the noble Lord the Minister is wrong in saying that there is no way at all in which you can provide competition, or something very similar to it, so far as the tariff customer is concerned.

There is a way and we shall come to it later on. Perhaps, therefore, one ought to reserve one's major activities for that particular argument and in those circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 81 not moved.]

Lord Belstead moved Amendment No. 76: Page 3, line 28, at end insert— ("(3) In performing his duty under subsection (2) above to exercise functions assigned to him in the manner which he considers is best calculated to protect the interests of consumers of gas supplied through pipes in respect of the quality of the gas supply services provided, the Secretary of State or the Director shall take into account, in particular, the interests of those who are disabled or of pensionable age.").

The noble Lord said: My Lords, I beg to move Amendment No. 76, and would suggest to your Lordships that we might take with it Amendment No. 76A which is an amendment to Amendment No. 76 in the name of the noble Lord, Lord Diamond, and Amendment No. 76B, in the name of the noble Lord, Lord Stoddart, which again is an amendment to Amendment No. 76, and Amendment No. 97. Amendment No. 97 is in the names of the noble Lords, Lord Diamond and Lord Ezra, and is an attempt to write into the Bill an amendment which was moved by my noble friend Lady Macleod in Committee. Amendment No. 76 which I am moving now, is in response to my noble friend's amendment which was moved in Committee. On that occasion, my noble friend Lady Macleod provided for a code of practice for the elderly and disabled to be provided in the Bill.

My noble friend then paid tribute to the services for the elderly and disabled provided by British Gas and said that her objective was to ensure that such good services should be continued. My response on that occasion was that the Government would make a change to the authorisation to meet the effect of the amendment proposed by my noble friend Lady Macleod, and that we would also bring forward an amendment to Clause 4 of the Bill so that we would have, on the face of the Bill, recognition of the particu-lar needs of the elderly and disabled.

So Amendment No. 76, which I am now moving, proposes a new subsection to Clause 4 which would require the Secretary of State and the director, in carrying out their functions to protect the interests of consumers in respect of the quality of gas supply services, to take account in particular of the interests of the elderly and disabled. This would mean that while the generality of interests of consumers are protected under Clause 4(2)(a) their particular interests in respect of special services would be protected by the new subsection (3).

Your Lordships may also be aware that, again in fulfilment of an undertaking which I entered into in Committee towards my noble friend Lady Macleod, we have extended Condition 12 of the British Gas authorisation to require British Gas to provide a code of practice describing special services for persons who are disabled or of pensionable age.

If 1 may refer to the other amendments which I suggested we might take, the noble Lord, Lord Diamond, is seeking to make a small drafting amendment to the Government amendment. I should like to hear what the noble Lord has to say. With respect, I think the drafting in the Bill is right. The noble Lord. Lord Stoddart, is seeking to introduce an extension to our amendment by placing a duty on the Secretary of State and the director to ensure that all domestic gas appliances used by the elderly and disabled may be checked free of charge.

Again, I must wait to hear what the noble Lord has to say; but may I make the observation that, with respect, I think an amendment of that kind ought not to be in Clause 4, which deals with the general duties of the Secretary of State and the director, while the noble Lord's amendment is seeking to impose a specific duty to ensure that a particular service is provided.

In moving Amendment No. 76, I am endeavouring to respond to a very important amendment which my noble friend Lady Macleod moved in Committee—an amendment which would have provided for a code of practice for the elderly and disabled. The Government's response to this has been to put into the authorisation in Condition 12 a clear requirement that British Gas must provide a code of practice describing special services for the elderly and disabled and must do so in consultation with the Gas Consumers Council and with the director. The amendment I am moving will put it on the face of the Bill that the director and Secretary of State must in particular have care for the needs of the elderly and disabled. I hope that my noble friend will feel that this is a proper response to the important amendment she moved at Committee stage. I beg to move.

Lord Diamond moved, as an amendment to Amendment No. 76, Amendment No. 76A: Line 5, leave out ("or") and insert ("and").

The noble Lord said: My Lords, I beg to move Amendment No. 76A. I am in a little difficulty because we are discussing a number of amendments together, and I do not know whether it is for the convenience of the House that I should limit my comments to No. 76A in moving that amendment or discuss what the noble Lord the Minister has just said.

Lord Belstead

My Lords, with respect, as the noble Lord's amendment is an amendment to my amendment, I should have thought that the noble Lord would be speaking to his amendment and my amendment.

Lord Diamond

Very well, my Lords. I am only too happy to deal with it in that way. The Minister is quite right: the amendment which I am moving is purely drafting. All that I want is assurance that the point is covered; that it is not really "either/or" but that it is really both.

We are grateful to the Minister for the amendment he has moved, which goes some distance towards satisfying the wishes of those of us on this side. I recognise that it goes even further towards satisfying the wishes of the noble Baroness, Lady Macleod. As far as we are concerned, if the noble Lord will be good enough to look at Amendment No. 97 in the names of my noble friend Lord Ezra and myself, he will see that the codes of practice specify not only in paragraph (c), the provision of special sevices for elderly and disabled but also, in paragraph (a), the nature of service available to tariff customers in relation to gas supplied", and in paragraph (b), the conditions attached to the payment of gas bills including guidance to domestic customers if they have difficulty in paying". I know there is no difference between us and between our wishes and the wishes of the Gas Corporation in corresponding with the intention of those two paragraphs; but, again, we would have preferred them to be in the Bill, just as the noble Lord said that incorporating his amendment in the statute is a step forward. Therefore, we do not wish to seem ungrateful, but we do not feel that the noble Lord has gone far enough.

Baroness Macleod of Borve

My Lords, I am not certain how many amendments we are now speaking to. From my list, I thought it was Amendments Nos. 76, 76A, 76B and 97. I hope that that is correct. First, I should like to express my gratitude to the Minister for tabling his amendment. It seems, for the first time, to mention those of pensionable age and the disabled. Because British Gas, as it is now, is particularly good (to my certain knowledge) at looking after people in that particular circumstance, I am quite certain that we should like to see in the Bill that the ensuing authorities for gas should also be enjoined in the Bill to look after these particular people.

I do not quite see that Amendment 76B is, as I think my noble friend the Minister said, essential to this Bill. I do not think it should be part of this Bill that the future gas organisation will have to give free of charge checking of all domestic gas appliances. When one considers the numbers of people coming under these two categories—I do not know whether anyone knows those numbers, but I should have thought there would be a great many of them—I do not think that financially it would be wise for us to make this part of the Bill. On the other hand, I am quite certain that so far as practicable British Gas, as it is now, will conform to the wishes of the noble Lord, Lord Stoddart. However, I still think this should not be part of the Bill. I am most grateful for Amendment No. 76 and I should like to thank the noble Lord the Minister for arranging it.

8.30 p.m.

Lord Campbell of Alloway

My Lords, the thread that binds this bundle of amendments for grouping is a common concern for the provision of special services for the aged and infirm of which no mention is made in the Bill. That is a concern which is also reflected in Amendment No. 125, which warrants separate consideration on its own merits in due course. The main issue, I would suggest with respect, arising on this set of amendments is whether certain breaches of the code of practice for the aged and infirm should be brought within the enforcement procedures of Clauses 28 and 30 of this Bill.

Baroness Macleod of Borve

My Lords, may I interrupt for one second? I hope that the noble Lord will refer to those persons as being of pensionable age, and not the infirm. Those of age 60 to age 65 are not always infirm.

Lord Campbell of Alloway

My Lords, I hear what my noble friend says. I do not think I am really in a position to argue with her. What I was trying to say to your Lordships was that the main issue before the House, and it is an important issue which was totally ignored by my noble friend Lady Macleod, is this: whether breaches of the code of practice for the aged and infirm (as I call them) should be brought within these enforcement procedures of Clauses 28 to 30 of the Bill. One example of that would be the free of charge checking introduced by the noble Lord, Lord Stoddart.

The code to which reference is made in Condition 12(l)(c) of the revised authorisation of 30th June of this year is actually the main issue. The consequential issues are whether the condition of authorisation should have the prior approval of Parliament, and, further, whether or not the codes should be prepared before the granting of authorisation. The first issue has been very much in the mind of the noble Lord, Lord Stoddart. The second is very much within the province of the amendment proposed by the noble Lord, Lord Diamond.

The door to the enforcement to which I have referred would remain locked under Amendment No. 76 and Amendment No. 97 as they stand. That door would be unlocked by Amendment No. 76B, by the noble Lord, Lord Stoddart, and left ajar so that it could be opened by the noble Lord's Amendment No. 88 by requiring that the conditions of authorisation should have the prior approval of Parliament. It is no doubt assumed by the noble Lord, Lord Stoddart, that Parliament would not approve conditions of authorisation in which certain provisions of the code were not written into the authorisation so as to constitute relevant conditions as defined by Clause 28(8) of the Bill, but Amendment No. 88 to Clause 7 makes no express requirement in this regard and Amendment No. 76B is limited to free of charge checking. With respect to the noble Lord, there is something in the criticism of my noble friend the Minister that it might perhaps not meet the problem.

As a matter of construction, unless the provisions of the code, which is the code for the elderly and the infirm, were to be a relevant condition of Clause 28(8), there is no enforcement machinery available to the director under Clauses 28 to 30. It then follows that there is no restricted private action for non-compliance under Clauses 35 to 37. It cannot arise. At Committee stage my noble friend the Minister, as reported at cols. 870 to 871 of Hansard, when opposing Amendment No. 63A, which is now Amendment No. 97, and my Amendment No. 84ZB, which is now Amendment No. 125, took the view that no enforcement machinery was requisite in this context and that an obligation upon the director to take the interests of the aged and infirm into account and to publish the codes would be sufficient to meet any reasonable concern.

I support Amendment No. 76A, which seeks to dispose of the unacceptable disjunctive. However, leaving that aside, there are three choices in this set of amendments, Amendment No. 76, Amendment No. 97 and Amendment No. 76B. Amendment No. 76, by its tailpiece, together with paragraph (l)(c) of the revised Condition 12 of the authorisation, faithfully represents the concession made by my noble friend the Minister at Committee stage.

Amendment No. 97 leaves beyond the rim of that concession two points which are alive. One is that the code should be published before authorisation and not within three months after authorisation, as proposed in revised Condition 12. There I am with the noble Lord, Lord Diamond, in principle.

The other point he leaves open is that to which I took objection when Amendment No. 63 was moved at Committee stage: that the codes under paragraphs (a) and (b) should be treated as if in the same material as the code under paragraph (c). In my view, they should not.

Then one comes to Amendment No. 76B, which is limited to free checking and perhaps ought not to be where it is but ought to appear in another form in Clause 7, affecting the authorisation. At this stage in my judgment, if one has to make a judgment between the three choices, the mythical golden apple would go to the noble Lord, Lord Stoddart, notwithstanding that his amendment (No. 76B) is not wholly apt, because the principle for which he contends opens the door by Amendment No. 88 to the enforcement procedures which would be available for this code. I am more concerned with that principle than with anything else at all; but in order to argue it I have to detain your Lordships to show how important it is and how it may be achieved. I am grateful to your Lordships for bearing with me.

Although of course this could set a collision course with my noble friend the Minister, the hope is that perhaps he could think again in the light of today's debate. There is scope for seamanship, and my noble friend is a most experienced navigator, especially in such waters. There is no draft of the proposed code; I have searched for it in the Library and I have asked my noble friend. It is not yet available. So no discussion has taken place as to which provisions, beyond the provision referred to by the noble Lord, Lord Stoddart, should be written into the authorisation procedure so as to become relevant conditions for the purpose of enforcement under Clauses 28 to 30. All I am asking is that we should follow the principle espoused by the noble Lord, Lord Stoddart, and look to a means of implementation which could give effect to it, for it is only by his amendment that this principle is established. There is no other amendment on the Marshalled List that could give effect to it.

It may well be that my noble friend the Minister could re-examine the bearing of certain provisions of the code for the aged and the disabled within the enforcement procedures of Clauses 28 to 30. And I stress that my plea and that of the noble Lord, Lord Stoddart—he will correct me if I am wrong because we have not spoken about this—is exclusively related to l(c)of Condition 12 or paragraph (c) in Amendment No. 97, and excludes the codes of practice in paragraphs (a) and (b). I understand that to be the position and, if that be so, it would be well within the drafting competence of the parliamentary draftsmen without in any way endangering the structure of this Bill or challenging any main principle either to carry in a revision into Clause 7 to give effect to the principle for which the noble Lord, Lord Stoddart, contends in Amendment No. 88 or to amend Condition 12 of the authorisation to ensure that certain provisions of the code constitute relevant conditions within the meaning of Clause 28(8).

In conclusion, if on this main issue Amendments Nos. 76B and 88 stand at the wicket of the enforce- ment procedures, then the code of practice proposed under Amendment No. 125 serves as an available long stop. Therefore, to give two examples, the code could be taken into account in the negligence proceedings preserved by Clause 28(3)(b), and, subject to clarification under Amendment No. 149A, in certain actions for damages for breach of statutory duty, where breach involves danger to life, limb or property. But, my Lords, does one dispense with the wicket-keeper merely because there is an available long stop? I am grateful to your Lordships for having borne with me over this. It is the principle for which 1 contend and I think it is the principle for which the noble Lord, Lord Stoddart, contends. I await with considerable interest to hear what the noble Lord and my noble friend the Minister have to say.

Lord Boyd-Carpenter

My Lords, may I very briefly say to my noble friend the Minister that I hope he will accept Amendment No. 76A in the name of the noble Lord, Lord Diamond. It seems sensible in the light of his own amendment (No. 76) that both the Secretary of State and the director should have this responsibility whereas, in its present form, if it is the Secretary of State or the director, it perhaps leaves in doubt whose duty it would be in any particular case. 1 hope therefore that my noble friend will considet accepting this amendment.

Lord Ezra

My Lords, I was very pleased when the noble Lord, Lord Boyd-Carpenter, rose. I was hoping that he would go on and say, as he did in connection with a previous amendment we were considering, regarding when the Secretary of State and the directot are to take into account the interests of British suppliers, that he would equally have said in the case of the amendment proposed by the noble Lord, Lord Belstead, that taking into account the interests of those who are disabled or of pensionable age is itself a somewhat vague formula. That, I understand, is what the noble Lord, Lord Campbell of Alloway, was trying to put right by getting into the Bill itself much more precision than this wording proposes.

8.45 p.m.

Lord Stoddart of Swindon

My Lords, perhaps I had better say a few words about Amendment No. 76B which stands in my name on the Marshalled List. May I say first of all to the noble Lord, Lord Belstead, that we had down an amendment to Clause 4 (Amendment No. 74) which we withdrew in order to save time because the noble Lord had placed his own amendment (No. 76) on the Marshalled List.

We felt it would be for the noble Lord's convenience and indeed for the convenience of the House to tag on to his amendment the provision regarding checking of all domestic appliances free of charge. We thought that that would be convenient and indeed that it was in the correct part of the Bill. I think that is probably the case. This is really a very simple amendment, and the noble Lord really ought to have no difficulty at all with it, because it is the present practice—as I am sure the noble Baroness, Lady Macleod, knows—of British Gas to do exactly that. All we are seeking to do—and I have to say to the noble Lord, Lord Campbell of Alloway, that it is as simple as this—is to ensure that British Gas plc retains that service. I find it very difficult to believe that the noble Lord does not want that to happen as well. Indeed, I believe it has support from all sides of the House. What we are concerned about is that British Gas plc may very well decide at some stage that, because it is a private organisation, it has no need to consider this service. That is why we should like to see it on the face of the Bill and that is the simple reason for moving the amendment.

The noble Lord, Lord Campbell of Alloway, is right. He has studied this Bill very closely indeed, and I must compliment him on his Amendment No. 125, with others, which seeks to tie up the matter very closely indeed and to see to it that, while breaches of the code of practice might not be the subject of a case in law, they could nevertheless be cited in any case in law. I believe that is the position. The noble Lord has given a lot of attention to this matter and he is to be complimented upon it. We shall be coming to this amendment later on, either tonight or on Wednesday. We shall have to see what progress we make. But I can assure him that his amendment has a good deal of support in the House.

Clearly, if Amendment No. 76B is carried—and I hope that the noble Lord will either accept it or will say that it is not in the right part of the Bill and will put it somewhere else—we shall come to Amendment No. 88, in which the noble Lord, Lord Campbell of Alloway, is again absolutely correct. I must not speak to that amendment now, but if it is carried it will ensure that these matters are properly enforceable, because Parliament will have said that they should be enforceable. I do not know whether we shall be fortunate enough to carry that amendment. As I said, I must not refer to it; but, again, the noble Lord is quite correct.

I do not want to take up the time of the House unduly, but I want to say in support of the amendment that gas is a dangerous and volatile subject and people who are above retirement age, and people who are disabled and who are either over retirement age or below retirement age, need additional protection. One of the protections which can be given to them is the free inspection of gas fittings and appliances, and it is essential that those people should not feel constrained in any way by cost from having their appliances properly checked. It is important to them, and it is important to all of us, that they should continue to have this service available.

There should be absolutely no shadow of doubt at all that the service will continue as at present, and they should have an assurance in law that that will continue as at present after British Gas is privatised. I do not think that is asking too much. I feel sure that the Minister will wish to respond sympathetically to this amendment, in the light of the support that has been given to it during this debate; and I shall just have to await his reply to see whether it needs to be pressed to a Division. I hope that it will not be and that the noble Lord will find some way of assisting us.

Lord Belstead

My Lords, may I reply as quickly as I can, because we have a lot of business? I am sorry that we seem to have rather a plethora of amendments. I wanted to have a word with my noble friend Lady Macleod about this, because it is she who is instrumen- tal in bringing us together on this subject this evening. It was her amendment at Committee stage which got the Government to say that we would endeavour to respond by changing the authorisation. My noble friend has achieved that. It was also her amendment which got us to say that we would put a duty in Clause 4—which was certainly not in the Bill when it came to your Lordships' House—to the effect that the director and the Secretary of State should have particular care for the needs of elderly and disabled people. So I thank my noble friend, and I am sorry that we seem to have rather a lot of amendments. That was the effect of Amendment No. 76.

The reason we have had to take Amendment No. 76A, in the name of the noble Lord, Lord Diamond, is that it is an amendment to Amendment No. 76. It has achieved the distinction of having been supported by the noble Lord, Lord Boyd-Carpenter, who on this matter is at one with the noble Lord, Lord Diamond. In the face of that very powerful double-barrel, all I can say is that I shall consult parliamentary counsel about this point. My advice was that this is right, because of the use of the third person singular in Amendment No. 76. But in the light of this formidable combination I will, if noble Lords will allow me, write to both noble Lords about Amendment No. 76A.

Lord Diamond

My Lords, I thank the noble Lord very much indeed. When the Minister says that it is right, does he mean that the intention of my amendment already exists within the wording of the amendment which he himself has proposed?

Lord Belstead

Yes, my Lords, that is precisely what I mean. I shall take advice, and if the noble Lord will forbear from pressing the matter, I shall write. It was necessary to take Amendment No. 76B, in the name of the noble Lord, Lord Stoddart, who made the final speech in this debate, because that is also an amendment to Amendment No. 76, the effect being to ensure that in respect of these two groups of people arrangements exist for the checking of all their domestic gas appliances, free of charge. Once again, my advice is that this is really not in the right place; but I recognise the strength of feeling which the noble Lord put not only into the drafting but into speaking to this amendment, and I should like to say a further word about it when we come to Amendment No. 125.

It is not quite as simple as perhaps the noble Lord feels. I understand his wish to say that what is free shall remain free; but my advice is that among the very valuable services for the elderly and the disabled provided by British Gas, to which my noble friend Lady Macleod paid tribute in Committee, the gas safety checks on gas appliances and installations, which are available to people aged 65 or over who live alone, or who are registered handicapped at any age and who live alone, are free up to a cost of £2.50 plus VAT.

But additional work has to be paid for, and for special controls and adaptors to help the disabled operate gas appliances, and for braille or studded controls fitted to some gas fires, cookers and central heating units, the standard charge is £2.30 plus VAT for each appliance. For moving a coin meter to a more convenient position for disabled people, if it is within three feet of its present position, the standard charge is £3.30 plus VAT. In addition to that, there are some absolutely free services. But I must come absolutely clean. My advice is that the service is enormously valuable, provided, certainly at costs which can be met but it is not necessarily falling within the scope of the way in which the noble Lord has put down his amendment. But may I look again at this in order to see to what extent it may be possible to move towards the noble Lord?

That finally brings me to the intervention of my noble friend Lord Campbell of Alloway. My noble friend is speaking to Amendment No. 125, and, as your Lordships know, the main effect of that amendment, on which my noble friend has put particular emphasis, is enforceability. There are other effects, but that is the effect on which my noble friend has put the main emphasis. Indeed, my noble friend specifically asked whether I could re-examine the bringing of certain provisions in the code for elderly and disabled people into the enforcement provisions of Clauses 28 to 30.

I am sure that we must reflect on that view expressed by my noble friend. I hope that I may be able to return to the subject again. I should certainly like to take the matter away and to consider to what extent on this aspect of my noble friend's amendment, and indeed any other aspects, it may be possible to move towards Amendment No. 125.

I had thought that by putting the provision in Clause 4 in response to my noble friend Lady Macleod, and by putting the condition in the authorisation for a code of practice, we had gone as far as we ought to go. But my noble friend has explained that he does not take that view and he has down Amendment No. 125. So that there is no misunderstanding, I am saying I should like to reflect on what my noble friend has said. I should like particularly to reflect on the express question which my noble friend has put to me. I should like to look at what my noble friend has said generally, and I hope to be able to come forward at Third Reading with a response to my noble friend which of course I shall discuss with him before we get to that stage of the Bill. That is all I ought to say in moving Amendment No. 76.

9 p.m.

Lord Diamond

My Lords, in response to what the noble Lord the Minister has just said, is he not going to say a word about Amendment No. 97?

Lord Belstead

My Lords, I am extremely sorry. If the House will bear with me for just a few more sentences, there is of course Amendment No. 97 on the Marshalled List. I apologise to the noble Lord, Lord Diamond, and to the noble Lord, Lord Ezra.

This amendment has the effect of writing into the Bill the amendment which my noble friend Lady Macleod put down and which started off the whole proceedings about two weeks ago. My noble friend Lord Campbell was quite clear in his advice. He felt that paragraphs (a) and (b) were in a different category from paragraph (c). I must confess that I feel the same about it. It is not a question of importance; I think it is a question of having to consider exactly what the treatment and status of a code ought to be, bearing in mind that not every code may necessarily have to be of the same status and indeed enforceability as another code. By putting those two codes in paragraphs (a) and (b) of Amendment No. 97 into Condition 12 of the authorisation, which is where they are, perhaps I may remind the House that the authorisation can be changed only by the mechanisms which are contained in Clauses 24 to 27 of the Bill, and of course those two codes will be subject to the enforceability proceedings of Clause 28 in the sense that if what is in the code is not the practice of the public gas supplier it will be possible under Clause 28 for the director to come down on the public gas supplier and to say, "Your code is not commensurate with your practice".

I believe that this is the right way to treat those two particular codes which are to be found in paragraphs (a) and (b) of Amendment No. 97, although recognise that we need to think perhaps rather differently about the code of practice for the elderly and disabled.

Lord Molloy

My Lords, speaking now in my capacity as president of the largest area of the Royal British Legion, the metropolitan area, and being associated with BLESMA, the British Limbless Ex-Servicemen's Association, I am very grateful indeed that the noble Lord is keeping the door ajar in looking at the valuable amendment moved by my noble friend Lord Stoddart. I ask him to consider this. Among the tens of thousands of new old age pensioners this year a large percentage will be British ex-servicemen who served from 1940 to 1946. That applies to the womer as well. Among the disabled will be a considerable number who are limbless, ex-service and old age pensioners, and who have managed somehow or other to eke out a living. Therefore, I should be most grateful if the noble Lord the Minister will be gracious enough to make representations on the points I have made

Lord Belstead

My Lords, with the leave of the House, perhaps I may say that we shall certainly take into account what the noble Lord, Lord Molloy, has said on this matter.

Lord Sanderson of Bowden

My Lords, as one of those who took part in an earlier stage of the Bill dealing with this question of the elderly and infirm may I say that I am very grateful to the Minister for putting down this amendment, which at least starts the ball rolling in the direction in which we intended it to roll. It is very useful to find that Clause 4 will be added to in this way. With regard to an amendment to which we are still to come and about which we are not meant to talk, I detect a note of hope in what the Minister says about the outcome of that amendment and I look forward to seeing what happens this evening when we come to that amendment, and perhaps hearing more of it at Third Reading.

Lord Campbell of Alloway

My Lords, is it in order to say that I am wholly content personally with the wonderful assurances and the open mind that the Minister has kept with regard to having a look at all this and trying to get it into shape? I should like to express to him my personal gratitude.

Lord Diamond

My Lords, I moved Amendment No. 76A, which, strictly speaking, is the one before us at the moment. As I therefore have a right of response. I believe, perhaps I may say first of all that I though the Minister was on a very good point when he said as a matter of procedure that we had a plethora of amendments before us. We are all very willing to be guided by whoever suggests putting one amendment with another and discussing a group of amendments in order to save time.

However, perhaps I may suggest for future consideration that that practice tends to lead to confusion. I doubt whether it saves any time whatsoever when amendments to amendments are not disposed of before we reach further amendments to those amendments and further amendments not to those amendments. We get into a very confusing position. I am happy to try to work with the system but I am bound to make that suggestion.

Secondly, I may say how grateful I am to the noble Lords, Lord Boyd-Carpenter and Lord Campbell of Alloway, for being good enough to support the very modest amendment that I put forward at line 5. We are told that the great characteristic of the British is that they do not discuss politics until after dinner. Perhaps we should take advantage of that and not discuss amendments to gas Bills until after dinner. Certainly there seems to be a different attitude in your Lordships' Chamber, for which I for one am most grateful. It only shows that if, as a true Yorkshireman, one keeps on what I call persisting in a good cause, and what others may call plain obstinacy, one may win support from unexpected quarters in the House. So I am most grateful to both noble Lords.

I am particularly grateful to the noble Lord, Lord Campbell of Alloway, who said that he was very content with the Minister's comments. If the parliamentary draftsmen, who are really superb in this matter, advise the Minister that the word "or" means "and" in this particular context, as indeed I thought it might (I put down the amendment for confirmation), and if the noble Lord, Lord Boyd-Carpenter, is content with that, as I gather he is, then I shall seek in a moment to beg leave to withdrawn that amendment.

I say "in a moment" because I have first to deal with Amendment No. 97, as we are discussing that amendment also. I repeat the gratitude that I have already expressed for bringing part of the authorisation's terms and conditions into the statute itself. I am bound to say that I was not wholly convinced by the Minister's remarks that the part that he proposed to introduce was properly introduced, and that the part that had been proposed at an earlier stage by the noble Baroness, Lady Macleod, and the further part introduced by myself tonight, was not wise drafting or legislation. The best thing for me to say at this stage is that I shall read very carefully what the Minister said. Certainly I shall not press the matter further tonight.

I shall not press it except to this extent. We are in the difficulty that we have an authorisation that is a most important condition. The whole condition under which the British Gas Corporation changes from that name to British Gas plc is in the terms of the authorisation. The Bill adds much to what the Minister, the Secretary of State and the director have to do. However, the real guts of the matter are contained in the authorisation. That authorisation is not part of the statute. Attempts have been made to introduce it into the statute but the Government have not been willing for that to be done.

We had an authorisation—at least we had one. It is now different from the authorisation we had when we were last discussing this matter. That is because the noble Lord, Lord Belstead, said that he has introduced something different into it. I hope that I am right in understanding him in that way. So it is a different authorisation. To what extent can he alter the authorisation before the appointed day?

Where do we stand with the authorisation? We have no protection, or the consumer whose interests we are trying to look after has no protection, against further alterations. It may be an alteration that is desirable, but the Government may think of another alteration during the Recess that is not, in our view, so desirable. Ministers have a long time in which they will be working hard and the rest of us will be gadding about in whatever way we think appropriate. The Government will not have the benefit of your Lordships' views as expressed in this Chamber. They may take the wrong view about altering the authorisation. I am bound to ask the noble Lord, "Where do we stand with the authorisation?". I understand that after the relevant date of transfer—

Lord Campbell of Alloway

My Lords, will the noble Lord give way? I am grateful and shall not keep him a moment. Will the noble Lord, Lord Diamond, agree that what he is saying is very important, but strictly relevant to Amendment No. 88 tabled by the noble Lord, Lord Stoddart, which takes this very point? As we have all kept off Amendment No. 88, other than to refer to it as an important amendment, perhaps it would be convenient to deal with the matter when that very important amendment is moved.

Lord Diamond

My Lords, I always listen with great interest and respect to the words of the noble Lord, Lord Campbell of Alloway. Amendment No. 88 is not before us at the moment and the alteration in the authorisation is before us, so perhaps the simple way is to continue with the consideration of this amendment. Thus the Minister will be warned, so that when we come to discuss Amendment No. 88 he will be fully charged with all the particulars that he wishes to put before the House with regard to that amendment.

Perhaps I may continue for just one moment to say that I well understand the arrangements in the statute that provide for the changes in the authorisation and inhibit changes which are not so provided for. But up to the date of transfer we are in this great difficulty, so I hope that the noble Lord will have a word to say on that matter. As I understand that I have the consent of all the noble Lords who have spoken to Amendment No. 76A, I beg leave to withdraw that amendment.

Amendment to the amendment, by leave, withdrawn.

9.15 p.m.

Lord Stoddart of Swindon had given notice of his intention to move, as an amendment to Amendment No. 76, Amendment No. 76B: At end insert ("and shall ensure that in respect of these two groups arrangements exist for the checking of all their domestic gas appliances free of charge.").

The noble Lord said: My Lords, I really only move this amendment formally in order that I can withdraw it. I am grateful to the noble Lord for what he said on this amendment. There is no need for me to keep the House any longer than is necessary. I understand his difficulty; but I accept his offer to take the matter back, to consider it between now and Third Reading, and it is to be hoped that if he feels that he can assist, then he will do so by way of amendment. Of course, if he is unable to be of assistance, then I shall have to try again. Having said that, I beg leave to withdraw the amendment.

Amendment to the amendment, by leave, withdrawn.

On Question, Amendment No. 76 agreed to.

[Amendments Nos. 78 and 80 not moved.]

Viscount Hanworth moved Amendment No. 82: Page 3, line 28, at end insert— (" £ Subject to subsection 1 above, the Se cretary of State and the Directors shall each have a duty to ensure that if persons authorised under this part adopt practices which in their view are inimicable to fair competition between suppliers of other fuels they shall refer the matter to the Office of Fair Trading.").

The noble Viscount said: My Lords, I think it will be for the convenience of the House if I speak to Amendments Nos. 82 and 83 but I should like to move them separately. The point of these two amendments and the reasons for them can be very simply and briefly stated. The electrical generating industry is very worried indeed that a newly-privatised gas industry may employ methods of promotion and selling of their products which are unfair and cannot be matched by a nationalised electricity industry with the constraints which such nationalisation implies.

Even when all supplies of alternative fuels were nationalised there was fierce competition and this competition was sometimes unethical, or at least it was against the consumer's interest and that of free choice: for example, an agreement with a property developer that in his new housing complex only electricity and not gas would be available. I know that the boot was on the other foot, but it illustrates what may happen—even more so when one of these two industries is privatised.

My first amendment is very moderate indeed. All it does is to encourage the director and the Secretary of State to make themselves aware of abuses and, where they consider them of importance, to refer to the Office of Fair Trading. This has two merits. In the first place it will be a warning and a discouragement to the privatised gas industry to avoid anything which might be considered unfair. Secondly, it should mean that action is taken in time and before a major scandal blows up. Surely the Government do not want their privatisation programme jeopardised and rejected for such a reason.

In case your Lordships may still think that those fears can be ignored, let me mention what some authorities have said. In 1980 the Monopolies and Mergers Commission published a report on domestic gas appliances. In paragraph 13.83 it was concerned that the British Gas Corporation had a monopoly in the retail supply of gas appliances and that that was against the public interest. Finally, the gas industry accepted those structures and no government action was necessary.

On another amendment concerned with industrial tariffs the Government have argued that firms could change their fuel and chase the free market forces. I forbear to comment, except to say that even if that were possible or wise in a highly volatile oil situation no such possibility, except in the long term, is available to the domestic consumer. In view of those fears of the electricity industry, I very much hope that the Government will be able to meet my first amendment. If, on the other hand, they do not do so, I shall formally move the second amendment and I am afraid, as a protest, drive it to a Division. I beg to move.

Baroness Gardner of Parkes

My Lords, I am not in favour of the amendment and I cannot see the need to protect the electricity industry in the way stated. I am a member of the London Electricity Board, and we are well aware that there will be differences when gas is privatised. But I thought that the concerns were more that skilled staff might be attracted by better salaries in the gas industry.

The point is made about ensuring fair competition, but I think that our ordinary laws already cover that adequately. Although I am a great supporter of the electricity industry, I do not believe that it should be wrapped in cotton-wool any more than the gas industry. My concern is for the consumers, but I think that the electricity industry has access to even home in the country—which is a point made by the noble Viscount—whereas gas goes to only a limited number of premises. Many areas of the country have no gas pipes, and I am keen to see an extension of gas supply after the industry is privatised. I know of many parts of the country that would like to have gas. I do not think that the amendment is to the advantage of consumers or is necessary for the electricity industry.

Lord Molloy

My Lords, I think that the amendment is worth supporting. The noble Baroness said that the CEGB does not need wrapping in cotton-wool. But we had to establish the Office of Fair Trading because there was so much cheating and swindling in private industry. Had that not been so, we should not have established it. We should not take a chance. If we are sensible we will acknowledge that there is sense in the amendment.

Lord Boyd-Carpenter

My Lords, it is significant that the noble Viscount referred to the alarm in the electricity industry at the threat of competition from the privatised gas industry. One can draw important conclusions from that, one of which is that it seems to be appreciated, even in a nationalised industry, that privatisation will increase the competitive power and efficiency of the industry that is privatised. I therefore very much welcome the noble Viscount to the ranks of those who favour privatisation.

The other point that I want to make is an obvious one. If the electricity industry is to be specially protected against competition from gas, it would seem logical that the converse should also apply. But it is only the gas industry which is to be privatised. In any event, I should have thought that current law, the Monopolies and Mergers Commission and the Director-General of Fair Trading were sufficient to deal with any such problems as may arise.

Lord Stoddart of Swindon

My Lords, I think that the noble Lord, Lord Boyd-Carpenter, was being unfair to the noble Viscount, Lord Hanworth. He knows well what the noble Viscount was getting at.

Lord Boyd-Carpenter

I do, my Lords.

Lord Stoddart of Swindon

Yes, indeed, my Lords. May I say to the noble Baroness, Lady Gardner of Parkes, that there is a distinct difference between the electricity supply industry and the gas industry? One industry is not constrained or restrained by 25 yards from the main. The electricity industry has a statutory duty to provide electricity wherever it is demanded. That is one of the constraints under which it operates. The problem is that when British Gas is privatised the electricity industry will be under a constraint of government. The noble Lord, Lord Boyd-Carpenter, will no doubt come back and say, "That is simple. Let us denationalise the electricity industry as well".

Lord Boyd-Carpenter

The noble Lord said it, my Lords.

Lord Stoddart of Swindon

My Lords, no; that is what I said that the noble would say. I was not saying it. It will not be so easy to privatise the electricity supply industry as it is to privatise the gas industry. That being so, the electricity industry knows that it will be some while before the Government can privatise it, if at all. We are opposed to the privatisation of gas, electricity or coal. We believe that oil should have remained under some form of state control through BNOC.

For the time being, the electricity industry will be operating under the constraint of government. Because of that, and because it will have to burn the fuels which the Government say it must burn and will have to buy them mainly from the sources which the Government say it must buy them, it will be at an unfair disadvantage in relation to gas. That is what this amendment is all about. That is why the noble Viscount has moved it. I can understand it. There will be real difficulties. Let us make no mistake about that.

The amendment is designed to be fair to the electricity industry and through it to the coal industry. It is incumbent upon the Government to accept the amendment or something like it so that the electricity industry can be protected. That will go some way towards ensuring that North Sea gas is not depleted at a rate which will cause us difficulties in 20 or 30 years' time.

Lord Ezra

My Lords, the noble Lord, Lord Stoddart, has put his finger on the real issue that we are debating. We are not saying in this amendment that we are against competition. We are saying that we consider that competition should be fair. On authorisation, a privately-owned gas enterprise will be given considerably more freedom than at present it possesses. It will compete with an electricity industry which will continue to have the restraints which at present it possesses. It will therefore be at a competitive disadvantage. That is what we are drawing attention to. To say that the solution then lies in privatising the electricity industry may be logically correct but it is not relevant in present circumstances. So long as that inequality exists, something must be put into the Bill to correct it. This is an attempt to do so.

9.30 p.m.

Lord Diamond

My Lords, before the noble Lord replies, I should like briefly to support my noble friend Lord Hanworth in the amendment that he has moved. I wish to deal with a matter that is very relevant and that worries me considerably. I am talking about advertising. The amendment refers to fair competition between suppliers of other fuels. At the moment, the nationalised British Gas is conducting an enormous amount of advertising. One sees it on full pages in The Times, on huge areas of the Underground and all over the place. It is gas that is doing all the advertising. Electricity is not advertising on anything like a comparable scale that I have noticed.

It is clearly gas that is spending all the nationalised industry's spare cash while it can in advertising its product in the hope, no doubt, of getting one up on electricity, while electricity, for all that we know, has no opportunity to respond. Perhaps the noble Lord, Lord Gray of Contin, is able to enlighten us. Has the electricity industry attempted to respond or sought permission to respond? Has it sought permission to spend millions of pounds on advertising? Has it sought permission to engage American advertising contractors to advise it on advertising as opposed, for example, to going to the British advertising contractors used by the Conservative Party to help it win elections? How has the electricity industry attempted to deal with this matter in order that there should be fair competition? I would be grateful if the Minister could respond to these points.

Lord Gray of Contin

My Lords, no doubt during my remarks I may be supplied with some additional information that I can pass on to the noble Lord, Lord Diamond. I should like to say straightaway, however, that I do not think that the noble Lord can watch as much television as I do. I am not a television addict by any means, but for many months the electricity authority have had a highly successful advertising programme on television. It must be very expensive, because television is an expensive media through which to advertise. I would suggest to the noble Lord that it matches anything I have seen on behalf of the British Gas Corporation. No doubt, as I am talking, I shall be given some figures that I can pass on to the noble Lord. If not, I shall let him know in due course.

I am most grateful to the noble Viscount. I know his views on the matter because he has discussed them with me, and we have also had correspondence. I am particularly grateful to the noble Viscount for leading the debate on this subject. I would also thank noble Lords for making a total of seven contributions inside 16 minutes. How wonderful it would be if all our debates could be so succinct!

My noble friend Lord Boyd-Carpenter seized immediately and correctly on fears that the British Gas Corporation, under the full benefit of privatisation—enjoying the efficiency that can follow and the tremendous new life that an industry, liberated from the control of Government, acquires—will be free to compete in the energy market. As my noble friend rightly pointed out, this is obviously something that gives cause for concern to those who take a different view. My noble friend Lady Gardner of Parkes was right when she said that the amendment was not needed. She saw no need for it, and I certainly agree. The Office of Fair Trading is equipped to deal with any unfair competition between fuels, such as predatory pricing against the electricity industry, using its powers under normal competition law.

It is not necessary for the gas consumers council to intervene for the Office of Fair Trading to be able to act. The Bill provides for the modification of public gas suppliers' authorisations after competition law investigation by the MMC. Under Clause 42 the director of Ofgas will be able to pass across to the Director General of Fair Trading any information which he considers would assist the latter in the performance of his functions. There is therefore the possibility of introducing proper control through mechanisms set out in the Bill in the event of real abuse. I know that the noble Viscount feels very strongly about this.

Lord Stoddart of Swindon

My Lords, I hope that the noble Lord will not mind if I ask him a point of information. He was talking about predatory pricing. One understands that the Office of Fair Trading would be able to do something about that. But there is a real difficulty because—at least as I understand it and the noble Lord will correct me if I am wrong—the contract price for gas is fixed to the prevailing oil price. Am I right on that? The noble Lord will tell me. If that is so, willy-nilly by the reduction in oil prices, the price of gas will reduce. But there is no compensating link between coal and oil prices. Therefore without predatory pricing it could very well be that gas—not because it is privatised but simply because of the way it has been organised over a long period of time—would be competing unfairly with the electricity industry.

Lord Gray of Contin

My Lords, no, I would not accept that that would be the case at all. With regard to the electricity industry, it is not dependent upon one fuel alone. Certainly the Government have an influence on where the electricity industry buys its coal and at what price. But electricity is made from nuclear power and from hydro-electricity, which is very much cheaper than anything else. There is little doubt that if we had the potential to produce hydro-electricity in the kind of quantity which we presently produce electricity from coal then it would be very attractive—but that is another argument. I simply use these examples as a comparison in the argument that the noble Lord is using.

I do not accept that the gas situation vis-a-vis oil would necessarily be a disadvantage with regard to the electricity industry. They will be competing in a market in which they had been competing for many years. The fear, for example, that the gas corporation will slash its prices to such an extent that nobody will be able to compete with them at all is to my mind a fantasy which one would naturally get during Committee and Report stages of a Bill—and rightly so—but it is totally devoid of realism in the commercial world.

Perhaps I can return to what I was saying to the noble Viscount. I obviously respect the view that he holds. He has explained it very clearly to me. I also thank him and appreciate his frankness. He said straight away that if I was not prepared to accept Amendment No. 82, then he would wish to move Amendment No. 83 and would insist on a Division on it, as he is perfectly entitled to do. I do not think that there is any point in my spoiling the excellent record which your Lordships have created on this amendment in being brief by being other than brief. I wish to mention the noble Lord, Lord Molloy. who has not in the past taken a very great deal of part in our energy subjects. We are delighted to see him with us and thank him for his contribution. With those few words, I leave it to the noble Viscount to decide what he wishes to do.

Lord Molloy

My Lords, before the noble lord sits down, may I thank him for what he has just said, and ask him whether he would clarify a point for me? I listened very intently to what he had to say. He seemed to indicate that the Central Electricity Generating Board could carry on what he called a massive and expensive television advertising programme, and that no doubt the new gas plc will do the same. They will carry on—using his words—a very expensive television programme. However, will that not inevitablv put up prices? Do we not all know that the people who pay the price for television advertisements are the consumers? Rather than have a television war, which can be massively expensive and for which the consumer will pay (because that is who will pay; otherwise they would not indulge in it), would it not be far better that there be written into the Bill—

Lord Brabazon of Tara

My Lords, I should just like to remind the noble Lord that we are at the Report stage of the Bill and that noble Lords are allowed to speak only once. The noble Lord is making a second speech.

Lord Moiloy

My Lords, I thought that it would be courteous to explain the point that the noble Lord made. In conclusion, if the amendment were accepted, would it not be far better to avoid this sort of television war, for which in the end only the consumer will have to pay?

Lord Gray of Contin

My Lords, by leave of the House, I said to the noble Lord, Lord Diamond—and the noble Lord, Lord Moiloy, has raised the same point—that I hope to give him figures. I am happy to tell the noble Lord that the note which I have received from the Officials' Box is almost verbatim the remarks I made earlier. Therefore, in due course perhaps I may drop the noble Lord a note and give him some indication of the costs.

Viscount Hanworth

My Lords, I am rather surprised at the two noble Lords who spoke against the amendment because, although I understand that one can take the view that it is unnecessary, I should have thought that that was the only logical view that one could take. The amendment simply says: if persons authorised under this part adopt practices which in their view are inimicable to fair competition between suppliers … they shall refer the matter to the Office of Fair Trading". The point is that they can do so anyway. I am simply writing it into the Bill to remind them, where necessary, to do so. For reasons which I have explained (and, once again, I wonder whether some people listened to what I had to say), the electricity industry is very worried. This would reassure that industry, and it is reasonable because it reminds the director and the Secretary of State that they have an obligation to look round and make sure that nothing is going wrong.

Therefore, I shall change my mind and divide the House on this amendment. I shall not move the next amendment, which is tougher still. I see no point in putting forward a tougher amendment when there is obviously a certain amount of opposition to this extremely sensible amendment. Therefore, I shall not withdraw the amendment.

On Question, amendment negatived.

[Amendment No. 83 not moved.]

9.45 p.m.

Clause 5 [Prohibition on unauthorised supply]:

Lord Belstead moved Amendment No. 84: Page 3, line 36, leave out ("public gas supplier") and insert ("person authorised to supply it by or under section 6, 7 or 8 below").

The noble Lord said: My Lords, I beg to move Amendment No. 84 and at the same time speak to Amendment No. 169. These two identical amendments are slightly technical but their purpose is clear. Subsection (2) of Clause 5 as presently drafted provides that a person, on selling gas supplied to them by a public gas supplier—that is a supplier authorised under Clause 7—for use in a building owned or occupied by him, does not commit an offence under Clause 5 in respect of unauthorised supply.

We have since given further thought to this and it seemed to us over-restrictive in creating a distinction between supply by a public gas supplier and by other suppliers, whether Clause 8 suppliers or those able to "notify" in respect of supplies of over 2 million therms a year under Clause 6 of the Bill. We could see no logical reason, for instance, to create a distinction between buildings supplied by British Gas or by Calor Gas in an isolated network in the country. We have therefore decided to bring to your Lordships a proposal to extend the scope of Clause 5(2) to any person authorised to supply by or under Clause 6, 7 or 8. This needs to be reflected in Clause 16, which deals with the quality of gas supplied, hence the second amendment to subsection (9) of that clause. I beg to move Amendment No. 84.

On Question, amendment agreed to.

Clause 6 [Exception to section 5]:

Lord Diamond moved Amendment No. 85: Page 4, line 7, leave out ("either").

The noble Lord said: My Lords, I am sure that we are on the Gas Bill. Apart from that, I could not say anything with precision. I gather that it is for the convenience of the House if, with this amendment, we discuss Amendment No. 86. We are now dealing with Clause 6, and the main substance of my amendments is the proposal that there should be added at line 13: that he is of the opinion that the gas supplier is unable to finance such a supply of gas.

Here there are a number of conditions which, all told, form an exception to Clause 5, and I could not understand why this one was omitted because it is one of the main conditions under Clause 4 which the Government have inserted into the Bill. I hope that with that short introduction, as we are all seeking to make the maximum progress on this Bill, the noble Lord the Minister will feel able to give us his views. I beg to move.

Lord Brabazon of Tara

My Lords, I hope that I can deal with this point briefly. This clause carries forward the provisions of Section 29A of the Gas Act 1972 as introduced by Section 12 of the Oil and Gas (Enterprise) Act 1982. The whole point about Clause 6 is that it deals purely with contracts between the gas supplier and very large customers who are taking more than two million therms a year. We believe that those supplies of over two million therms a year can only be undertaken by companies of substance who will be of sufficient weight to meet their contractual supply obligations without the application of a test of the kind proposed in this amendment.

Clause 4 is quite a different matter about public gas suppliers from Clause 7. This is purely for the large customers taking more than two million therms a year. Those customers are quite capable of making a contract with the gas supplier without any need for the director to get involved in the proposal in the amendment as to the financial viability of that supplier.

Lord Diamond

My Lords, I gather that what the noble Lord the Minister is saying is that the customer here is capable of looking after himself and does not need the assistance given under Clause 4. If I understand that correctly, then I shall give thought to what the Minister has said, and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 86 and 87 not moved.]

Clause 7 [Authorisation of public gas suppliers]:

Lord Diamond moved Amendment No. 87A: Page 4, line 41 after ("section") insert ("or an amended authorisation").

The noble Lord said: My Lords, we have now reached the important Clause 7, which provides for the authorisation of public gas suppliers. This amendment deals with the variation of that authorisation. It proposes, at page 4, line 41, to insert, not "for an amended authorisation". I apologise to the House: that is a misprint on the Marshalled List for "or". The "f" has crept in unexpectedly. It would read: 'public gas supplier' means any person who holds an authorisation or an amended authorisation".

The other amendment, Amendment No. 194A, to which I am speaking, merely defines what an authorisation is.

Why do we have to refer to an amended authorisation in this way? It is because of the restrictive way in which Ministers have hitherto interpreted the authorisation. I have the details somewhere among the mass of paper on the Bench. It is not easy to refer to it, but if my recollection is reasonably correct, the noble Lord, Lord Belstead. said on an earlier occasion, in relation to another amendment, that an authorisation could not be altered; if one did alter it, the gas supplier would not be a gas supplier under the terms of the Bill because according to the Bill a gas supplier is the supplier who had been given the original authorisation. If the authorisation was altered, he would no longer be a public gas supplier and everybody would be in a terrible fix. The noble Lord used that argument against amendments we were proposing in order to make adjustments.

I suggested at the time we were discussing this point that there were other ways out of it. But on further thought it seemed to me that the simple way was to provide in this clause that a public gas supplier is a person who holds either an authorisation or an amended authorisation. That is the purpose of my amendment. I beg to move.

The Deputy Speaker (Lord Airedale)

My Lords, the amendment proposed is on page 4, line 41: after ("section") insert not as printed on the Marshalled List but ("or an amended authorisation").

Lord Belstead

My Lords, Clauses 23 to 27 set out the arrangement for modification of public gas suppliers' authorisations whether by agreement or following a reference to the Monopolies and Mergers Commission under the provisions of the Bill or under competition law. I am advised that an authorisation as modified under those clauses remains an authorisation granted under Clause 7. A public gas supplier whose authorisation has been so modified remains a public gas supplier within the meaning given by Clause 7(1). Therefore the amendment proposed by the noble Lord, Lord Diamond, is unnecessary, for the reasons I have just given.

Lord Diamond

My Lords, I have listened to what the noble Lord the Minister has said. Regretfully I cannot turn up at this moment the one or two statements that the Minister himself made during the course of our Committee proceedings dealing with the difficulties arising out of an amended authorisation. I shall come back to that if necessary, though I hope it will not be. I have listened to what the Minister has said and I shall read it all very carefully in Hansard and, if necessary, come back at a later stage. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Stoddart of Swindon moved Amendment No. 88: Page 5, line 1, at end insert ("and following approval of the conditions of the authorisation by both Houses of Parliament").

The noble Lord said: My Lords, it may be convenient if we discuss with this amendment Amendments Nos. 90, 91, 92 and 93. If this amendment were carried, Clause 7(2) would then read: The Secretary of State after consultation with the Director and following approval of the conditions of the authorisation by both Houses of Parliament may authorise any person to supply gas through pipes to any premises in that person's authorised area",

etc.

Noble Lords will recall that at Committee stage we attempted to write the authorisation into the Bill as a schedule. Had we been successful in doing so, it would have been possible at a further stage to amend the schedule in accordance with what we felt the authorisation should cover. But unfortunately—and perhaps the matter was a little complicated because the schedule was very long and complicated by the price formula—the Committee felt that it could not agree to that course of action. The opportunity is therefore given by this amendment and others for this House to ensure that before an authorisation is agreed Parliament has the opportunity to see it and to agree it. Unfortunately, orders cannot be amended and that is why this method is not as good as our previous method. An order cannot be amended, but at least both Houses would have the opportunity to see the conditions and would be able to approve or disapprove of those conditions.

As we said at Committee stage—all those of us who took part in it—we are very concerned that Parliament should continue to have some kind of input. Here we have an industry, the gas industry, which has been under public control for over 40 years. The opportunity has been available to the public to have their say through their Members of Parliament in what the gas industry is doing or what it is not doing. The fact is that it has been an industry responsible to Parliament; people know that it has been responsible to Parliament; the gas industry itself has known that it has been responsible to Parliament. Therefore Parliament has been able to exert a considerable influence on the development of that industry and on the way that industry treats its customers.

After the Bill becomes law, there will be no such opportunity. The gas industry will be in private hands and Parliament will be very much at arm's length. The noble Lord will say, "Yes, but the Secretary of State has certain duties and powers within the Bill and he is responsible to Parliament". But in my view that is an arm's length relationship. It is therefore essential that Parliament should be able to see the authorisation, should be able at least to comment on that authorisation and, if necessary, reject the order which contains the authorisation.

Quite frankly, I should have thought that that was the least we could do. That is the least that we could say to the customers, to the consumers; and it is the least we could do for Parliament, which is to lose control of a great industry that it has controlled over a long period of time. With an industry such as this, which is to be converted from a public monopoly to a private monopoly, it must be right that Parliament has some say as to how that industry is going to be regulated and run in the future.

This is the way that we now see of achieving just that. It is not as good an amendment as we proposed at Committee stage. That would have been the ideal, that would have been the real way in which Parliament could have had an influence on the authorisation and a way that would have enabled Parliament to revise the authorisation itself if it felt like doing so. However, that was not agreed. We believe that this amendment and the amendments associated with it are the right and proper way now of ensuring that Parliament keeps some measure of control over the industry, which, as I have said, will be converted from a public monopoly to a private monopoly.

I hope that the noble Lord will feel able to accept this amendment, especially in the light of the discussion we had on the previous amendment where I detected some support for continued Parliamentary input into the authorisation of the privatised gas industry. I have moved this amendment shortly because we really must get on. I hope the noble Lord will be able to offer me some encouragement on this amendment, and I beg to move.

10 p.m.

Lord Campbell of Alloway

My Lords, I only wish to speak to Amendment No. 88 which affects the enforcement of the code of practice for the aged and infirm. I have supported this amendment hook, line and sinker for the reasons I gave when I spoke to the group of amendments. It is a prime consequential issue as to whether and how certain breaches of the code of practice for the aged and disabled should be brought within Clauses 28 to 30 of the enforcement procedures. This amendment, in another form, could constitute a relevant requirement by amendment to Clause 28(8). This amendment is the door to Clauses 28 to 30, concerning enforcement. It is fundamental.

One has to consider the drafting of Amendment No. 76B in context with Amendment No. 88 and also with Clause 28(8). My noble friend the Minister agreed to take this back for consideration. It is Lord Diamond's point that it is rather odd to keep amending the proposed authorisation under Clause 7. This amendment disposes of that objection because it requires that the authorisation before grant should be laid before Parliament.

Your Lordships would no doubt agree it is right to give my noble friend the Minister an opportunity to consider with his advisers how this may best be drafted and I hope that in those circumstances effect can be given to the main principle, and that the amendment need not, subject to Lord Stoddart's view, be pressed.

Lord Diamond

My Lords, we are discussing this amendment together with Amendments Nos. 90, 91, 92 and 93. Amendment No. 91 is in my name and provides that on page 5, line 2, after the word "authorised" one should insert: by order (except in those cases where the Secretary of State considers that, having regard to the likely volume of gas to be supplied, the representations made, and all other relevant circumstances, no useful purpose would be served thereby)". I want to make it absolutely clear that I support Amendment No. 88; but one has to be satisfied with something less than the ideal if one is, as we are, a minority in the House dealing with a Government which has a very substantial majority. The noble Lord, Lord Stoddart, has proposed an amendment which would provide the proper safeguard in these circumstances. In view of the objections that were raised at an earlier stage in our discussions, I thought perhaps the Government, even supposing for one moment that they were prepared to accept the amendment, might be prepared to accept a less useful and less forceful amendment of the kind that I have put forward. That would be where the Secretary of State can of his own consideration and within his own mind come to the conclusion that the likely volume of gas to be supplied is so small, the representations made so negligible and all the other relevant circumstances so satisfied that no useful purpose would be served by making an order of that kind. So it is really spelling out the de minimis rule, to which we always subscribe in legislation, hoping that by doing so we can make it more possible for the Government to accept an amendment which goes part of the way, if it is not prepared to accept the amendment which has been moved, which goes much further and which I support entirely.

Lord Bruce of Donington

My Lords, since we are taking Amendments Nos. 92 and 93 together with the three amendments which your Lordships have just been discussing, I should like to return, if I may, to those Amendments Nos. 92 and 93, which were discussed in Committee on the 3rd June last. I then put the case to your Lordships that during the passage of the Telecommunications Bill we successfully argued with the noble Lord, Lord Cockfield, that the licence granted to the new British Telecom plc should be the subject of review by the House. The review by the House, under the provisions of the Telecom-munications Bill was exactly in the same words as those put down in Amendments 92 and 93, applicable to the authorisations granted to a public gas supplier in this Bill which, for all practical purposes means (at any rate for the moment and indeed for the foreseeable future) British Gas plc. I ventured to give quotations from the noble Lord, Lord Cockfield, at col. 729 of Hansard for 3rd June last, but I would not wish to detain your Lordships by repeating those quotations here.

In reply, the noble Lord, Lord Belstead, seemed rather to fasten on only one aspect of the authorisation to be granted to British Gas plc: that of safety. He rather fastened on that one and, in the course of his reply, referred to the Health and Safety Act and all the rest of it. The gravamen of his argument was that this particular authorisation was not comparable with the licence granted to British Telecom, as in the Telecommunications Act the main legal framework for the operator's activities was contained in the licence, and that is not the case in this Bill. Whether the main framework was in the licence, as in the case of British Telecom, and the main framework is not in the authorisation proposed to be granted to British Gas plc is surely very largely immaterial.

The authorisation covers a variety of matters. It provides for separate accounts for the gas supply business; the restriction of gas prices to tariff customers; standing charges; pricing for contract customers; connection charges; the provision of information to the director; the provision of informa-tion to the Gas Consumers Council; the conveyance of gas for others; the supply of back-up gas; the emergency service; the codes of practice for tariff gas supplies and payment of bills; the supply to public lamps and the payment of fees. There are also a couple of schedules dealing with the revocation of authorisation and Annex A on gas supply business.

This is fairly comprehensive and one of our difficulties in discussing this Bill in Committee and, so far, on Report—and this has been referred to many times by my noble friend Lord Stoddart and the noble Lord, Lord Diamond—is that all we have before us is a proposed authorisation. It is not reproduced in the Bill and it has not been put in as a schedule. There is nothing to stop the Government from altering this proposed authorisation, provided that it accords with the broad general parameters of the Bill. They can more or less do what they like with it and there is nothing that another place or this House can do about it. The Government can change their mind, even after the Bill has gone through Report stage and Third Reading, on, for example, the price formula. There is nothing in the Bill to stop them from altering that. This goes right to the roots of the Bill.

The noble Lord, Lord Cockfield, was not always accommodating to the Opposition, and I say that with some personal experience. But—and I say this without offence to any noble Lord opposite—he was so public spirited in this matter, and saw the force of the arguments put forward by the Opposition, that he met us on this point on the Telecommunications Bill, in the words that are incorporated in Amendments Nos. 92 and 93.

If the Government have no intention of making any substantial amendments to the proposed authorisation, prior to the date of transfer or prior to the granting of the first authorisation, but after the passing of this Bill through this House and another place and after it has come back to this House again, why can they not do precisely the same as the noble Lord, Lord Cockfield, did in respect of the Telecommunications Bill? Why can they not see that the authorisation is laid before the House in the form of an order? I do not want to prolong the argument at this time of night, but why cannot the noble Lord agree with that or, alternatively, give some rather more convincing reasons than he gave on 3rd June last?

10.15 p.m.

Lord Belstead

My Lords the effect of these amendments generally is to provide for consultation with Parliament in granting an authorisation to a public gas supplier. As your Lordships are already well aware, there is in the Bill a full system of consultation prior to the issue of an authorisation to a public gas supplier. We have already provided ample opportunity for Parliament to scrutinise and comment on British Gas's draft authorisation by publishing it before the Second Reading of the Bill in another place, and I really do not accept the need for further parliamentary involvement. It is basically for that reason that I cannot accept the amendment.

Incidentally, may I repeat what I have already said this evening. If an authorisation is to be changed in future, there is a mechanism in the Bill in Clauses 23 to 27 for changing it; and only by referring to those clauses can an authorisation be changed. We have not yet come to these clauses during our Report stage; but here again both Houses of Parliament have every right to put their stamp on Clauses 23 to 27.

The only other thing I think I need to say is in reply to the question put to me by the noble Lord, Lord Bruce. I shall not go into the points put to me by my noble friend Lord Campbell. Why, asks the noble Lord, Lord Bruce, can we not do what my noble friend Lord Cockfield did when he was Minister in this House so far as the Telecommunications Act was concerned? The parallel with the Telecommunications Act where the order designating public telecommunications operators contains equivalent provisions to those in Schedule 5 to this Bill is not a true one. These provisions are in our case fully contained in the statute; namely, in Schedule 5. It would not be appropriate for the same parliamentary procedure to be involved. I said very much that at rather greater length during the Committee stage. I am sorry that, if rather more briefly, I am saying the same thing at Report stage in reply to the noble Lord, Lord Bruce.

Lord Diamond

My Lords, before the noble Lord sits down, is he going to say anything in relation to the other amendments which are being discussed at the same time?

Lord Belstead

My Lords, I apologise to the noble Lord, Lord Diamond. The noble Lord has down Amendment No. 91. I simply say that I do not believe that even a reduced form of parliamentary approval which is contained in the noble Lord's amendment would be appropriate, having regard to the fact that once again Parliament will have passed the Bill with the draft of the authorisation before it. Perhaps I may remind your Lordships that the first draft of the authorisation was put before the House of Commons. We made sure that the revised draft of the authorisation, taking into account drafting points and points put forward in the House of Commons, was put before your Lordships' House at Second Reading. I have now made sure that a further draft of the authorisation, taking into account points put by your Lordships in Committee, has been placed before your Lordships for the Report stage. All along so far as the authorisation is concerned we have kept your Lordships fully informed. I repeat that if either the director or the public gas supplier later wants to make a change to the authorisation, he has to do so via Clauses 23 to 27. If the House wants to change Clauses 23 to 27, the House has every right to do so. They will receive full parliamentary scrutiny.

Lord Ezra

My Lords, can we be quite clear on up to what point in all this the Government can change the authorisation? I am quite clear that once the procedure starts operating the changes are covered by Clauses 23 and 24. But up to what point can the Government unilaterally alter the authorisation?

Lord Belstead

My Lords, I believe I am right in saying that it is up to the time of the setting up of the public gas supplier. Up to that time we will ensure that Parliament is kept fully informed, as it has been so far, about the authorisation.

Lord Diamond

My Lords, before the noble Lord finishes that point, and, if necessary, with the leave of the House, may I ask for further clarification? We are now fairly near to the Summer Recess. I have already raised this point but I do not recollect having had an answer to it. What will happen if after the House has risen the Government decide that owing to represent-ations made by sections of the trade or whatever—perfectly good representations—they ought on second, third or fourth thoughts to alter the authorisation? It would still be before the relevant date. It would still be within the power of the Government to alter it. It would not be within the power of the Government to notify the House or to obtain the reaction of the House to it. What does the Minister propose to do about that?

Lord Belstead

My Lords, for the last time, and only by leave of the House, the answer to the noble Lord, Lord Diamond, on that important point is that the changes that have been made to the authorisation hitherto have been confined to drafting changes and to changes made in response to points raised in both Houses of Parliament. That will remain the situation. There is, therefore, no danger that something will be put into the authorisation of which Parliament would not approve.

Lord Stoddart of Swindon

My Lords, there is clearly a yawning gulf between the two sides of the House, and certainly between the Minister and this side of the House. The Minister says that Parliament has been able to discuss the authorisation. The quarrel is that we have only been able to comment on the authorisation and not properly to discuss it, and certainly not to amend it.

So far as concerns changes, it may be that the director, the supplier, the Office of Fair Trading and the Monopolies and Mergers Commission may have something to do with changing the authorisation and making amendments to it, but Parliament will have absolutely nothing to do with it. That is what the debate has been all about. We believe that Parliament should have an input, and that there is no provision for Parliament to have such an input.

I feel, therefore—and I do this in the interests of brevity—that I must press this amendment to a Division. It is important that we do so. I beg to move.

10.21 p.m.

On Question, Whether the said amendment (No. 88) shall be agreed to?

Their Lordships divided: Contents, 18; Not-Contents, 51.

DIVISION NO.5
CONTENTS
Airedale, L.	McNair, L. [Teller.]
Bruce of Donington, L.	Molloy, L.
Crawshaw of Aintree, L.	Morton of Shuna, L.
Dean of Beswick, L.	Northfield, L.
Diamond, L.	Ponsonby of Shulbrede, L.
Ezra, L.	[Teller.]
Gallacher, L.	Seear, B.
Grey, E.	Stoddart of Swindon, L.
Kilmarnock, L.	Tordoff, L.
Mackie of Benshie, L.

NOT-CONTENTS
Arran, E.	Crathorne, L.
Bauer, L.	Davidson, V.
Belhaven and Stenton, L.	Denham, L. [Teller.]
Belstead, L.	Donegall, M
Boardman,L.	Elliot of Harwood, B.
Boyd-Carpenter, L	Elliot of Morpeth, L.
Brabazon of Tara, L.	Elton L
Brougham and Vaux, L.	Erroll of Hale, L.
Caithness, E.
Cameron of Lochbroom, L.	Ferrers, E.
Campbell of Alloway, L.	Gainford, L.
Carnegy of Lour, B.	Gardner of Parkes, B.
Carnock, L.	Gibson-Watt, L.
Clinton, L.	Glanusk, L.
Coleraine, L.	Glenarthur, L.
Craigmyle, L.	Gray of Contin, L.

Henley, L.	Pender, L.
Hives, L.	Rankeillour, L.
Hood, V.	Sanderson of Bowden, L.
Hooper, B.	Sandford, L.
Long, V.	Sandys, L.
Lucas of Chilworth, L.	Skelmersdale, L.
Macleod of Borve, B.	Suffield, L.
Margadale, L.	Swinton, E. [Teller]
Monk Bretton, L.	Thomas of Swynnerton, L.
Montgomery of Alamein, V.	Trumpington, B.

Resolved in the negative, and amendment disagreed to accordingly.

10.30 p.m.

Lord Diamond moved Amendment No. 89: Page 5, line 1, at end insert— ("and, except in those cases where the Secretary of State considers that, having regard to the likely volume of gas to be supplied, the representations made, and all other relevant circumstances, no useful purpose would be served thereby, after a public hearing.").

The noble Lord said: My Lords, I understand that it will be convenient to discuss also Amendments Nos. 95 and 96. Amendment No. 89 deals with the authorisation of the Secretary of State. The authorisation should be given only after a public hearing unless the circumstances to which the amendment refer apply.

The more that we discuss the grant of authorisation and alterations to such an authorisation, the more are we anxious that the matter should be dealt with properly, either, as we have previously suggested, by the authorisation of both Houses of Parliament, which has not been agreed, or by a public hearing.

I noted carefully what the Minister said on a previous amendment as to the extent of the variations that would be permitted to the authorisation. He made it clear that the Government were denying themselves the right to consider alterations to the authorisation once the House had risen for the Recess. Presumably there will be no opportunity to inform the House in the spill-over period, because I assume that will be too late, and there will be no opportunity for further alteration to be made. I shall read carefully what the Minister said in case I am reading too much into his comments. But, nonetheless, even if no authorisations are made before the transfer date, alterations in the conditions can be made after that.

The first relevant provision is in Clause 23, and although we have not yet reached it, let me refer to it in passing. It refers to modification by agreement. The whole authorisation or conditions in it can be varied, without a word to Parliament and without a public hearing, by what might turn out to be a cosy arrangement between the director and the public gas supplier.

One has to provide for all eventualities when drafting legislation of this size and importance and legislation which affects so many of Her Majesty's subjects, and therefore we should take every possible precaution. The amendment would provide the precaution of a public hearing.

The provision in the statute is an important one. It would affect the interests of many people, and there should be a public hearing, unless, as the amendment proposes, the circumstances are so slight—and that is defined in the Bill—that it would be a waste of everybody's time, and the Secretary of State would then be given the power to make that decision. As I have said, the de minimis rule applies to those circumstances.

In Amendment No. 89 we propose that except in those minimal circumstances there should be a public hearing. We are also considering Amendment No. 95, in the name of the noble Lords, Lord Stoddart and Lord Gallacher, and Amendment No. 96 which is in my name. The clause provides: Before granting an authorisation under this Section, the Secretary of State … shall consider any representation or objections that are duly made and not withdrawn".

The amendment provides that after "shall" the words "after a public hearing" should be inserted, again with the de minimis exception, in the way that I have defined it. That is by way of being a rather better alternative to the amendment that I have already moved.

I shall say no more about Amendment No. 96 because the arguments have already been expressed. I beg to move.

Lord Gallacher

My Lords, as Amendment No. 95 is being discussed with this amendment, it may be for the convenience of the House if I speak to it at this stage. It will be recalled that in Committee we tried to open up this clause in the belief that the public hearing procedure gave the Secretary of State the opportunity to practise open government. We argued that it need not be bureaucratic or time-consuming or too revealing or expensive. We referred to the fact that public hearings were common in the United States system, but we did not wish slavishly to follow that system although we did not regard the United States system as being devoid of merit.

However, our arguments then failed to carry the day with the Government. Therefore on the basis that the Government are not prepared to accept a completely open system we merely propose in Amendment No. 95 that objections which are not subsequently withdrawn should be subject to a public hearing so that the public may know, a propos of authorisation, which objections the Minister has failed to resolve by consultation with the parties. That seems to us to be the minimum that the Government could do so that this important aspect of the Bill may be as open to the public as possible. I hope that on that limited basis the Minister may be more sympathetic on Report than he was in Committee. I shall be interested to hear what the Minister has to say about Amendment No. 95.

Lord Belstead

My Lords, we have already discussed in Committee the principle of including a public hearing in the authorisation procedure. We had a vote and the Committee voted against the proposal.

Your Lordships will forgive me if I am brief in my reply. The Bill already provides for the public to make their views known on a proposal to give a Clause 7 authorisation. We do not believe that a public hearing would be likely to be of help to my right honourable friend in coming to a decision on an application. It would be extremely time-consuming and could lead to substantial delays before supplies were authorised and consumers received the gas that they were waiting for.

The noble Lord, Lord Diamond, said that the interests of many people are involved. Yes, indeed; and that is why there is provision for full represent-ation on an authorisation application written into Clause 7. It is for those reasons that I am sorry that I cannot accept the proposed amendment.

Lord Diamond

My Lords, I do not think that there is any point at this stage in pursuing the argument. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 90 and 91 not moved. ]

Lord Diamond moved Amendment No. 94:

Page 5, line 6, at end insert ("in accordance with the provisions contained in Schedule (Standing Charges) to this Act.").

The noble Lord said: My Lords, I am sure that with this amendment it will be convenient to discuss Amendment No. 127, which is the schedule in question. I understand from the noble Lord, Lord Stoddart, that it will be convenient to discusss also Amendment No. 141, dealing with standing charges, which is in the names of the noble Lords, Lord Stoddart and Lord Bruce of Donington.

The substance of the amendment is of course the schedule. Aś noble Lords will recollect, we had a short discussion in Committee when this was seen as a matter of considerable importance. If my recollection is correct, the Government undertook to provide a drafting amendment in respect of the words "best endeavours". I hope that they will wish to say something in response to this amendment. I do not believe that Ineed pursue my remarks until I have heard what the Government have to say. I beg to move.

Lord Stoddart of Swindon

My Lords, it would perhaps be as well, before the noble Lord replies, if I were to speak to Amendment No. 141 standing in my name and that of my noble friend Lord Bruce of Donington. The noble Lord has gone a little way to meet some of our objections. He has amended the authorisation and has removed the offending words, "best endeavours". The new condition in the authorisation, as I understand it, will not be a question of using "best endeavours". British Gas plc will be required to ensure that standing charges do not go up in any relevant year by more than the retail price index. If that is not correct, the noble Lord will put me right when he replies.

But of course Amendment No. 141 is a little different from the amendment proposed by the noble Lord, Lord Diamond. We say in our amendment: Where in the light of such investigations the Director is satisfied that—

1. (a) the services provided and paid for by the standing charge have been reduced; or
2. (b)the public gas supplier has achieved significant cost reductions in the components making up such a charge, then he may give direction to the public gas supplier to reduce standing charges or to increase them by amounts in any one year less than the increase in the retail price index.").

We are going a little further than the Minister has done and a little further than the noble Lord, Lord Diamond. We seek to ensure that if the cost of the services covered by standing charges goes down, then the gas customer should not have to pay increased standing charges in accordance with the RPI but would be paying standing charges at a lower rate than the increase in the RPI. I hope that I have that right. The noble Lord will understand, I think, what we mean. I hope that he will see the sense of this amendment. It is sensible that if it were found that the costs of the standing charges had gone down, the savings should be passed on to the customer. I hope that the Minister will see the sense of it and give some indication that he will either accept the amendment or at least consider it between now and Third Reading.

10.45 p.m.

Lord Belstead

My Lords, both the noble Lord, Lord Diamond, and the noble Lord, Lord Stoddart, have expressed their concern about proper control over standing charges. We share that concern. It is for this reason that the draft authorisation which has been made public includes provisions controlling standing charges. These fall within the general control of prices under the price formula set out in Condition 3. Under this formula British Gas will have a clear and strong incentive to reduce the costs within its control and customers will benefit from improved efficiency through the efficiency factor X which is now set at 2. There will be adequate incentive for British Gas to keep the standing charges as low as possible. I suggest to your Lordships that it is clear rules of this nature rather than intervention by Secretaries of State after wide-ranging consultations which provide the necessary incentive. However, there is the important question as to how the total should be recovered between the standing charge and the rate per therm. Here I come much closer to Amendment No. 141. It is in order to prevent unreasonable increases in the standing charge that the Government believe that there should be a further control to ensure that they rise no faster than the rate of inflation. That is why we have Condition 4 of the draft authorisation setting out the obligation. Indeed, we have removed the words "best endeavours" from Condition 4 so that the obligation is absolutely direct that the standing charge shall not rise faster than the rate of inflation.

I realise that my answer does not go as far as the noble Lord, Lord Stoddart, would wish, but, my goodness, this is a belt and braces situation. Standing charges are part and parcel of the non-gas costs in Condition 3 and they are protected with regard to the RPI in Condition 4. I do not think that we can go further than that.

Lord Diamond

My Lords, before the noble Lord sits down will he say a word about paragraph 2 of my Amendment No. 127? I did not refer to it because I did not know what the Government were going to say. Paragraph 2 of the amendment says: The Secretary of State may, after consultation with the supplier, the Director and the Council, limit the said percentage increase to the extent he considers appropriate". Is the noble Lord saying that under no circumstances will that limitation take place?

Lord Belstead

My Lords, I did not refer to it because it is not part and parcel of the deal that the Government are offering, which I think is an excellent deal.

Lord Bruce of Donington

My Lords, before the noble Lord sits down, I wonder whether he will answer one question. We are very appreciative of the removal of the words "best endeavours" from Condition 4, but paragraph 1 of that condition refers to the percentage increase in the retail price index. The point on which I seek some clarification is this. What is to happen when the whole basis of the retail price index is changed? As the noble Lord well knows, there has been some discussion about a change in the basis. Is it the intention of the noble Lord that the retail price index one year taken against another should be on a published consistent basis? That would help because otherwise one might find all kinds of unexpected things happening to the standing charges as a result of quite unexpected factors—particularly where the noble Lord, Lord Young of Graffham. was involved—arising regarding the RPI.

Lord Belstead

My Lords, I think that this arose at a previous stage of the Bill, but whether or not it did the noble Lord has asked me a direct question. My answer is that if there is a material change in the basis of the index, such other index as the director may, after consultation with the supplier, determine to be appropriate in the circumstances would be the index which would be used.

Lord Bruce of Donington

My Lords, I am obliged.

Lord Diamond

My Lords, it is difficult to keep up with the pace at which your Lordships' House is dealing with all these amendments. I think that we are now discussing Amendment No. 94, which I have moved. The Government have replied in a rather unsatisfactory way, but we cannot do very much about that, and I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 92, 93 and 95 to 98 not moved.]

Lord Stoddart of Swindon moved Amendment No. 99: Page 5, line 38, at end insert ("but such period shall not, in any case exceed 15 years").

The noble Lord said: My Lords, I shall briefly move Amendment No. 99. It has not been possible to make any amendment to the proposed authorisation, so I move this amendment to the Bill in an attempt to limit the period of the authorisation to 15 years rather than to the 25 years contained in the draft authorisation itself. We believe that a period of 25 years is far too long. After all, it is a quarter of a century, and a lot can happen in that time. Governments change and have different outlooks, policies and attitudes, and we should not circumscribe their actions for so long a period ahead. Franchises granted to the ITV companies run for only eight years, yet here we are proposing to give what is literally a franchise to private people to operate a public gas industry for 25 years.

Twenty-five years takes us to the year 2011, assuming that British Gas is sold off this autumn, and few, if any, of us will be around then unless we have the constitutions of a Shinwell, a Macmillan (who we hope will soon be restored to full health) or a Brockway. Fifteen years is much more rational and reasonable, and in fact more convenient since the licence would run until 2001—just about the turn of the century.

If this amendment is accepted, we of course understand that notice of termination would need to be altered, probably to five years. I think that this is a reasonable and sensible amendment, and one which the noble Lord could easily accept. I beg to move.

Lord Belstead

My Lords, as the noble Lord is very well aware, the problem with this amendment is that it is essential, where investment of the kind necessary to sustain activities of a public gas supplier is concerned, to provide some certainty as to the duration of the authorisation. In this case we provide what we regard to be a realistic period, which totals 25 years. However, if the Secretary of State was minded to terminate the authorisation he must give 15 years' notice; and, of course, as the noble Lord is again aware, there are the provisions in Clauses 23 to 27 whereby there is a mechanism for changing the authorisation either by agreement or not by agreement. We think that this adds up to a fair package, but of course different arrangements might be appropriate in the case of other suppliers.

Therefore, we believe that it is right to leave the Secretary of State discretion in this matter, and we think that it is right to have a period which totals 25 years. It is in fact a 10-year period with a 15-year notification period written in. I am sorry; it is a 15-year period with a 10-year notification period written in.

Lord Stoddart of Swindon

My Lords, I was about to query that because the position seemed much worse than I thought it was. The fact is that we do not really agree with the noble Lord. We think that 15 years is quite adequate; but we have aired the matter and the Minister now knows our point of view. I should have said that it might be convenient if, with this amendment, the House discussed Amendment No. 113. That will save us time later. In view of the time of night, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 100: Page 5, line 40, after ("the") insert ("present and future").

The noble Lord said: My Lords, I beg to move, on page 5, line 40, after "the" to insert "present and future". The Bill would then read: An authorisation under this section may include— (a) such conditions relating to the present and future supply of gas".

I gather that with that amendment it would be convenient to take Amendment No. 101, at line 44. That would mean that the authorisation may include: such conditions relating to the present and future supply of gas … as appear to the Secretary of State to be requisite or expedient having regard to the duties imposed by section 4 above and to the need for a supplier to engage in such research and development activities as are likely to preserve the long term future of its markets".

These two amendments taken together mean that we are anxious that the authorisation should include —although we recognise that the provision is only that it may include; and we have not suggested altering "may" to "must"—the need to have regard to preserving the long-term future of its markets, and to the present and future supply of gas.

I had better say a word about Amendment No. 122, at line 33 on page 8. Page 8 deals with the general powers and duties of public gas suppliers. The amendment is of considerable importance and I had better read it out. It proposes: It shall be the duty of the public gas supplier to settle from time to time with the Director a general programme of research affecting gas supply and other matters affecting their functions, which will also include matters affecting the supply of gas for a specified forward period as well as matters affecting the general policy of the gas supplier towards all classes of customer and, insofar as it is practicable, consideration of the supply and demand of other energy sources".

I now see that this is an amendment in the name of the noble Lord, Lord Stoddart, and there is no need for me to pursue that matter further. I apologise for impinging on his territory. He will no doubt want to move that amendment and explain it. I return to the amendment I have moved at page 5, line 40, regarding the present and future supply of gas. That opens up the whole question of taking the long-term view as well as the short term view and the need for research and development activities so as to preserve the long-term future of its markets. As is stated in the amendment, we are anxious about this important aspect. It may be that regard will be had to it in any event; but we think that it ought to be specified in the statute because it is of much importance. I beg to move.

11 p.m.

Lord Brabazon of Tara

My Lords, on the noble Lord's first point on Amendment No. 100 concerning "present and future" I can give him the assurance that he seeks. The interpretation of the words in the Bill as presently drafted already covers both the present and the future supply of gas.

Turning to the substance of the amendment, which is the need to continue with research and development, we had a very good debate on a similar amendment at the last stage in which a large number of noble Lords took part. I made the point clearly, and it was accepted by the Committee, that British Gas already runs a whole range of schemes and spends millions of pounds looking into ways of improving the technical aspects of its business. Through privatisation we are seeking to release the industry from political interference and to place British Gas in an atmosphere of commercial discipline and competition. I have no doubt that British Gas will invest in research and development as a way of ensuring the continued success of its business: indeed all other large businesses spend large amounts of money on research and development in their particular fields. I further believe that imposing the kind of regulatory oversight which conditions of the kind proposed would entail would not be consistent with achieving the aim of lifting unnecessary bureaucratic burdens.

As my honourable friend the Parliamentary Under-secretary of State for Energy said in another place on a similar amendment, nationalised industries are creatures of statute and their duties and powers are appropriately encompassed in the statute. Private sector companies have articles and memoranda of association. Moreover, it is part of the make up of industrial and commercial life for such companies to make major investments in research and development. I am sure that noble Lords know from their own experience that that is the case. I therefore really cannot accept this amendment. I do not believe a duty such as this should be put on the director and I cannot accept the amendment.

Lord Stoddart of Swindon

My Lords, I really should have spoken to Amendment No. 122 before the noble Lord replied, but my noble friend Lord Ponsonby was so concerned about the progress we were making that I was discussing that with him and I could not turn my attention to the amendment.

I shall not keep the House for long. We had a discussion about it and about the research effort of British Gas at Committee stage, but although we are perfectly satisfied with the research effort made by the present British Gas Corporation, we are concerned that when the industry is privatised that effort may not be continued. It may seem on the face of it that it is the sensible and reasonable thing to do; but industries, particularly when they are under private control, do not always do what is reasonable and sensible.

For example, if they are under pressure from the shareholders or from a group of directors to increase their profits if their profits are falling, then they may say to the board. "You must cut down on research and development". Frankly, that would be disastrous for the industry. That is why the noble Lord, Lord Diamond, and I are trying to write something into the Bill to ensure that does not happen and that British Gas plc is under a duty to maintain a good research and development effort.

That is the reason we have proposed this amendment. I hope that explains our position without going into too much detail, and I hope the noble Lord will be rather more sympathetic than he has been to date on this group of amendments.

Lord Brabazon of Tara

My Lords, with the leave of the House perhaps I may say that I do not see why British Gas, when they go into the private sector, would wish to spend any less on research and development than they currently spend in the public sector. They are in competition, after all, to a large extent with other fuels. The oil companies all spend a great deal of money on research and development. If they are going to remain competitive with other fuels, particularly in the industrial market, then they are going to want to continue their large programme of research and development. I really think that there is no need to put this sort of thing into statute.

Lord Diamond

My Lords, I am grateful to the Minister for his assurance that the words in the Bill mean what my first amendment, No. 100, indicate. I accept that if that is the advice the draftsmen have given him then that is the correct situation. So that point is met. As to the rest of it, particularly page 5, line 44— the need for a supplier to engage in such research and development activities as are likely to preserve the long term future of its markets"— I am really very unhappy that the Minister is saying that there is no need to put it in the Bill. There is, indeed, need to put it in the Bill. There is need to help the public gas supplier and the director to understand that there is a long term interest to this country which may not coincide with a particular short term interest of the shareholders.

The two interests may not coincide. They may be in opposition. It is not the case that they would automatically, in the circumstances of a private sector company, do what they have been doing in the circumstances of a public sector company, where it is accepted to be in the national interest that research and development should take place and where, therefore, the Government are prepared if necessary to provide the funds for that to happen. So I am bound to say that I cannot accept that there is no need for this amendment or, indeed, for the amendment moved by the noble Lord, Lord Stoddart. I can only repeat that in the circumstances, if the Government are not prepared to move, there is nothing more that we can do about it and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 100A: Page 5, line 40, after ("the") insert ("prices charged and the other terms of).

The noble Lord said: I beg to move this amendment, which again is referring to the conditions that may be included in an authorisation. It would then read: An authorisation under this section may include"— again, it is only "may" an not "must"— such conditions relating to the prices charged and the other terms of the supply of gas".

This is an attempt to introduce the question of a price—which is, after all, one of the most important elements of the whole thing, and has been totally left out of the statute so far—into the statute. The Government have acknowledged that the authorisation is of great importance and that they have not published the authorisation or any terms of the authorisation, although such terms exist and such authorisations exist. They have not brought that into the statute. At all events, we should bring a reference to the price (which, after all, is the main condition of the authorisation) into the statute because it is the price formula which is intended to protect the consumer so far as the future supply of gas is concerned. I beg to move.

Lord Brabazon of Tara

My Lords, the noble Lord, Lord Diamond, has sought in this amendment to clarify the first paragraph of the subsection permitting authorisation conditions relating to the supply of gas by adding specific references to the prices charged and other items of supply. However, I am afraid that in his search for clarity the noble Lord has brought about the incidental effect of limiting the vires for such authorisation conditions. In any event, the clarity which he seeks is quite unnecessary since paragraph (a) refers back to the duties on the Secretary of State and the director in Clause 4, which cover a range of matters but specifically include those referred to by the noble Lord. I therefore have to say that this amendment is both inappropriate and unnecessary, and I must invite the noble Lord to withdraw it.

Lord Diamond

My Lords, I may astonish the noble Lord, but I think that what he said is quite right and therefore I seek to leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 101 not moved.]

Lord Stoddart of Swindon moved Amendment No. 102: Page 6, line 5, after ("authorisation") insert ("but which shall not exceed 0.1% of the annual turnover of the public gas supplier unless authorised by affirmative order of both Houses of Parliament").

The noble Lord said: My Lords, I shall move Amendment No. 102 briefly. The noble Lord might wonder why I put down this amendment. The reason is that I have a suspicious mind. I am suspicious that the licence fee could be used to milk the industry and the consumer. I do not believe in taxing by stealth. Tax policy should be patent and not surreptitious. The 0.1 per cent. mentioned in this amendment would be roughly £7 million on a 1986 basis and that, in my view, would adequately cover the running of the director's office and the national Gas Consumers' Council.

It may very well be that I should not be suspicious, and I hope that the Government will tell me that all is well. I have read Condition 15 of the new draft authorisation and it seems to cover the point, except of course that the authorisation can be amended without reference to Parliament. Perhaps the Minister should like to comment on that.

Just to prove that I have read the condition, may I point out that there is an error in Schedule 2 of the new authorisation which refers to Condition 14 when it should refer to Condition 15. Perhaps that can be corrected before it goes into operation. I beg to move.

Lord Brabazon of Tara

I shall certainly look at the last point that the noble Lord, Lord Stoddart, has raised regarding whether Schedule 2 should refer to Condition 14 or Condition 15. In turn perhaps I may draw the noble Lord's attention to Schedule 1, paragraph 5, and Schedule 2, paragraph 7, where he will see that the cost of Ofgas and the Gas Consumers' Council is met out of money provided by Parliament. That means that the amount to be paid to Ofgas and the Gas Consumers' Council will appear in the estimates and it will therefore be open to Parliament to raise any matter of concern on the level of fees, which I believe is the appropriate way forward. I quite accept that in practice the moneys will be provided by the fees raised from the supplier, but it will, through that route, be subject to parliamentary attention in any case.

Lord Stoddart of Swindon

In the light of that explanation I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.15 p.m.

Lord Ezra moved Amendment No. 103: Page 6, line 5, leave out ("and").

The noble Lord said: My Lords, although this amendment, and Amendment No. 104, were referred to at an earlier stage, I should like to make a brief point in connection with them. The draft authorisation now includes in Condition 13 a requirement for the public gas supplier to encourage the efficient use of gas by consumers. It would therefore seem to me to be appropriate that the fact that this is now included should be stated in the Bill, and this would be an appropriate place to bring it in. It is on that basis that I should like to move Amendment No. 103. I beg to move.

Lord Gray of Contin

My Lords, I think I may have touched partly on those amendments when replying to the debate on Amendment No. 72. The noble Lord, as he indicated, realised that those were grouped with it; so if I reiterate some remarks I have already made, perhaps the noble Lord will be tolerant with me.

I gave various examples of the methods which the British Gas Corporation has already taken in order to ensure efficient energy management at that time and so I shall not repeat them. But these are all backed up by British Gas's considerable research and develop-ment effort for all sectors, including the development of energy-efficient appliances. As a result of the resources of the British Gas School of Fuel Management and the British Gas Technical Consultancy Service, already hundreds of millions of therms have been saved; and there is even greater potential for saving. British Gas has played its part in many of the programmes which have been launched and have been successful.

Amendment No. 104 would permit the Secretary of State to include conditions relating to energy efficiency in the Bill; but this is really the case already, because under Clause 7, so far as concerns advocacy and advice through the publication of information, there is already provision for that. Clause 7(7) reads: An authorisation under this section may include— … such conditions", and then goes on to describe them.

There is an energy-efficiency duty in Clause 4, backed up by Clause 7(7)(a), which relates to these duties. I think that covers the points made by the noble Lord. I can quite see the reason for this suggestion that it should be written into the Bill; but I would submit to him that the provision already exists in the Bill to do as much as is reasonable to legislate for. Perhaps he will consider, in the light of this, withdrawing the amendment.

Lord Ezra

My Lords, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 104 and 105 not moved.]

[Amendment No. 106 had been withdrawn from the Marshalled List. ]

Lord Diamond moved Amendment No. 107: Page 6, line 12, at end insert— ("and ( ) conditions requiring the public gas supplier to publish, six monthly, accounts showing separately the profit or loss arising from sales of gas subject to maximum price regulation, which accounts shall be certified by the Director as showing, with reasonable accuracy, the costs and revenues ascribable to those activities;").

The noble Lord said: My Lords, I beg to move this amendment. Again, we are dealing with the same clause. There was a discussion on a similar amendment during the Committee stage and a number of objections were put forward to it. Those objections have, I hope, been met in the amendment which I am now moving.

One of the proposals made earlier was that there should be audited accounts. There is no reference here to audited accounts, because I understand that the position of the auditor is somewhat different from that of the director, and it was put forward by the Government that it was too difficult for the auditor. So one has left out the question of audited accounts, because the important thing is that the accounts should be figures which the director himself has been able to examine. As it is no longer a question of audited accounts, there is no reason why one should wait 12 months, so this amendment proposes six-monthly accounts, and that every six months the public gas supplier should publish accounts showing separately, the profit or loss arising from sales of gas subject to maximum price regulation".

I shall come back to that. A further condition is that those accounts, shall be certified by the Director as showing, with reasonable accuracy, the costs and revenues ascribable to those activities.

The words "reasonable accuracy" have been put in because the Government suggested that it was quite impossible to arrive at precise figures. So we are saying that we do not entirely share the view, but reasonable accuracy is enough in the circumstances, because we are dealing with very large figures. The important point is that the accounts should show, separately the profit or loss arising from sales of gas subject to maximum price regulation".

There are certain costs which are not subject to maximum price regulation and certain costs which are, and they are about 50–50. For example, the costs of gas purchase are not subject to maximum price regulation. The costs of gas purchase are passed onto the consumer, together with a figure representing the increase in the retail price index. It is not correct to assume that there is no flexibility as between the costs of gas and costs which are similar, but which do not come into the costs of gas and are subject to maximum price.

For example, there is the great problem of the winter peak supplies. During the course of the winter, gas consumption goes up and, therefore, the gas supplier has to be prepared to supply additional gas. He can do it in more than one way. He can simply contract to buy larger quantities of gas at that time, and may have to pay the increased price which results from the extra demand on the market, in which case that cost will be passed on directly to the consumer. Alternatively, he can do it by providing additional storage facilities, and himself incurring the costs of additional plant, and so on, involved; and the depreciation on that would be part of those costs which are subject to a maximum price. He could do it in either way, and it would affect the answer considerably.

There has to be some control over that and therefore the answer has to be that there should be some way of finding out what profit has been made by the gas supplier on that part of his business which relates to maximum price regulation.

There are many other ways in which there could be costs which could be charged either to the part that is not subject to maximum price regulation or to the part that is. But I do not want to delay the House on those examples at this point in time. I therefore invite the Government to agree to this amendment, which would enable the director and the public to know what is the true situation. I say "the true situation" because the accounts would have to be certified by the director and he would therefore have to have the necessary access to documents and information to enable him to do that. He would be concerned in the apportionment of costs and revenues to these various activities. The answer would therefore be a reasonably reliable answer, again having regard to the size of the figures that we are concerned with.

I hope that the Government will recognise that this is the case and recognise that in order to protect the consumer, in addition to the limitations on the build-up as is provided in the authorisation, you have to have an overall view to see whether a reasonable or unreasonable profit is being made all told out of the business which is price regulated, because it is the only way of protecting the consumer. That is what we are concerned with still. We are concerned with protecting the consumer in a private monopoly by seeing that the price is reasonable.

The provisions for that are inadequate in that there is no overall view. My recollection of the Oftel arrangements is that there is the right to have an overall view of its activities so that it is possible for the director of Oftel to be able to say whether the profits being made (albeit within the individual price formula which applies there, which is a different price formula) although consistent with the price formula, amount in total to a figure which in his view is excessive, or not, as the case may be. In judging whether it is excessive in total, you would have to have regard to the level of profits made by industry in that field generally. That would be a fair comparison.

With that further explanation, I hope that the Government appreciate the kind of anxiety that we have here, an anxiety based on experience of the difference between the make-up of individual items and the total looked at from an entirely different point of view. We have this anxiety. We think it can be met only by something along the lines of this amendment and we hope therefore that the Government will regard it as a reasonable amendment, either to accept or accept with modifications. I beg to move.

11.30 p.m.

Lord Gray of Contin

My Lords, as the noble Lord has acknowledged, a similar amendment was debated at some considerable length during the Committee stage of the Bill. It is not possible to associate in a rigorous way specific costs to individual sectors of the market. Not only do tariff and non-tariff sales have the same pipes, but the same emergency, gas purchasing and general services. There are serious technical difficulties in apportioning those costs that relate to meeting peak supply in the middle of the winter, when the supply system is running flat-out, and those that relate to meeting demand at normal times. That is a significant factor because tariff customers have a higher relative demand in the winter than industry. Indeed, interruptible contracts to industry—where gas supply can be temporarily stopped during peak demand periods—have a key role to play in balancing supply and demand.

British Gas's long-term gas purchase contracts contain a range of provisions as to time of supply, and they have developed over the last 20 years to reflect changing market circumstances. As a result, there is no simple relationship between a particular kind of demand and costs. Allocating the cost of meeting specific demands can therefore be done in any one of a variety of ways.

I am well aware of the accounting expertise and experience of the noble Lords opposite, but it is not a matter of ½ or 1 per cent. Relatively minor alterations in the way cost allocations can be done make a large difference to the relative profit levels between tariff and non-tariff sectors. It would therefore be an unreliable indicator of the relative profitability of the two sectors and would fail to meet the purpose of the amendment.

Of course the Government have looked very carefully at the problem, and we have sought advice from the accountants Touche Ross. Their advice was that the range of acceptable cost allocation would be large in relation to the net profit of each market segment and would introduce considerable uncertainty about the accuracy of the absolute level of profits shown by the accounts. On that basis, it is the Government's view that the objective accuracy of separate profit figures for the price-regulated sector of the market is not sufficient for the authorisation to require audited published accounts. The aim behind the amendment, though understandable, is simply not in line with the realities of the business. Perhaps, therefore, the noble Lord will consider withdrawing his amendment.

Lord Diamond

My Lords, I hear what the Minister has to say, and I am grateful to him for explaining that the Government have taken the point on board and have paid serious regard to it, but have not been able to come up with an answer. I think that they will have to find an answer.

It is quite unsatisfactory to have a distinction between controlled prices and uncontrolled prices, and not to be able to see overall the profit being made by that section of the private monopoly that is subject to price control. There will be no benefit whatsoever in terms of protecting the consumer in seeing the overall figures that will be produced. The overall figures will reveal absolutely nothing except the overall profit, as it will no doubt be and I hope it will be. But they will reveal nothing beyond that.

As to how the profit has been made, who has contributed to it—whether it is the contract customers who have been paying of their free will and against a small amount of competition a price that has produced a profit, or whether it is the poor tied consumer who has no alternative and who has no other shop at which to shop, but who by necessity must buy his or her gas from that one supplier, we shall not know.

That is a totally unsatisfactory position. The Government may claim that they are trying to protect the consumer by price regulation, but they are not. There is a minimum amount of examination under the Bill. It is quite inadequate and, with respect to the distinguished auditors whom the Government consulted, I have endeavoured to cover that point by making it clear that we are not seeking audited figures but figures of a kind with which the director would be satisfied, showing with reasonable accuracy the amount of the profit of the price-regulated sector.

If the director is not satisfied he can say so. He can say, "I am not able to give a clean certificate, as it were. I am not able to report as required by the Act, because I find it impossible, for the following reasons, to arrive at the correct answer". So one would know where one was. At the moment there is the intention to launch on to the public a system under which the public will believe that it has some measure of price protection; but that price protection will be very limited indeed.

So it is a very unsatisfactory state of affairs. I am sorry that we cannot do anything about it at this time of night other than withdraw the amendment, which is what I seek to do. However, I am bound to say that I shall have to come back at a later stage to this immensely important protection of the consumer if I am compelled to do so after reading what the Government have to say. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 108: Page 6, line 24, at end insert— ("() to comply with any direction given by the Director as to the formulation of indicators of standards of service to be published with the annual accounts; ").

The noble Lord said: My Lords, I beg to move this amendment. We are still on the same clause and this amendment provides the power, to comply with any direction given by the Director as to the formulation of indicators of standards of service to be published with the annual accounts".

Perhaps I may deal with this amendment and also with the other amendments which are to be taken at the same time—namely, Amendment No. 121 (which is not in my name) and Amendment No. 186G (which is tabled in my name). So far as concerns Amendment No. 108, I think its purpose is fairly straightforward. It is to ensure that there should be compliance with, any direction given by the Director as to the formulation of indicators of standards of service".

The annual accounts are not complete if they merely provide an indication of the overall profit and loss and of how that has been arrived at. That is the minimum requirement under the Companies Act, but it is by no means sufficient to enable the public to see whether there has been adequate service provided. We are interested not only in the costs and the charges but also in the standards of service, which can be measured in a number of ways, as they are already, and these indicators should be published. One should publish the number of complaints, broken down so far as they reasonably can be. For example, I am told that the number of complaints concerning British Telecom has risen very substantially indeed. One does not quite know the cause. It may be unsatisfactory service, or to some extent that the public is more aware of its rights of complaint. I want to be absolutely fair about that, but the number of complaints has increased enormously. I think that it has more than doubled. That is one indication.

There should be a compulsion on the gas supplier to comply with any direction that the director thinks is appropriate, reasonable and not too troublesome, so as to give the public an indication of the standards of service to be supplied. There are many other methods by which that can be done, such as with graphs and pictures of little men running up and down ladders. We are all familiar with the different methods of making the position clear to the public. But we should have comparisons set out with figures and indicators of the previous six years, or something of that kind, showing how the service is developing. That is essential to a total understanding of how the industry is being run. Everybody is anxious that once the private monopoly is established there will not be solely a consideration of shareholders' interests and the maximisation of profits for the shareholder but that reasonable regard shall also be given to the service to the consumer, so that he can also get a fair deal for what he pays.

Everybody understands that merely to limit the payment is not a full protection for the consumer. It limits only what he pays and not what he gets: and he gets a whole host of services in addition to the gas supplied and its quality. That is what we are anxious about. That is the reason I move Amendment No. 108, and I hope that the Government will look on it with considerable sympathy.

Amendment No. 186G much later on provides that: It shall also be the duty of the Director to lay down, and from time to time amend, such standards of consumer service as may appear to him expedient in the public interest".

That is the associated power of requiring the standard of service to be improved or altered, as the case may be, and it corresponds to the publication of indicators of service to which I have already referred. The point is the same. The consumer needs protection in regard to services as well as in regard to charges. I hope that the Government will have regard to both amendments. I beg to move.

Lord Gallacher

My Lords, it may be for the convenience of the House if I speak at this stage to Amendment No. 121 which is grouped with the amendment just moved by the noble Lord. The object of Amendment No. 121 is again in line with the statement made by the noble Lord, Lord Diamond. The Government have chosen price control through the tariff formula as their main method of regulation of a monopoly supplier. With, say, a changed directorate it is possible, in our view, that the monopoly supplier may institute cuts in the standard of service in order to enhance profits. It is to guard against that possibility that Amendment No. 121 has been tabled.

The effect of the amendment would be to allow the director of gas services, in consultation with the Gas Consumers' Council—and we regard that consultation as very important—to ensure that those standards of service are complied with by the supplier. That would have the additional effect of allowing the director to collect information which would enable him to monitor quality control. We regard this as an important provision. As has already been said, there is a feeling, for example, that since privatisation British Telecom has stopped giving information which would allow the director of Oftel to monitor standards. In the light of that experience, it is our view that it is important that the provision should be included in the Bill at this stage. That is the justification for Amendment No. 121.

11.45 p.m.

Lord Gray of Contin

My Lords, we debated an amendment almost identical to this one which was tabled by the noble Lord, Lord Diamond, in Committee. As my noble friend Lord Brabazon then said, we do not believe that standards of service should be legislated for, but should be the responsibility of the supplier, who in responding to normal commercial pressures will have every incentive to maintain and improve standards of service.

If the Gas Consumers' Council, which will be monitoring trends in complaints, should identify a particular problem with the quality of gas supply services, it can pass that information on to the director. As my noble friend pointed out at that time, it will be within the director's powers to propose changes to the British Gas Corporation's authorisation if it becomes clear to him that that would be desirable.

As we have made clear, we believe that this matter should be principally one for the supplier. The House has already voted on this matter and rejected the noble Lord's proposal by a substantial majority. In the light of that and what I have said, I urge the noble Lord to withdraw the amendment.

Lord Diamond

My Lords, before the noble Lord sits down, will he help us by giving an indication as to where in the Bill are to be found provisions which would enable the director to insist on alterations in the authorisation so as to require an improvement in the services which he thinks are inadequate? The amendment deals with standards of service. The noble Lord has stated that the director has powers to alter the conditions of the authorisation. I agree that he has certain powers, but where does he have the powers to insist on alterations in the conditions of the authorisaton of a kind which related to his view that the standards of service are inadequate?

Lord Gray of Contin

My Lords, with the leave of the House, Clauses 25 to 27 deal with the director changing the authorisation. The procedure is laid down in those clauses. Condition 7 of the authorisation will permit Ofgas to obtain any informa-tion needed to monitor the quality of service. I reject the suggestion that British Gas will be able to conceal any changes to the provision of services which it offers.

Clause 4(2)(a) duties relate to the quality of gas supply services. I have nothing more to add.

Lord Diamond

My Lords, I am grateful to the noble Lord for having taken the trouble to remind us of what we are familiar with; that is to say, the contents of Clause 4. Clause 4(2)(a) provides: The Secretary of State and the Director shall each have a duty to exercise the functions assigned to him by this Part in the manner which he considers is best calculated … to protect … the continuity of supply and the quality of the gas supply services provided.". I quite understand that. It is a function that is put upon them. My anxiety is that there is nowhere in the Bill a power on the part of the director to require an improvement in the standard of service or the continuity of gas supply services if, in his view, they are not being supplied. The Minister says that the director will be able to ascertain this. I quite agree that the director, if he and his staff are lively in their examination of what is happening and if the council is efficient in bringing to his attention complaints by consumers, will be aware of inadequate services being supplied or a drop in the level of services. I cannot, however, see in the Bill anything that protects the consumer in the way that I suggest he should be protected.

I am bound to refer to this because we know what has happened in regard to British Telecom. British Telecom was carrying out certain services as British Gas is carrying out certain services at the moment. There was nothing in the Bill to require those services to be continued. I refer to free emergency telephone calls relating to fire, ambulance, and so on. These ceased to be provided free after British Telecom changed its practice. The justification, as I heard from the mouth of a British Telecom spokesman on the radio, was that there was no provision in the pros-pectus for these services to be continued, that British Telecom had to have regard to the interests of its shareholders and that there was nothing in the prospectus sent to the shareholders to indicate that this service would of necessity be increased.

I am trying to press upon the noble Lord what is a very reasonable point of view if there is nothing in the Bill that requires the quality of service to be maintained. I know that it is something in the mind of the director and the Secretary of State, but if there is nothing that requires it, I do not see how it is to be achieved. Certainly, there is provision for the authorisation to be amended by agreement. If there was agreement between the director and the gas supplier that the services were inadequate and should be increased or that the services were failing in certain respects, that could be increased. But that can only be done by agreement. One is contemplating a circumstance in which the gas supplier had decided deliberately to vary a service that was being supplied at the start of the licence but that was not required by any power and that was, as a consequence, under normal commercial pressure, falling. It is the power to remedy that situation that I invite the Minister to indicate in the Bill.

Baroness Gardner of Parkes

My Lords, is the noble Lord, Lord Diamond, pressing the amendment or withdrawing it? We have, I feel, had due discussion on it. I have noticed since coming into the Chamber that the noble Lord has spoken more times than is normal at Report stage.

Lord Diamond

My Lords, I am sorry to say that I could not hear everything that the noble Baroness said. I gather that she is asking whether I intend to press the amendment or withdraw it. I am doing both. I am pressing the amendment on the Government in the hope that they will listen to what seems to me to be farily good sense. As the hour is late, I seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 109 not moved.]

Lord Diamond moved Amendment No. 109A: Page 7, line 7, leave out ("with").

The noble Lord said: My Lords at the moment the Bill reads: Neither the requirement to consult with the Director",

and so on. This is not a question of the content of the Bill. It is a question of protecting the English language. There is no such proper use of the verb "to consult" as to "consult with". One consults a person or one has a consultation with a person. But with the verb "to consult" the requirement should be "to consult the Director". "To consult with the Director" and the horrible phrase "I am going to meet with so-and-so" are wretched Americanisms which ought not to be incorporated in our language, and I propose that they should be excluded. I beg to move.

Lord Gray of Contin

My Lords, the noble Lord has identified what at first sight may appear to be an unnecessary word in Clause 7(13). In fact, the inclusion of the word is appropriate and I shall briefly try to explain why.

The noble Lord will see that Clause 7(13) refers the reader back to a requirement under subsection (2). Subsection (2) uses the phrase "after consultation with the Director". The Bill also uses the phrase "consultation with" in various other places; for example, Clause 8(1) and Clause 16(1) and (2). The phrase "consult with" in subsection (13) which the noble Lord is seeking to amend is simply used so as to be consistent with the wording in subsection (2) to which I have referred and should, I think, remain as it is. I hope that on those grounds the noble Lord may be prepared to withdraw his amendment.

Lord Airedale

My Lords, this will not do. Surely one cannot leave out "with" when one says "consultation with" somebody; but one does not have to "consult with" somebody. One can consult somebody. I am quite sure that the noble Lord, Lord Diamond, is right. If we want to get good English into our statutes this is an example of where a subsection should be amended and an unnecessary word cut out.

Lord Diamond

My Lords, I am grateful to my noble friend. I should have thought this was obvious. I am objecting to the use of the word "with" attached to the verb "to consult". One consults a person. The noble Lord has referred me to the use of the word "with" attached to the noun "consultation". Of course one has to have "with" when one has the noun, and one does not have to have "with" when one has the verb. If the draftsman wanted more particularly that this subsection should hark back to previous subsections, he should have said "Neither the requirement to have consultation with", because that is what is referred to in the previous subsections.

It is perfectly all right to use the words "Neither the requirement to consult", but it is not right to say "Neither the requirement to consult with". This amendment does not alter the Government's policy at all. It is part of the duty of the House of Lords to try to protect the Queen's English. I should have thought that is what the Government would be prepared to do.

12 midnight

Lord Gray of Contin

My Lords, by leave of the House, I have listened very carefully to the noble Lord, Lord Diamond, and the noble Lord has been convincing on this, if not on a great deal else this evening. I am certainly prepared to take this away and discuss it with the draftsman who drafted this Bill. I do not have to tell the noble Lord how difficult it can sometimes be to persuade draftsmen, but I am prepared to take this back and look at it with the draftsman, and in due course I shall drop the noble Lord a line.

Lord Diamond

My Lords, I am most grateful to the noble Lord for his promise to have a look with the draftsman, and I hope that he will consult the draftsman as to this horrible Americanisation which has crept into the legislation and which I have every reason to believe will be removed. In the light of those circumstances I repeat my gratitude and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Authorisation of other persons]:

[Amendments Nos. 110 to 116 not moved.]

Clause 9 [General powers and duties]:

Lord Ezra moved Amendment No. 117: Page 8, line 27, at end insert— ("() to promote energy efficiency and economy, and in particu-lar to ensure that in acquiring gas supplies, the principle of least cost resource acquisition is observed; and").

The noble Lord said: My Lords, part of this amendment has already been the subject of discussion in relation to energy efficiency and economy, but the principle of least cost resource acquisition has not been mentioned earlier during this stage. This is in connection with the acquisition of gas supplies. This was a matter that was discussed at the Committee stage, but as the cost of gas supplies is directly reflected in the tariff price, this is an important issue. The American well tried practice applies this principle. I know of the objections of noble Lords opposite to anything that the Americans have tried in this connection, but nevertheless it has been well tried. It is an additional protection for the consumer and I should, therefore, like to urge that this amendment be seriously considered. I beg to move.

Lord Gray of Contin

My Lords, with the greatest respect to the noble Lord, Lord Ezra, these groupings were agreed, and when amendments are grouped the first amendment is spoken to and it is not common practice to speak to each amendment when it comes up. I answered this debate when I spoke to Amendment No. 72. The noble Lord then spoke to Amendment No. 4, which had already been spoken to, and I answered it again then. With the greatest respect to the noble Lord, I can find nothing new to say about Amendment No. 117 at this stage. I know that the noble Lord is not doing it out of any malice aforethought, but it is not the common practice in the House to speak to these amendments as they come up when they have already been grouped.

Lord Ezra

My Lords, will the noble Lord not agree that I have raised a totally different issue from the question of energy efficiency?

Lord Gray of Contin

My Lords, with the greatest respect to the noble Lord, he should have raised the issue when Amendment No. 72 was debated and with which this amendment was included.

Lord Ezra

My Lords, in those circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 118 and 119 not moved]

Lord Diamond moved Amendment No. 120: Page 8, line 30, at end insert— ("and ( ) to draw up, in consultation with the Director, the Gas Consumers' Council and organisations representing consumers who have difficulty in paying bills, a Code of Practice for the protection of such consumers from hardship. A code drawn up under this section shall include provisions to prevent the unreasonable disconnection of gas supply to elderly and disabled people.")

The noble Lord said: My Lords, I suppose that there is nothing improper in moving an amendment of which notice has been given on the Marshalled List and which has not been subject to the words, "Not moved". As so many amendments are not moved, it is very difficult to keep pace and to follow the reasons why some of the amendments are not being moved. Some of the amendments which have not been moved refer to important aspects of the Bill on which some of us should have liked to seek the views of the Government.

However, we have reached an amendment which I now move, Amendment No. 120: Page 8, line 30, at end insert— ("and ( ) to draw up, in consultation with the Director, the Gas Consumers' Council and organisations representing consumers who have difficulty in paying bills, a Code of Practice for the protection of such consumers from hardship. A code drawn up under this section shall include provisions to prevent the unreasonable disconnection of gas supply to elderly and disabled people.")

The amendment is set forth in the plainest of terms and simplest of language. I hope it represents the views of noble Lords and noble Baronesses on all sides of the House, and I hope that it will draw sympathy from the Government. I beg to move.

Lord Belstead

My Lords, this is covered in Condition 12 of the authorisation, and I therefore resist the amendment.

Lord Diamond

My Lords, I have not got the authorisation with me. I suppose some of your Lordships have. Could the noble Lord say whether it is covered completely? If it is, then there is no need to press it.

I was asking the noble Lord, Lord Belstead, if he could say whether the amendment is covered completely in the authorisation to which he referred. I have not got a copy of it. If he says it is, that is the end of the matter.

Baroness Gardner of Parkes

My Lords, as this is the second time the mover of this amendment has spoken, it is the occasion on which he should be either pressing the amendment or withdrawing it. He did not ask the leave of the House to ask a question or to intervene a second time. Therefore, I think it important that he now makes clear whether he is pressing the amendment or withdrawing it.

Lord Stoddart of Swindon

My Lords, under those circumstances, perhaps it would be as well if I asked the noble Lord, Lord Belstead, the same question. I have a copy of the revised authorisation, and it is difficult to make the comparison, but probably the matters in Amendment No. 120 are covered in Condition 12, "Codes of practice for tariff gas supplies and payment of bills". But the noble Lord, Lord Diamond, can hardly be expected to take it from me that Condition 12 covers his amendment. He needs to have that assurance from the Minister.

I hope that the Minister—I am sure the House will give him leave to reply to me—will say whether Amendment No. 120 is covered by Condition 12. If he can say that my view is correct, then I may very well be satisfied and it may satisfy the noble Lord, Lord Diamond, as well, and get us out of a difficulty.

Lord Diamond

My Lords, for reasons which I fail to understand the noble Lord the Minister does not seem to be willing to respond to a normal, courteous request. I shall endeavour to acquire—it is quite impossible at the moment—a copy of the authorisation. It is not available. It should be. It is part of the Government's duty to see that every relevant document involved in a discussion in your Lordships' House is available. I did not want to have to make this point, but we have tried to get hold of it and cannot. In the absence of the document I asked the Minister to be good enough to confirm that it is precisely covered in the document. That is not open to me, and therefore all I can do is endeavour to get a copy at a later stage to see whether it is in there. If it is, there is no need to take the matter any further. If it is not in, we shall have to bring it up, with the necessary implications, at a later stage. That being the case I seek your Lordships' leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 121 to 123 not moved.]

Lord Diamond moved Amendment No. 124: Page 8, line 33, at end insert— ("( ) It shall also be the duty of a public gas supplier to avoid any undue preference in favour of, and any discrimination against, any person from whom he purchases gas.").

The noble Lord said: My Lords, we now come to a very substantial amendment which refers to the supply of gas by public gas suppliers. It refers to their general powers and duties. The purpose of the amendment is to insert the following words: It shall also be the duty of a public gas supplier to avoid any undue preference in favour of, and any discrimination against, any person from whom he purchases gas".

The difficulty of the present situation has been well described by many of your Lordships who have spoken in the debate. Not only do you have a private monopoly, but what is unhappily called a monopsony as well—that is to say, not only is there one seller but there is also one buyer for all practical purposes. In those circumstances, those who supply gas may find themselves discriminated against because the purchaser of the gas, having the total power that he has, may prefer one supplier to another for no good reason. That is why one talks about "undue preference". This would not produce economy in the supply of gas. It would not produce cheapness of supply of gas, which is an essential part of the price protection, because as I have already indicated previously there is no protection to the consumer on that element of the price which represents the cost of gas and is therefore roughly one half of the consumer's bill. There is no protection there unless there is an avoidance of undue preference and an avoidance of discrimination. I should have thought that this was something that the Government would share my view about. It is for that reason that I am hoping for a sympathetic reply. I beg to move the amendment.

Lord Bruce of Donington

My Lords, I hope that the noble Lord may be disposed to give a favourable response to Amendment No. 124 as moved by the noble Lord, Lord Diamond. It is unfortunately the characteristic of a private monopoly responsible to no one to develop a cosy relationship between itself and those people with whom it has been habitually engaged in entering into contracts for the supply of various commodities. In this case we are dealing with gas.

All the noble Lord, Lord Diamond, is seeking, as I understand him, is that a strictly competitive condition should apply in what is almost an undifferentiated quality of supply in gas. If I may run the risk of being criticised technically by any noble Lord who is engaged in the gas production business, one is tempted to say "Gas is gas". Therefore, all that the noble Lord, Lord Diamond, is asking (and, in my view, quite reasonably) is that there should be no undue preference to any particular supplier. This, I would have thought, fits very well within the oft-proclaimed philosophy of the Conservative Party, which, of course, does not owe anything to sentiment, does not owe anything to philosophy, but owes everything to the naked cash nexus 'twixt man and man. Therefore, I trust that the noble Lord may feel disposed in this case to accept the amendment put forward by the noble Lord, Lord Diamond.

12.15 a.m.

Lord Ezra

My Lords, I should like to support this amendment on the ground that we have here a situation in which virtually a single purchaser is facing a number of suppliers. While that single purchaser was under public ownership, there was recourse to the public organisations responsible for supervising the operation of that public supplier to take the necessary action were it necessary. Under private ownership, however, that will be removed and therefore the non-discrimination principle, which is already applied in the clause that we are talking about in relation to those who purchase gas, should also be applied in the case of the purchase of gas by the supplier.

Lord Belstead

My Lords, if we were to accept this amendment it would mean giving the director a role in vetting gas purchase contracts, which, I must say, we believe would be clearly against the best interests of gas consumers and, indeed, gas producers alike. I can assure the House that while we share the keenness of noble Lords opposite to avoid any unfairness which could arise in the purchase of gas, we are satisfied that existing competition law would be adequate to tackle it. It is for that reason that I oppose this amendment.

Lord Bruce of Donington

My Lords, before the noble Lord sits down, will he please bear in mind that Clause 9, which this amendment seeks to amend, deals with the duty of a public gas supplier. It does not deal with the duties of the director, as such. Perhaps he would care to modify his reply in the light of the text of Clause 9.

Lord Diamond

My Lords, we have reached an extraordinary situation in your Lordships' House, quite clearly, where the Government are not prepared to deal in any real sense with the amendments put forward from this side of the House.

Lord Belstead

My Lords, that is not the case. The noble Lord got up a little while ago and charged me—and I am in charge of the Bill on this side of the House together with my noble friends on the Front Bench—with not providing the necessary and correct papers. The papers to which the noble Lord referred were safely in the Printed Paper Office. The noble Lord had no right to do that and owes an apology to the House for acting in that particular way.

The noble Lord now sees fit to rise to his feet and to say that amendments are not being replied to. Again, I am being charged with that. The reply which I have given to this amendment is quite clear. It is unneces-sary, and it is unnecessary because of competition law, which is a matter that we have gone over again and again, not only today but recently. It may be that the noble Lord, Lord Diamond, does not agree with me, but it does not mean that the answer which I gave was wrong.

Lord Diamond

My Lords, of course, if I accused the noble Lord unfairly I would be the first to apologise. All that I can say is that I caused inquiries to be made at the Printed Paper Office and the answer was that it was not available. If it is available, why do the Government demonstrate it on the Government Front Bench instead of having the normal courtesy to pass it round?

Lord Brabazon of Tara

Since the noble Lord made his last remarks I have been to the Printed Paper Office and picked up a copy of the proposed authorisation. I have it with me. If the noble Lord wishes to go to the Office and collect a copy, he is welcome to do so.

Lord Diamond

All I can say is that when my noble friend Lord Ezra went to the Office and asked for a copy, it was not available. I should not make accusations like that if it was in fact available. All I can say is that it is obviously now available if the noble Lord, Lord Brabazon, has been able to get a copy. I am very grateful to him for his courtesy in passing it along. A little courtesy of that kind saves a great deal of bad temper and waste of time. I am grateful to the Government for having supplied that document. I do not suppose that, in the circumstances, the Minister asks me to apologise. I have explained why I made the statement which I made, and I am sure he does not deny that it is the responsibility of the Government to provide the papers. He now says that the papers are available and I am glad that they are.

Lord Denham

Will the noble Lord now apologise?

Lord Diamond

If the Minister will tell me what I have to apologise for, I shall be the first to apologise. I can only repeat, in case the noble Lord, Lord Denham, did not hear what I was saying, that my noble friend Lord Ezra was unable to obtain a copy. It may be that copies have since been obtained, but as a result of that lack of facility at the time. I was relating what I thought was the fact at the time, which was confirmed as the fact at that time. I am grateful to have the copy now. We could have avoided this storm in a teacup if the Government had been good enough to pass the document round a little earlier.

Baroness Gardner of Parkes

It is your amendment.

Lord Diamond

My Lords, if it is my amendment, then I owe an apology to the House for not withdrawing it earlier. It is difficult to keep up with the pace of business this evening. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Campbell of Alloway moved Amendment No. 125: After Clause 9, insert the following new clause: "Code of Practice for supply to elderly and infirm.

1. .—(1) The Secretary of State shall, prior to such day as may be appointed by him in accordance with section 3 of this Act, issue and approve a Code of Practice relating to the provision of special services by gas suppliers for domestic customers qualified to receive state benefits by reason of age or infirmity; and from time to time he may issue or approve alterations to such a Code.
2. (2) The Secretary of State shall consult the Director and the Council before issuing or approving such a Code, or issuing or approving any alteration to such a Code under subsection (1) above.
3. (3) Failure on the part of any person to comply with any provision of a code issued or approved under subsection (1) above shall not of itself render that person liable to criminal or civil proceedings but—
1. (a) any such code shall be admissible in evidence in any such proceedings; and
131
2. (b) if any of its provisions admitted or sought to be admitted in evidence appears to the court having conduct of the proceedings, or to any revisory court, to be relevant to any question arising in the proceedings, it shall be taken into account in determining that question.
4. (4) The Secretary of State shall lay before Parliament—
1. (a) copies of any code issued by him under subsection (1) above and of any alteration made by him in any such code; and
2. (b) copies of any code approved by him under subsection (1) above and of any alteration approved by him in any such code;
• and if either House of Parliament passes a resolution requiring the code of alteration mentioned in paragraph (a) above, or the approval mentioned in paragraph (b) above, to be withdrawn the Secretary of State shall withdraw it accordingly; and where he withdraws a code issued by him or his approval of a code he shall issue or approve a code, as the case may be, in substitution for the code previously issued or approved.
5. (5) Nq resolution shall be passed by either House under subsection (4) above in respect of any code or alteration after the end of the period of forty days beginning with the day on which a copy of the code or alteration was laid before that House; but for the purposes of this subsection no account shall be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.")

The noble Lord said: My Lords, I beg to move the amendment. At Committee stage (cols. 870 to 871 of Hansard), the Minister opposed this amendment, saying in effect that what has become his concession, as reflected in Amendment No. 76 and revised Condition 12, rendered it not necessary to have either a wicket keeper to bring the code of practice for the aged and infirm within Clauses 28 to 30, enforcement procedures, or to have the longstop in the form of a code of practice as proposed by this amendment.

He also raised two other objections: the burden upon Parliament and the fear of political interference. So far as these matters were discussed on the amendments grouped with Amendment No. 76, this requires no repetition. It is contended that both the wicket keeper and the longstop are required, and this without even the clarification sought from Amendment No. 149A which relates to actions for breach of statutory duty. This code of practice would, for example, be taken into account in such proceedings and in the negligence proceedings preserved by Clause 28(3)(b).

This code would be approved by Parliament before any authorisation would be granted by the Secretary of State and no doubt would serve as the code to which reference was made in Condition 12, irrespective of whether any or all of the provisions of the code were relevant conditions for the purpose of enforcement within Clauses 28 to 30. Without enforcement machinery this amendment stands as the essential bare minimum; with the enforcement machinery it is still a modest proposal. As the Minister has already intimated that he would wish to have time to consider the matter (for which I am indeed grateful), I should not wish to divide on this amendment and neither would my noble friend Lord Henderson of Brompton. In due course, I shall ask leave to withdraw the amendment.

Lord Diamond moved, as an amendment to Amendment No. 125, Amendment No. 126:

In subsection (2) after ("consult") insert ("the gas suppliers to domestic customers,").

The noble Lord said: My Lords, I beg to move Amendment No. 126. I apologise for intervening in the amendment which the noble Lord, Lord Campbell of Alloway, has moved, but I could not understand why subsection (2) of the new clause merely provided that the Secretary of State should consult the director and the council. Clearly two of the parties affected would be the gas suppliers—or, to be more precise, the gas suppliers to domestic consumers—and the consumers themselves. I should have thought therefore that the first need for consultation was with the gas suppliers. If I have got it wrong, I shall of course not pursue the matter, but I should have thought that it would improve the amendment which the noble Lord has put forward. I beg to move.

Lord Belstead

My Lords, my noble friend Lord Campbell of Alloway accurately recorded the objections which I raised to this amendment when my noble friend moved the same amendment at the Committe stage. Because I am still uncertain on the particular issues I raised at that time I said on an earlier amendment today that I should like to look again at this particular amendment. That I shall do; and indeed I have given an assurance that I shall come back with a response to this amendment and will get in touch with my noble friend and the other noble Lords who have added their names to this amendment before the next stage of the Bill. With that assurance I hope that my noble friend Lord Campbell will feel that it is right to withdraw the amendment.

Lord Campbell of Alloway

My Lords, I am grateful yet again to my noble friend the Minister for his concession and I beg leave to withdraw Amendment No. 125.

Lord Diamond

My Lords, I thought that the noble Lord, Lord Campbell of Alloway, was going to say something about Amendment No. 126.

Lord Campbell of Alloway

By leave, no, my Lords.

Lord Diamond

My Lords, the conclusion is fairly obvious. I beg leave to withdraw Amendment No. 126.

Amendment to the amendment, by leave, withdrawn.

Lord Bruce of Donington

My Lords, I do not want to protract the proceedings unduly, but I should like to have an assurance from the noble Lord, if I may, that he intends in particular to pay attention to subsections (4) and (5) of Amendment No. 125. The noble Lord will recall that in addition to the other questions of legality raised by the noble Lord, Lord Campbell of Alloway, in subsections (1), (2) and (3) of Amendment No. 125, we attach particular importance to subsections (4) and (5). We should like to have the noble Lord's assurance that those, too, will fall fully within his review.

Lord Belstead

My Lords, as I said, I raised objections at a previous stage of the Bill. I still have reservations about this amendment, but I give the undertaking the noble Lord asks for—that in looking at Amendment No. 125 we will look at it from beginning to end.

Amendment, by leave, withdrawn.

[Amendment No. 127 not moved.]

Schedule 3 [Acquisition of land by public gas suppliers]:

[Amendment No. 128 not moved.]

Schedule 4 [Power of public gas suppliers to break up streets, bridges etc]:

[Amendment No. 129 not moved.]

12.30 a.m.

Lord Diamond moved Amendment No. 130: After Clause 10, insert the following new clause:

("Avoidance of cross subsidisation.

1. .1 —(1) A public gas supplier shall in any financial year during which he supplies goods or services otherwise than relating to free safety checks and other essential safety work, avoid cross-subsidisation between one part of his gas supply business and another and between his gas supply business and any other business.
2. (2) For the purposes of subsection (1) above and without prejudice to subsection (7)(c) of section 7 above, the supplier shall furnish to the Director, in such manner and at such times as he may reasonably require, such documents, accounts, estimates, returns or other information as he may require to determine whether the tariffs and charges fixed by the supplier in respect of the goods and services which the supplier provides involve cross- subsidisation.
3. (3) For the purpose of this section "cross-subsidisation" shall be defined as the unreasonable allocation of costs by the supplier when fixing tariffs and charges; and "financial year" shall be defined in accordance with section 227 of the Companies Act 1985.").

The noble Lord said: My Lords, this amendment provides for the avoidance of cross-subsidisation. I gather that with this amendment it would be convenient to discuss Amendment No. 147, which is in the names of the noble Lords, Lord Harris of High Cross and Lord Bruce-Gardyne, who make very much the same point but who may not be able at present to move their amendment.

Perhaps I may draw the attention of the House to subsection (1), which states: A public gas supplier shall in any financial year during which he supplies goods or services otherwise than relating to free safety checks and other essential safety work, avoid cross-subsidisation between one part of his gas supply business and another and between his gas supply business and any other business".

We had a discussion at Committee stage on a very similar matter and my recollection is that the reply of the Government was that there was difficulty in subscribing to the view of avoiding cross-subsidisation, because there were certain facets of the work of the gas supplier which would necessarily involve that. They instanced free safety checks and possibly other essential safety work. At all events, free safety checks were instanced so those have been eliminated, because it is a perfectly valid point that they could be held to be a form of subsidisation. Anything which is not charged for at full cost price could be so held, and therefore that has to be eliminated. Indeed, if there is any other small point of that kind I shall be happy that it should be eliminated.

But apart from those very minor points, there is clearly a need to avoid cross-subsidisation if the purposes of this Bill and of the privatisation of gas are to be carried out. Cross-subsidisation is defined in subsection (3). All that subsection (2) states is that, the supplier shall furnish to the Director … such documents, accounts, estimates, returns or other information as he may require to determine whether the tariffs and charges fixed by the supplier … involve cross-subsidisation.

It is essential for the director to have access to and sight of all these documents and so on, because without that he would be quite incapable of seeing whether there had been cross-subsidisation. It might have taken place deliberately or through an oversight, but whichever it is it is only the furnishing to the director of all this information that will enable him to determine the true position. Therefore, I hope that the Government will feel that this is an amendment that meets the anxiety they expressed. I beg to move.

Lord Bruce of Donington

My Lords, the noble Lord will recall that, when speaking to an earlier amendment at Report stage, the noble Lord, Lord Diamond, outlined the difficulties with which the director general would be faced, particularly in the light of what the noble Lord, Lord Diamond, considered—and we agree with him—was to be a very limited staff. All the noble Lord is asking for here is material which in another context has always been insisted on by members of the noble Lord's own party. The noble Lord may not have been actively engaged here at the time of the Telecommunications Bill—perhaps he was moving in circumstances more astral than that at the time—but he will recall in particular the interventions of his noble friend Lord Orr-Ewing, who within the context of the Telecommunications Bill was very insistent that all cross-subsidisation should be limited.

In his amendment, the noble Lord, Lord Diamond, has very properly excluded from this consideration the free safety checks and other essential work on which he has touched in some detail during the course of the Report stage. But otherwise the amendment provides for the provision to the director general of certain information, rather than the director general being required with a restricted staff at his disposal to unearth information that he requires.

I should have thought that this is a very non-contentious matter, It is purely practical. The noble Lord, Lord Diamond, is fully justified in raising it, and we on this side of the House sincerely hope that the noble Lord will on this occasion be able to give a favourable response to the noble Lord, Lord Diamond, if only in pursuit of the policy so often pressed upon him by his own Back-Benchers in this place.

Lord Gray of Contin

My Lords, it is important that there should be proper safeguards against unacceptable behaviour by a gas supplier damaging to the interests of consumers or competitors. I believe that the Bill and the draft authorisation already meet the noble Lords' concerns.

First, let us consider the tariff market. In addition to the specific provisions in the Bill protecting tariff customers, including the provisions relating to no undue preference, there is direct control over prices by means of the price formula set out in the draft authorisation. The formula, monitored and enforced by the director, will ensure that there is no room for British Gas to manipulate prices, and by setting a price ceiling the formula would prevent British Gas from raising tariff prices in order to subsidise activities elsewhere. Furthermore, price rather than profit control will ensure that British Gas has a clear incentive to increase efficiency, not to engage in uneconomic subsidised pricing.

As regards the contract market, there is strong competition, but we have nonetheless provided safeguards against anti-competitive behaviour generally and this would include cross-subsidised predatory pricing. Here the Director General of Fair Trading has a role. Competition and fair trading legislation applies, and in addition there is specific provision in Clause 27 that the authorisation may be modified to take account of any order made by the Secretary of State following an investigation by the Monopolies and Mergers Commission.

On appliance retailing and servicing, the noble Lord will recall that the corporation was the subject of a Monopolies and Mergers Commission inquiry in 1980. As a result, British Gas reformed its accounting procedures. That demonstrates how fair trading law operates. The Director General of Fair Trading also looked at installation and contracting last year when there were allegations of cross-subsidisation of work. Again, that demonstrates that there are proper safeguards to deal with anti-competitive behaviour.

Because we have built in full safeguards, the new clause proposed by noble Lords is unnecessary. Although, as I have explained, cross-subsidisation to enable unfair anti-competitive pricing is an abuse, a blanket prohibition of cross-subsidy, as the new clause would require, would not be right. It is important that British Gas should be able to provide free safety checks and undertake other essential safety work free or at below full cost. In view of what I have said, and in view of the extensive discussions that we have had on this and on similar amendments throughout the course of the Bill's passage, I reject the proposed new clause and invite the noble Lord to withdraw his amendment.

Lord Diamond

I am grateful to the Minister for his consideration and for having given a full and courteous reply to this amendment. I hope that he does not get into any trouble on that account. We are grateful to him; but of course it is not the case that the amendment requires no cross-subsidisation in relation to free safety checks. It specifically excludes, in line 3 of subsection (1) of the proposed new clause, work relating to free safety checks and other essential safety work". That is the only example that the noble Lord has again given of the kind of cross-subsidisation that inevitably has to take place. I am sorry that his answer is not as convincing as he would expect it to be. Nor am I happy that the procedure he recommends should be the only way of preventing cross-subsidisation.

The noble Lord proposes that one should rely on the existing law, which works very slowly and only after there has been an offence; only after allegations of cross-subsidisation, which then have to be investigated. The OFT takes the case on board and it then makes a report that goes to the Monopolies and Mergers Commission. The commission in turn conducts an inquiry that may take many months or one or two years, as the case may be. It will be one or two years after the event, in the normality of circumstances, before one can obtain an answer to the allegation.

Here is an attempt to deal with the difficulty before it arises, and not to have allegations examined at length after the incident has arisen. Nonetheless, I repeat my gratitude to the noble Lord for having explained why it is that the Government believe that the principles behind the amendment are met in the legislation. That being the case, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 [Power to require security]:

12.45 a.m.

Lord Bruce of Donington moved Amendment No. 131: Page 11, line 14, at end insert— ("and such security shall not exceed one-sixth of the anticipated annual payment for supply of gas.").

The noble Lord said: My Lords, the House will be aware that Clause 11(1) applies essentially to the normal domestic consumers of gas. At a time when poverty in the United Kingdom among the 50 per cent. of the population who own only 4 per cent. of the disposable assets of the country is increasing, there are a number of potential gas consumers who are probably not as well placed financially as many of us who live not necessarily in affluence but in comparative comfort. To them the provision of sums by way of security represents quite a significant drain on their personal resources. I am well aware that members of Her Majesty's Government tend to concentrate on the wellbeing of that quite considerable section of the working population who are in work, but there are quite a large number who are not; and among those who are working there are a number of people who are on very low incomes indeed and a number of people who lack any significant financial resources or disposable property other than the clothes in which they stand, the furniture that they may have and the few personal possessions which they have managed to acquire over the years. They are not well off people; they are poor people.

I think that very often in this modern age there is a tendency among those who are more comfortably off to pretend that "the other half does not really exist, or if it does, that it is of no particular consequence and not particularly deserving of any concession. It is on behalf of those poorer people that we on these Benches seek to speak on this occasion and we hope to be joined by all like minded people in whatever part of the House they may sit.

We think that the security ought not to exceed two months' consumption at current prices. The amendment says: one-sixth of the anticipated annual payment".

We do not think that figure is unreasonable and we do not see why this provision should not be written into the Bill. If the Government can find any particular reason that impels them to exclude the amendment, we should be glad to hear it. We just think that it is fair; and we commend that fairness to your Lordships' House. I beg to move.

Baroness Gardner of Parkes

My Lords, I am sorry, but I think that this amendment is totally wrong. First of all, this clause covers work such as the laying of a pipe which might involve a very large sum of money. Clause 11 (1)(a) covers the pipe laying and the security is related to that. Certainly if one intends to become involved in the cost of laying an expensive pipe, there must be a high security for that. On the other hand, the sort of persons to whom the noble Lord, Lord Bruce, is referring, who are not able to afford any significant security, would not be having a new pipe laid. Rather they would be wanting a supply connected, and this is now dealt with on quite a different basis by supplying a prepayment meter. If such a meter were supplied, no security would be required. Therefore, though I think that the noble Lord's reasons and motives may be good, his amendment is not.

Lord Brabazon of Tara

My Lords, this is a subject on which we have touched on earlier occasions. At the Committee stage noble Lords opposite originally tabled an amendment calling for one-twelfth of the deposit, and in another place they were asking for one-twenty-fourth. We understand the anxieties to which the need for security payments gives rise. At the same time, we have to recognise that the Bill, like current gas legislation, places onerous supply obligations on public gas suppliers and there has to be a counterweight to these. Security payments are one.

It is not unreasonable that a public gas supplier should be able to obtain security in respect of charges which are likely to arise. But this security must be realistic. The practice of British Gas is to secure a sum equivalent to the two heaviest quarters' consumption. What the amendment proposes would come nowhere near that. It would be insufficient even to offset one quarter's charges.

It is a question of balance. There is of course no fixed amount or formula specified in the Bill with regard to security payments, and ultimately it would be for the director to determine whether an amount demanded was reasonable in enforcing the public gas supplier's duty to supply under Clause 10(1). My noble friend Lady Gardner rightly mentioned the possibility of a pre-payment meter, which in the case of poverty, to which the noble Lord, Lord Bruce, referred, would probably be the best answer.

I am afraid that we consider the best way to approach security deposits is to leave the Bill as it stands; that is to say, with it being for the director to determine whether an amount demanded is reasonable. Therefore, I regret to say that I cannot accept the amendment.

Lord Bruce of Donington

My Lords, I am sorry that the noble Lord is not able to accept the amendment. I assure the noble Baroness that I fully understood the implications of the provision in the Bill when I moved the amendment, but I accept the view that she put forward as to its application. However, that point does not ameliorate hardship.

I am sorry that the noble Lord has not been able to comply with the request, but I suppose that that is all one can expect in such circumstances, when the Government have shown themselves throughout the proceedings singularly immune to suggestions that their precious Bill might in any way be wrong, even in the detail. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 132 not moved. ]

Lord Brabazon of Tara moved Amendment No. 133: Page 11, line 28, leave out ("in writing").

The noble Lord said: My Lords, with the leave of the House, I shall speak also to Amendments Nos. 159 and 191. The purpose of these amendments is essentially drafting, and quite straightforward. Clause 48(1) of the Bill defines "notice" as notice in writing. Where references to notice occur in Part I of the Bill, the additional words "in writing" are therefore redundant. We are simply removing them to improve the drafting of the Bill. I hope that noble Lords will agree. I beg to move.

Lord Bruce of Donington

My Lords, we on this side of the House are very glad indeed that, on reflection, the noble Lord has fallen in with the suggestions that we ventured to make to him in Committee.

On Question, amendment agreed to.

[Amendment No. 134 not moved.

Lord Stoddart of Swindon moved Amendment No. 135: Page 11, line 41, leave out ("six") and insert ("three").

The noble Lord said: My Lords, it may be for the convenience of the House if, with this amendment, we discuss Amendment No. 152. I did not move Amendment No. 134 because I appreciate that it is difficult to fix a rate of interest which is not less than the market rate. The market rate changes often. In relation to the period of six or three months, it seems wrong that British Gas plc should be able to hold money for six months without paying any interest. Three months would be a more reasonable period.

I feel sure that the noble Lord will have thought about this matter since we discussed it in Committee. I hope that he will be able to accept the amendment or at least tell me that he accepts its principle, and if the amendment is not correctly worded will bring forward an amendment of his own on Third Reading. I beg to move.

Lord Brabazon of Tara

My Lords, I listened carefully to what the noble Lord, Lord Stoddart of Swindon, has just said and what he said in Committee. If for a moment I may perhaps have the attention of the noble Lord, Lord Bruce of Donington, I should like to say that we accept the amendment as it stands and also the consequential amendment, Amendment No. 152.

Lord Bruce of Donington

The noble Lord had my attention, my Lords.

Lord Stoddart of Swindon

My Lords, I should like to thank the noble Lord for accepting the amendment and considering what we said in Committee. I must now press the amendment.

On Question, amendment agreed to.

[Amendment No. 136 not moved.]

Clause 14 [Fixing of tariffs]:

Lord Diamond moved amendment No. 136A: Page 14, line 8, at end insert ("after consultation with the council").

The noble Lord said: My Lords, I am confident that the amendment will meet with the same success as the last amendment. The amendment provides that at line 8 on page 14 in the clause which deals with the fixing of tariffs, at the end should be inserted: after consultation with the Council.".

I understand that it will be convenient to discuss also Amendment No. 138, in the names of the noble Lords, Lord Stoddart and Lord Gallacher. If the amendment were accepted the clause would read: the prices to be charged by a public gas supplier for the supply of gas by him shall be in accordance with such tariffs as may after consultation with the council be fixed from time to time by him".

At the moment, we want to concentrate on consultation with the council. There was some discussion at an earlier stage, at about 5 a.m. when no one claims to be at his or her brightest. It was with some difficulty that it was established that the prices were fixed by the gas supplier. It was also a little difficult to establish the point that consultation with the council was being pressed because one wanted to have that consultation before the tariff was fixed and that we should not have a method of complaining afterwards which was much more roundabout and time-consuming.

I hope therefore that on reconsideration of the matter during more acceptable hours of daylight, the Government have come to the conclusion that it is reasonable that the council should be consulted and that it should be consulted before the price is fixed. I beg to move.

Lord Gallacher

My Lords, as Amendment No. 138 is also relevant in this context, it would perhaps be for the convenience of the House if I spoke to it now. Clause 14(1) seems to us to be heavily loaded in favour of the gas supplier. Provided that he is operating within the tariff laid down, any reading of Clause 14(1) leads one to think that the gas supplier may do what he likes. Any changes he makes to the tariff can be as complex as he likes and as bewildering as he is capable of devising. Provided that no one can prove that anything within the tariff structure is not in accordance with the tariff scheme, he is free to proceed as he wishes.

That seems to us an excessive power and a negation of what a gas consumers council is supposed to be about. The purpose of Amendment No. 138 is to bring the Gas Consumers Council into the ball game, although not in any decisive way. It is not permitted to take penalty kicks at the public gas supplier's goalkeeper. It is simply entitled to information so that, as a council, it is capable of comprehending what is being proposed. The amendment also seeks a timescale for consultation of such a kind that the Gas Consumers Council can legitimately say that it has a meaningful relationship with the public gas supplier about tariffs.

1 a.m.

It seems to me that, short of that kind of arrange-ment, the Government are demeaning the Gas Consumers Council, about which they made a great song and dance when they told us that this body was to be set up, and that thereafter, in conjunction with the Director General of Ofgas, all would be well and that the consumer would have nothing to fear from this public limited company that they are creating on the basis of a statutory monopoly. Some of us think rather differently. We feel that the consumer may have a great deal to fear. I might say, in passing, that one is surprised at the comparative complacency of the consumer movement in this regard. One can only assume that the penny has not yet dropped. That seems to us regrettable.

It will be a tragedy, in our opinion, if we pass into law a Bill which the Gas Consumers Council reduced to the mere transmission of complaints either to the Director General of Ofgas or to the public gas supplier itself. That, for our money, is not a fit and proper role for a gas consumers council. Certainly under public ownership the Gas Consumers Council, at national and regional levels, enjoys powers far in excess of those it is proposed should be given to it under the Bill. For this reason, we feel that the amendment in the name of the noble Lord, Lord Diamond, and also Amendment No. 138 in the name of my noble friend Lord Stoddart and myself, are fully justified. I hope that the Government will at least say something meaningful at this stage, having had due notice of our concern about the issue.

Lord Belstead

My Lords, as Clause 14 makes clear, the public gas supplier will be required to publish not only tariffs but also the principles on which charges are to be made. This should provide the necessary assurances that within the overall framework of price control, tariffs are being set in a way which is both fair and non-discriminatory as required by Clause 14(3). Although he has no direct role, Clause 14 is, of course, one of the clauses to which the director's enforcement powers under Clause 28 of the Bill apply. If the public gas supplier failed in any of his duties under Clause 14(1) or (3), the director would be able to make an enforcement order which, if not complied with, would open the way for damages by anyone whose interests were adversely affected.

The regulatory regime therefore provides an effective and reliable means of policing a public gas supplier's tariff obligations. I have not said anything, I realise, about the Gas Consumers Council. Condition 8 of British Gas's draft authorisation will require it to inform the council of any change in the price of gas or in the principles of charge. It will be open to the council to advise the director, using its powers under Clause 40, if it is concerned about any aspect of tariffs. It is right that the director should have a role in relation to the important matter of tariffs and that enforcement powers should be available to him. I devoted my first few words in reply to this trying to set that out. But although the Gas Consumers Council will have an important advisory role through which they will be able to exert considerable influence, I do not think that it is right to write them into Clause 14.

The noble Lord, Lord Gallacher, was critical of the powers given to the Gas Consumers Council; but I must say that I think the range of powers given to the council—particularly with the rounding off of their powers in Clause 33 which was put into the Bill in another place—means that the council has powers which are as wide as they could possibly want. However, in this particular case it is the director who is the policeman, seeing whether the public gas supplier is fulfilling his obligations under Clause 14, albeit with advice from the council. It is for that reason that I hope noble Lords will not press this amendment.

Lord Diamond

My Lords, I heard what the noble Lord had to say with regard to the strength of the director's position. I must say that I cannot see that his position is weakened in any sense by offering consultation with the council. I am sure that the two are complementary to one another and not opposed to one another. I should have hoped therefore that the Government would have accepted what is a very minimal amendment; namely, to bring in the council in its proper function of being consulted—nothing more than that—when the price is fixed.

I am sorry that they are not prepared to do so, but there is nothing that I can do about it at this hour although I have the strongest views to the contrary. Unless any other noble Lord wants to intervene at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 136B: Page 14, line 9, after ("him") insert ("in agreement with the Director or, where such agreement is not reached, by the Secretary of State.").

The noble Lord said: My Lords, I beg to move this amendment. In view of what we have just heard, there must be every reason to hope that this amendment will be accepted. This amendment inserts the words: in agreement with the Director or, where such agreement is not reached, by the Secretary of State".

Therefore, that part of the clause would now read that the tariffs will be fixed from time to time by the gas supplier and that the tariffs shall be so framed as to show the methods by which the charges are to be made as well as the prices which are to be charged, and shall be published, and so on. The amendment adds the words, "in agreement with the Director".

The Minister has said what an important role the director has. I can therefore see no reason why that role should not be incorporated in the clause and for it to be made clear—not as at present provided that the tariff was fixed by the gas supplier without any limitation whatever—that it should be fixed by him in agreement with the director.

If the gas supplier and the director find it impossible to reach agreement because they represent two different points of view—the one concerned with maximising the profits from the point of view of the shareholder, and the other concerned with maintain-ing a balance between the interests of the shareholder and the interests of the consumer—then the amendment which I am proposing suggests that, if agreement is not reached between the director and the gas supplier, then the Secretary of State should be the person to determine what the charges, and so on. should be. He is the person who has final responsibility and I cannot see that the Government could resent him being named in the Bill as having that responsibility. Therefore, all-told, I think that it is a very reasonable amendment which restores the balance which at present is lacking in the wording of the clause.

The wording of the clause makes it appear that the public gas supplier is the person who, without consult-ing the council, without any other limitation, fixes the tariffs; whereas in fact, as the Minister has pointed out, the director has a considerable say in the matter. This amendment gives shape and words to that say. I hope, therefore, that the Government will find it possible to accept the amendment, which I beg to move.

Lord Belstead

My Lords, if I may say so, I do not think that the noble Lord, Lord Diamond, need worry that in some way the public gas supplier, in trying to satisfy his shareholders, will, inflate prices for the consumer, because your Lordships will remember that the Bill has already provided for the director to have a considerable control over gas prices to tariff customers through the price formula in the authorisation. If the formula is exceeded, the noble Lord will remember that the director has the right to step in and, in the ultimate case, actually fix prices if there has been overpricing by the supplier.

Of course, the whole formula has been designed to ensure that any change in the price of gas is controlled by reference to changes in gas costs. In addition to this, the director can also use his Clause 28 enforcement powers in respect of the obligations placed on public gas suppliers by Clause 14. This clause requires the public gas supplier not only to publish tariffs but also the principles on which changes are to be made. Therefore, the regulatory regime which is being proposed here will provide an effective means of controlling the increase in the price of gas.

In moving this amendment, the noble Lord, Lord Diamond, spoke about the balance. With respect, I think that the balance here is about right. The director is acting as the policeman of what the public gas supplier is under a duty to do in Clause 14. However, that is quite a long step away from saying that the public gas supplier must go off and get his tariffs individually agreed by the director. That would be the effect of this amendment, and it is something which the Government would not wish to be carried out.

Lord Diamond

My Lords, I am grateful to the Minister for that explanation. I shall consider it carefully, and in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Stoddart of Swindon moved Amendment No. 137: Page 14, line 9, leave out from ("tariffs,") to ("shall") in line 11.

The noble Lord said: My Lords, I beg to move Amendment No. 137. As the clause presently stands, it says: Subject to the following provisions of this section, the prices to be charged by a public gas supplier for the supply of gas by him shall be in accordance with such tariffs as may be fixed from time to time by him, and those tariffs, which may relate to the supply of gas in different areas, cases and circumstances, shall be so framed as to show the methods by which and the principles on which the charges are to be made",

etc.

This amendment seeks to remove the words: which may relate to the supply of gas in different areas, cases and circumstances".

If this amendment were carried it would then read: and those tariffs … shall be so framed as to show the methods by which",

etc.

We move this amendment because, as the law stands, it seems that different prices can be charged for different areas. Indeed, that is the case. We fear that a great deal of unfairness will be caused; that those people who are remote from gas storage at the end of a pipeline may very well suffer and be charged additional costs for those reasons. The people in rural areas—particularly, for example, in Cornwall—may well be adversely affected. We see no reason why that should be so, and can see no good reason why those words should remain in Clause 14. We believe that the matter would be clearer and that there would be less risk of unfairness if they were removed, and that is what the amendment seeks to do.

We had a discussion on this at Committee stage. The noble Lord then rejected our amendment out of hand and I hope he has had second thoughts about it. There are worries about this, and they will continue. I hope he will agree with us that there are circumstances where people who are disadvantaged could very well have their gas prices increased, or fixed at a level above other areas.

I have mentioned rural areas because it is obvious that there the costs will be rather higher than in urban areas. At the moment the Gas Corporation evens out its charges and the price of gas in one area is virtually identical to what it is in another area. We do not want that to alter when British Gas is privatised. We want to ensure that there is no method by which the privatised Gas Corporation can alter the situation, and that is why we move our amendment and hope that it will be passed. I hope the noble Lord will look at the amendment sympathetically and accept it. I beg to move.

1.15 a.m.

Lord Belstead

My Lords, I recognise the reasons which have prompted the noble Lord to move this amendment; they are valid and understandable. I ask the noble Lord to recognise that in this part of the Bill we are not changing the law. I understand that when the Bill was being prepared considerable thought was given as to the way in which an avoidance of undue preference duty should be imposed upon public gas suppliers. The 1972 Act requires the corporation to avoid undue discrimination in fixing tariffs for supplies to premises of under 25,000 therms. A similar duty existed in the 1948 Act, except that it extended to all suppliers of gas. The limiting of the requirement was designed to mirror the restriction of the supply duty to customers requiring less than 25,000 therms. The law is as we are intending to continue it in the Bill. There was a considerable precedent for couching the undue preference duty in respect of tariffs in the way that it is couched in the Bill. That is what the amendment seeks to change.

The noble Lord has laid considerable emphasis on the problems of rural communities. The reason the law stands as it does, and why we want to continue it, is that it is always possible that circumstances might arise in the future whereby charging on a uniform tariff across the country no longer represented a fair or equitable distribution of the cost of providing the gas, and that it would be right in order to avoid unfair discrimination between consumers that a supplier could charge according to different tariffs in different areas. We believe that it is essential to provide flexibility in the Bill to allow for such a situation. I cannot agree to the amendment not because of a hidebound principle, but because if one is to have an undue preference provision in the Bill, one has to have written in some flexibility in case it is needed. British Gas has, I understand, given an assurance that it has no intention of changing its present arrangements for isolated communities.

I would not wish the House to believe that my reply to this amendment in some way presages a change in the policy of British Gas. We simply believe that we must have the drafting of the Bill as it is. As I say, if you are to have an undue preference provision, then if you do not have the ability to be able to charge according to different cases, areas and circumstances, the day could eventually come when a public gas supplier could find that he was in breach of his undue preference duty.

Lord Stoddart of Swindon

My Lords, I understand the point that the noble Lord is making, but I remain rather unhappy about it because it seems that there is a loophole here whereby the privatised gas corporation could make additional charges to those in remote parts of the country. However, I have taken note that the present British Gas Corporation has said that it will not seek to alter its present arrangements. This debate is on record and can be referred to. I sincerely trust that it will hold to this arrangement and its assurances. In the light of that and in the hope and expectation that it will, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 137A: Page 14, line 11, leave out ("framed") and insert ("designed").

The noble Lord said: My Lords, this amendment is admittedly rather lighthearted. It proposes that as tariffs are to be fixed by the gas supplier they shall be so framed as to show the methods. "Framed" is a word that has certain overtones which might be misunderstood in this context. I think, therefore, that the word suggested in the amendment is a more happy choice. I therefore beg to leave out "framed" and to insert "designed", or any word other than one that carries the overtones of "framed".

Lord Belstead

My Lords, I recognise that the noble Lord is moving this amendment in a desire to frame nobody, but the parliamentary draftsman is quite clear that the word "framed" is the one that we ought to use. I understand that it is defined as meaning "to form or construct by fitting parts together". As your Lordships may be aware, the tariff may be composed of a variety of elements such as the charge for gas supplied and the standing charge, and it is those various elements which have to be fitted together in such a way as to show the methods by and the principles on which charges are to be made. It is for those reasons that I feel we ought to stick to "framed".

Lord Diamond

My Lords, I never disagree with the considered view of the parliamentary draftsman and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 138 not moved. ]

Lord Diamond moved Amendment No. 138A: Page 14, line 15, at end insert— ("() In fixing such tariffs the supplier, the Director and the Secretary of State shall have regard to the pursuit of efficiency and economy at all times and in particular, but without prejudice to the generality of the foregoing, in the acquisition of gas (whether from fields whose owners are at arms' length from the supplier or otherwise) and in resolving the problem of winter peak supplies. Such tariffs may be based on the recovery of all costs properly incurred and ascribable to the supply in question together with a margin of profit, or on the price customarily charged at the date of authorisation as varied subsequently from year to year, first in respect of any increase in the cost of gas, and secondly, in regard to all other costs, as increased in respect of inflation and reduced by no less than 4 per cent of such costs as representing an efficiency factor.")

The noble Lord said: My Lords, this is indeed a very important amendment. It is at page 14, line 15, to insert the words on the Marshalled List; and there are quite a few of them. We are still dealing with the fixing of tariffs. I had better read the relevant parts of the amendment. It reads: In fixing such tariffs the supplier, the Director and the Secretary of State"—

the three major parties concerned— shall have regard to the pursuit of efficiency and economy at all times"—

there is no problem about that; that is already provided for under Clause 4— in the acquisition of gas (whether from fields whose owners are at arms' length from the supplier or otherwise) and in resolving the problem of winter peak supplies".

May I stop there for the moment and refer to the "acquisition of gas (whether from fields whose owners are at arms' length from the supplier or otherwise)". One knows of course that British Gas own their own fields and there is going to be quite a problem in the objective fixing of the price of gas when it is their own gas that British Gas plc will be acquiring and supplying to their customers. The cost of that gas will go directly on a cost-plus basis into the charge to be made. That provides a very great difficulty indeed, and therefore there has to be some care taken about it, as the amendment provides by saying that, the supplier, the Director and the Secretary of State shall have regard to the pursuit of efficiency and economy".

The amendment, as I have already indicated, also refers to, resolving the problem of winter peak supplies".

Your Lordships know that this is an ever-present problem and that that problem of winter peak supplies can be dealt with either in a way which does not affect the price formula—it is treated as an additional cost and is just passed on, as would happen if British Gas merely made arrrangements or continued the arrange-ments which it has already made for acquiring winter peak supplies at, presumably, well-above average costs—or, alternatively, the costs would not be passed on in that way at all but the costs would arise, as I have already indicated, from the alternative method of dealing with this problem by storage, by having additional storage facilities; in which case the additional cost would not arise to anything like the same extent and there would instead be what might well be a much smaller cost of the depreciation, and so on, of the capital involved in the facilities provided for the winter storage. Therefore, that is one of the problems which has to be referred to and that is why that is provided in the amendment.

Then the amendment goes on to say: Such tariffs may be based on the recovery of all costs properly incurred and ascribable to the supply in question together with a margin of profit"—

that is to say, it can be cost-plus. The alternative is then described: or on the price customarily charged at the date of authorisation as varied subsequently from year to year, first in respect of any increase in the cost of gas, and secondly, in regard to all other costs, as increased in respect of inflation".

So that provides for the two methods which refer to both the charges for gas supplied and to the standing charge which we have recently discussed.

The amendment which I am moving brings into the Bill (in the only way in which I can see one can bring it into the Bill) the whole of the charging formula which at the moment is completely absent from the Bill. It is the main method of protecting the customer, and yet it is not in the Bill at all. It is left to an authorisation which can be changed, as we know, by agreement. That provides very little protection to the consumer and that is why the amendment has been framed in the way it has, to enable discussions to take place concerning the basis on which the tariff should be fixed.

The amendment continues: Secondly, in regard to all other costs, as increased in respect of inflation and reduced by no less than 4 per cent, of such costs as representing an efficiency factor.

Again, this is the only way in which we can discuss the efficiency factor, and the factor that is proposed here is a figure of 4 per cent. of such costs.

We have, first of all, a precedent to follow. In the case of British Telecom, the efficiency factor was 3 per cent. on the totality. The figure that the Government have proposed is 2 per cent. on certain costs, but excluding the cost of gas itself. Gas itself costs approxi-mately one half of the total costs, and therefore, in fixing 2 per cent. on the other half, the Government are in effect proposing an efficiency factor of roughly 1 per cent. on the total. That is to be compared with 3 per cent. for British Telecom.

It is, of course, a totally inadequate figure. It does not match up at all to the kind of efficiency which could be achieved by British Gas with the greatest of ease. One per cent. on the total costs, which is what the Government propose, is a negligible factor. It means, as I feared (and I expressed my fear at Committee stage), that what is going to be involved is a straight cost plus, with only a deduction of 1 per cent. That is negligible, and I hope the Government reconsider that before establishing it in the authorisation. It is a negligible attempt to talk about efficiency in such a reduced percentage.

All the experience I have had would indicate that a figure of 5 per cent. would be more appropriate. I have compared notes with the noble Lord, Lord Bruce, and his view (he being more concerned with care and courtesy toward the Government than I am) is that 4 per cent. would be appropriate, and in the hope of getting his support I limited it to 4 per cent. I regard 4 per cent. as being the absolute minimum for a figure of efficiency as an encouragement to the managers of an industry like this which is changing so rapidly, and where the costs could be reduced so considerably.

The amendment introduces into the Bill the question of charges, which is perhaps the main protection for the consumer. It also encourages efficiency by providing an efficiency factor of 4 per cent. of the costs which are variable and which do not include the cost of gas itself. I hope that I have sufficiently explained the purpose and meaning of the amendment. I beg to move.

Lord Belstead

My Lords, the noble Lord, Lord Diamond, is seeking in this amendment to involve the director and the Secretary of State in the setting of tariffs. We went through this at Committee stage and I sought then to explain that the Government believe that the primary responsibility for the setting of tariffs should be with the supplier but within the overall framework of control set by the Bill and the authorisation. It will be for the director to ensure that the supplier adheres to the requirements of the Bill and the authorisation. He will also, of course, need to have regard to the duties set out in Clause 4, which include promoting economy and efficiency.

I like to think that the Bill, as drafted, meets to a considerable extent the spirit of the first part of the noble Lord's amendment but, as I have said, leaving primary responsibility for the setting of tariffs to the supplier. Perhaps I may just say in that connection that the noble Lord drew the attention of the House to the problem of winter peak supplies; and of course he is absolutely right. Ordinary domestic customers normally take the bulk of their gas in the winter, and therefore impose costs on British Gas for meeting winter peak demands. The tariff which British Gas sets reflects the costs of meeting this kind of demand and hence is implicitly covered by the arrangements already in place.

In the second part of the amendment the noble Lord proposes that there should be an efficiency factor of 4 per cent. in his version of the retail price index minus X plus Y formula, instead of the 2 per cent. chosen by my right honourable friend. I really cannot accept what the noble Lord has said about the efficiency factor. The cost reduction within the control of British Gas will be 2 per cent., this figure representing the results of an exhaustive study of the circumstances of British Gas. I am sure this represents the right figure to protect the interest of consumers.

The noble Lord's amendment also seeks to involve the director in the decisions made by a supplier on the acquisition of gas. We have been over this ground many times before, but may I simply say that the example of the United States, where direct control of prices at the well head led to almost a complete paralysis of exploration, shows the very undesirable effects of such an approach. I really think it would be very much in the long-term interests of British Gas to acquire gas on the best terms possible, since only in this way can it ensure that it remains competitive with other fuels.

I recognise that we have reached a moment with the formula when we are starting to disagree about the details, particularly on the value of the X factor. I am afraid that there is nothing we can do but disagree, and for me to say that the 2 per cent. figure was reached after a very thorough study.

Lord Diamond

My Lords, before the noble Lord sits down, on that single point of the 2 per cent. I am sure he will confirm that that is on the part of the costs other than the cost of gas. The cost of gas is about half, and therefore this represents about 1 per cent. on the total.

Lord Belstead

My Lords, the noble Lord's premise is absolutely right; it is the retail price index minus X that the non-gas costs must not rise above. I agree with the premise on which the noble Lord based his remarks. I am sorry; I am not capable of saying whether the noble Lord's conclusion is right. If I may say so, I should think that he is putting it low. But there it is. I shall look at what the noble Lord has said, and if I feel I ought to write to him, of course I shall do so.

Lord Diamond

My Lords, it is somewhat late and therefore I cannot pursue this matter to the same extent as I would otherwise want. This is an absolutely crucial matter. It is crucial for the protection of the consumer, and I cannot see that the premises, which the noble Lord has been good enough to agree with, lead to any conclusion other than the one I have drawn. It is the non-gas costs to which the 2 per cent. refers. The non-gas costs exclude the cost of gas, by definition. I am sure I can turn it up in an answer by a Minister, but it is firmly implanted in my mind that the cost of gas is approximately one-half.

The Minister has been good enough to nod and I am not putting it higher than that. Therefore, the 2 per cent. on one-half is equivalent to 1 per cent. on the whole. I had to use that figure, because it is the figure comparable with the 3 per cent. which applies in the case of British Telecom, and it gives some indication of the extent to which the Government are going easy with regard to British Gas. It is a wholly unsatisfactory figure. I am grateful for what the Minister said about the earlier part of the amendment, but the crucial figure is the efficiency factor and I have no doubt that we shall have to come back to this again. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 138B: Page 14, line 15, at end insert— ("( ) The tariffs referred to in subsection (1) above shall not apply until the Director has certified that he is satisfied that they are fair and reasonable having regard to the provisions of this section and of Part 1 of this Act generally.").

The noble Lord said: My Lords, this is a very moderate and modest amendment indeed. It does not seek to alter in any way the price-fixing arrangements or the reasons which the various parties must have in mind. The clause states that the prices to be charged by a public gas supplier shall be fixed by him. There is no doubt about that bald statement. The amendment merely removes some of the severity and the lack of balance of that statement, by adding that the tariffs shall not apply until the Director has certified that they are fair and reasonable having regard to the provisions of this section"—

there is nothing new there— and of Part I of this Act generally.

There is nothing new there. Part I includes, in particular, Clauses 4 and 7. No new material at all is being introduced. It is merely a statement of what the Minister referred to in more precise terms.

He has referred to the responsibility of the director and the input of the director in arriving at the tariffs and it is only reasonable, if the noble Lord insists on leaving the clause as it stands—namely, that the gas supplier shall fix the tariff—that the director shall be able to say "Yes, I have looked at them. I am satisfied that the tariffs are fair and reasonable having regard to the provisions of this Act." That seems a minimum and reasonable amendment and I hope that the Government will be prepared to accept it. I beg to move.

1.45 a.m.

Lord Belstead

My Lords, I regret to have to say that I must oppose this amendment for two reasons. The first is that it is really a re-run of Amendment No. 136B. The effect of that, your Lordships may remember, would have been to require the public gas supplier to agree his proposed tariffs with the director. This amendment says that the director must be satisfied that a new tariff would be fair and reasonable.

To replace the system of clearly established rules for tariff fixing by the general requirement that the director should be satisfied that tariffs are fair and reasonable would not produce satisfactory results for customers or for the health of the gas industry itself. It would in effect transfer the responsibility for individ-ual pricing decisions to the director. The incentive for efficiency which the price control formula brings would be lost. In its place there would grow up a bureaucratic system, as the justification for each and every price change had to be scrutinised.

If the noble Lord will forgive me for saying so, this is precisely why I mentioned the United States only a few minutes ago, because this is exactly what happened there with absolutely disastrous results for a time for the gas industry. I really feel that an amendment of this kind would also be disastrous for the gas industry in this country as well.

Lord Diamond

My Lords, I heard what the Minister said and I am grateful to him for giving attention to this matter. But of course I do not know the precise circumstances in America to which he is referring, or whether the Americans have continued the system of protection they have and to which we have referred in earlier clauses and which, so far as I knew, had continued. So there may have been a temporary upset which has been cured, for all I know, and the main essence of the system continued. I do not know, without going into the matter with much more care, whether it is a fair example to bring to show that this provision would not work.

I think it would work perfectly well. The director would be a reasonable person. He would be informed by the public gas supplier of the arrangements and tariffs proposed. He would not have to interfere unless he thought they were unfair and unreasonable. It is far better that he should be consulted in advance, which would have to be the case, rather than this long procedure, on which the Government rely and which the Minister has indicated, of the director complaining if the formula has in some way in his view not been carried out. There would certainly be argument about whether it has or has not. We have experienced that already with Oftel. There would be argument which would only be settled after years by the long-drawn-out process of making a direction, the direction being disregarded, and having to go to the courts to have it enforced.

I do not think that is the happy way of carrying on this industry. It would be far happier for the gas supplier and director to work together in the way that has been indicated. But if the Government are not prepared to accept the amendment, there is nothing more that I can do about it at this stage. I therefore ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Stoddart of Swindon moved Amendment No. 139: Page 14, line 17, after ("may") insert ("not").

The noble Lord said: My Lords, it may be for the convenience of the House to discuss with this amendment Amendment No. 140A. The amendment seeks to exclude the possibility of a standing charge being made in addition to the charge for actual gas supplied.

At the present time, Clause 14(2) allows a supplier to make a standing charge in addition to the normal charge for gas. We believe that there ought to be at least a discussion, and perhaps even a vote, as to whether that system should continue to prevail. The amendment seeks to prevent the public gas supplier from making a standing charge as such; but taking into account Amendment No. 140A, it would allow the supplier to make a charge for the hire of meters and gas fittings.

Noble Lords will know that there has been a good deal of public disquiet about standing charges over a very long period of time. They are not understood by consumers of gas, who believe that they are simply a surcharge levied against them for no good purpose. They believe also that all charges should be on the basis of gas used, so that those who use most, pay more and are not subsidised by way of standing charges by the low gas users, who are usually the poor.

I know, and the noble Lord opposite knows, that standing charges have a legitimate purpose, but the public do not understand, nor do they accept, the reasons for standing charges. It would be far better therefore if they were done away with. The two amendments together would make it perfectly possible for the gas undertaking to make a charge for the hire of meters, fittings and what-have-you, and the public would understand, because they could see what those charges were for. They do not understand standing charges because they are not itemised and therefore the public do not know for what it is that they are paying.

It would be far better if standing charges were done away with. I do not expect the noble Lord to accept the amendment, and nor do I expect him to agree with my reasoning. However, I assure him that the public at large, if they were present and if they could hear what I was saying, would agree with me. If the public were voting, I have no doubt at all that the amendment would be carried. I beg to move.

Lord Diamond

My Lords, I support what the noble Lord, Lord Stoddart, has just said. Not only would the abolition of standing charges be good in terms of public relations, but it would be a minimum justice to those at the poorest level who use the minimum amount of gas and who therefore pay more for their heating per therm than do the rest of us. Those who are in particular difficulties, and perhaps even elderly persons who may suffer if they do not have enough gas, are discouraged because of the price. They use as little gas as they can because they cannot afford to consume as much as they need, and the net result is that they pay a price per therm that is excessively high. That would be avoided by the adoption of this amendment, which commends itself to the House.

Baroness Gardner of Parkes

My Lords, the poorest people would not benefit from this proposal. As I explained in Committee, when the rebate system for low usage was introduced, it was found that it did not benefit poor people and it was discontinued. The amendment would not be to the benefit of the poor.

Lord Brabazon of Tara

My Lords, the noble Lord, Lord Stoddart, said that he understood the purpose of standing charges but that the general public would no doubt accept his amendment. I shall seek to convince the noble Lord and the general public, if anybody is listening—which I rather doubt at this hour of the evening—that there is a good and valid reason for making standing charges.

Such charges cover the costs, as noble Lords know, of reading meters, the preparation of accounts, the maintenance of meters, connection to the mains, and of course the provision of an emergency service to deal with gas escapes. The standing charge is an important part of the tariff, in ensuring that the costs of providing gas are shared equally fairly between different customers, whether they consume large or small quantities of gas.

Of course nobody likes paying the standing charge, but then I should imagine that nobody likes paying their gas bills at all. Abolishing the standing charge would mean that the costs that it cover would have to be recovered by increasing the rate per therm, and the amendment certainly does not make this clear to the general public who might observe it. It would definitely mean putting up the rate per therm.

I have to disagree with the noble Lord, Lord Diamond, in particular. He said that many pensioners and old people use only small quantities of gas. The reality is that there are a lot of pensioners and old people in this country who use more energy and have higher energy bills in order to keep their homes warm than do younger members of the population. These people would be hit harder by the abolition of the standing charge because of the increase in the price per therm.

I appreciate that standing charges are not popular.This subject has been looked into over many years and I think in fact that it was examined when the last Labour Government were in power, when it was decided that the best way was to keep them as they are at the moment. Therefore I cannot accept this amendment.

Lord Stoddart of Swindon

My Lords, I have listened to what the noble Lord has said and I have to tell him that over a very long period of time I have argued and discussed this matter at great length with all sorts of people. At the end of the day they still come to the conclusion that they would prefer standing charges not to be levied, particularly at the present level, and that they would prefer to pay per therm for their gas through either a credit meter or a slot meter.

I have already said that the Minister and I know the reasons for standing charges, but they are so complex that the ordinary public simply do not understand them or how they work. We can explain to them until we are blue in the face, but they still will not understand. I believe that it would be far better if standing charges were abolished. However, at this time of the morning I shall not put the matter to a vote, and under the circumstances the only thing I can do is beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 140 had been withdrawn from the Marshalled List. ]

[Amendments Nos. 140A, 141 and 142 not moved.]

Lord Bruce of Donington moved Amendment No. 143: Page 14, line 34, after ("are") insert ("in the opinion of the Director.").

The noble Lord said: My Lords, I beg to move Amendment No. 143. Clause 14(4) reads as follows: Notwithstanding anything in section 12 or 13 above"—

that deals with the various rates— or the preceding provisions of this section, a public gas supplier may enter into a special agreement with any consumer for the supply of gas to him on such terms as may be specified in the agreement if either— (a) the tariffs in force are not appropriate owing to special circumstances".

This amendment seeks to insert after the word "are" in subsection (4)(a) the words "in the opinion of the Director".

The director, whose function is to safeguard the interests of the consumer as well as to enforce the various obligations under this ever-amended authorisation, has been given a position of considerable importance in the whole of this Bill, and there is no reason why the word "appropriate" should not be qualified by, in the opinion of the director".

Is there any reason why the director should be excluded from the operation? On the face of it, it does not appear to us to be reasonable. The Government ought either to supply convincing reasons why the director should not be involved or accept the amendment. I beg to move.

2 a.m.

Lord Brabazon of Tara

My Lords, Clause 14(1) provides that the prices to be charged by a public gas supplier for the supply of gas by him shall be in accordance with tariffs that are to be fixed by him. This requirement on a public gas supplier is a "relevant requirement" which is enforced by the director under Clause 28. Clause 14(1) is, however, subject to subsection (4), which enables a special agreement to be entered into if the tariffs are not appropriate owing to special circumstances or the supply is for more than 25,000 therms a year.

The position therefore is that a customer who takes less than 25,000 therms a year pays for gas supplied on the basis of the Clause 14(1) tariffs unless these are not appropriate owing to special circumstances. As the requirement under Clause 14(1) is a relevant require-ment, and Clause 14(4) is in effect an exception to that requirement, it is open to a customer to complain to the director that a public gas supplier is insisting on a special agreement being entered into when the supply is for less than 25,000 therms a year and that there are no special circumstances which make the tariffs inappropriate. If the director was satisfied that there were no special circumstances, he would be under an obligation to take enforcement action against the public gas supplier under Clause 28, which would require British Gas to comply with Clause 14(1) and charge that customer according to the tariffs fixed under that subsection.

I hope that with that rather complicated explanation the noble Lord will feel that his amendment is unnecessary.

Lord Bruce of Donington

My Lords, I am greatly obliged to the noble Lord for having sought to elucidate the complexity of the position. Perhaps he will go a little further. I deeply sympathise with him in the interpretation of Clause 14, on which, as the noble Lord, Lord Gray of Contin, will recall, we had exchanges during the Committee stage. It did not appear clear as to whether the price is fixed by the gas supplier or by the director. He will recall the altercation, which was somewhat inconclusive, as he declined to contribute anything further to that part of the debate. I sympathise with the noble Lord, Lord Brabazon, in his endeavour to elucidate the complexities.

Perhaps the noble Lord will supply one further glimmer of information even at this early hour. I am quite sure that noble Lords are feeling just as sprightly as they were at 2.30 in the early afternoon. Can he indicate the special circumstances that are envisaged in subsection (4)(a) and (b)? The words "special circumstances" can cover a multitude of sins or (shall we say at this time of the morning?) virtues. Can he please explain what he means by special circumstances? For all practical purposes, what are the circumstances that he envisages?

Lord Brabazon

of Tara: My Lords, I must admit that at the precise moment I cannot give the noble Lord an example of the type of special circumstance that there might be. It may be that my memory will now be jogged as to exactly what a special circumstance could be. It could, for example, be a supply which was needed on a few days a year only. That is the only example that I can give the noble Lord at the moment. I can perhaps think of some more and write to him about them.

Lord Bruce of Donington

My Lords, I am greatly obliged to the noble Lord for having enlightened us with that example. It affords us some clue as to the way in which the mysterious mind of Her Majesty's Government and their advisers work. In those circumstances I ask the leave of the House to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 144 to 147 not moved ]

[Amendments Nos. 148 and 149 had been withdrawn from the Marshalled List. ]

Clause 15 [Public gas supply code]:

[Amendment No. 149A not moved.]

Schedule 5 [Public gas supply code]:

Lord Stoddart of Swindon moved Amendment No. 150: Page 74, line 41, at end insert— ("() A public gas supplier shall in the case of credit meters ascertain at intervals of not more than 4 calendar months, the consumption of gas by the tariff consumer and recover any charges due to him. () Where a prepayment meter is installed the tariff for gas supplied shall not exceed the total of the following—

1. (a)such proportion of the standing charge as is payable by credit meter consumers;
2. (b) the cost of gas supplied;
3. (c) a sum not exceeding 0.1 per cent. of the annual charge (this sum to be used to insure the contents of prepayment meters);
4. (d) a sum not exceeding two-and-a-half per cent., of the customer's net weekly income where an agreement has been reached for recovery of previous charges.

() Prepayment meters shall be recalibrated as soon as is practicable after the granting of any price increase and in any event not later than one calendar month afteer such an increase. Prepayment meters shall be emptied by the public gas supplier at intervals of not more than three calendar months.")

The noble Lord said: My Lords, the amendment seeks to ensure that the privatised British Gas will read credit meters at intervals of not more than four calendar months and that there is a proper relationship in the treatment of people who pay for their gas by coin-operated meters and those who pay by credit meter.

The present Gas Corporation has for some while been guilty—and I used the word advisedly—of not reading meters at least every four months. The result has been that many people feel most aggrieved because they receive instead of a proper bill an estimated account every six months and a real account every year. That is one thing in the case of a nationalised corporation, but it is another in the case of a private monopoly.

The amendment therefore seeks to ensure that meters are read once every four months and that the customer receives a proper bill every four months showing the amount of gas that has been used and charging for no more and no less than the gas that has been used.

We also seek to see that those who pay for their gas by slot meter are treated fairly in relation to credit customers. I understand that at present the additional charge (a surcharge) on people who pay as they go is high. That is most unfair. Time is moving on. I have no more to say at present. I shall welcome the noble Lord's reply. I beg to move.

Lord Belstead

My Lords, I realise that in this amendment the noble Lord seeks to be as fair as possible to the customer. I shall go straight to the part of the amendment that deals with meter reading and the emptying of meters. This is, of course, a very expensive operation. The man-hours involved lead to a significant cost, which is, of course, passed on in turn to the consumer. Given this, I do not believe I can agree that it would be right to lay a statutory require-ment on British Gas to read meters within specified time limits, since this would reduce the flexibility we desire and would require British Gas to carry out an expensive exercise which we do not consider to be, as a tried requirement, of advantage to consumers generally.

I should like to refer quickly to the practice of having meters read. I understand that the current practice of British Gas is that about two-thirds of its customers have their meters read every six months, but in all cases the customer receives a quarterly bill which includes a facility for the customer himself to correct an estimate, if he considers this to be inaccurate. I believe it is far better for British Gas to have the flexibility, based on experience, to decide on the optimum period which enables it to recover fully the cost of gas supplied while keeping to a minimum administrative costs passed on to the consumer.

Recalibration of prepayment meters is only occasionally necessary since the appropriate adjustment will be made from the rebate and to the customer from the money collected. As to emptying of prepayment meters, the normal cycle for emptying is 1'7 weeks. This reflects the average levels of consumption and the relatively high staff costs involved. In addition, however, British Gas will make a special visit to empty a full meter without charge.

I feel that the arrangements made are at the moment in the interests of the customer and that it is very much in the interests of the customer to allow flexibility for British Gas in the future. It is because I am genuinely worried about the way this amendment would tie down British Gas to arrangements that would not be in the interests of the customer that I feel I must resist it.

Lord Bruce of Donington

My Lords, I am very sorry that the noble Lord has not seen fit to accept the amendment. I am more particularly concerned with prepayment meters. It is well known that people with prepayment meters are, normally speaking, not the more highly endowed in monetary terms of the population of our country. They tend to be among the poorer people. From what the noble Lord has said, it seems to me that not only are they saddled with the extra burden involved in the prepayment meter but they are also involved in part with the charge that arises by reason of the visits that have to be made to clear the meters. As the noble Lord pointed out, this involved some extra cost that had to be recovered.

I am well aware that these circumstances have existed during the time that British Gas has remained a public corporation responsible through the Minister to Parliament and that therefore it would be open to Members of Parliament or to the public at large to mount a campaign to secure a fairer deal for those who have to have prepayment meters. So long as British Gas remained a public corporation, it would always be susceptible to public pressure. This is no longer to be the case. The noble Lord cannot even tell me that the regulations concerning the limitation of amounts paid in prepayment meters are incorporated in the authorisation.

He cannot even wave that document in my face and say, "It is all right, it is in the authorisation however susceptible that authorisation may be to alteration without the knowledge of Parliament." Bearing in mind that one of the aims of the Government in this matter is the avowed protection of the consumer, with a particular claim on the Government for the poorer consumer, I should have thought it right—because the sums of money are not vast—that this should have been incorporated in the statute.

Speaking for our part therefore we are very dissatisfied with this and we feel that we ought to test the opinion of the House upon it.

2.15 a.m.

Lord Stoddart of Swindon

My Lords, I moved the amendment and I am replying to the amendment.

Baroness Gardner of Parkes

My Lords, I should have liked to comment very briefly.

Lord Stoddart of Swindon

My Lords, I am sorry.

Baroness Gardner of Parkes

My Lords, I think that the problem with this amendment is that it is completely out of date. By the time the Bill is prepared it is totally ignoring the move within the industry away from meter reading altogether to remote meter reading and to prepayment by card that will be calibrated right at the source. I therefore think it very wrong.

Lord Stoddart of Swindon

The noble Baroness knows a lot more than I do about what is going on in the gas industry. I understand the system that she described is a long way off. It certainly will not be universal so far as I understand for a very long time yet. But we are talking here about charging most customers many hundreds of pounds for gas which they may or may not have used. There is a good deal of disquiet about estimated accounts. I have to confess that I do not like estimated accounts myself. I like to pay for what I have used.

We are reaching a situation where it would be possible for the gas industry, and indeed the electricity industry, to read meters by remote control. But, as far as I know, there are no real moves being made to do just that. It seems to me that rather than allow a privatised gas industry to carry on with the unsatisfactory method of estimating accounts and sending them out to people, causing a good deal of disquiet and sometimes financial difficulty, we ought to be insisting, through this amendment, that credit meters should one way or another be read every four months and that people should receive a bill every four months saying exactly how much gas they have used and how much they owe the gas corporation. That is the only proper and satisfactory way of dealing with matters.

My noble friend Lord Bruce dealt with the position of coin-in-the-slot meters and the difficulties that people have who pay their gas bills by this means. They are unfairly discriminated against—of that there can be no doubt at all. It is quite wrong that they should be discriminated against because, as my noble friend pointed out, they are very often among the poorest people. Sometimes they are people who have not been able to meet their obligations through a credit meter and have been forced into taking a prepayment meter by the gas board, or indeed perhaps at their own request, in order that they can better manage their affairs. My noble friend gave an indication that we would vote on this amendment; and we attach such importance to it that I think we should.

2.20 a.m.

On Question, Whether the said amendment (No. 150) shall be agreed to?

Their Lordships divided: Contents, 3; Not-Contents 18.

DIVISION NO.6
CONTENTS
Gallacher, L. [Teller.]	Ponsonby of Shulbrede, L.
Stoddart of Swindon, L.	[ Teller. ]

NOT-CONTENTS
Belstead, L.	Glenarthur, L.
Brabazon of Tara, L.	Gray of Contin, L.
Brougham and Vaux, L.	Hertford, M.
Campbell of Alloway, L.	Hooper, B.
Coleraine, L.	Long, V.
Denham, L. [Teller]	Lucas of Chilworth, L.
Elton, L.	Monk-Bretton, L.
Gardner of Parkes, B.	Skelmersdale, L.
Gibson-Watt, L.	Swinton, E. [Teller.]

2.28 a.m.

The Deputy Speaker (Lord Aberdare)

My Lords, there have voted: Contents, 3; Not-Contents, 18. As it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 55 I declare the Question not decided, and that further proceedings on the Bill stand adjourned.