§ 3.31 p.m.
§ Read a third time.
§ Clause 4 [General duties of Secretary of State and Director]:
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead) moved Amendment No.1:
Page 3, line 28, after ("or") insert (", as the case may be,").
§ The noble Lord said: My Lords, at the previous stage of the Bill the noble Lord, Lord Diamond, tabled an amendment, Amendment No. 76A, which would have substituted the word "and" for "or" in the Government's amendment to Clause 4 placing a duty on the Secretary of State and the director to take into account in particular the interests of the elderly and disabled in performing their Clause 4(2)(a) duty to protect the interests of consumers of gas in respect of the quality of the gas supply services provided. The noble Lord sought an assurance, supported by my noble friend Lord Boyd-Carpenter, that the duty applied to both the Secretary of State and the director, and I undertook to consult parliamentary counsel on the point.
§ Although counsel advised that the interpretation of the Government's amendment was that the duty did apply to both the director and the Secretary of State—and this was certainly the Government's intention in moving that amendment—counsel agreed that noble Lords were on to a point in that a few words 1021 might be added in the interests of clarity, and this is the purpose of inserting the words "as the case may be". I hope that this removes any possible doubt on the point. I beg to move.
§ Lord Diamond
My Lords, I agree with every single word the Minister has said, and I am grateful to him.
§ On Question, amendment agreed to.
§ Clause 7 [Authorisation of public gas suppliers]:
Lord Diamond moved Amendment No. 2:
Page 5, line 38, at end insert—
("and shall include such conditions requiring arrangements to be made with respect to the provision of special services for meeting the needs of consumers of gas supplied through pipes who are disabled or of pensionable age as appear to the Secretary of State to be requisite or expedient having regard to the duties imposed by section 4 above.").
§ The noble Lord said: My Lords, in moving this amendment perhaps I may speak to Amendments Nos. 3 and 9 at the same time. This amendment is precisely the same as the following amendment in the name of the noble Lord, Lord Belstead, Amendment No. 3, and Amendment No. 9 is purely consequential. For that reason I shall not bother your Lordships with the central content of the amendment, and I shall leave it to the noble Lord, Lord Belstead, if he will be good enough to deal with that. The only point of my putting this amendment down was to make what is a permissive arrangement under the noble Lord's amendment a compulsion under my amendment.
§ My amendment, using the same words, came at a point in the Bill where we are talking about "shall" and not "may". The amendment of the noble Lord, Lord Belstead, at page 5, line 33, comes at a point in the Bill where we are talking about "may". Therefore, the only difference is the one I have already described, and there is no need for me to say more than that at the moment. I beg to move.
§ Lord Belstead
My Lords, the brief introduction of the noble Lord, Lord Diamond, to his Amendment No. 2 shows that Amendments Nos. 2, 3 and 9, the last two amendments being Government amendments, are all aiming to do something which I believe noble Lords in all parts of the House wish to see accomplished. I am anxious in the few words that I shall speak to try to make a case to your Lordships that although it is true that the Government amendment comes at a point in the Bill where it is permissive and not mandatory, at the end of the day the amendments we are putting forward, together with a changed condition in the authorisation for British Gas, add up to the same thing as the noble Lord, Lord Diamond, wants; namely, a mandatory requirement.
Noble Lords will recall that at the previous stage of the Bill, in response to my noble friend Lady Macleod who had moved an amendment at that stage for the care of the elderly and disabled, theGovernment tabled an amendment to Clause 4 imposing a duty on the Secretary of State and the director in exercising certain functions to take account in particular of the interests of elderly and disabled people. At the same time my noble friend Lord Campbell of Alloway also 1022 spoke in favour of another amendment to Clause 9, proposing a legally enforceable code of practice designed to protect the interests of elderly and disabled people. I undertook on behalf of the Government to take the whole thing away and to see if we could come back with amendments which would meet the case being made from all sides of the House.
The proposed Government Amendment No. 3, which is the substantive Government amendment, is an endeavour to fulfil the Government's commitment. This amendment will enable conditions to be included in a public gas supplier's authorisation requiring arrangements to be made for the provision of such special services for the elderly and disabled as the Secretary of State considers to be necessary or expedient in the light of his Clause 4 duties. The amendment to Clause 48 is simply consequential.
I have made available to noble Lords who spoke on this subject on Report, and I have put into the Library of the House, the text of a new condition in the authorisation for British Gas which we proposed should be included in the authorisation if the amendment is accepted. The new condition means that the Secretary of State and not British Gas will decide what services would be appropriate to be included in the code of practice, and it also means that the code of practice would be enforceable by the director using his powers at Clauses 28 to 30 of the Bill so that failure to make arrangements for the provision of the services specified, which cover all those currently provided by British Gas, including the free safety checking for which the noble Lord Lord Stoddart, particularly pressed at Report, would be a breach of a relevant condition, and that would entitle the director to make an enforcement order.
But bearing in mind that one of the matters about which the noble Lord, Lord Campbell, was particu-larly anxious was that there should be some form of legal status to the code, the amendment we are bringing forward also has the effect that if an enforce-ment order were not complied with by British Gas this would enable an aggrieved elderly or disabled customer to go to court to seek damages. If the public gas supplier—in other words, British Gas—remained in breach of the code the director operating under his Clause 4 duties would also be able to go to court for an injunction. The legal enforceability for the amendment I am seeking to put to your Lordships goes a good deal further than my noble friend Lord Campbell of Alloway sought to go when he moved his amendment.
I come now to my final point. The noble Lord. Lord Diamond, quite rightly has said that the Government nonetheless are asking your Lordships to agree that Amendment No. 3 should go into a part of the Bill where this is a power and not a duty. We believe this is right because we think that we ought to leave the Secretary of State the final discretion as to how he carries out his duty in setting conditions for public gas suppliers generally, and that in this context it is the proper drafting to use the word "may" in Clause 7.
The noble Lord, Lord Diamond, will remember that he particularly pressed the Government at previous stages of the Bill to try to make it easier for other gas suppliers to set up in the future in addition to British Gas—the franchising amendments. We believe 1023 therefore that we ought to stick to that part of Clause 7 where there is a power for the Secretary of State to decide what conditions a gas supplier should have to set out in carrying out its duties, bearing in mind that it may not be just British Gas that is a public gas supplier in the future but that there might be some very small gas suppliers for whom an absolutely blanket requirement would not be appropriate.
However, although our construction is different from the construction of the amendment of the noble Lord, Lord Diamond, I believe that, so far as concerns British Gas, we reach exactly the same objective as the noble Lord. We do it by this way. Given the combina-tion of the duty in Clause 4 and the express vires that we are putting into Clause 7 by Amendment No. 3, it is impossible to conceive of how any Secretary of State could omit a condition in services to the elderly and to the disabled in any authorisation. With the proposal for Amendment No. 3 is the new condition to which I have already referred, which spells out the detailed special services that must be provided for elderly and disabled people.
I hope that after that explanation your Lordships will feel that we are providing, first, that a code must be drafted; secondly, that the code must be approved by the Secretary of State and cannot just be written by British Gas; thirdly, that the code will be legally enforceable. My Lords, I am speaking to Amendment No. 3.
§ Lord Diamond
My Lords, I cannot see the noble Lord, Lord Campbell of Alloway, in his place and so I assume that he has no desire to speak on these matters. It therefore falls to me to say how grateful I am to the Minister for the very careful consideration that the government have given to this aspect. The issue is purely between, as the Minister himself has said, mandatory and permissive or voluntary. We wanted to make sure that it was not voluntary but compulsory; that is to say, that it would be compulsory, or mandatory as we would prefer.
Let me clear my amendment out of the way by saying that it ill-fits the place in which I had put it, but there was no other way of bringing my point to the attention of your Lordships. So I shall not be pressing my amendment.
To turn to the amendment of the Minister, I have listened very carefully to what he has said, and I believe that I speak for all sides of the House when I say that the amendment achieves what we all wanted. However, it does so by a long way round. Simply, the authorisation is not in the Bill, and however hard we try to get it into the Bill, the Government are not prepared to have it in the Bill. Had it been in the Bill, then what we are now being told about an alteration in the authorisation would be seen on the face of the Bill.
We have of course expressed anxiety—both Opposition parties have done so—that the authorisation can be altered so many times between the time when your Lordships see it and it leaves Parliament and the time when it becomes effective. We are a little anxious about that. However, I do not want to look a very acceptable gift-horse in the mouth. I repeat my gratitude to the Minister for doing what we all wanted done and doing it, I suppose, in the only 1024 way in which it can be done, consistent with the Government's desire not to include the terms of the authorisation in the Bill.
§ Lord Belstead
My Lords, if I may be permitted to speak again, I ought to tell the House that my noble friend Lord Campbell of Alloway notified me that he could not be present today; but he particularly requested that I should say, on behalf of the Government, that he endorsed Amendment No. 3.
§ 3.45 p.m.
§ Lord Henderson of Brompton
My Lords, on behalf of the noble Lord, Lord Campbell of Alloway, as well as on my own behalf, I thank the Minister unreservedly for what he has achieved. I wish to thank not only him but also the officials in the departments concerned, and the parliamentary draftsmen. They have gone to very great lengths to accommodate the point of view which was expressed by the noble Lord, Lord Campbell of Alloway, when he moved an amendment in Committee at about 2.30 a.m., when neither I not the noble Baroness, Lady Masham, had the stamina to be in the Chamber. Great thanks are due to the noble Lord, Lord Campbell of Alloway, for having persevered, not only in the House but, as the Minister perhaps knows only too well, outside the House also.
In many ways, Amendment No. 3 is a very great tribute not just to the noble Lord, Lord Campbell, but to what can be achieved in this House by perseverence and without taking up much time on the Floor of your Lordships' House.
I grant the noble Lord, Lord Diamond, that the amendments are obscure, and that on the face of it, the amendments of the noble Lord, Lord Campbell of Alloway, to which my name was also attached, were much clearer. The only difference really is that the Government have not conceded one of the points we wanted, which was by no means essential to our package. That was, that the code of practice would be embodied in regulations that would be laid before Parliament, and that there would be some kind of parliamentary approval. That is the one item that is missing. Otherwise, the Minister has gone as far, and even further, than we ourselves proposed. The disablement organisations had nothing to do with all that, and they should be very grateful to the noble Lord, Lord Campbell, for what he has achieved. So should the organisations concerned with the elderly.
I have no more to say except that I see that the noble Baroness, Lady Macleod, is in her place. It was on the foundations of her amendment that the superstructure or refinement now before your Lordships, which brings the code of practice within the legal and judicial process, has been built. I give my thanks to the noble Baroness as well as to those others that I have mentioned.
§ Baroness Macleod of Borve
My Lords, first, may I ask the Minister if I am to understand that he will not now be speaking to Amendments Nos. 3 and 9? I see that I am correct, in which case I shall say a few brief words. The noble Lord, Lord Diamond, has already paid a tribute, and all parts of the House are enormously in debt to my noble friend the Minister. I 1025 know that he has spent many hours, way into midnight, trying to find a way around the various requests that have been made in your Lordships' House. I feel, as I am sure we all do, that the Minister has not only met us 100 per cent., but perhaps has gone a little over the top as well.
We have accomplished what we wanted, in that at the end of the day the disabled and those less able to look after themselves because of age and other reasons will be as adequately looked after in the future under the Bill as they are looked after now by British Gas. That responsibility will be part of the Bill and will be mandatory. That is a great step forward.
Many points will be emerging about the care of the people that I have mentioned. Perhaps I may refer just to the free services that have been given to gas consumers in the categories in question. I had a feeling at one time that we could not make British Gas give a free service in the future; but the Minister has put that into the Bill with the authorisation and the codes of practice. Being myself disabled, perhaps I may say a word about how grateful I am sure everybody is, although, with the noble Lord, Lord Henderson, I have not received any mail from those representing the disabled, which is perhaps surprising. On their behalf, and on behalf of the elderly with whom I am also associated, we are very grateful to the Minister for what he has done for us.
§ Lord Stoddart of Swindon
My Lords, I shall be brief. We had many attempts both in Committee and on Report at dealing with this problem of the disabled and elderly. I think the Minister has now probably got it as right as he can. We are indeed grateful to the noble Lord, Lord Campbell of Alloway, for his persistence and for his drafting skills which I think helped the Minister along the road to accepting what has now been put into the Bill and into the authorisation.
I am particularly pleased that the Minister honoured his pledge to me that he would also get the free checking of appliances into the Bill or into the authorisation. He has now got it into the authorisation. Elderly and disabled people will now have a remedy in law, if the new British Gas plc does not in fact perform. I think we can all be pretty satisfied with the result of the combined efforts of all sides of this House.
§ Baroness Masham of Ilton
My Lords, I should like to add my thanks to all those who supported the needs of the elderly and disabled. As I had my name to the amendment tabled by the noble Lord, Lord Campbell of Alloway, I pay tribute to the work that he did and I thank him very much indeed.
Had there not been pressure from Members of your Lordships' House, perhaps the change would not have been made to the Bill, since the Government had not brought forward their own amendment. I thank the noble Lord the Minister for listening to your Lordships and for being sympathetic towards the amendment. I am sure that it is now a much better Bill than it was. There were people outside this House who were concerned about the needs of the disabled and the elderly. I am sure they will be as relieved as we are. I thank all those who have supported the amendment.
§ Lord Diamond
My Lords, is the noble Lord the Minister seeking to intervene? No; then with your Lordships' permission I beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.
Lord Belstead moved Amendment No. 3:
Page 5, line 44, at end insert—
("(aa) such conditions requiring arrangements to be made with respect to the provision of special services for meeting the needs of consumers of gas supplied through pipes who are disabled or of pensionable age as appear to the Secretary of State to be requisite or expedient having regard to those duties;").
§ The noble Lord said: My Lords, I spoke to this amendment when speaking to the previous amendment of the noble Lord, Lord Diamond. I beg to move.
§ On Question, amendment agreed to.
§ Clause 39 [Annual and other reports]:
Lord Diamond moved Amendment No. 4:
Page 41, line 39, after ("year;") insert—
(" ( ) the functioning and staffing of, and the provision of facilities for, his department and any representations made to the Secretary of State thereon;").
The noble Lord said: My Lords, I gather that it will be for the convenience of the House if Amendment No. 8 is taken at the same time as this amendment. I shall speak to Amendment No. 8 in a moment. Page 41, line 39, relates to that part of the Bill which deals with reports to be made by the director. It states that:
The Director shall, as soon as practicable after the end of the year…make to the Secretary of State a report on".
I have added,
the functioning and staffing of, and the provision of facilities for, his department".
§ I have done that because we know that there are going to be staff and facilities, but we also know that they are going to start at a very low level and will need to rise considerably. One of the reasons for the amendment, therefore, is to give the director a little encouragement in engaging the most effective staff as circumstances require—not before that—and in publishing any comments he has to make; that is, bringing the public's attention to any particular difficulties he has had in staffing his department and in having the facilities he thinks he requires in order to carry out the duties which Parliament imposes on him by this Bill. That is the reason for this amendment so far as the director is concerned.
As I said, I wish to refer also to Amendment No. 8, which uses the same words in the context of page 42, line 32. This deals with the annual reports of the council. Clause 41 states:
The council shall…after the end of the year…make to the Director and to the Secretary of State a report on its activities during that year".
My amendment proposes to add that the report should also deal with,
the functioning and staffing of, and the provision of facilities for, the Council and of any representations made to the Secretary of State thereon".
§ Again, the council will need staff. The council will have additional responsibilities to those it had previously; that is, there will be one central council 1027 which will have to cover the whole country as opposed to a central council which did not have to do that and which had regional councils to handle the second part of that function. Here again the council may find it necessary—I do not know that it will—to seek increases in staffing and facilities in order to enable it to carry out its very important functions and duties in:posed on it by this Bill.
§ I hope that the Government will find these amendments reasonable and will either accept them or say that they are unnecessary because they are already provided for in the Bill. After all, we have been very kind to the Minister and accepted his amendments, and he might be willing to reciprocate; who knows? Those are my reasons for the amendments. They are reasonable, and I hope they will find favour with the Government. I beg to move.
§ Lord Belstead
My Lords, the effect of the noble Lord's amendment is to require the director and the Gas Consumers' Council respectively to include in their annual reports a section on the functioning and staffing of their organisations. As the noble Lord, Lord Diamond, has explained, this derives from his concern that there shall be a strong and effective system of regulation based on the office of the Director General of Ofgas. The noble Lord is, of course, also concerned that the new Gas Consumers' Council shall be properly staffed.
I reiterate the Government's commitment to ensuring that the Office of Gas Supply will be adequately and fully staffed to do its job, and I remind your Lordships once again of the example of the Office of Telecommunications. In his latest annual report, which was published only two months ago, Professor Carsberg, the Director of Oftel, makes specific mention of the staffing and recruitment position in Oftel, pointing out that numbers are expected to continue growing—approaching 120 staff during 1986. That is a doubling in the staff of the office of Oftel in the telecommunications field. The Director General of Gas Supply will have exactly the same powers to appoint staff as Professor Carsberg has now.
In the light of the current information I have just provided I cannot see that there is an argument that the director is likely to have difficulty in adequately staffing his office. With respect to the noble Lord and his amendments, I do not think it is appropriate to require someone of the standing of the Director General of Ofgas to have to include comments on the staffing and functioning of his office in his annual report.
The noble Lord, Lord Diamond, invited me to say whether the power is there. Indeed it is. If the Director General of Ofgas feels that there is any merit in commenting on staffing matters or the way that his office is working, he will do so, and he has the power to do so. Exactly the same applies for the Gas Consumers' Council. They too have the power to appoint such staff as they determine, subject to the usual constraints, and they also have the power to include in the annual report anything relating to their activities during the year, including staffing and other matters. It is for that reason that I suggest that these amendments, although I understand the reasons of the noble Lord in putting them forward, are not necessary.
§ 4 p.m.
§ Lord Stoddart of Swindon
My Lords, I am surprised that the noble Lord will not accept this amendment. What the amendment seeks to do is to place a duty on the director to report on his staffing requirements: What staff he has, what staff he may need in the future and any representations he may have made to the Secretary of State. It seems to me, bearing in mind the fact that Parliament is losing control of this industry and indeed handling over the regulatory authority to what I suppose is an independent body, that they are entitled to know whether Ofgas is properly staffed and whether the director believes that it is properly staffed.
It might be, although I doubt very much whether this would happen, that the director wished to conceal the number of staff he has. There are circumstances in which he might wish to do that, and that would be a matter of concern both for Parliament and indeed for the Minister. Therefore, I should have thought that the safest course would be that which is suggested by the noble Lord, Lord Diamond, in the amendment which puts the duty in the Bill. We could then be sure that Parliament and the public were kept abreast of how many staff the director had, whether he thought they were adequate, what he thought the calibre of the staff to be and whether he thought they were doing the job for which they were appointed.
It is a very simple amendment. It is just as simple as the amendment which the Minister really accepted in relation to the free checking of gas appliances, and it would improve the Bill and create satisfaction. I hope the Minister will reconsider his reply and accept it.
§ Lord Belstead
My Lords, if your Lordships will allow me one more word, may I say that with respect to the noble Lord, Lord Stoddart, who is as ever persuasive, I do not think that this amendment would improve the Bill. The difficulty is that if one starts to specify the functions to be reported upon in the annual report—and in this case the Government are being asked to agree that only the functions concerning the facilities and the staffing of the director of Ofgas shall appear in the annual report—I think that most readers of the Bill would raise an eyebrow and ask: "What about all the other activities?" The answer is that, as it is drafted, the Bill says that the Secretary of State shall receive a report from the director and in that report there shall be included the activities carried out by the director during the year. If I may say so, I think that is a safer and better way of legislating.
However, there is also a second reason. I think that if a person of standing is appointed as director of Ofgas—and the new director designate is a very distinguished man who is going to have a very important job—to put in the statute that one of the things he must do in the annual report is to report on the way his office is running is unnecessary; it is asking a bit much of a man who is highly qualified and who will undoubtedly include such information as being part of his activity during the year if he feels that Parliament or the general public or the Secretary of State needs to know if anything is not going right in his office.
§ Lord Diamond
My Lords, I am grateful to the Minister for the full consideration he has given to these amendments and I am particularly grateful to the noble Lord, Lord Stoddart, for what he had to say. It would have been more satisfactory to me, and clearly also to the noble Lord, Lord Stoddart, if the Minister had come to the conclusion that it was possible to include these amendments, prefaced, if necessary, by the words, "without prejudice to the generality of the foregoing". That always deals with the situation in which anyone, including the Government and this very Bill, wants to bring in a particular matter without bringing in all matters and therefore makes it clear that the generality is not affected by the particular instance.
The main purpose of my amendment has been achieved, however, because the Minister has made it quite clear that now, at all events, the director and the council will indeed publish reports about their staffing and will refer to any particular difficulties they have had. Now that there has been this exchange and the Government have made it clear through their official spokesman that it is expected that the director and the council shall, if they desire, make a report of this kind, and that it will be fully understood that if they want to make public or draw to the attention of either House of Parliament certain differences of view they may have had with the Government as to their staffing and similar needs that shall be published as well, I must say that the main purpose of this amendment is achieved. I am grateful to the Minister for what he has said. He has made it very clear that what I thought ought to be done can and will be done if the director and the council so desire. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Diamond moved Amendment No. 5:
Page 41, line 42, ("include") insert ("(a)").
§ The noble Lord said: My Lords, in moving paving Amendment No. 5, I wish also to speak to Amendment No. 6, which is the substantive amendment, and to Amendment No. 7, which is the consequential amendment.
Amendment No. 6 is a substantial amendment which I will deal with in two parts because the second part relates to certain information which has just been handed to me and needs to be aired at this particular point. To put Amendment No. 6 in context, it is necessary to refer to page 41, line 42, dealing with the annual report of the director. Subsection (2) says:
Every such report shall include a general survey of developments…
§ This amendment seeks to add a statement of increase in efficiency achieved in each management area of the successor company in respect of the supply of gas through pipes to tariff customers. There is in fact a slight misprint in the Marshalled List but the reference is obviously to tariff customers.
§ I contend that this is an important amendment because it deals with the fundamental difficulty that arises from the whole of this measure in dealing with the privatisation of a monopoly without providing any competition. Hitherto, the Government's argument has always been that greater efficiency will be achieved by transferring an activity from the public sector to the 1030 private sector because competition will result which will be the spur to efficiency. There is no competition whatever in the present arrangements so far as tariff customers are concerned. Not only is there no competition but it is very difficult to think of any way of having competition, given that no one wants to put two lines of pipe next to one another running down the same street. We are talking here about the supply of gas to tariff customers.
§ The next best thing to competition is comparison. We suggested from these Benches at Committee stage, and again on Report in a similar way, that there should be a measure of comparison which could be arrived at by selecting a typical area—not a large area but one sufficient for the purpose—which can be used by way of comparison with other areas, and that the supply of gas in that particular area should be licensed or franchised so that another party could have the opportunity of trying its hand at doing the same job that British Gas was doing in the rest of the country, with the possibility of doing it even better.
§ If one found in that licensed or franchised area that gas was being supplied through pipes to tariff customers more efficiently, with better service and at no greater cost to customers, then that would be an indication that the rest of the supply by the private monopoly of British Gas was worth inquiring into, and indeed improving, and one would have gone some way toward achieving the effect of competition.
§ The House will know that in British Telecom, which is the nearest parallel, the Government have indeed introduced competition. They were so satisfied that privatising a monopoly was not of itself sufficient unless one had competition that they created a creature called Mercury to provide that competition. At this moment, the competition is being provided; namely, calls are being made available at a price some 20 per cent. cheaper than those provided by British Telecom. That is why—I am still speaking about the background rather than the content of this particular amendment—we tried to provide a franchise, which would enable a useful comparable area to have its results compared under the management of the licensee as opposed to British Gas for the rest of the country. That proposal was rejected. It is a great pity, but there is nothing that a minority Opposition can do about it.
This is a very modest amendment. It provides merely that the director shall include,
a statement of the increase in efficiency achieved in each management area of the successor company".
§ We know that there will be management areas of the successor company, because we have been told so. I do not know whether they are specifically identified in the Bill, but there will be management areas of the successor company. Under this amendment, the director is required to look at the results of each area and to ascertain the increase in efficiency achieved in each one. Again, we are talking only about the supply of gas through pipes to tariff customers.
§ What would be the benefit of this procedure? It would be substantial. It may come to light that in one or two areas the increase in efficiency is substantial; that in other areas there is no increase in efficiency at all; and that in certain areas there is a falling off in 1031 efficiency. That can be measured without too much difficulty. One does not want anything too precise; one merely wants an indication of which particular areas do not seem to be functioning as efficiently as others.
§ Of course, there may be a perfectly good explanation; and if so it would have been given to the director. The director would have access to the information he required in order to come to a conclusion and he may come to the conclusion that notwithstanding the fact that certain areas are not showing very good results in terms of their increase in efficiency, there are good reasons for it and there is no reason to inquire further. However, there may be other areas where the lack of efficiency or the great increase in efficiency could only be attributed to good or bad management, as the case may be. Good management would set the pattern for management elsewhere and bad management would need to have corrective measures applied.
§ So, clearly it would be of benefit for the director to know and to make available to Parliament and others who are interested through his report details of the increase in efficiency achieved in each management area. It is a simple point to grasp but it is an extremely important one in relation to the whole of this Bill, which, I repeat, is creating a private monopoly without any competition or anything approaching competition. I hope therefore that the Government will regard this amendment as a very worthwhile attempt to fill in a large and clamant gap and will accept if not the words then the spirit of the amendment. I beg to move.
§ 4.15 p.m.
§ Lord Belstead
My Lords, during the various stages of this Bill we have debated the question of whether what are called indicators of service (these being one of the ways in which efficiency should be measured) should in some way be written into the Bill or possibly into the authorisation. As the Government have previously made clear, they do not believe that provisions about indicators of service ought to be in the Bill because they consider that it is the responsibility of the public gas supplier to respond to normal commercial pressures and to maintain and improve standards. This amendment proposes that there should be a statement of increases in efficiency in each of the areas of the public gas supplier put into the director's annual report.
If I may say so, I think there is something in the Bill which is rather better than that, which I should like to outline to the House. Within the new regulatory arrangements, via any complaints that it receives, the Gas Consumers' Council will be able to monitor the standards of service which British Gas offer. That will provide a good measure of those areas which are of real concern to consumers. Yet there is more to it than that. The council will then be able to refer to the director any deterioration that it discovers in the quality of the gas supply services to tariff customers and, in turn, the director will be able to propose modifications to British Gas's authorisation if he feels that it is necessary in the light of what he has heard.
I think that that is really rather more practical than having a statement of increases in efficiency in the annual report. I believe that the noble Lord, Lord 1032 Diamond, and the Government are driving for much the same goal but that we are setting about it in a different way. Perhaps I may add that the noble Lord made some play of the fact that we are setting up a private monopoly. Although basically that is true, there are aspects of the Bill, as the House will know, through which we intend to try to encourage competition, particularly through the common carriage arrangements. When one looks at the whole of the energy field—oil, electricity, coal and nuclear—it is clear that it will be very much in British Gas's own interests to maintain its standards.
I assure your Lordships that the new company will have every incentive to be efficient both through normal market pressures and as a result of the regulatory regime under which it will operate. In addition to what I have tried to say in answer to the amendment, there will be a watchdog (namely, the consumer council), and the council will be able to feed its views to the director. At the end of the day, if he feels that he has to, he will be able to take action. I hope that your Lordships will feel that that is preferable to the amendment.
§ Lord Diamond
My Lords, I regret to say that we are talking about very different things. I hope that I may exercise my right of reply to say why I think the Government are not meeting the purpose of the amendment and to add a point which I did not want to bring in earlier because it is wholly different and relates to information on energy efficiency which has only just reached me.
I first turn to what the Minister said. The amendment does not relate to standards of service generally. The consumer council will be aware of falling standards of service and may make complaints. But in this amendment we are not concerned with that, but with efficiency. There may be the same standard of service in different areas, but in one case the service may be carried out efficiently and in the other, not. The net result would be that, although the consumer would receive the same standard of service and would not complain to the consumer council and via it to the director general, nevertheless in one case the service may be provided much more cheaply by better management and a better conception of what is required.
We are dealing not with overall standards of service but with the comparative efficiency of different management areas. One may be more efficient than another, and we should know about that. There is no way other than this proposal open to Parliament, the consumer, the director and the public generally with a private monopoly of this kind to see which area is being managed efficiently. There will be minor variations. Some people will be better at the job than others, there will be reasons for variations and there will be temporary circumstances. We understand all that. But one or two areas may not increase efficiency year after year and quarter after quarter as well as the rest.
The Government have recognised the principle of driving towards increased efficiency and have included in the authorisation an efficiency factor. That is what we are talking about. It was put in by them to encourage the management of the gas supplier to be 1033 more and more efficient each year. That is what the amendment is driving at. The provision is to find out what success there has been in the various management areas in achieving greater efficiency. Without competition and without the licensing and franchise arrangements suggested at the previous stages of the Bill, I know of no other approach. This method is by no means totally satisfactory, but it would give an indication which could be followed up.
For example, if two or three areas consistently showed far less than average increases in efficiency and that fact was included in the director's report, which would go to the Select Committee on Energy in another place, it might well decide to call for evidence to see whether it indicated that overall in the management of the private monopoly there were serious gaps. There might be reasons or justifications, or there might not be. But this would be an indication, and I believe that the Government ought to require that. Having heard the Minister's reply, I am by no means satisfied that he has taken on board the essential point. He keeps talking about services, but that is not the essential point of the amendment.
Let me leave that for the moment and go to my second point, which I did not deal with earlier. It relates to a promise given by the Government to include in their authorisation a concession on energy efficiency. That is not directly referred to in the amendment, but we are talking about energy efficiency. The information has only just reached me, and I shall well understand if the Government cannot deal with it immediately. I am sure that they will take it on board, consider it and, if necessary, write to me.
I understand that the revised draft authorisation orders the supplier of gas to make available informa-tion to tariff customers; and the relevant word is "information". On the other hand, I understand that the promise was that advice would also be sent. There would not just be information, but information and advice. That is to be found in col. 759 of the Official Report at the Committee stage of the Bill. Unfortunately, I do not have it with me, but I imagine that it is an accurate reference. Making information available to ordinary consumers simply means reminding them to turn appliances off overnight, for example, but that is not the same as giving them proper advice about installations and other such matters. That is what I am told is the position. There has been an alteration in what the Government said. I should be grateful if they would take that on board and perhaps be kind enough to let me have a reply later.
The amendment ought to commend itself to the House. We have tried time and time again to remedy the major defect of the Bill, which for the first time contains a proposal by the Government to turn a public monopoly into a private monopoly without any competition being built in, and I therefore do not propose to withdraw the amendment.
§ Lord Ezra
My Lords, I should like to take up a point made by the noble Lord, Lord Belstead, at an earlier stage, when he said that it was in the interests of the gas industry to maintain the highest level of efficiency, bearing in mind that it would be competing in the tariff market with the other forms of energy. I 1034 agree. That is true today; that is the situation which now exists. The act of privatisation will not alter that one jot or tittle.
Gas, electricity, coal and oil are today competing for the domestic market. Despite that pressure of competition, the Government decided some time ago that each of those publicly owned enterprises should periodically be subject to detailed inquiry by the Monopoliies and Mergers Commission to judge whether they were efficiently managing their businesses. As the position will not have changed in any way by privatisation, because the gas supplier will remain in exactly the same control of the business, facing exactly the same forms of competition, it seems to me to be not logical to contend that there should be some continuing efficiency audit, by an independent body, of its activities. As the director has now been appointed to take on that role, I should have thought that it is not unreasonable to suggest that this proposal should be one of the provisions in the Bill.
§ Lord Belstead
My Lords, perhaps I may reply to the noble Lord, Lord Diamond, who was concerned about an undertaking which we gave to make a change to the authorisation so that the public gas supplier should give advice to tariff customers about the efficient use of gas supplied to them. The wording in the authorisation is,information for the guidance of tariff customers".That amounts to guidance or advice. I think that we have discharged our undertaking in that respect.
I am sorry, but the noble Lords, Lord Diamond and Lord Ezra, and the Government must agree to differ. I believe that under a privatised British Gas, management is a matter for British Gas. I believe that British Gas will be spurred on by competition in the whole energy field and, as the noble Lord, Lord Diamond, fairly said, also by the efficiency factor in the price formula. If noble Lords intend to divide on this amendment, I would say that I see the amendment as being an unwarrantable interference in what will be a privatised company. I shall resist the amendment.
§ 4.32 p.m.
§ On Question, Whether the said amendment (No. 5) shall be agreed to?
§ Their Lordships divided: Contents, 73: Not-Contents, 114.1035
|DIVISION NO. 1|
|Addington, L.||Dean of Beswick, L.|
|Airedale, L.||Denington, B.|
|Amherst, E.||Denning, L.|
|Ardwick, L.||Diamond, L.|
|Attlee, E.||Donaldson of Kingsbridge, L.|
|Aylestone, L.||Dowding, L.|
|Banks, L.||Elwyn-Jones, L.|
|Barnett, L.||Ennals, L.|
|Birk, B.||Ewart-Biggs, B.|
|Bottomley, L.||Ezra, L. [Teller.]|
|Brockway, L.||Fitt, L.|
|Bruce of Donington, L.||Foot, L.|
|Burton of Coventry, B.||Gallacher, L. [Teller.]|
|Caradon, L.||Gladwyn, L.|
|Carmichael of Kelvingrove, L||Grey, E.|
|Cledwyn of Penrhos, L.||Grimond, L.|
|David, B.||Harris of Greenwich, L.|
|Houghton of Sowerby, L.||Oram, L.|
|Hutchinson of Lullington, L.||Pitt of Hampstead, L.|
|Irving of Dartford, L.||Ponsonby of Shulbrede, L.|
|Jeger, B.||Prys-Davies, L.|
|Jenkins of Putney, L.||Ritchie of Dundee, L.|
|Kilbracken, L.||Rochester, L.|
|Kilmarnock, L.||Ross of Marnock, L.|
|Leatherland, L.||Sefton of Garston, L.|
|Listowel, E.||Serota, B.|
|Llewelyn-Davies of Hastoe, B.||Stallard, L.|
|Lloyd of Kilgerran, L.||Stedman, B.|
|McGregor of Durris, L.||Stoddart of Swindon, L.|
|McNair, L.||Taylor of Mansfield, L.|
|Mais, L.||Underhill, L.|
|Mayhew, L.||Wells-Pestell, L.|
|Monson, L.||White, B.|
|Morton of Shuna, L.||Williams of Elvel, L.|
|Mulley, L.||Winstanley, L.|
|Nicol, B.||Winterbottom, L.|
|Abinger, L.||McAlpine of Moffat, L.|
|Allenby of Megiddo, V.||McFadzean, L.|
|Alport, L.||MacLehose of Beoch, L.|
|Auckland, L.||Macleod of Borve, B.|
|Belhaven and Stenton, L.||Malmesbury, E.|
|Beloff, L.||Mancroft, L.|
|Belstead, L.||Margadale, L.|
|Bessborough, E.||Masham of Ilton, B.|
|Birdwood, L.||Maude of Stratford-upon-|
|Brabazon of Tara, L.||Avon, L.|
|Brougham and Vaux, L.||Merrivale, L.|
|Broxbourne, L.||Mersey, V.|
|Butterworth, L.||Middleton, L.|
|Caithness, E.||Minto, E.|
|Campbell of Croy, L.||Monk Bretton, L.|
|Carnegy of Lour, B.||Montgomery of Alamein, V.|
|Carnock, L.||Mowbray and Stourton, L.|
|Chalfont, L.||Moyne, L.|
|Coleraine, L.||Murton of Lindisfarne, L.|
|Constantine of Stanmore, L.||Newall, L.|
|Cork and Orrery, E.||Norfolk, D.|
|Cowley, E.||Nugent of Guildford, L.|
|Craigavon, V.||Onslow, E.|
|Crathorne, L.||Orr-Ewing, L.|
|Dacre of Glanton, L.||Pender, L.|
|Darcy (de Knayth), B.||Penrhyn, L.|
|Davidson, V.||Peyton of Yeovil, L.|
|Denham, L. [Teller.]||Plummer of St Marylebone,|
|Drumalbyn, L.||Porritt, L.|
|Eccles, V.||Rankeillour, L.|
|Ellenborough, L.||Reigate, L.|
|Ferrier, L.||Renton, L.|
|Fortescue, E.||St. Aldwyn, E.|
|Gainford, L.||Sandford, L.|
|Gardner of Parkes, B.||Selkirk, E.|
|Gisborough, L.||Sempill, Ly.|
|Glanusk, L.||Sherfield, L.|
|Glenarthur, L.||Skelmersdale, L.|
|Gridley, L.||Stodart of Leaston, L.|
|Hardinge of Penshurst, L.||Strathcarron, L.|
|Henderson of Brompton, L.||Sudeley, L.|
|Henley, L.||Swinton, E. [Teller.]|
|Hives, L.||Teviot, L.|
|Hooper, B.||Thomas of Swynnerton, L.|
|Hylton-Foster, B.||Thorneycroft, L.|
|Ilchester, E.||Trumpington, B.|
|Killearn, L.||Tryon, L.|
|Kimball, L.||Ullswater, V.|
|Kinnaird, L.||Vaux of Harrowden, L.|
|Knollys, V.||Vickers, B.|
|Lane-Fox, B.||Vivian, L.|
|Lauderdale, E.||Whitelaw, V.|
|Layton, L.||Wise, L.|
|Long, V.||Wolfson, L.|
|Lucas of Chilworth, L.||Young, B.|
|Lurgan, L.||Ypres, E.|
|Lyell, L.||Zouche of Haryngworth, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.