Lords Sitting of 5 July 1989

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Chester.

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, before the commencement of business, I take the opportunity to inform the House that I have accepted an invitation from the Inner London Magistrates' Courts Service to attend on Thursday 13th July a service of commemoration in Westminster Abbey in the gracious presence of Her Majesty Queen Elizabeth, the Queen Mother, to celebrate 100 years of the work of the Inner London Magistrates' Courts, and that I am to visit Humberside magistrates on Friday 14th July. Accordingly, I trust that the House will agree to grant me leave of absence for Thursday 13th and Friday 14th July.

Forestry Tax and Grant Regime
2.37 p.m.
Lord Jenkin of Roding Lord Jenkin of Roding asked Her Majesty's Government:
Whether they have assessed the impact on forestry planting of the new forestry tax and grant regime introduced in the 1988 Budget.
The Minister of State, Scottish Office (Lord Sanderson of Bowden): My Lords, as the private planting grant-aided in the year to 31st March 1989 included a substantial amount undertaken before the 1988 Budget—or subsequently with the benefit of transitional tax reliefs—it is too early to say what impact the new forestry tax and grant regime will have on planting levels.
Lord Jenkin of Roding: My Lords, in view of the reported burning of many millions of small nursery saplings and of the widespread expectation that forestry planting this year may be no more than a third of the level that it reached last year, is there not a case for a much greater publicity drive to alert companies—perhaps foreign companies—which might be prepared to invest in forestry in this country? They were not able to take advantage of the previous tax regime, whereas they can take advantage of the new grant regime. If this is not done we shall face a shortage of timber in the years to come.
Lord Sanderson of Bowden: My Lords, I take my noble friend's point on this matter. The secretary of the Royal Forestry Society has said that prospects for forestry seem to be better. It is a question of attracting different types of investor. With the
1160
information coming from the Forestry Commission and the dedicated work of the Forestry Industry Committee of Great Britain, I am absolutely certain that we shall achieve over time what my noble friend requires.
Lord John-Mackie: My Lords, does the Minister agree that his noble friend's Question would have been much better asked before the Budget? If some assessment of what might happen had been made then, we would not have had this cock-up, which, as the noble Lord said, is messing up 40 million young trees.
Lord Sanderson of Bowden: My Lords, I recall that it was not only on these Benches that the changes in the Budget last year were welcomed. One of the experts who has nursery trees in his business, Mr. Christie of Fochabers, has said:
"The Government's long-term policy is not far wrong. We think it will come right. Demand for timber is there".
It is not just one-sided in this matter.
Lord Rees: My Lords, if, as seems likely, actual planting, as opposed to grant applications, which are always notoriously an unreliable guide to such matters, falls short—it seems likely to fall far short of the Government's figures—what measures will they propose to restore confidence in this much battered area of economic activity?
Lord Sanderson of Bowden: My Lords, my noble friend is an expert on these matters. He will recall that I said that with such a big change we expected that there would be a dip in planting in the year ahead and perhaps in the years ahead. However, we feel that it was in the long-term interests of the industry to move to the new position. These matters are kept under review by myself and my colleagues.
Lord Lloyd of Kilgerran: My Lords, the Minister was enthusiastic about the potential prosperity of forestry in the United Kingdom. Does he have the same enthusiasm for the future of forestry in Wales? In this connection I must declare an interest as the owner of a few hundred acres of forestry planted 1,000 feet above the little town of Tregaron.
Lord Sanderson of Bowden: My Lords, I know that the noble Lord is an expert on matters concerning Wales. I undertand his point, but I should make it clear that the long-term future of the timber industry in this country is assured. At the turn of the century the Forestry Commission, which is a major part of the forestry industry, though somewhat reduced in size, will be supplying substantially more timber to the industry than it does at present.
Lord Lloyd of Kilgerran: My Lords, the noble Lord has set out the position for the whole country. I asked about the position in Wales. As far as I have understood him this afternoon he made no mention of Wales.
Lord Sanderson of Bowden: My Lords, if the noble Lord wishes to have details of the position in Wales I shall be perfectly happy to write to him. But, overall, the industry is in good heart.
Lord Eden of Winton: My Lords, in keeping the matter under review, will my noble friend bear in mind that there is a strong case for making a distinction between the planting of broad-leaved hardwood timber and the planting of coniferous timber? Is he not aware that the planting of broad-leaved trees may well suffer as a result of the tax proposals? Is it not therefore most urgent that this matter is reviewed?
Lord Sanderson of Bowden: My Lords, my noble friend may be aware that the broadleaf policy is being reviewed at present. The Government will come forward with their acknowledgment of the consultation which has recently taken place. As regards the question of broadleaves as such, I must say that I do not share my noble friend's pessimism; in fact, only last month I attended the opening of a new nursery in Scotland where 75 per cent. to 80 per cent. of the good business being carried on was in broadleaves.
Viscount Thurso: My Lords, the noble Lord has referred to a long-term policy for forestry on the part of the Government. Can he tell me where I may discover what that policy is?
Lord Sanderson of Bowden: My Lords, as the noble Viscount knows, we have targets for forestry planting in this country which he will be aware cover both the woodland grant scheme and the forestry grant scheme. In both cases those targets are constantly watched. In addition, I do not think that it is insignificant that investors in the industry—to quote, Caledonian Paper, which has a factory in Irvine that will be opened tomorrow—do not believe that the future of forestry in this country is under threat.
Lord Stodart of Leaston: My Lords, does my noble friend realise the significance of, and does he not also draw great encouragement from, the fact that a former distinguished member of the Treasury—namely, my noble friend Lord Jenkin—has made encouraging remarks about forestry?
Lord Sanderson of Bowden: Yes, my Lords. I believe that there is a sound future for forestry. Of course, when a major change in budgetary arrangements takes place there must be concern as to whether the whole situation will improve. But my noble friend is quite right, I have no doubt that there is a very good long-term future for the prosperity of this industry. Indeed, I take note of what my noble friend Lord Jenkin said as regards publicity.
Lord Jenkin of Roding: My Lords, perhaps I may say in response to my noble friend—
Noble Lords: Question!
Lord Jenkin of Roding: My Lords, the question I wish to ask is whether my noble friend recollects that, as Financial Secretary to the Treasury, I actually published in 1970 a very encouraging White Paper
1162
on forestry? I must say that I hope my noble friend will follow up his last remarks about publicity with some urgency. I believe that without such action we shall be in danger of having a considerable gap in planting which we shall regret in the years ahead.
Lord Sanderson of Bowden: My Lords, I acknowledge that a good deal is going on in this respect; however, there is always room for more.

Occupied Territories: Closure of Schools
2.46 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
What representations they have made to the Israeli Government concerning the indefinite closure of all educational establishments in the occupied territories of Palestine.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur): My Lords, we have repeatedly made clear our view that Israel's security concerns do not justify the closure of schools. We have called on the Israeli authorities, most recently in the European Council Declaration on the Middle East on 27th June, to allow the schools to reopen.
Lord Hylton: My Lords, I am grateful for that reply. However, is the noble Lord aware that over 300,000 children and students are affected by the closures? Is he further aware that it is even illegal to teach in private houses? Does the noble Lord also accept the wish of Members from all sides of the House to uphold the educational rights of both the Palestinians and the Israelis? Will Her Majesty's Government continue to press for the reopening of such schools and universities as an essential confidence-building measure pending a negotiated political settlement?
Lord Glenarthur: My Lords, I must say that the figures quoted by the noble Lord are indeed disturbing; but there is more than one source for the kind of figures he used. It is difficult to get the true picture. However, I certainly agree that what he has described is a deplorable state of affairs. I can assure him that we shall continue to press the matter.
Lord Molloy: My Lords, can the Minister say which other countries are supporting the British Government in their endeavours to bring peace to the Middle East and to see an end to the appalling situation which exists in the occupied territories?
Lord Glenarthur: My Lords, I think the noble Lord will appreciate that many countries are keen to see a resolution of this tragic state of affairs. We have been closely engaged in the matter as have the Americans, which is extremely important. Many countries in the Arab world are also involved.
Lord Mellish: My Lords, can the noble Lord say why it is that the Israeli Government are doing what they are doing? After all, if we are to have a balance sheet we ought to have all the figures.
Lord Glenarthur: My Lords, there is a danger on this sort of Question that we become involved in a major debate on the whole Arab-Israeli conflict. It has happened fairly regularly recently. The Question relates strictly to the matter of schools.
Lord Hailsham of Saint Marylebone: My Lords, can my noble friend tell the House what is the justification put forward by the Israeli Government for the closure of all the schools in this part of the world?
Lord Glenarthur: My Lords, the excuse put forward by the Israeli Government is that it is a matter of security for them. We understand that they have security concerns. However, I do not believe that what they have done with their schools can in any sense be considered as some sort of security risk.
Lord Mayhew: My Lords, apart from the denial of education, which I believe has lasted now for 18 months, does the Minister recall stating recently that the Israeli army has killed 90 children and wounded 20,000 others by beating and shooting? Will he give the assurance that, while that treatment of children continues, there will be no official educational or cultural links with Israel?
Lord Glenarthur: My Lords, those figures are broadly correct, as I said the other day. On cultural and educational links between Israel and this country, the British Council is active in Israel and there is a budget of £1.7 million for 1989–90. It is important to bear in mind, however, that withdrawal of that type of aid would not help to solve the problems of the occupied territories. That type of aid is more a force for good and understanding than anything else.
Baroness Phillips: My Lords, is the Minister aware than some of us sympathise with the Israeli Government—the only democratic government in the whole of the Middle East—in their fight against the PLO and its various arms? Surely they closed the schools merely as a matter of security.
Lord Glenarthur: My Lords, yes, but I cannot accept, and nor can the Government, that the closure of the schools was necessary from a security point of view.
Lord Cledwyn of Penrhos: My Lords, knowing as he does our concern and long-standing friendship with the state of Israel, will the Minister say what steps Her Majesty's Government are taking? In view of the close relationship which has existed over the years between the British Government and the Government of Israel, would it not be appropriate for his right honourable and learned friend to make direct approaches to Mr. Shamir and the Foreign Secretary?
Lord Glenarthur: My Lords, the noble Lord will be aware that Mr. Shamir's visit confirmed our good relations with Israel. We had thorough talks covering the Arab-Israel situation and other regional issues and bilateral questions. I can assure him that we shall of course continue to remain in close touch.

Crime in Rural Areas
2.53 p.m.
Baroness Masham of Ilion Baroness Masham of Ilion asked Her Majesty's Government:
What plans they have to arrest the escalation of crime in rural areas.
The Earl of Arran: My Lords, crime levels are falling in non-Metropolitan Police force areas, but outbreaks of particular types of crime occur in various places from time to time. To counter this we have increased police manpower for non-metropolitan forces. We are introducing a new training programme for their officers and we are encouraging the development of Farm Watch and other crime prevention schemes.
Baroness Masham of Ilion: My Lords, I thank the noble Earl for that courteous and helpful Answer. Is he aware that the depressing aspect of the matter is that the stolen goods are hardly ever recovered and that the criminals come out from the towns and target the rural areas? They are mobile and motivated and get away with their crimes.
The Earl of Arran: My Lords, unfortunately and sadly that is the case in some circumstances. The police are obviously aware of the position and do everything in their power to see that the goods are returned to their rightful owners.
Baroness Sharples: My Lords, does my noble friend agree that insurance companies can be extremely helpful by advising owners of property which is at risk from vandals and so forth as to what type of equipment they should put on their doors, because we are all losing swords and so on?
The Earl of Arran: My Lords, my noble friend is right. Insurance companies reflect their clients' awareness in their premiums. It is the job and responsibility of good, sensible insurance companies to ensure that clients are always advised how best to protect their property.
Baroness Ewart-Biggs: My Lords, in view of the fact that some of the crime is committed by young people under the influence of drink, will the Minister say whether there has been any success as a result of the recent Licensing Act which strengthened the law governing the sale of alcohol to under-age drinkers, and whether there have been any prosecutions of licensees and publicans? What training is given to teachers and social workers to help prevent young people falling into the habit of drinking or to help them out of it?
The Earl of Arran: My Lords, with regard to the recent report on rural violence, we have strengthened the law relating to the sales of alcohol to under-age drinkers and have increased the penalties available to the courts. Advice has been issued to the police and courts about the powers available to deal with outbreaks of disorder. We have encouraged the drinks industry to increase the production and promotion of low and no alcohol drinks.
Baroness Strange: My Lords, is my noble friend aware that those of us who live in isolated rural areas are grateful to the police for their support and protection, and that if one is alone in a house, of course with dogs, it is nice to see a police car driving around?
The Earl of Arran: My Lords, I am sure that your Lordships will all agree with what my noble friend has said.
Lord Winstanley: My Lords, has the Minister noted that many of the supplementary questions addressed to him on this subject have been to do with the theft of property in rural areas? Does he accept that in many cases it is the theft of stock that concerns people? Highly organised gangs steal sheep and other stock from the Fells, butcher them on site and take them away. The Minister has referred to the efforts made to restore property to its rightful owners. One cannot apply that remedy to thefts of the type that I have described.
The Earl of Arran: My Lords, we are aware of the point that the noble Lord makes. With regard to the theft of animals and stock, in their Farm Watch scheme the police encourage people to have markings on their property or animals.
Lord John-Mackie: My Lords, is the Minister aware that the advice I received from the police after I had a burglary at my farm in Essex was that it was a good idea to have sufficient light, and a good barking dog, on farm buildings and farm houses? Electricity is expensive, and I hope that the Government will take note of that advice when we deal later on with the first amendment to the Electricity Bill.
The Earl of Arran: My Lords, I am sure that the police gave extremely good advice. Farm Watch schemes now operate in 18 counties.
The Earl of Swinton: My Lords, is my noble friend aware that one of the reasons why it is becoming difficult to recover property is the plethora of car boot sales and other associated events? They are obviously a good way for petty criminals to get rid of goods which are not worth much, and they are difficult to stop. I am not suggesting for a moment that any action should be taken to stop that excellent form of raising money for charity, but can my noble friend give any advice to the people who organise such events to keep a special watch for that type of activity?
The Earl of Arran:My Lords, the sensible advice is to keep a good watch for that type of activity. My noble friend will no doubt be aware from when he visits car boot sales that the items in the backs of cars tend to be of low value.
Baroness Robson of Kiddington: My Lords, I welcome the noble Earl's reply about the reduction of crime in rural areas. Will he tell us by how much crimes of actual bodily harm and vandalism have decreased? In my experience as a justice of the peace,
1166
those crimes have increased enormously in rural areas in the past few years.
The Earl of Arran: My Lords, I cannot answer that question without notice. I can tell the noble Baroness about the general decrease in crime during the past 10 months. For example, until the end of April this year, recorded crime fell by nearly 5 per cent. in non-Metropolitan Police rural areas and by 9 per cent. in North Yorkshire.
Baroness Masham of Ilion: My Lords, does the Minister agree that, as the roads in the North of England have come to a standstill due to traffic hold-ups, it might be a good idea if police forces had helicopters to help catch criminals?
The Earl of Arran: My Lords, such action is at the discretion of and is the responsibility of the chief officer of the county; but helicopters are extremely expensive to run.
Baroness Ewart-Biggs: My Lords, I am sorry to press the Minister but can he answer the question that I put to him? It was whether there had been any prosecutions of publicans for selling drinks to under-age drinkers following the introduction of the Licensing Act. Also, what training is available to teachers and social workers to help young people avoid becoming involved?
The Earl of Arran: My Lords, what teachers can do to help is slightly wide of the Question on the Order Paper. I shall send to the noble Baroness the imformation she seeks. As regards the first part of the question, I believe that the sensible course would be to spell out the answer in writing.
Lord Glenamara: My Lords, does the noble Earl agree that the new phenomenon of the lager lout in small country towns and the trouble they cause is not attributable to young people from the towns, as the noble Baroness, Lady Masham, said? The problem is caused by the young people from the rural areas themselves: that is quite new.
The Earl of Arran: My Lords, unfortunately that is quite accurate.

Crown Courts: Building Programme
3.1 p.m.
Lord St. John of Fawsley Lord St. John of Fawsley asked Her Majesty's Government:
What is their building programme for Crown Courts.
The Lord Chancellor: My Lords, the capital court building programme currently contains nearly 50 schemes for the Crown Court, either in construction or yet to reach that stage, involving both adaptations and new buildings.
Lord St. John of Fawsley: My Lords, I am grateful to my noble and learned friend for that Answer. However, does he agree that the Crown Courts are

1167
the last in a noble tradition of public building which should be maintained by employing architects of distinction? Does he agree that there is a tendency, as at Middlesbrough, to use prototypes and to design and use building procedures which result in mediocre buildings? Can he give an assurance that wherever possible old court buildings will be retained and modified for their present legal use and not rendered redundant?
The Lord Chancellor: My Lords, I agree with the view that Crown Court buildings are extremely important public buildings and that an appropriate standard of design must be attained. That standard must enable the building to blend with its environment, create a civic presence reflecting the dignity of justice, command respect for the legal process and mark the place of the law at the focal point of a community. On the other hand, it is also wise to develop general criteria for the requirements of court buildings.
The building at Bradford has similarities with one other court building in its internal layout. But the external appearance is intended to blend with its environment; for example, through the use of local stone for the facing. As regards adaptation of all buildings, where that is economical it is kept very much in mind. But the noble Lord will be aware that it is sometimes extremely difficult to keep the general appearance of an old building while providing the kinds of facilities now required for witnesses, staff and the other users of the court building.
Lord Northfield: My Lords, is the noble and learned Lord prepared to put some designs out to open competition among architects given that these are in many cases such important civic buildings? Is he aware that in Telford, where we asked for a building in keeping with the new modern image of the town, what we got was a purely nostalgic pavilion that people think was built in the 1930s? The design was by an in-house architect; we could not shift his authority from that design.
The Lord Chancellor: My Lords, the arrangements attempt to secure good design consistent with creating buildings within a reasonable economic cost. As concerns Telford, the point which the noble Lord raises is obviously a matter of judgment. A nostalgic building may have great attractions for some of us.
Lord Elton: My Lords, in considering the advice of my noble friend Lord St. John of Fawsley about retaining existing courts in existing positions, will the noble and learned Lord please balance that advice against the necessary considerations of security and ease of accesss for the prison service and for witnesses, particularly when changing traffic patterns sometimes make existing locations quite untenable?
The Lord Chancellor: My Lords, all these circumstances certainly have to be taken into account. I am sure that my noble friend appreciates that local circumstances sometimes make it impossible to continue with the old building,
1168
however desirable it might be. I assure your Lordships that we consider carefully whether the old building can be maintained as the court building before we decide to go for a completely new one.
Lord Elwyn-Jones: My Lords—
Lord Irvine of Lairg: My Lords, does the noble and learned Lord agree that although it is often desirable to retain the originality of buildings, there are some which were originally bad?
The Lord Chancellor: Certainly, my Lords.
Noble Lords: Lord Elwyn-Jones.
Lord Elwyn-Jones: My Lords, patience has been rewarded! Is it not the case that the time spent in custody by those awaiting trial in the Crown Courts has become grossly excessive? It is an unjust feature of our arrangements. Is there not therefore urgent need to accelerate the building of Crown Courts?
The Lord Chancellor: My Lords, obviously one of the aims of the programme which I described in my original Answer is to attempt to cope with this problem. Over the last five years several major schemes have been completed, providing nearly 60 additional Crown Court rooms, almost half in London and the South East. Despite a huge increase in the workload, this has helped over the period to keep average waiting times more or less as they were. Our aim is to reduce these times because I entirely accept the principle underlying the noble and learned Lord's point.
Lord Dean of Beswick: My Lords, is the noble and learned Lord aware that designing each court building on a one-off basis is a very expensive exercise? At a time when there are severe restrictions on spending on housing, schools and hospitals, is it not nonsense to allow costs to escalate severely in the building of Crown Courts?
The Lord Chancellor: My Lords, there are difficult questions of priorities to be decided in relation to any expense. However, within the limits of trying to be as economical as possible, we attempt to get the best design we can. It is important that the design should take account of the locality. That does not necessarily involve additional expense, but it is an important consideration. It must be taken into account along with all the other considerations that go into the production of a good Crown Court building.
Lord Hutchinson of Lullington: My Lords, can the noble and learned Lord say whether any consideration is being given to the abolition of that archaic institution, the dock? Is it not high time that accused persons were allowed to sit with their legal advisers, as they do in all other civilised Western nations? The present situation is ridiculous. The defendant is isolated in a dock in the centre of the court. This takes up an enormous amount of space and it is impossible for the defendant to communicate with his legal advisers. Is it not high time that that institution was abolished?
The Lord Chancellor: My Lords, I am certain that the noble Lord will be aware that these are not matters on which universal agreement is easily reached. Before any decision is taken to abolish the dock, a number of interests would require to be consulted. I have no doubt that the noble Lord is promoting his point of view actively in those quarters.
Lord Benson: My Lords, will the noble and learned Lord the Lord Chancellor help us as regards the number of courts in the new programme which are designed and equipped to deal with the new information technology which is developing very quickly in this country?
The Lord Chancellor: My Lords, this is an aspect of court design which we are taking into account. The precise requirements are not always easy to estimate, but in the design of the buildings the development of a technological requirement is kept in mind.

Business
3.10 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I tell the House that after 3.30 this afternoon my noble friend Lord Glenarthur will, with the leave of the House, repeat a Statement that is to be made in another place on Hong Kong. It may also be for the convenience of your Lordships to know that the Report stage of the Electricity Bill will be adjourned at about seven o'clock for about an hour and that during this adjournment the Third Reading of the International Parliamentary Organisations (Registration) Bill will be taken.

New Southgate Cemetery and Crematorium Bill
Read a second time, and committed to an Unopposed Bill Committee.

Employment (Age Limits) Bill [H.L.]
Baroness Phillips: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Baroness Phillips.)
On Question, Motion agreed to.

Electricity Bill
3.13 p.m.
Report received.
Clause 1 [The Director General of Electricity Supply]:
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 1:
Page 1, line 11, at end insert ("in a manner that protects consumers of electricity without discrimination").
The noble Lord said: My Lords, with your Lordships' permission I wish to speak also to Amendments Nos. 32, 60 and 61, which are consequential on this amendment. The noble Earl, Lord Halsbury, who is supporting these amendments, tenders his apology.
The purpose of these amendments is to ensure that no one in any particular area is discriminated against as regards charging for electricity. I need hardly add that my particular concern is the rural community. Even though I appreciate that the Government's intention is the same, I suggest to your Lordships that the words used in Clauses 4 and 20 do not make this very clear. In fact the noble Lord, Lord Peston, went so far in Committee as to call the drafting "weasel words". Perhaps I would not go quite as far as that, but I do not understand it. Hence these amendments which I hope clarify the matter.
In Committee, the matter of charging rural users of electricity more than others was discussed under Clause 18, now Clause 20, but since then we have had both Report and Third Reading of the Water Bill, upon which your Lordships put forward the same point. However, my noble friend Lord Caithness persuaded me that the correct way to deal with the problem was by giving the Secretary of State and the director general under Clause 7 of that Bill duties to protect the rural consumer. The Government graciously drafted and accepted such an amendment at Third Reading. It is therefore with some hope that I return to the Electricity Bill with a similar amendment that would make it a specific duty on the Secretary of State and. the director general to ensure that rural users of electricity pay at the same rate as anyone else. In fact that is the position today, and will, I understand, continue for at least five years as promised by my honourable friend Mr. Michael Spicer in another place [Official Report, Commons, 6/4/89; col. 400].
These amendments, therefore, merely put on the face of the Bill the desires and hopes that he had. Having a somewhat suspicious nature, I fear that the new commercially orientated electricity plcs will in future have to answer to their shareholders and profitability will inevitably take precedence over service. So the promise might easily be forgotten and those least able to protect themselves will be charged more, not least those in rural areas because there neither is nor will be any competition from other sources of energy.
Noble Lords who followed a similar amendment in the Water Bill will note that we have included in this set of amendments an additional consequential

1171
amendment to Clause 20. I have to admit that it was in my mind to do so on the Water Bill, but, as I have said before, my noble friend Lord Caithness persuaded me—though not all of your Lordships—that such a course of action was impractical and indeed could have strange results because water charges are related to rates. However, in this Bill such an argument just cannot apply.
I was pleased, and indeed encouraged, to read reports of the remarks of my right honourable friend the Prime Minister when she attended the Royal Show on Monday. She said that she considered farmers to be the backbone of our society. That backbone, as many noble Lords know, is suffering at the moment from a series of financial slipped discs. So I hope the House will support this series of amendments, which will prevent any further financial burden being put on those who live in the country. I beg to move.
Lord John-Mackie: My Lords, I cannot add a lot to what the noble Lord, Lord Stanley of Alderley, has said on these amendments except to say, as I pointed out in my earlier efforts at Question Time today, that we in farming have to provide our own roads and our own street lighting, or at least lighting for buildings and houses outside. That is very expensive, as was pointed out earlier. Any discrimination which would make that more expensive for farmers would be completely unfair. I had experience of the early days in Scotland when the Scottish Hydro-Electric Board came into being. That board was going to charge a lot extra for laying electricity to remote farms. If I remember rightly, it had to change its policy and try to spread the price.
The Minister has told us that somewhere around 80 per cent., if not more, of the cost of electricity lies in the generation of it and that the spreading cannot therefore be all that expensive. I hope, therefore, that noble Lords will support these four amendments, which I feel will achieve non-discrimination for rural areas.
Lord Trafford: My Lords, I have some anxiety about these amendments on two grounds. First, in a number of different places in the Bill the statement is made that electricity shall be provided without discrimination. Clause 4(2)(a), for example, states that the prices charged to tariff customers shall not:
"distinguish … between different parts of that area".
Elsewhere in the Bill there is reference to the avoidance of discrimination between various groups of people. Yet, in Amendment No. 61, which my noble friend will be moving, he wishes to add the words:
"particularly consumers in rural areas".
It seems to me, therefore, that we are saying that there is one particular group which shall be singled out—apparently for all time, as no time limit is set on this factor—with regard to tying the hands and the pricing mechanisms of electricity suppliers. That seems to me to be an error.
There is a second point which makes me feel slightly uncomfortable. I hope that my noble friend on the Front Bench will be able to confirm that the
1172
area board chairmen have stated that they expect to maintain the current system of domestic tariffs—which does not discriminate—for at least five years. I should have thought that that represents an acceptable assurance to those who fear that there may be discrimination. In addition, the Bill quite clearly states on page 16, in Clause 20(4), that the,
"public electricity supplier shall not exercise any undue discrimination against any person or class of persons".
Therefore, their concern is in part covered.
We should hesitate to write on to the face of the Bill that a particular group of people should be singled out either for discrimination or for protection from discrimination.
Lord Ezra: My Lords, I should like to support the noble Lord, Lord Stanley of Alderley, on this issue, despite what the noble Lord, Lord Trafford, has just said. Your Lordships will recall that when we debated the Telecommunications Bill and the Gas Bill we were all concerned about people in rural areas. It is a fact that to supply them with basic services costs more, but under public service arrangements they were not discriminated against. There is concern that under privatised arrangements they could be.
Therefore I believe that it is perfectly proper to instance them for specific consideration. These people have lived in those areas on the assumption that they would continue to be supplied with the basic services which they need to conduct their normal lives, without discrimination compared with those who live elsewhere. As the noble Lord, Lord Stanley, pointed out, there will undoubtedly be a temptation for a commercially oriented organisation to have regard to the costs of supplying the services. In rural areas those costs are undoubtedly higher. However, social considerations intervene.
I believe that in this House we should pay regard to those social considerations, which apply particularly to people in this category. I disagree with the noble Lord, Lord Trafford, in this respect. This group of our compatriots is potentially at risk under the legislation and they should be exempted specifically from that risk. Therefore I support the amendments.
Baroness Elliot of Harwood: My Lords, I too should like to support the amendments of my noble friend Lord Stanley of Alderley. We discussed this matter at an earlier stage and the Minister said that he would reconsider the position. I believe that the proposals that have been put forward today are very much in tune with what he would like, and I very much hope that he will accept them.
Unless one lives, as I do, miles away in the country, it is very difficult to realise what an enormous difference electricity has made to life on farms in isolated areas. We all know about the Highlands: they had electricity before the south of Scotland. Now we all have electricity, and all agricultural work is organised around the use of electricity in every form. It is more economic and saves labour.
I therefore believe that this is a very important matter. I very much hope that the Minister will realise that this is an issue which all of us who live

1173
in rural areas or work in farming and agriculture believe to be extremely important, and that he will accept the amendments.
Lord Peyton of Yeovil: My Lords, I had hoped that we should see on the Marshalled List an entry in the name of my noble friend the Minister, at least in an attempt to meet the anxieties which were expressed very clearly during the Committee stage. It is not my intention to repeat at length the arguments in favour of giving special attention to the concerns and needs of those who live in rural areas; that has already been done by others. However, I should like to call your Lordships' attention to the alternatives offered by my noble friend's amendments.
The first amendment requires the Secretary of State or director to take into account the needs of those living in rural areas. I can see the possibility that, in order to blunt the concerns which have been expressed, the Government might yield to the temptation to insert those words into the Bill. However, I have very grave doubts as to whether they would be adequate. I fear that they would be merely cosmetic and might have little or no effect.
I greatly prefer Amendments Nos. 60 and 61 in the name of my noble friend which specifically require that there should be no undue discrimination against any person or class of persons, particularly in rural areas. Noble Lords may think that that says much the same as the earlier amendment, but in my view it is much clearer. I hope therefore that the Government will be moved to accept those amendments.
Lord Renton: My Lords, on the Water Bill I was glad to support my noble friend Lord Stanley of Alderley, and was very glad of the outcome of the persuasion which he and others exercised on that Bill. But if I remember rightly, it was not just a measure advanced to protect those in rural areas, taking the country as a whole. The purpose and the result of the amendments which he moved—and the Government accepted the last of them at Third Reading—was to ensure that there should be no discrimination within each area.
We have a slightly different situation this afternoon. I have some sympathy with my noble friend Lord Peyton in the detailed points that he made about the amendments. I find that the first amendment—which is the one we are discussing—is inconsistent with Amendment No. 32 and with Amendments Nos. 60 and 61. I say that for this reason: Amendment No. 1 says that the duties to be performed by the Secretary of State shall be performed:
"in a manner that protects consumers of electricity without discrimination".
That could mean that people in urban and rural areas are all to be treated the same. But that is not what my noble friend Lord Stanley of Alderley and others are seeking in this amendment. Therefore, it seems to me that Amendment No. 1 is contrary to the argument which they are putting forward. My noble friend shakes his head, but if he can persuade
1174
the Government, and me and others, that that is not so, I shall be very interested to know what the argument is.
We know—I speak as one who is bath a consumer in an urban area, namely London and a consumer in a rural area—that the cost of electricity in London tends to be rather expensive compared with some other parts of the country. The great thing is that within each area, whether it be an urban area or a rural area, there should be no discrimination between consumers.
The difficulty that I find is that Amendment No. 1 militates against that aim because it seems to indicate that those consumers in urban and rural areas must be treated in the same way. But, by referring to rural areas collectively in Amendment No. 32 and again in Amendment No. 61, we are avoiding the situation that we happily reached on the Water Bill that there should be no discrimination between the consumers in any particular area. That is why I find some difficulty with the amendments. But, having said that, I hope that on this Bill the Government will find a way of reaching the admirable conclusion that was reached on the Water Bill.
3.30 p.m.
Lord Stoddart of Swindon: My Lords, while I understand what the noble Lord, Lord Renton, says, I nevertheless think that Amendment No. 1 is correct and the right road to pursue in order to achieve what the noble Lord, Lord Stanley, and I hope many other people wish.
The amendment must also be praised given the historic discrimination against rural areas not only in the electricity industry but in other industries too. I remind noble Lords that it was not until the industry was brought under public ownership in 1949 that rural areas were given much better consideration than before. As a result, 99 to 100 per cent. of all rural areas in this country now have access to an electricity supply, which was certainly not the case before 1949. Many of us are concerned that we may not return to that position. For example, when matters of capital expenditure are considered by a board, it may well take the view that, because the return from a strengthening of the electricity supply in a rural area will be much lower than extending the network in an urban area, the capital expenditure should be in the urban area where the flow of money will be better, rather than in the rural areas where the system needs strengthening, perhaps because bad weather conditions have weakened it generally. I think that that is what the noble Lord is getting at. That is the sort of thing about which many of us will be concerned when the electricity industry is privatised and split up into 12 area boards.
At the present time, while it is true that there are 12 separate area boards, the ethos of the industry is service rather than profit. There is a co-ordination of the operations of the electricity supply industry through the Electricity Council. That will not apply when the industry is privatised. That is why I think the noble Lord is perfectly right in bringing forward the amendment, which I believe deserves support.
Baroness Carnegy of Lour: My Lords, I do not know what my noble friend will say in reply to the amendment. I see the difficulties about the wording of Amendment No. 1, but the important thing that we need to hear from the Government is that something will be done about that before the Bill leaves the House.
I say that as someone who now lives further north than many noble Lords. The further north one goes, the more electricity matters. If one is a farmer, the drying costs of electricity are quite enormous nowadays. If one happens to be a long way from the site of electricity generation and the price of electricity goes up as a result, there will be great confusion in Scottish agriculture. That applies not only to agriculture; simply living further north affects you very much because you must keep your house warm and you therefore use more electricity. All those things matter very much.
"Rural" is not necessarily the word that I want to use, because there are towns in Scotland which are a long way from a site of electricity generation and may well be discriminated against. The Government must confront that matter, give a satisfactory reply today and, if possible, bring forward their own amendment at the next stage because it is a serious matter.
Lord Hylton: My Lords, this is an important amendment and I am glad that it has support from all sides of the House. Ever since nationalisation of the electricity industry—and perhaps even before—there has been a convention in practice that a public service principle would be applied to the price of electricity. Thus, although there are small differences between the price applied in one board area and another, by and large rural consumers are not discriminated against in favour of urban consumers. That is the principle which we all wish to see maintained and which the Government have no possible mandate for overthrowing.
I also see that, in the nature of things, distribution costs in rural areas are bound to be higher because of the length of transmission lines as compared with those in towns and for many other reasons. It is that kind of hurdle that we are trying to overcome.
We should perhaps also note in connection with the five-year moratorium that, by the time of privatisation, the price of electricity will already have increased very much above the going rate of inflation. I support the amendments.
Lord Williams of Elvel: My Lords, we also support the amendment moved by the noble Lord, Lord Stanley of Alderley, and the consequential amendments to which he spoke. The noble Lord, Lord Renton, asked what the argument is. Perhaps I may refer to the individual amendments as we go through to explain to him exactly what the arguments are.
Amendment No. 1 introduces a general precept that the director should exercise his duties,
"in a manner that protects consumers of electricity without discrimination".
The director has many areas in which he must protect the consumer, not simply on tariffs or prices.
1176
Generally, he is required under the amendment—which, by itself, has nothing to do with prices—to protect the consumer without discrimination.
Amendment No. 32 goes a little further and lays a general duty under Clause 4 on the Secretary of State or the director to,
"take into account in particular the protection of the interests of consumers of electricity in rural areas".
That amendment therefore moves a little further than the general paving amendment in Clause 1.
The guts—if I may put it like that—of the thesis of the noble Lord, Lord Stanley, lie in the amendments to Clause 20, because it is in that clause that we come to the power to recover charges. The two amendments to Clause 20—Amendments Nos. 60 and 61—not only directly address a general theme that the Secretary of State and the director should protect consumers without discrimination but specifically home in on the problem of prices. That is the logical sequence of these amendments, and that is why I believe that the noble Lord, Lord Stanley, has the sequence right. I hope that those remarks will help the noble Lord, Lord Renton, in his reading of the amendments.
The noble Baroness, Lady Carnegy, made an eloquent plea for Scotland but, as we know, in Clause 4(2) Scotland is covered by the common tariff. She is quite right. But, so far as the north of Scotland is concerned, all her arguments have been met by the Government in Clause 4(2). The point that I wish to make, and, I believe, the noble Lord, Lord Stanley, would also make, is that what is good for the Scots should also be good for the English and for the Welsh. We cannot understand why Scotland has this particular privilege under the Bill. We should like to see the matter regularised for those of us who have the fortune or misfortune to live south of the Border.
With great respect to my noble friend Lord John-Mackie and the noble Lord, Lord Stanley of Alderley, so far as we are concerned the point of the amendments is not to encourage the farmer. We are not necessarily supporters of the National Farmers' Union. On some occasions we may support the farmers; on others we do not. We feel that there are areas of rural poverty that need to be catered for especially. It is not necessarily the farmer who will be at risk if charges increase to a great extent to account for the capital equipment and other costs which go into transmitting electricity to the rural areas. It is the rural poor who will suffer; those are the people we have very much in mind.
A number of noble Lords have spoken. I believe that there is general support in the House for this amendment. I hope that the Government reply favourably to the noble Lord, Lord Stanley. However, time is running short and we have to come to some conclusion. In the light of all the arguments we shall be supporting the noble Lord, Lord Stanley, should he decide to take the opinion of the House.
3.45 p.m.
Baroness Gardner of Parkes: My Lords, I am sure that no one will be surprised to hear that I am opposed to the amendment. Although those who have put the case for the amendment have done so

1177
very clearly I feel that they have not really understood the problem. The amendment, instead of helping, may be harming the case.
As I understand it, the element of competition is the whole purpose of privatising electricity. It is the element of competition that distorts the issue and makes the situation totally different from that in the Water Bill. It is not a parallel. As the noble Lord, Lord Renton, said, there will be price differences in different areas. At present each domestic consumer—no one has referred to the difference between commercial and domestic consumers—in a certain area is getting electricity at a particular cost.
With the element of competition, instead of there being a monopoly right to supply all those people, anyone will be entitled to come into the area and supply electricity. That is true. The whole purpose of the Bill is to produce an element of competition.
Lord Williams of Elvel: My Lords, I know that the noble Baroness has been present at all our discussions in Committee. However, on all sides of the House it is understood that public electricity suppliers who supply to the consumer, domestic or otherwise, will have a monopoly in their area. I thought that that was an established fact.
Baroness Gardner of Parkes: No, my Lords, I am sorry; I think that that is quite wrong. I think that there will be secondary and tertiary generators who will be able to supply and that anyone will be able to offer a supply. That is what will happen and that is why the five-year protection may be relevant now. Following that period there will be nothing at all to stop the entry into this field of other people.
The noble Lord, Lord Ezra, made the very good point that it is more expensive to maintain lines of supply to remote places. That is true. But the present area boards are quite happy to maintain a fixed price at the same tariff, whatever price has been agreed, for the person in the remote area as for the person in the town. The boards appreciate that there will be additional costs associated with a rural supply but accept the point made by the noble Lord, Lord Williams, that there are areas of rural poverty. All sorts of social reasons have been mentioned in this debate as to why the supply needs to be continued. The boards are prepared to bear the extra cost involved.
What the boards are not prepared to do is to put themselves in a position where they find that someone comes forward—I think the phrase is "cherry-picking"—and says, "I will supply electricity to, say, the City of Oxford and supply it more cheaply than you do. It is a nice little area which is easy to supply. I will supply that area and undercut the price of the local supply company". All the customers in that area, which has a high density of population and offers a high profit margin in comparison with a rural area, will say, "Yes, we should like our electricity to be cheaper", and so they get it more cheaply.
However, I do not at all suggest what I think has been put forward in this debate; namely, that rural
1178
customers should have their price put up. I argue that the amendment would prevent an area board reducing its tariff to meet a competitor who came forward. As a result the board would lose all its town customers and would be left only with rural customers.
It should be remembered that the boards have a duty to supply. They cannot refuse to supply power to people. There is a charge for connection, as we have debated in this House many times. There is no argument about higher costs. One noble Lord from Scotland mentioned certain areas in which delay on a line would cost £100,000. Of course no one saw that as realistic. If the area board is left only with the rural customers and a few people who do not care what they pay, in the long run that will be worse for everyone because the higher costs will still have to be borne by the supplier.
I can see that the noble Lord, Lord Williams, does not believe me, but that is certainly the industry's reasoning. The industry is perfectly happy to supply at the same rate to town and rural customers alike. However, if that is written into the Bill as proposed it will prevent entry into a normal competitive business situation should the time come when there are other suppliers. As I understand it, under the Bill other suppliers will be entitled to come in as secondary suppliers and licences will go out at other levels.
As I pointed out, water is not a parallel. There is not the same element of competition involved. The noble Lord, Lord John-Mackie, raised the issue of discrimination. I believe that I have covered the point. But this would be a reverse discrimination that might work just the wrong way. My noble friend Lady Elliot has made clear the importance of electricity to the farming industry and the difference that it has made over the years. I accept what she says; indeed we all accept those arguments. I agree with the noble Lord, Lord Peyton, who pointed out that there were differences in these amendments.
I do not agree with the point made by the noble Lord, Lord Renton. I do not think that he has understood the full implications of my remarks. He said that the rate should be the same within each area. But that would not apply. Each area will have both types of area to supply: the more densely populated, cheaper area and the more expensive area. One could not do this by area; it would not work in the same way.
Lord Ezra: My Lords, perhaps I may point out to the noble Baroness that my understanding of the kind of competition that will arise as a result of this measure is not at all in line with her interpretation. I believe that there will be a certain amount of competition at the generating end and a certain amount of competition in the supply to large industrial consumers. I cannot see for many years competition in the supply to domestic consumers, which is what the noble Baroness has been discussing. I do not believe that that is a feasible proposition under this legislation.
Baroness Gardner of Parkes: My Lords, it is the concern of the electricity authorities that they will be painted into a corner. They do not foresee it

1179
happening immediately, in the next three to five years; but after that there is a possibility that secondary and further licences granted would enable people to supply within limited areas. In choosing the areas they would pick those with maximum profit. Anyone coming into business as a competitor will clearly look for where the greatest profit is. Such suppliers will have no obligation to supply any person in the country, remote or not remote. They will be able to offer their supply in any area that suits them. Certainly this is how the industry sees the position. This is why the industry is so very concerned about this amendment. It does not believe that the situation is parallel with that of the water industry.
Lord Stoddart of Swindon: My Lords, will the noble Baroness give way? Is she saying that the industry is so concerned about possible competition that it must have a reserve power to give detrimental treatment to rural areas to be able to meet that competition? That is what it sounds like.
Baroness Gardner of Parkes: My Lords, no. The noble Lord is trying to turn my argument on its head. As I explained previously—and I shall repeat it—the electricity authorities are perfectly happy to supply urban and rural areas at the same price. If a competitor comes in to undercut them, to take away all their business in the urban area, leaving them with only the rural area, it could create an adverse effect for the area board on the overall costing of the supply. Where the same charge has been guaranteed for everyone, the only people left to be supplied would be the rural customers. They would be paying higher prices with no discrimination against them because they would be the only people being supplied. It would all be supplied at the same price, but much more expensively than if they had been able to retain a competitive base and supply some of the profitable areas as well as the less profitable ones. I can see that the noble Lord has a further comment.
Lord Stoddart of Swindon: My Lords, I find the argument quite incredible. If the noble Baroness is correct in her argument that a new firm can come in and be competitive to the extent that it will take away all the urban business from the established business, then there is something radically wrong with the established business, or we should not go ahead with this Bill.
Baroness Gardner of Parkes: My Lords, I shall quote figures which have no relevance. If you are paying 10p per unit and you get a leaflet through your door to the effect that you can have all your power at 5p or 7p a unit, would you not think twice about it? I certainly would.
Lord Stoddart of Swindon: My Lords, perhaps I may—
Noble Lords: Order!
Baroness Gardner of Parkes: My Lords, it is not a new argument. We have seen this cherry picking in
1180
transport. People take the profitable routes. No one wants the unprofitable routes. Anyone looking for a new opportunity looks to where profit can be made, It would mean that the electricity industry as it now exists could be left with the duty to supply. The noble Lord, Lord Stoddart, made the point that it might consider whether or not it would extend into a rural area. There is an obligation to supply. If someone asks for a service in the most remote area, the electricity authority has to be willing to connect him. There is the duty to supply—not without cost, but certainly with obligation. This is where its hands would be tied. It has a duty to supply even the most unprofitable area. If it has an overall pool of supply with the good and bad mixed together, it can make a much better go of it than if it ended up with only the unprofitable section. That would force costs up for the rural area. On those grounds I oppose the amendment.
Lord Moyne: My Lords, perhaps I may suggest that in a competition for domestic supply there would be a conflict as to the ownership of the supply lines. Would there not be a danger of getting the wires crossed?
The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper): My Lords, I have listened with interest to the variety of points that have been raised. I shall attempt in my few remarks to respond to some of the questions that have been put. We are all grateful to the noble Lord, Lord Williams of Elvel, for differentiating between the various amendments before us and for drawing our attention in particular to the fact that Amendment No. 1, which is the first in this grouping, has a general application to consumers overall.
Clause 1, to which Amendment No. 1 relates, simply gives the Secretary of State the power to appoint the Director General of Electricity Supply and sets out the provisions which apply to that appointment. We do not feel that it is appropriate that it be used as a clause for assigning duties to the director. As the noble Lord, Lord Williams, pointed out, that is properly handled in Clause 4.
The central purpose of the Bill is to create a climate in which fair competition will develop and flourish. My noble friend Lady Gardner's understanding is perfectly correct. Where it is appropriate to protect consumers against unfair discrimination we believe that we have ensured that the necessary safeguards have been provided. As my noble friend Lord Trafford pointed out, Clause 20 of the Bill therefore prohibits a public electricity supplier from showing undue preference or exercising undue discrimination in fixing his tariffs. The public electricity supply licence provides similar protection in respect of contract sales. The licence requires that the terms offered to contract customers should not be materially more or less favourable than those on which it supplies, or offers to supply, to comparable contract customers. This will ensure that, for example, the problems which arose in respect of the pricing policies of British Gas and which were referred to the MMC, resulting in fundamental changes being made to those policies, cannot arise

1181
in respect of electricity sales. Your Lordships may be reassured that our proposals already contain the necessary protections for consumers in this respect.
Furthermore, if—as this amendment proposes—the director were required to protect consumers without discrimination, he would be obliged to treat all consumers on the same basis and not just in relation to prices. He could not differentiate between them in any way. This would create obvious and unworkable difficulties. For example, the conditions in the public electricity supply licences which require licensees to make special arrangements for the provision of services for the elderly and disabled would not be permitted; nor would the condition requiring licensees to produce a code of practice on the payment of bills setting out the assistance available to those in difficulty; nor would the related condition, which requires the licensee to adopt a special procedure for dealing with customers in default, be permitted. These conditions are designed to provide valuable assistance to those groups. They have been warmly welcomed by consumer organisations generally and indeed, I believe, by Members of your Lordships' House. It would be an enormous step backwards to prevent those arrangements being made.
The amendment would also have the effect of preventing the director from taking account of the essential differences in the requirements and characteristics of industrial, commercial and domestic consumers which distinguish them from one another. He would be unable to allow suppliers to offer different tariffs to those different classes of customer. Nor would individual customers be able to enter into contracts with their supplier on any terms which differed from those for other customers. For example, ICI would have to be supplied on exactly the same terms as an ordinary domestic customer.
These limitations would not only apply to public electricity suppliers and their customers. The duty would apply to all consumers. The amendment would, therefore, require the director to ensure that there was no discrimination between a public electricity supplier's customers and those of a private electricity supplier—first and second tier suppliers. He could not, therefore, allow second tier suppliers to supply customers, or offer to supply potential customers, at a lower price than the public electricity supplier. The reverse would also apply. That was the point that my noble friend Lady Gardner of Parkes was making.
Your Lordships will appreciate the consequences of this. I have said that fair competition is the central theme of the Bill. With no prospect of competition there would be no opportunity or incentive for new entrants to come into the market. The director would have to ensure that all customers of all suppliers were supplied on the same terms. That is a totally illogical and retrograde step and is of no benefit to consumers.
4 p.m.
Lord Peston: My Lords, I am sorry to interrupt the noble Baroness but perhaps she should reflect on
1182
what she has been saying. I believe that she said that what her noble friend Lady Gardner of Parkes stated was right. But what her noble friend said is completely incompatible with the whole section of the Bill on licensing of supplies. Clauses 5, 6, 7, 8 and so on all say that no one can enter the supply without the permission of the Secretary of State and the director. They say that they must give reasons why they are allowed to supply. They say that the licence must include conditions which, if the amendment were passed, would certainly include non-discrimination against rural areas. Those of us who have been mystified by the intervention of the noble Baroness, Lady Gardner, are even more mystified by the Minister saying that her Bill is compatible with what she said. It is totally incompatible.
Baroness Hooper: My Lords, I was coming on to deal with some of these points more specifically, but perhaps I can take the opportunity to say that new entrants into the market will require licences. But the noble Lord has not satisfactorily explained how the licence conditions, which may operate against each individual licence holder, should be made general in a way that will fix prices among all licence holders.
I now turn to Amendment No. 32 and I hope that I shall pick up some of the other points as I go through it. This is the closest amendment in the grouping to the amendment of my noble friend Lord Stanley which was defeated at Committee stage. The whole point of our proposals is that they are designed to give protection to all consumers. We believe that the fairest way of achieving that is to ensure that one group's costs are not unfairly subsidised by imposing additional costs on other groups. It is wholly reasonable therefore that prices should reflect costs. Certain of your Lordships appear to be seeking to give preferential treatment to consumers in rural areas because it is feared that any change in the current tariff system would unfairly discriminate against rural consumers. If that is based on an assumption that rural consumers impose the highest costs on their suppliers, I remind the House that, of all the area boards, the one with the highest operating costs—my noble friend Lady Gardner did not mention it—is the London board, which has no rural consumers at all.
I can also confirm what my noble friend Lord Trafford asked in this respect. I remind your Lordships of the assurance given by the area board chairmen of England and Wales and the chairman of the South of Scotland Board that they expect to maintain the current system of tariffs for domestic customers for five years after privatisations, which will cover the transitional period. I assure your Lordships that suppliers will not be permitted to load their costs on to, say, rural consumers, commercial consumers or any other group of consumers simply so that he may increase his profits or undercut his competitors. Because of the duties placed on him, the director will be looking very closely at prices to ensure that the requirements of the Bill and the licence are being adhered to. That will include the requirements of Clause 20, which prohibits a supplier from showing undue preference or

1183
exercising undue discrimination against any tariff customer or group of tariff customers. That will ensure that a supplier cannot offer a lower price to one class of customers or to an individual customer or group of customers within that class simply to undercut a competitor if it was not justified on the basis of the true costs of providing those supplies.
Should the director consider that a supplier's pricing policy does not conform with those requirements, he will have the necessary powers to require him to rectify the sitution. Nobody has suggested that in carrying out his duties the director general would not be giving rural customers fair treatment. That is certainly not the case.
The noble Lord, Lord Williams of Elvel, referred to proverty in rural areas, I should have thought that it is very difficult for him to justify such an arbitrary cut-off. There will always be people in all areas who experience difficulties. To take an example, we are all well aware of the present problems in the inner city areas. I cannot see any justification whatever for requiring consumers in the inner cities who already have problems to subsidise the costs of supplies to those in rural areas. There is no justification for doing so. I believe that it is totally illlogical, just as it would be if we suggested that any other group of consumers or another class should be given preferential treatment.
Reference has also been made to a similar debate on the Water Bill. I believe that it was the noble Baroness, Lady White, who, while expressing concern about the need to protect rural customers in that context, made the point that it must be recognised that electricity is open to some kind of competition, whereas for water there is no choice. That is absolutely correct. There is a real and fundamental difference between the industries. For electricity not only do we have the competitive pressure from other electricity suppliers, but also the competitive pressure from competing fuels. It is that difference which justifies and necessitates that they be treated differently.
On this question of monopoly of supply, it is right to emphasise that there are two types of supply licence specified in Clause 7. It is true that the public electricity supplier has an obligation to supply within the area, but he has no monopoly. Suppliers granted licences under Clause 7(2) will have a right to supply premises specified in their licence and to compete with the public electricity supplier for customers. We believe that that is an important element of competition permitted by the Bill.
We believe that the duty placed on the director by Clause 4(3) in respect of prices ensures that the interests of all consumers are protected. We cannot endorse a proposal which would give preferential treatment to one group at the risk of disadvantaging others. I hope that I have demonstrated why we cannot support this amendment.
I turn now as rapidly as possible to Amendments Nos. 60 and 61. We believe that Amendment No. 60 is unworkable. It would prevent a public electricity supplier from discriminating between any person or class of persons when fixing his tariffs. However, the clause would still permit the supplier to exercise due
1184
preference when doing so. It would simply not be possible for a public electricity supplier to show due preference if at the same time he was prevented from exercising any discrimination between his consumers. I remind your Lordships that it is in the consumers' interest that a public electricity supplier should be permitted to exercise due preference or due discrimination.
For example, there will be cases where the demand pattern of a customer enables the supplier to optimise his operations and thereby reduce his costs. That is clearly beneficial to all his customers. Therefore it would be reasonable to permit him to offer terms to that customer reflecting the benefits of that particular sale to the supplier. A specific example affecting many customers would be the Economy 7 tariff, but the same factors would also apply to the various load management arrangements which currently benefit the industry. Therefore there is a demonstrable need for suppliers to be able to show discrimination or preference where it is due, and on that basis I cannot accept the amendment.
Amendment No. 61 seeks to protect rural consumers in particular from discrimination through the public electricity suppliers' tariff systems. In this case I have to say that the amendment is unnecessary. The wording of Clause 20(4) specifically prohibits a public electricity supplier from showing undue preference to any person or class of persons, and from exercising undue discrimination against any person or class of persons. This would, by definition, include rural consumers. There is no need for the additional qualification that has been proposed.
The provision in the Bill will prevent unfair pricing practices such as predatory pricing, where the only justification for charging different prices is the convenience or policy ends of the supplier. A supplier would not, therefore, be permitted to offer a lower price to one class of consumers, or to an individual consumer or group of consumers within that class, simply in order to undercut a competitor.
Your Lordships are aware that the area boards—acting in accordance with a similar requirement under the Electricity Act 1947—currently offer the same tariffs to all customers within the same class. I remind your Lordships, however, that they are not bound to do so. I know that much concern has been expressed about the explicit provision in the Bill that permits a public electricity supplier to charge different tariffs in different areas, cases and circumstances. I must emphasise, however, that this power is not new: the area boards have had precisely the same power for over 40 years. Our proposals have not changed that position although they have clarified it. In that context I remind your Lordships that the area boards have of course, given a welcome assurance that they expect to maintain that system for a five-year period.
Nor are the provisions of the Bill the only constraint on suppliers. The public electricity supply licence contains conditions which reinforce the provision on undue preference. A licensee will be prohibited from cross-subsidising between any of his separate businesses; for example, between the supply of electricity to his tariff and contract customers, or

1185
between his supply and appliance sales businesses. Secondly, the licence specifically prohibits the public electricity supplier from supplying at different prices unless those differences reasonably reflect differences in the costs associated with the supply.
The noble Lord, Lord Stoddart, asked about preferential capital investment in urban areas. The duty placed upon public electricity suppliers by Clause 10(1) is to maintain an efficient, co-ordinated and economical system of electricity supply. That applies throughout the supplier's area.
I realise that I have spoken at length but I felt that I should put the record absolutely straight on this important matter. I hope that my remarks will have convinced many noble Lords who may have been in doubt of the reasons why the Government do not feel able to accept any of the amendments in this grouping.
As regards Amendment No. 1, I shall not reiterate the arguments but I must point out that its effects would be so widespread as to wreck the whole basis of the Bill. I urge all noble Lords who support the principles of the Bill to vote against it.
4.15 p.m.
Lord Sefton of Garston: My Lords, if the noble Baroness will give way I should like to ask her to say a little more—
Noble Lords: No, no!
Lord Sefton of Garston: My Lords, I am perfectly in order according to the rules of this House. I asked to interrupt the noble Baroness and she kindly gave way. I now intend to ask the question.
Noble Lords: Hear, hear!
Lord Sefton of Garston: My Lords, the noble Baroness said that nobody justified the subsidies from one set of people to another. For many years I was a member of the Merseyside and North Wales Electricity Board. It was constituted as such for a specific reason. In the setting up of the electricity industry it was understood that one of its vital jobs was to provide power to those who until then had been denied it. The whole of the North Wales area was then enabled to become an efficient supplier for produce and dairy food to the Merseyside area. That subsidy was paid by the large users in Merseyside to the hill farmers in North Wales.
If the Government subscribe to the point of view that there should be no subsidy from one set of people to another, what will be the position in five years' time when all the network which the present Merseyside and North Wales Electricity Board maintains in the hill farms of Wales needs to be renewed at a tremendous cost? Who will pay for that? Will it be the board, thereby using its facilities to make a profit in the industrial area, in order to pay for the network, or will the people in North Wales have to pay for its renewal? If that is so, then the cost visited upon the hill farmers of North Wales will be that again the area will become denuded.
1186
There is no other form of power such as gas and therefore it will mean that North Wales will revert to its position in 1945, when it was practically denuded. Quite simply, does the Minister agree that when that tremendous expense is required it should be subsidised by someone in order to enable the people in North Wales to live there?
Baroness Hooper: My Lords, with the leave of the House, the example quoted by the noble Lord entirely justifies the Government's opposition to these amendments. That is precisely the kind of deal that we wish to allow the area boards to carry out. I assure the noble Lord that there is no possibility of a public electricity supplier being permitted to charge differently simply on the basis of geographical location. The noble Lord's worst fears are certainly not justified.
Lord Stanley of Alderley: My Lords, I took four minutes to open the debate and I shall try to end it in the same time. I believe that enough time has been spent on it and a decision must be reached on the principle. I shall first try to comment on a few remarks which I believe to be important.
The noble Lords, Lord John-Mackie and Lord Hylton, spoke about costs. I must remind the House that the cost of distribution is only 20 to 30 per cent. of the whole cost. The main cost lies in the generation. In that regard I agree with noble Lords opposite that if there is to be competition there will be competition there. One will not get competition in a village such as Little Tooting (if there is such a village) which I quoted during our discussions on the Water Bill.
Secondly, my noble friend Lord Trafford raised the point that there are powers and the Bill contains the words "not to discriminate". I am sorry, but I must now agree with the noble Lord, Lord Peyton.
The words contained in the paragraph are reasonable words. I go further, because they are the kind of words which were contained in the Water Bill. The Government then accepted an amendment on this issue and I shall quote what was said by my honourable friend Mr. Howard on 3rd July, when the amendment was before another place. He said that there was a need for further protection for rural customers, and he said:
"A direct consequence of the amendment is a substantial additional reinforcement for consumers in rural areas". [Official Report, Commons, 3/7/89; col. 50.]
I am sorry but if it applies to water, then it applies to electricity.
Regarding the set of amendments and the point raised by my noble friend Lord Peyton, I see them all hanging together with the possible exception of Amendment No. 1. However, certainly Amendments Nos. 32, 60 and 61 must be read in conjunction and cannot be separated one from the other.
I was confused by what my noble friend Lord Renton said. Either I have it wrong or he has it wrong. He wanted all consumers in one particular electricity area to be treated equally. That is what my amendment says. Perhaps I can put that in agricultural terms by saying that there is no question of pigs being more equal. We are all equal in that

1187
area, and these amendments are drafted in that way. If they are incorrectly drafted, I shall redraft them; but I should like the principle to be decided now. We have wasted enough time and have had enough Second Reading speeches.
My noble friend Lady Carnegy raised the question of Scotland. Of course, there is the nasty sore of the North Scotland Board which has been granted the privilege of equal charging. I asked in Committee: what is the difference just because the north of Scotland has a lot of hydro-electric power? In Wales there are two nuclear power stations. I just cannot see the difference.
My noble friend Lady Gardner treated us to a Second Reading speech. I can only repeat that the competition will be in the generation and not in the supply.
I was pleased at the way in which my noble friend Lady Hooper started her remarks, and I thought I was going to get on all right. She said that it is the Government's desire to protect the consumer, and that that is written into the Bill. I must admit that later on, when she commented on my Amendment No. 32, she said the opposite. Therefore, I feel that I may have to join some of your Lordships who do not understand this Bill. I believe that there are very few who understand the Bill completely.
Concerning my amendment, at the end of the day the noble Baroness was talking about charging ICI the same as a domestic consumer; and she said that that would be a consequence of my amendment. That would not be so. My amendment says that the director general and the Secretary of State should pay particular regard. If the electricity plcs go to the director general and the Secretary of State and say, "Look, we want to charge this", if they think that is reasonable then they are entitled so to do. I should like to tighten that further but I cannot, and I do not believe that it would be fair. However, I do not think that that is a valid point.
I am sorry to say that my noble friend gave me no satisfaction over her original wish not to discriminate against those least able to protect themselves because there will never be any competition there. All noble Lords know that the purpose of my amendment is perfectly clear. It may be that the drafting is wrong, and I agree with my noble friend that I am suspicious about Amendment No. 1. However, I do not believe that we can continue like this, and I shall put this matter to the House. If the drafting is wrong, I shall redraft it or ask the Government to do that for me on Third Reading. I commend the amendment to your Lordships.
4.23 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 117; Not-Contents, 91.

DIVISION NO. 1

CONTENTS

Addington, L.

Belhaven and Stenton, L.

Airedale, L.

Birk, B.

Ampthill, L.

Blease, L.

Ardwick, L,.

Blyth, L.

1188

Bonham-Carter, L.

McNair, L.

Boston, L.

Masham of Ilton, B.

Boston of Faversham, L.

Mason of Barnsley, L.

Broadbridge, L.

Mayhew, L.

Bruce of Donington, L.

Milner of Leeds, L.

Burton of Coventry, B.

Monson, L.

Callaghan of Cardiff, L.

Moran, L.

Carmichael of Kelvingrove, L.

Morris, L.

Mountevans, L.

Carter, L.

Mountgarret, V.

Cledwyn of Penrhos, L.

Moyne, L.

Cocks of Hartcliffe, L.

Nicol, B.

Craigavon, V.

Northfield, L.

David, B.

Ogmore, L.

Davies of Penrhys, L.

O'Neill of the Maine, L.

Dean of Beswick, L.

Peston, L.

Donaldson of Kingsbridge, L.

Peyton of Yeovil, L.

Dormand of Easington, L.

Phillips, B.

Elliot of Harwood, B.

Pitt of Hampstead, L.

Elwyn-Jones, L.

Ponsonby of Shulbrede, L.

Ennals, L.

Prys-Davies, L.

Ewart-Biggs, B.

Radnor, E.

Ezra, L.

Raglan, L.

Falkland, V.

Robson of Kiddington, B.

Foot, L.

Rochester, L.

Gainsborough, E.

Sainsbury, L.

Gallacher, L.

Seear, B.

Galpern, L.

Sefton of Garston, L.

Gladwyn, L.

Serota, B.

Glenamara, L.

Shackleton, L.

Graham of Edmonton, L. [Teller.]

Shannon, E.

Sharples, B.

Grey, E.

Shaughnessy, L.

Hampton, L.

Shepherd, L.

Hanworth, V.

Stallard, L.

Harris of Greenwich, L.

Stanley of Alderley, L. [Teller.]

Hatch of Lusby, L.

Henderson of Brompton, L.

Stedman, B.

Hirshfield, L.

Stodart of Leaston, L.

Houghton of Sowerby, L.

Stoddart of Swindon, L.

Howie of Troon, L.

Strabolgi, L.

Hunter of Newington, L.

Strange, B.

Hutchinson of Lullington, L.

Taylor of Blackburn, L.

Hylton, L.

Taylor of Mansfield, L.

Hylton-Foster, B.

Thurlow, L.

Irvine of Lairg, L.

Tordoff, L.

Jenkins of Hillhead, L.

Turner of Camden, B.

John-Mackie, L.

Underhill, L.

Kilbracken, L.

Walston, L.

Kinloss, Ly.

Whaddon, L.

Kinnaird, L.

White, B.

Lawrence, L.

Williams of Elvel, L.

Lloyd of Kilgerran, L.

Wilson of Rievaulx, L.

Lockwood, B.

Winchilsea and Nottingham, E.

Longford, E.

Lovell-Davis, L.

Wise, L.

McIntosh of Haringey, L.

NOT-CONTENTS

Abercorn, D.

Constantine of Stanmore, L.

Airey of Abingdon, B.

Cork and Orrery, E.

Alexander of Tunis, E.

Cullen of Ashbourne, L.

Arran, E.

Davidson, V. [Teller.]

Beloff, L.

Denham, L. [Teller.]

Belstead, L.

Dundee, E.

Bessborough, E.

Eccles, V.

Blatch, B.

Eden of Winton, L.

Bolton, L.

Elles, B.

Borthwick, L.

Elliott of Morpeth, L.

Boyd-Carpenter, L.

Elton, L.

Brougham and Vaux, L.

Gardner of Parkes, B.

Bruce-Gardyne, L.

Gibson, L.

Caccia, L.

Glenarthur, L.

Caithness, E.

Grantchester, L.

Campbell of Alloway, L.

Gray of Contin, L.

Campbell of Croy, L.

Hailsham of Saint Marylebone, L.

Carnegy of Lour, B.

Carnock, L.

Harvington, L.

Clitheroe, L.

Havers, L.

Cockfield, L.

Henley, L.

Coleraine, L.

Hesketh, L.

1189

Hives, L.

Nelson of Stafford, L.

Hood, V.

Norrie, L.

Hooper, B.

Nugent of Guildford, L.

Jenkin of Roding, L.

Oppenheim-Barnes, B.

Johnston of Rockport, L.

Oxfuird, V.

Kaberry of Adel, L.

Pender, L.

Killearn, L.

Penrhyn, L.

Knutsford, V.

Prior, L.

Lucas of Chilworth, L.

Rankeillour, L.

McFadzean, L.

Rees, L.

Mackay of Clashfern, L.

Renton, L.

Mancroft, L.

Sanderson of Bowden, L

Margadale, L.

Skelmersdale, L.

Marley, L.

Strathcarron, L.

Marshall of Leeds, L.

Strathclyde, L.

Maude of Stratford-upon-Avon, L.

Sudeley, L.

Suffield, L.

Merrivale, L.

Terrington, L.

Mersey, V.

Teviot, L.

Montgomery of Alamein, V.

Thomas of Gwydir, L.

Mottistone, L.

Trafford, L.

Mowbray and Stourton, L.

Tranmire, L.

Munster, E.

Ullswater, V.

Murton of Lindisfarne, L.

Whitelaw, V.

Melson, E.

Resolved in the affirmative, and amendment agreed to accordingly.
4.33 p.m.
The Earl of Dundee: My Lords, I beg to move that the House do now adjourn during pleasure.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 4.33 to 4.36 p.m.]

Hong Kong
Lord Glenarthur: My Lords, with the leave of the House, I now repeat a Statement made in another place by my right honourable and learned friend the Foreign Secretary. The Statement is as follows:
"With permission, Mr. Speaker, I shall make a Statement about Hong Kong, which I visited from 2nd to 4th July. I held extensive discussions with members of the Executive and Legislative Councils, with professional people, entrepreneurs, students and others.
"There can be no doubt that the appalling events in Peking have badly shaken confidence in Hong Kong. It is of the first importance that the Chinese Government take early, tangible and sustained action to begin restoring confidence in China's intentions towards Hong Kong. We shall be pressing them strongly on this.
"There has been understandable pressure on this country to grant a right of abode to all British passport holders in Hong Kong. I had to explain that this House would not support an indefinite and open-ended commitment of that kind. It would test our capacity in all kinds of areas—housing, employment, transport, inner city services—on an unprecedented scale. The Select Committee on Foreign Affairs reached a similar conclusion.
"I was, however, able to assure the people of Hong Kong that we can and will take action in a number of fields. First, on the question of nationality, we want to enhance people's
1190
confidence to remain. We are working urgently on a scheme which will make some provision for people in both the private and public sectors on the basis not simply of connections with Britain but also the value of service to Hong Kong.
"Secondly, at the European Council in Madrid we alerted our Community partners to Hong Kong's problems. I am also in direct touch with the other countries which will attend next week's Economic Summit in Paris. We shall continue there and elsewhere to mobilise the support of the international community.
"Thirdly, I was able to confirm as common ground that the joint declaration, with its prospect of the greatest possible autonomy, remains the best foundation for Hong Kong's future. We have identified a number of ways in which Hong Kong's traditions of freedom can be further protected. In particular there is scope for reviewing the rate of progress towards representative government. In this, the wishes of the people of Hong Kong will continue to be fundamental to our approach. We also favour a Bill of Rights entrenching essential freedoms. The Hong Kong Government are announcing today that they will introduce such a Bill as soon as possible. It will form part of the existing law and be able to continue after the transfer of sovereignty. We shall also take up with the Chinese Government two matters of special concern—Article 18 of the draft Basic Law, which could enable the central government in Peking to declare a state of emergency in Hong Kong after 1997, and, even more important, the question of the stationing in Hong Kong of Chinese military forces.
"Events in China have overshadowed Hong Kong's most immediate practical problem: how to cope with the 48,000 boat people who have found shelter there. I visited two of the camps housing boat people and saw the screening of new arrivals now being conducted under the auspices of the United Nations High Commissioner for Refugees.
"The Hong Kong Government and people have dealt magnificently with an appalling problem. But Hong Kong is being overwhelmed by the sheer weight of numbers. The vast majority of those reaching Hong Kong are not political refugees. They have no hope of being accepted for resettlement anywhere else in the world. Hong Kong cannot offer them a home or a livelihood.
"At the recent conference in Geneva, resettlement pledges were made for all those who qualify as refugees. The report of the Select Committee recognised that it is intolerable for those who do not qualify as refugees to have to spend years in camps. Their only future lies back home. I have discussed this problem with the Vietnamese Foreign Minister both in Geneva and in London. Official talks are continuing. I am hopeful that we shall be able to find a solution which enables boat people to return to Vietnam in safety and dignity.
"Hong Kong's predicament reflects the facts of its history and geography. These are inescapable. But, in approving the joint declaration, this House

1191
undertook to make the best possible provision for Hong Kong after 1997. We shall pursue the measures I have outlined with vigour as part of that wider and unchanged commitment".
My Lords, that concludes the Statement.
4.42 p.m.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Lord for repeating the Statement. When the Foreign Secretary decided to visit Hong Kong he knew, as we all did, that he would have a very critical reception; and so it turned out. Sir Geoffrey conducted himself with dignity and courage. It is also noteworthy that the members of the Hong Kong community, apprehensive and uncertain as they are, gave him a reasonable hearing.
As the Foreign Secretary said before he set out, he went to listen. The Statement contains his reactions. It does not go into detail on the main issues, and I do not complain about that at this point. However, I think that a clear, full and detailed note of government policy will be required fairly soon so that the people of Hong Kong know more precisely where they stand.
Regarding nationality, the renewal of confidence is of paramount importance, as the Statement says. We note that a scheme is being prepared, and we welcome that. Can the noble Lord, Lord Glenarthur, say when that is likely to be announced, and what options are being considered? For example, is one of those options a quota system operating over a period of years? Is he aware that a selective scheme based on wealth alone would not be acceptable to the people of this country?
We note and welcome the reference to the international community in the Statement. That is necessarily vague at this point, and in due course we shall expect a fuller report of the responses of the European Community and the other countries referred to.
We also welcome the steps proposed to protect the traditions of freedom, including a Bill of Rights. We note that some of those need further negotiations with the Chinese Government, for example Article 18 of the draft Basic Law, and the stationing of Chinese forces in Hong Kong. That has now become a matter of first importance, and we support the Government's proposal to discuss the matter further with the authorities in the Chinese Republic.
On democratic development generally, can the noble Lord say whether the Government propose to speed up elections to the legislative council and other bodies in Hong Kong? We shall obviously have to return to all those matters and to have a debate when the Government are able to furnish us with more clearly defined objectives and policies.
4.45 p.m.
Lord Bonham-Carter: My Lords, I am grateful to the noble Lord for repeating the Statement made by his right honourable and learned friend in another place. I too should like to pay tribute to the conduct of Sir Geoffrey Howe in the very difficult circumstances in which he found himself in Hong Kong. On the other hand, conduct is rather different
1192
from policy. The policies set forth in the Statement are hardly likely to achieve the purpose which is required, which is to allay the apprehensions of the people of Hong Kong faced with the alarming situation in which they find themselves.
The Statement which has just been read to us is rather more full of aspirations than actions. It says "It is of the first importance that the Chinese Government begin … restoring confidence in China's intentions". It is equally important that the British Government restore confidence in the British Government's intentions by taking action which is urgently required. Sir Geoffrey says "We want to enchance people's confidence to remain". "We alerted our Community partners to Hong Kong's problems". "There is scope for reviewing the rate of progress". "We favour a bill of right".
One feels like saying "Why don't you do something, or tell us when you are going to do something?" Above all, some guarantee to the people of Hong Kong is required that their lives and liberties will be assured. It is not enough at this stage to alert our partners in the European Community. It is generally agreed by the Select Committee, by both parties on these Benches, and by Mr. Martin Lee of Hong Kong, that if we are to assure the people of their liberties and their safety, we must mobilise the European Community, the Commonwealth and the United States to undertake to accept people from Hong Kong should the worst possible case occur. I should like to know what steps the Government are taking now to put that into practice.
The situation is serious because the prosperity of Hong Kong depends on keeping people working there; and on the prosperity of Hong Kong depends its future after 1997. I hope that we shall not have to depend on aspirations but that there will be decisions and action by Her Majesty's Government in the very near future.
Lord Glenarthur: My Lords, perhaps I may first of all thank both noble Lords opposite for their kind tributes to my right honourable and learned friend. His was not an easy task to undertake; but I am grateful, as I am sure he will be, for the kind remarks which have been made about his visit.
Perhaps I may deal first of all with the more general point raised by the noble Lord, Lord Bonham-Carter, that the Statement is one rather more of aspiration than of action. I am sure he will appreciate that the Statement was made immediately upon the return of my right honourable and learned friend. He went to Hong Kong to glean at first hand the views of those that he described in the Statement. Obviously, it is aspiration; action will follow.
I have given some indication of the kind of action which will go part of the way—though not the whole way—towards meeting some of the anxieties that have been expressed to my right honourable and learned friend on his visit. More will follow in due course. The noble Lord, Lord Cledwyn, asked me when that would be. I cannot give him a precise date, but I am sure he will understand that much is under active consideration at the moment; and as soon as the Government are in a position to make an announcement, it will be made.

1193
So far as concerns the ideas that have been considered, I hope the noble Lord will forgive me if I do not go into absolute detail. He raised one particular topic with me, and referred to a quota system. All such matters will naturally be under consideration. I would rather go no further today than saying that we must try to look at all the options to meet the anxieties of all those people, whether they are on the private side or in the public sector. They are all under consideration at the moment. When my right honourable and learned friend is ready he will be able to make an announcement about it.
The noble Lords, Lord Cledwyn and Lord Bonham-Carter, asked about mobilising the international community. As the Statement makes clear, we have already spoken to our European Community partners. We have spoken to Commonwealth governments and to the United States. The matter will be raised at the Paris Summit. We shall continue to urge the wider international community to join us in doing everything possible to restore confidence in Hong Kong in the way that both noble Lords would have us do.
I have to say, however, that mobilisation of a view is a necessary precursor to the kind of detail about which the noble Lord, Lord Bonham-Carter, asked me the other day. We have some time to go. It is difficult, as the noble Lord will imagine, to get into the kind of detail which he urges me to do. I acknowledge that there is force in that argument but I hope he will understand that mobilisation and understanding of the problem are all important. That is what my right honourable and learned friend has already set about and I am sure will carry forward to great effect.
The noble Lord, Lord Cledwyn, asked me about the pace of democratisation. I have made it clear that, as a result of the actions in Peking, the Government are already looking carefully at the programme for advancing and consolidating effective democracy in Hong Kong. During his visit my right honourable and learned friend discussed this with the governor and his advisers and with representatives of a wide range of opinion in Hong Kong. Recent events in China have inevitable caused people in Hong Kong to think very deeply about democracy. It is already clear that plans for 1991 will have to be looked at again. We must also consider what more should be done before 1997.
I would caution the noble Lord on one aspect. We should not try to rush a judgment while views in Hong Kong have not yet crystallised. Indeed, OMELCO has indicated that, following the events of 3rd and 4th June, it will have to look again at the position it reached in May. But I have said before, if Hong Kong can reach a clear consensus, that would be a significant development to which we would certainly want to respond. I hope that that is a fair answer to the noble Lord's point.
The noble Lord, Lord Bonham-Carter, referred to the report of the Foreign Affairs Committee. He said that even the committee indicated that more should be done to alert the international community. The
1194
report is being studied at the moment. A response will come forward in the usual way in due course. I am grateful to both noble Lords for their reception of the Statement and for their tributes to my right honourable and learned friend.
Lord Walston: My Lords, on these Benches we should like to congratulate the Foreign Secretary on his courage and dignity. I wish that we could congratulate on more than that but it is quite clear from what has been said and from the Statement—and not surprising—that his visit was not what one would call a resounding success.
I have only two points to make in addition to those made by the noble Lords who have already spoken. One was touched on in the reply of the noble Lord, Lord Glenarthur. I refer to the potential role of the Commonwealth in dealing with this matter. While I am as ardent a supporter of the European Community as anybody in this Chamber, I am also an ardent believer in the Commonwealth. It saddens me that the Commonwealth has not been asked to take a more prominent role in solving this extremely difficult and very human problem. I urge the noble Lord and his colleagues to continue, as they say in the Statement, to raise the matter at this week's Economic Summit in Paris and elsewhere. I hope that that "elsewhere" will include a specific approach—perhaps through the Commonwealth Secretariat in London—to rallying the support of the Commonwealth, and in particular, of those members of the Commonwealth with large areas of land and relatively few people living in them. The Commonwealth could come to the help not only of the people of Hong Kong, should the need arise, but also of those unfortunate refugees from Vietnam—I deliberately call them "refugees" whether they are political or not—who are living in such appalling conditions in Hong Kong and are imposing such a burden on the people of Hong Kong and are themselves suffering in such hopeless squalor. I urge the noble Lord to take the lead in rallying support and co-operation of the whole of the Commonwealth to help to solve this problem.
Lord Glenarthur: My Lords, I take the noble Lord's point that it is important to examine further the scope for the Commonwealth to play the role which he seeks. We are in a sense at the beginning of this operation. As my right honourable and learned friend made plain, the matter will be raised in Paris. Indeed it has already been raised. My right honourable friend the Prime Minister has already indicated that this will need to be discussed at the Commonwealth heads of government meeting in October.
Countries from within the European Community have already played a role in regard to the Vietnamese boat people and those who have been resettled from camps throughout South-East Asia.
Lord MacLehose of Beoch: My Lords, I should like to thank the noble Lord for repeating the Statement and I should like to be associated with the tributes to the Foreign Secretary. I regret that while he was there he was subjected to one small piece of studied discourtesy. I welcome much of

1195
the contents of the Statement. I welcome the part concerning the Vietnamese boat people. I welcome too the more flexible administration of the Nationality Act and of the immigration rules to allow more Hong Kong people to come to the United Kingdom fairly soon if they wish, and the working out of a more general plan later. I should like to know whether that interpretation of the Statement is correct.
Above all I welcome the fact that Hong Kong's future will continue to be built on the Joint Declaration and that the Government foresee the Basic Law being stiffened to implement it. The problem is that, to have confidence in their future under the Basic Law, the Hong Kong people are asking for right of abode in this country. They are backed in this by the governor, the Executive and Legislative Councils and a formidable number of people. On the other hand, the two major parties in this country will not have it. There is an impasse which is threatening the development of the future of Hong Kong and of British policy and interests there. I hope that there will be an opportunity to debate this at some future date.
Meanwhile, should we not bear in mind that this crisis is due not to a recent action of the British Government but to what the PLA did in Peking? Would it not be a help if the Chinese Government were to volunteer—and to volunteer soon—that they do not envisage the PLA being stationed in Hong Kong except in time of war?
5 p.m.
Lord Glenarthur: My Lords, I am most grateful to the noble Lord, Lord MacLehose, for welcoming what is contained in the Statement, what my right honourable and learned friend said about the Vietnamese boat people and what is being looked at in terms of flexibility. As I indicated to the noble Lord, Lord Cledwyn—and I hope the noble Lord will forgive me if I do not go into detail—what I said when I repeated the Statement earlier and spoke from this Dispatch Box was that all this is being looked at and it is to be hoped that an announcement will be made before too long. I certainly agree with him that it is important to build on the magnificent achievement in the Joint Declaration and, as I have indicated, stiffen the Basic Law where it is practical to do so.
The noble Lord raised the matter of the right of abode. Of course, I realise the force of the argument in support of that and, indeed, the feeling with which it is put forward so regularly by people in Hong Kong. However, as my right honourable and learned friend made perfectly plain, granting automatic right of abode to the several million people there is simply not a realistic option; it would create the most immense practical difficulties, and I must say that I think that that is a view which is shared by the great majority of Members on all sides of your Lordships' House. Indeed, it has been confirmed by the report of the Foreign Affairs Committee in another place. Perhaps I may paraphrase what my right honourable and learned friend said in Hong Kong the other day: to hold out the promise of an insurance policy knowing that a future British Government could not possibly deliver would be a gross deception.
1196
I turn now to the issue of the actions of the People's Liberation Army being largely responsible for what has occurred in damaging the confidence of Hong Kong. I certainly take the point that the noble Lord made. However, I think that, if he reflects upon what I repeated in the Statement, he will see that what he spoke of is just the sort of action that is under consideration.
Lord Eden of Winton: My Lords, listening closely to the Statement which my noble friend read to the House, it seemed to me that the British Government are engaged in discussions with the governments of other countries with a view to mobilising some sort of rescue operation should circumstances ever overtake Hong Kong which would make such action necessary. If that is the correct interpretation, then that is tantamount to saying that were such appalling disasters to overtake Hong Kong, the British Government would not let down the people of Hong Kong. Further, if that interpretation is correct, has that fact been made as clear as that to the people of Hong Kong?
While I am on my feet, perhaps I may trespass for a moment on a related aspect of the matter and ask my noble friend if he can comment—if not immediately, perhaps at some point—about something which I understand is shortly to take place; namely, a visit by a top level British industrial and commercial mission to China. It seems to me that if that is the case, then it is shamefully soon after the events in Tiananmen Square and ought not to take place.
Lord Glenarthur: My Lords, my noble friend's interpretation of the mobilisation of international support is broadly correct. Of course, if matters were to go so horribly wrong as he envisages, there would also be a commitment upon us. Indeed, my right honourable and learned friend made that perfectly plain on one or two occasions when he spoke in Hong Kong. However, it is extremely important that the ground is prepared for the kind of detailed work which we all hoped it would not ultimately be necessary to bring into effect. That is why my right honourable and learned friend has taken the step so far of stimulating interest in this serious problem in the United States and in the European Community, and among Commonwealth countries. Therefore I very much take the point made by my noble friend.
So far as concerns the industrial mission—that is, the Sino-British Trade Council mission, which is being looked at—I can reassure my noble friend that it is currently under reconsideration.
Lord Hailsham of Saint Marylebone: My Lords, it may or may not be that my noble friend will wish to comment upon this, but I should like to put forward a point of view from this Bench. It relates solely to the main issue and not to the Vietnamese boat people. I should like to say that, not only for his personal dignity but also for his extremely sensible, restrained and responsible attitude, the highest possible praise ought to be given to my right honourable and learned friend the Foreign Secretary.
I think that I should also express from these Benches, from which perhaps it comes better than

1197
anywhere else, the fact that I am extremely grateful personally—as I hope the House is—for the extremely responsible attitude of the official Opposition, both in another place and here through the person of the noble Lord, Lord Cledwyn. It is a most difficult and dangerous situation and there is an immense temptation, in view of the revulsion which we all feel about certain matters and which the Hong Kong people probably feel even more deeply and acutely than we do, to take a populist attitude, which is the worst possible attitude we could take.
Our responsibility to the people of Hong Kong is not only what may or may not happen in 1997, when I shall probably not be alive; it is here and now, and in the immediate years which follow. We have seen one of the most appalling events of recent history. In my opinion the overriding duty of Her Majesty's Government, and their duty to Hong Kong, is to persuade the rulers of China during the coming eight years—and I start from now—that it is immensely to their advantage to make it wholly clear that they intend to abide by their agreement and retain the rights and privileges of the people of Hong Kong; and that it would be the most serious disadvantage to them if they were to frighten or bully those people or to create a situation in which they took over a wilderness instead of a going concern.
I am quite sure that my right honourable and learned friend has taken exactly the right line. Further, I hope that he will have the support of the whole country in so doing.
Lord Glenarthur: My Lords, I am grateful to my noble and learned friend for his very wise words. I should say, however, that I fully expect him to be with us in 1997, contributing to our debates in the way that he always does. I am also grateful to him for his tributes to my right honourable and learned friend the Foreign Secretary. I too should like to be associated with his words as regards the attitude of the official Opposition and that of the noble Lord, Lord Cledwyn. As he says, it is important to remember that this is a time for cool heads, both here and in Hong Kong. It is an extremely difficult issue and one which will not be solved overnight. That is precisely why my right honourable and learned friend undertook his visit to Hong Kong: he wished to hear opinion at first hand. I am also sure that we must consider the matter coolly and carefully and give it all consideration, as indeed is being done at present.
Baroness Ewart-Biggs: My Lords, perhaps I may ask the Minister for a little more information as regards two points which he made in the Statement. First, he spoke about the Basic Law. However, can he say whether work has resumed in that connection? I am sure that he will agree that everything should be done to maintain some movement and action in Hong Kong in order to fill the dangerous vacuum which is clearly visible.
Secondly, as regards the Vietnamese refugees, I should like to say how happy I was to see that the Secretary of State during his very short time in
1198
Hong Kong still managed to visit two of the camps. However, can the Minister give an assurance that there will be no question of forcible repatriation of any refugees? Does he agree also that negotiations with the Vietnamese Government should be more on the basis of aid programmes and trade? Surely the Minister will agree that boosting Vietnam's economic development is the long-term answer to the problem of increasing economic migration and that, at the worst, the isolation of Vietnam will in no way prevent those refugees going to Hong Kong, nor will it make it easy for them to return.
Lord Glenarthur: My Lords, I said on a previous day that work on the Basic Law had been suspended. That position holds good at the moment, but of course we shall need to consider how to take forward the points that my right honourable and learned friend made in his Statement, when he said that we have to look at certain Articles of that Basic Law and will need to make representations to the Chinese authorities about it, in the way that we have played a part in this matter throughout. That is a matter which is under consideration at the moment. I cannot say when the work will restart. The noble Baroness will appreciate why it has been suspended in the meantime.
As regards the Vietnamese boat people and forcible repatriation, we have no interest in using force. Our aim is merely to follow up the principle which was clearly established and was part of the comprehensive plan of action that was endorsed at Geneva: that all those boat people who do not qualify as refugees must find their future in Vietnam.
We are working for arrangements to enable those people to return to their country of origin, safely, in dignity and without fear of punishment. On Vietnam's economic and trade position, while I take the point that the noble Baroness made, I am sure that she will understand that we still await the withdrawal of the Vietnamese army of occupation from Cambodia.
Baroness Phillips: My Lords, will the Minister assure us that the Government will emphasise the fact that the Hong Kong people do not wish to come here in great numbers; that they merely need some kind of insurance policy? Too much propaganda has been put around to the effect that 3.5 million people will descend suddenly on Great Britain. It is difficult for Hong Kong people to understand why they do not have such an assurance when they see the number of people from other countries who are living here. Each time that there is a demonstration, I am amazed at the thousands of people—Arabs, Iraqis, Iranians and so on—who are obviously living here. From the demonstrations outside the Chinese embassy, it appears that a number of Chinese people are living here. We must show the Hong Kong people that we are behind them if the necessity arises for them to come here. When I was there I gained the impression that they do not want to come to Britain, but that they want some assurance that we are behind them.
Lord Glenarthur: My Lords, I appreciate the concern of people in Hong Kong who are looking for an assurance. The noble Baroness is suggesting

1199
that a sort of blank cheque be written for an unknown possibility of which we cannot foretell the outcome. That is why to hold out the idea that I described as an insurance policy, knowing that a future British Government could not possibly deliver on it for the immensely difficult practical reasons that I gave, would be nothing other than a great deception.
Lord Northfield: My Lords, the Minister has repeated again today that the Government accept responsibility for mobilising other countries in the event of some refuge being needed for Hong Kong people. I want to ask him again about the position of Taiwan. I fully understand tthe Government's difficulty. We have no diplomatic relations with Taiwan. I do not expect diplomatic relations to be resumed, and I do not press for that; but is it not a possible refuge for some of the people from Hong Kong? In the coming years do not we need to consider the possibility that if it were ever needed some of them could go there? It is Chinese. Its democracy is developing fast. Our trade relations with it are good. Can the Minister say at least that we hope that over the coming years our relations will improve, and that eventually we may be able to talk to Taiwan in some way about the possibility of it providing part of the insurance system that he has talked about?
Lord Glenarthur: My Lords, the noble Lord will realise that it is impossible for me to look into the future in relation to Taiwan. As he is aware, we do not have diplomatic relations with Taiwan. I am equally aware that the people of Hong Kong and the international community as a whole will understand that Taiwan might have some role to play in the future, but that is not a point for me.
Viscount Davidson: My Lords, we have been 33 minutes on the Statement. It might be appropriate to return now the Report stage of the Electricity Bill.

Electricity Bill
5.15 p.m.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, the Question is that the Bill be now further considered on Report.
Noble Lords: No!
The Deputy Speaker: My Lords, I apologise.
Lord Williams of Elvel: My Lords, I understood that the Question would be put that we should continue with the Report stage. Before we continue, perhaps I may remind the Minister that she described Amendment No. 1 as a wrecking amendment. I am sure that that was not the intention of the noble Lord, Lord Stanley, and I do not believe that it was a wrecking amendment. Nevertheless, that was the Minister's view. In the light of the fact that the House carried Amendment No. 1 on a Division, do the Government still wish to continue with the Bill on Report?
Baroness Hooper: My Lords, I am, glad that the characteristic sense of humour of the noble Lord, Lord Williams, has not deserted him. In winding up the debate, my noble friend Lord Stanley recognised that we were voting on the principle of the amendment. He also recognised that the amendment might be defective. The Government will of course be considering their position. However, I feel sure that in the meantime we should press on with the many important amendments before us.
Consideration of amendments on Report resumed.
Schedule 1 [The Director General of Electricity Supply]:
Lord Peston Lord Peston moved Amendment No. 2:
Page 73, line 18, leave out from ("may") to ("appoint") in line 19.
The noble Lord said: My Lords, I hope that the principle that we have just discussed is one that the Government will take seriously to heart. With the amendment we are back to our normal detailed scrutiny of the Bill and one's desire for some enlightenment. The schedule is headed:
"The Director General of Electricity Supply".
The schedule refers to staff, and as drafted the paragraph reads:
"The Director may, with the approval of the Treasury as to numbers and terms and conditions of service, appoint such staff as he may determine".
The Government's argument, which appears in the Notes on Clauses, is that there are similar provisions in corresponding schedules of the Gas Act, the Telecommunications Act and the Fair Trading Act. The Minister's noble colleague, the noble Lord, Lord Peyton, said at one point that he was becoming fed up with arguments such as, "We have done it before and therefore we propose to do it again". I raise the point to seek genuine enlightenment rather than to be given the answer, "We have done it before and we want to do it again". The substantive point is: why cannot the sentence leave out the reference to the Treasury in order that the director may do his job by appointing such staff as he may determine, on the assumption, which noble Lords on the Government Front Bench have made before, that he knows what he is doing and can be trusted to do the job?
If we are discussing general Treasury control—I stand second to no one in my support for general Treasury control—that does not have to be written into the Bill because it is taken for granted in all matters to do with Whitehall. We do not have to write the provision into the Bill to get Treasury control; we get Treasury control whether we like it or not. We should not lose Treasury control if the parenthetic statement were taken out. We should just have a rather better drafted Bill showing that we accept that we want the director to do his job correctly, efficiently, with great support from the Government and—if the Bill is passed—with great support for the carrying out of a good job from noble Lords on our side. That is the reason that I put this down. Assuming that my argument is right, I should like to see some of the other legislation where this appears amended, so that it can be brought into line the other way. I beg to move.
Lord Boyd-Carpenter: My Lords, I cannot see the point of the amendment in the light of the speech to which we have just listened. The noble Lord opposite said that such matters would need Treasury approval anyhow whether or not it was in the Bill. Therefore, the proposal would not make a pennyworth of practical difference. On the other hand, it is the practice in similar statutes—and the noble Lord cannot brush this aside—to lay down that where we are concerned with the manpower arrangements of central government and attached organisations, the approval of the Treasury is required. It seems strange in this Bill to omit that provision unless there were some intention that the situation should be different from that under other Bills. Therefore the amendment appears pointless.
On the merits, it must remain the duty of the Treasury to keep a close eye on the manpower requirements of these public organisations. Your Lordships know perfectly well that, however well intentioned, they all have a tendency to expand, to find additional jobs, to increase their complements. It is therefore very useful in practical terms—and I have some experience of this—for the Treasury to be able, quietly but firmly, to keep their ambitions under control. I hope that your Lordships will not accept the amendment.
Lord Renton: My Lords, as your Lordships may remember, I take a different view from that expressed by my noble friend Lord Boyd-Carpenter. I have expressed that view so often that I do not wish to weary noble Lords again, except to say that both the Chancellor of the Exchequer and the Secretary of State and, incidentally, the Chief Secretary, are all members of the Cabinet. They all have collective responsibility. That we should have to write this into the Bill would merely be a reflection of the failure of the machinery of government. It is sheer nonsense and I hope that one day the Treasury will drop it.
Baroness Hooper: My Lords, I am grateful to the noble Lords who have contributed to the discussion. I note that the noble Lord, Lord Peston, effectively regarded this as a probing amendment. Therefore, I shall respond by saying that the Office of Electricity Regulation will be a non-ministerial government department. It is entirely customary for all Civil Service manpower issues to be cleared with the Treasury.
We believe that it would be completely wrong to ignore precedents or, as the noble Lord suggested, to change the precedents which appeared in the Gas Act, the Telecommunications Act and the Fair Trading Act and to try to establish a new policy in this area. It is a necessary part of the control of public expenditure that there should be this requirement, and I understand also that it is necessary to write it in. However, I wish to assure your Lordships, as I did previously when we discussed a similar issue, that the director will be given all the resources he needs to perform his functions effectively and efficiently and that Offer will have fully adequate staff and resources to carry out its important job.
Lord Peston: My Lords, I thank the noble Lords who have intervened both for and against the amendment as well as the noble Baroness. Clearly the amendment has been put down in order to obtain some enlightenment and some simplicity. However, I have not received quite the enlightenment that I wanted. Perhaps I may ask the noble Baroness, even though she may not be able to answer me at this precise moment, if this phrase were not in the Bill, does she imply that the director general and his office would not be subject to Treasury control?
My point is that there would be Treasury control anyway. In a sense I invert the argument of the noble Lord, Lord Boyd-Carpenter, that because it would be subject to Treasury control anyway, why write it in? I take that to be the argument of the noble Lord, Lord Renton and it is certainly mine. I should be extremely interested to know, if we did not write it in, whether there would not be Treasury control. That would certainly justify the phrase being there; but it would be news to me. I do not know whether the noble Baroness wishes to say any more at the moment.
Baroness Hooper: My Lords, with the leave of the House, perhaps I should say that he system of funding is that Offer will be financed by vote. Its costs will be clearly identified and, as with all the costs of regulation, they will be recovered through the licence fees.
However, in terms of public accountability my understanding is that the requirement is written in, in relation to Treasury consent, in order to make the position absolutely clear, particularly in the light of the precedents that exist in the area.
Lord Peston: My Lords, I thank the noble Baroness. I know how busy the Government are but if it were possible for them to write to me giving a definitive statement, as a lifetime student of Treasury control I should be obliged have clearly made the points I wished to make. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Consumers' committees]:
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 3:
Page 2, line 10, leave out ("Director") and insert ("Secretary of State").
The noble Lord said: My Lords, in moving this amendment I wish also to refer to Amendment No. 4. Not only is this a short point; it is also one which was dealt with at an earlier stage of the Bill. At the end of that stage I was left with a tender hope that it might lead to the Government having some thoughts on the matter and perhaps feeling it appropriate to do something to meet the views which had been expressed. I am disappointed, though not altogether surprised, that the Government have not seen fit to move on the matter.
To my mind the arguments are very simple. The consumers' committees will have a very important role. They ought to be independent of the director general and high ranking personages in the electricity supply industry. My advice is that they would like

1203
to be independent and that they should be aloof from someone like the director general. Therefore I very much prefer that the Secretary of State should be responsible for appointing them. I hope that even at this late stage the Government might consider that there is something in this point and indicate their willingness to meet it. I beg to move.
Lord Ezra: My Lords, I wish to support the amendments proposed by the noble Lord, Lord Peyton. An important principle is at stake here. We are privatising a basic industry and it is vital that it should be shown that the consumers' interests will be fully protected. Under this Bill as drafted it is intended that there should be consumers' committees but these committees will be the creatures of the director. The director's task covers not only consumers' interests but the interests of producers, distributors and everyone else involved.
It would be far better if the consumers' organisations had a separate identity. That can very easily be achieved by accepting the modest amendment proposed by the noble Lord, Lord Peyton. This would make it appear that they are independent bodies and that they can approach the director, the Secretary of State or any of the other bodies concerned. But if they are appointed by, and are responsible to, the director, their freedom of action would thereby be circumscribed. They would not have the independence, for example, that the comparable body has in the gas industry. I cannot for the life of me see why it is proposed in the case of electricity that there should be a different situation to that under gas. They are two basic energy commodities which were previously publicly owned but are now to be privately owned. The least the Government can do is to make sure that the consumers' interests can be seen to be fully and independently protected. This change is one that I hope very much the Government will accept.
5.30 p.m.
Baroness Gardner of Parkes: My Lords, I am not in favour of this amendment because I believe the whole idea of privatising the electricity industry is to take it away from political control and make it responsible for its own affairs, but with an adequate degree of protection. I do not consider this amendment achieves that purpose. All it does is immediately to bring the Secretary of State and the political element of control back in. I do not think this provision offers any advantage to the consumer world. I consider it would be a disadvantage.
Lord Howie of Troon: My Lords, it appears to me that these amendments are correct and ought to be supported. It seems to me, from memory, that all the precedents point in this direction. When industries were nationalised in the past, no one thought that the consumers' committees should be appointed by the head of the nationalised industries. They were appointed by the Secretary of State to make them separate from the nationalised industries. It would be quite wrong for the director to appoint the consumers' committees in this case because, with the best will in the world, it would be quite impossible to
1204
convince the public at large that the committees were not in the pocket of the director general. It would be quite impossible to convince people that the committees were independent. They should be independent, and be seen to be independent. I believe the amendments should be supported.
Lord Peston: My Lords, I have nothing to add to the arguments which have already been put forward. I accept those arguments. However, as a last point, I wish to ask the Minister when he replies, to deal with the intervention of the noble Baroness, Lady Gardner of Parkes, which I found a little troublesome. Her view was that if the Secretary of State made these appointments they would be political ones. The Government have usually been at pains, when we on this side of the House have occasionally suggested that the Government act politically in these matters, to point out that they simply appoint the best people for the job. I hope that, whatever the noble Lord feels, he will not accept the argument that the Secretary of State cannot appoint the consumers' committees because he cannot be trusted not to appoint political people. It seems to me that the key argument here is the one that my noble friend Lord Howie of Troon made—other speakers also made this argument —that what is required here is a modicum of independence in appointing the best people. I believe the Secretary of State is the right person to do that job.
Lord Sanderson of Bowden: My Lords, I am sure my noble friend Lord Peyton of Yeovil realises that we have been here before. My noble friend Lord Glenarthur answered as best he could the points which have again surfaced in this debate. I think at the time that my noble friend said the Government should have the good sense to go away and reflect upon his anxieties. That is indeed exactly what the Government have done.
My noble friend Lord Glenarthur made clear when these amendments were moved in Committee, that the day-to-day responsibility for protecting the interests of consumers in the electricity industry will lie with the Director General of Electricity Supply. It is clearly right that he, with his general responsibility for the regulation of the industry, should establish and appoint the new consumers' committees. I might add that the director is not part of the industry, as I understand it.
Part of the duties of the new committees will involve investigating and determining certain matters on behalf of the director and providing him with a source of lay advice on consumer matters. Given that the committees will be working closely with the director, it is surely sensible that his should be the primary responsibility for their establishment.
Nonetheless, we recognise that the Secretary of State should have a legitimate interest in the appointment of the chairman of the committees, given his own duty under Clause 4 of the Bill of protecting the interests of the consumer. This clause therefore currently provides that in making his choice of chairman, the director must consult the Secretary of State, and then consult the chairman in

1205
appointing the rest of the committee. The Government feel that this is the appropriate level of involvement for the Secretary of State and will guard against any suspicion of irregularity in any of the director's appointments.
Therefore, I feel that to remove the director entirely from the appointments process would, first, undermine his ability to carry out his own statutory duty to protect consumers' interests and, secondly, involve the Secretary of State to a greater degree than the Government think appropriate in the appointments process. Part of our purpose in making these new arrangements is to minimise the extent to which political judgments—that matter has been referred to—may affect appointments to the new consumer bodies.
In answering the points raised in debate about political appointments, I would say that what we propose simply removes the doubts which I believe the noble Lord, Lord Peston, has. The noble Lord, Lord Ezra, asked why the position under electricity is different from that under gas. I have in reply to say that this House, and indeed another place, have already agreed that the arrangements for water and British Telecom are affecting what we are doing in this particular Bill.
As regards the question of a separate identity for the consumers' committees, surely the answer is that that is already there. They have independent statutory duties and powers. So, in answer to my noble friend's very genuine request that we look carefully to see whether we have this particular matter right, I should say that we happen to believe that we have. Perhaps, however, I have not persuaded my noble friend to that end.
Lord Peyton of Yeovil: My Lords, I must confess to some disappointment although, as I said before, no surprise. However, it would be churlish if I did not say that I appreciated the courteous way in which my noble friend replied to my amendments. I have to say that I think the argument he adduced, that the chairman should be appointed by the director after consultation with the Secretary of State, is at least a two-edged argument. If the Government are prepared to go that far, it would seem to me that they are at least recognising that there is some cogency behind the demand that the Secretary of State be involved.
For my part, I believe that the director general will be so deeply immersed in the affairs of the industry that it would be as well if the consumers' committees were appointed by someone who was a little more remote, as the Secretary of State will be. I am very far from saying that Secretaries of State are possessors of great virtues, but I feel that remoteness on this occasion is one. I do not think it is worth pressing this any further, and I do not wish to detain your Lordships' House. However, I wish to ask my noble friend whether the opinion of those who are currently members of consumers' committees has been sounded on this matter.
Lord Sanderson of Bowden: My Lords, I believe that to be the case as regards the situation South of
1206
the Border. I have certainly done that to my own satisfaction with the consumers' committees North of the Border.
Lord Peyton of Yeovil: My Lords, I am much obliged to my noble friend. However, I see no alternative but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
The Deputy Speaker: My Lords, I should inform your Lordships that if Amendment No. 5 were to be agreed to I could not call Amendment No. 6, as it would pre-empt it. I now call Amendment No. 5.
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 5.
Page 2, line 25, leave out subsection (4).
The noble Lord said: My Lords, this subject was debated, discussed and views were expressed upon it in Committee. It seems to me, however, that the answer given by the Government in Committee was not at all convincing. For my part, I believe that if the consumers' committees are going to be useful, the last thing we want to have is some kind of camouflaged expert to be a member of the committees. There is a very strong argument for insisting that the director general of the supply industry should be someone:
"who has experience of, and has shown capacity in, matters relevant to the provision of electricity supply services".
I do not think that that is in any way necessary for the representative of the consumer. The consumer committees can avail themselves of expert advice as and when they need it. They do not need to be saddled with camouflaged experts in their midst, who may not be as up to date or as expert as they think they are. I hope that even at this late stage the Government will have further thoughts on the matter. I beg to move.
Lord Peston: My Lords, although the two amendments are grouped together they are only slightly incompatible. Their theme is not exactly the same but they are related. As I understand it, the amendment of the noble Lord, Lord Peyton, proposes that the industry expertise should be vested in the director themself rather than in the consumer committee. I understand the argument and it is one to which I subscribe to some degree. Amendment No. 6 refers to the appointment of other persons with interests in that area.
Having listened to the noble Lord, Lord Peyton, I realise that the word "interests" is misleading. It does not mean that they should be persons who are involved in the electricity industry. It means that we should appoint people who have some interest in consumer energy matters. I apologise for the fact that the wording is rather dreadful. I can only say in expiation of the sin that subsection (4) is itself appallingly worded. It ought to read:
"In appointing persons to be a member of a consumers' committee, the Director shall have regard to the desirability of appointing a person".
My excuse for my infelicitous style is that the style of the Bill is itself infelicitous.

1207
My point is that the committee should not consist of people who turn up at the first meeting and say that they are delighted to have been appointed, they do not know anything about the subject, and will someone tell them what they are supposed to do. Therefore interest in these matters should be at least one of the criteria for appointing some of the members.
The purpose of Amendment No. 6 is to place on record the criteria which we hope the director will employ in appointing the people concerned. However on past performance one would not expect the Government simply to accept such an amendment, however sensible it may be.
5.45 p.m.
Lord Moyne: My Lords, I hope that my noble friend, when replying for the Government, will indicate whether subsection (4) means that all the members of a consumers' committee have to be experts in electricity rather than in representing the interests of the consumer. If so the amendment of the noble Lord, Lord Peston, is necessary.
Lord Howie of Troon: My Lords, I find myself in the interesting position of agreeing with both amendments. However, that is impossible because if we have one we cannot have the other. As I read subsection (4), it suggests that the director shall have regard to the desirability of doing something. That presumably means that, having had regard to the desirability of doing so, he may do something else. Presumably he is permitted to consider appointing persons who have experience of this, that and the other, but he might appoint people who do not have that experience. That would be a very desirable arrangement, one which I believe the noble Lord, Lord Peyton, would desire.
However, the subsection does not say that. I believe that the Government should take the matter away and amend the subsection to indicate that the director can appoint people who have other experience. The experience desirable for a member of a consumers' committee would not be experience of, or capacity in, matters relevant to the provision of electricity supply. It would be experience of, or capacity in, matters relating to the consumption of electricity.
If I am right in supposing that the director can appoint people who are experienced in the provision of electricity and also people who are experienced in supply, I should probably be happy with the subsection as it stands. However, the Government should make that clear. I should like the clause, if it cannot be wholly rewritten, to have the amendment of my noble friend Lord Peston added at the end.
Lord Ezra: My Lords, we have been over this ground before. It is rather unfortunate that the Government did not take note of noble Lords' concerns and introduce their own amendment to widen the membership of the committees. I have had experience of consumer committees in the coal industry. It was certainly not a condition that everyone on those committees should be a mining engineer. There were no mining engineers on the
1208
committee; they were people who represented the consumers—housewives and others who could speak up on the consumers' behalf.
I find it very puzzling, in the light of the debate in Committee, that the Government have not at least seen fit to say that although some members of consumers' committees should have had experience of the provision of electricity supply services others might have different backgrounds. If this is meant to be a consumers' committee it seems odd that apparently no persons will be selected as consumers to be members of it. I should like to press that point on the noble Lord.
Lord Renton: My Lords, I believe that this subsection should be considered again by the Government. We are dealing here with consumers' committees. We ought to ensure that it is consumers who are represented.
I have always agreed with the Government when the Opposition have tried to elaborate the representation on various public boards so as to make them representative of too many particular interests. Here, however, there is an attempt at specifying a particular interest. And, as has been pointed out, it is expressed in a rather odd way. I take the point made by my noble friend Lord Moyne that they all have to be people who have experience of, and have shown capacity in—which must mean that they are very good at—
"matters relevant to the provision of electricity supply services".
What are they? We seek guidance on that phrase, and we find it in Clause 5 where a distinction is made between generation, transmission and supply of electricity. When we look at Clause 5(4) we find that "supply" means,
"supply through electric lines otherwise than to premises occupied by a licence holder for the purpose of carrying on the activities which he is authorised by his licence to carry on".
That is an entirely new concept of electricity supply which will, as I understand it, arise for the first time as a result of the Bill. It seems rather strange that representation on consumers' committees should be tied to that new and unusual definition. I therefore think that we should look again at the matter.
Baroness Gardner of Parkes: My Lords, I find this a slightly strange clause, although I do not particularly support either amendment. Amendment No. 6 is slightly ambiguous. I had taken the phrase "interests in the area" to mean that the people concerned possibly had some financial interest geographically in the area. I consider the wording not satisfactory.
Lord Peston: My Lords, perhaps I may interrupt the noble Baroness. She is right to find the wording ambiguous. I fully accept her comment in that respect. I tried to make it unambiguous by explaining what I meant, which is to some extent what the noble Lords, Lord Renton and Lord Ezra, have said that the amendment means.
Baroness Gardner of Parkes: My Lords, I thank the noble Lord for his comments. The clause is probably just an attempt to explain what is meant, but it states,
"shall have regard to the desirability of appointing".

1209
If I were the person making the appointments, I should consider that it was not necessarily desirable to appoint all the people on that basis. When I served on the North Thames Gas Consumers Council, I knew nothing whatsoever about gas other than as an ordinary person. I found that being someone with common sense who knew a little about social services and the way that ordinary people live was just as useful as anything else. I do not understand exactly where the consumers' committees tie in with knowledge of the electricity industry unless, as at present, there must be consultation in terms of setting tariffs. When one reaches that more technical aspect, there is a need for someone to study those financial questions. But, if the consumer body is simply to deal with people's complaints and to assess whether justice is being done and whether the supply industry is meeting its objectives, people with common sense and a wide general experience of any type would be perfectly suitable. Thus, although I do not agree with either amendment, there is perhaps a need to look at the clause.
Lord Coleraine: My Lords, I apologise for intervening when I have not taken part in previous debates. However, having heard what has been said, I cannot help wondering whether the subsection should not read, "that the Director shall have regard to the desirability of there being on consumers' committees one or more persons who have experience of, and have shown capacity in, matters relevant to the provision of electricity supply services".
Lord Swinfen: My Lords, I wonder whether the Government will consider taking away the amendment, as has already been suggested, and, rather than have an expert as a member of the committee, have an expert who is an adviser to that committee on technical matters but is not a member of the committee.
Lord Sanderson of Bowden: My Lords, I am grateful to all noble Lords who have taken part in the debate. We have already discussed the matter, as my noble friend said when he moved his amendment, the first of the two in this grouping.
I believe that what is of greatest importance in membership of the consumers' committees is that the director should be able to appoint persons of high quality who are capable of turning their hand to the very wide spectrum of matters relating to electricity supply and who are committed to the interests of the customer. I do not believe that there is any difference between us on that point.
Perhaps I may deal first with the amendment of the noble Lord, Lord Peston. As I read it, it means that the director would need to have regard to the desirability of appointing a person who himself has shown capacity in appointing other persons. I assume that the noble Lord intends that the director should appoint other persons with interests in the area. I am not sure who,
"other persons with interests in the area"
1210
would be. I do not think that it is desirable that the committees should become representative bodies for various specialist interest groups. The members should be lay people, chosen because they seem the best individuals to fulfil that important and demanding function.
It is the director, with the overall responsibility for regulation of the electricity industry and for consumer protection, who will be best placed to decide who will be the most effective members of consumers' committees. In making those choices, he will be able to take advantage of local knowledge and the experience of the chairmen. The Government's aim is to ensure that the consumers' committees provide real and effective representation for the consumer. We believe that the criterion for appointment set out in Clause 2(4) will help us to achieve that aim.
I must say to my noble friend Lord Peyton of Yeovil that I have contemplated carefully what he has asked us to do in relation to the matter. Just to show that the Government do bend now and again, I propose to accept his amendment, but must reject that of the noble Lord, Lord Peston.
Lord Peyton of Yeovil: My Lords, 1 can hardly manage to get to my feet. Dumbfounded and stricken as I am, almost helpless with surprise and amazement, I am just able to force through my lips some few words—albeit lame words—of thanks, to my noble friend for his grace in accepting the amendment. I believe that I can modestly say that the Bill is a great deal better without those rubbishy words in it.
On Question, amendment agreed to.
[Amendment No. 6 not moved.]
[Amendment No. 7 not moved.]
Schedule 2 [Consumers' committees]:
Lord Peston Lord Peston moved Amendment No. 8:
Page 74, line 20, after ("Director") insert ("after a proper assessment of remuneration").
The noble Lord said: My Lords, in moving this amendment, I speak also—slightly to my surprise—to Amendments Nos. 9, 10 and 13.
The main purpose of the amendments is to clarify certain aspects of Schedule 2, which deals with remuneration. Perhaps I may try to guide noble Lords through the different parts. Under the terms of Amendment No. 8, we require—again, I should be interested to know whether the Government argue that the assessment is implicit in the Bill—an explicit rather than an implicit assessment of the nature of the remuneration that would be paid. That point is not unrelated—and it is useful to ask about it now—to my earlier amendment concerning Treasury control.
In other words, it may well be that the relevant answer to my concern here—where, instead of saying,
"as the Director may determine",
we say,
"after a proper assessment of remuneration"

1211
—is that, having already obtained the blanket Treasury controls, he will have to do that anyway. But, nonetheless, I think that that point is worth raising. Certainly anyone who has had experience of matters of that kind is always intrigued as to how the remuneration is arrived at and what the relevant criteria are. That is the reason for the amendment.
We ask to leave out the word "gratuity" in Amendment No. 9 because we should like an explanation. I understand the use of the word "pension". I think that I understand the meaning of the word "allowance". I have proposed to leave out the word "gratuity" because I do not quite know what its effect will be. Again, this is a plea for information or advice as to what the Government have in mind when they refer to "gratuity". For example, does it mean that it is tax free or something special of that kind? That is what we should like to know.
Those are the more important amendments. Amendment No. 13 would delete the words:
"with the approval of the Treasury".
I suppose that I could be hoist with my own petard if I should be asked, "Why am I not putting it in here?", but if I can put that argument and be defeated, as I was earlier, then I can change my argument now and ask, "Why do the Government want it here?". In other words, I am perfectly willing to accept consistency as a principle at least. Sub-paragraph (4) would then simply be the drafting consequence of doing things the other way round.
Those are the points that I should like to raise. We are not pressing for something major. We are just interested in knowing precisely what the schedule has in mind. Any help that the noble Lord can give us on that matter will be useful in the future when this measure is put into pactice. I beg to move.
6 p.m.
Lord Sanderson of Bowden: My Lords, Schedule 2 of the Bill simply lays down a standard set of financial parameters for the consumers' committees, all of which are well precedented in other public bodies of this kind. The committees are not intended to be composed of salaried officials but of lay members of the public who have a contribution to make in the field of consumer protection in their areas.
Perhaps I may deal with the noble Lords' proposals in order. First, the payment of remuneration to the chairman of the committees, which will be determined by the director, will of course be subject to proper assessment—indeed it is difficult to see how a judgment could otherwise be made. I feel therefore that that amendment is unnecessary.
Secondly, the noble Lord has brought to our attention that it is important to explain how one construes "gratuity". The phrase "pension, allowance or gratuity" is quite standard, and is typically used for bodies of this kind which are not composed of salaried officials. In no sense is the word intended to connote an underhand payment of any sort. It simply provides the director with a degree of flexibility to take account of individual circumstances. For instance, a chairman, for
1212
whatever reason, may have to resign his post earlier than originally expected and it might be appropriate to provide part of his entitlement to remuneration in the form of a one-off payment or gratuity. I am advised that that of course would be subject to normal tax law. The proposed amendment would remove part of that flexibility and, we believe, would be undesirable.
I come now to the matter of Treasury approval. The noble Lord, Lord Peston, knows very well—although perhaps my noble friend Lord Renton will not agree with what I have to say—that the requirement for Treasury approval for payments to the chairman and members of the committees is necessary. It must surely be right that public expenditure of that kind is subject to the same scrutiny as any other. It would be quite improper to exempt the consumers' committees from the normal rules of financial propriety in the way suggested.
I am absolutely certain that when he moved this amendment the noble Lord, Lord Peston, expected the reply that I have given to him.
Lord Williams of Elvel: My Lords, I wonder whether I may press the noble Lord on two points in his response. I think that we accept that the approval of the Treasury is necessary since funds voted by Parliament are to be used for this purpose. I am grateful to him for explaining that point. The expression "proper assessment of remuneration" is designed to smoke out the Government as to what they intend as remuneration for a chairman of such a committee. Will it be in line with the normal practice of remuneration of what used to be called quangos (and are perhaps no longer so called)? Will it be in line with commercial practice? Will he be paid the equivalent of the chairman of the National Westminster Bank? I think that we need a little more guidance from the Government on that issue.
With regard to the point about "gratuity", I understand that, where a chairman of a committee leaves early, as the noble Lord said, for a variety of reasons and perhaps for reasons which are outside his control, there may be—and I say "may" advisedly—a case for making an ex gratia payment. I am not convinced that there is ever a case for making an ex gratia payment to somebody who takes on the business of being a chairman of a consumer committee. But there may be a case, and if so the noble Lord still has to make that case a little more strongly than he has done.
However, if there is a case to be made, surely the payment should not be called a gratuity. It should be called an ex gratia payment. That is the expression in the Income and Corporation Taxes Act and, as the noble Lord rightly said, it should be subject to the provisions of that Act. We have stumbled over the word "gratuity" because it seems to us to convey something other than an ex gratia payment along the lines which the noble Lord has explained to us. I should be grateful if he could enlarge on his remarks.
Lord Sanderson of Bowden: My Lords, with the leave of the House, I shall indeed try to explain to the noble Lord the two points which he raised. First,

1213
with regard to the level of remuneration, I believe that the way that this will be arrived at is for the director to make a proposal. I imagine that the proposal made by the director will not ensure that the chairmen of those committees will receive remuneration commensurate with that of the chairman of the National Westminster Bank or the like. However, this is something that will, I think, be in the hands of the director.
The other amendments mentioned by the noble Lord, Lord Peston, perhaps come in at this point. One can see the worth of the Treasury involvement. My understanding is that Treasury approval will have to be given to any proposals of that sort. That is the insurance against a level of remuneration that is the concern of the noble Lord, Lord Williams. With regard to the level in cash terms, that is not for me to say at this stage.
The noble Lord, Lord Williams, questioned the use of the word "gratuity". As I mentioned in my reply, the phrase "pension, allowance or gratuity" is quite standard. The level will depend on the individual circumstances. I recall that at Committee stage the noble Lord was very concerned about these matters and about gratuitous sums of money being passed down for particular services rendered. I believe that the term as used is defensible and I hope that the example that I gave will indicate the kind of circumstances that we have in mind.
Lord Peston: My Lords, having introduced the amendment perhaps I may thank the Minister for his reply, which is extremely interesting. With regard to Treasury control, I place on record, because it is of interest to note, that the remuneration referred to here in all its forms will be fully charged to the consumer and will not be public expenditure in the form in which I think that would be correctly defined. At least that point is worth considering, since we understand that it is the intention for the cost of consumer committees to be recovered from licence holders through licence fees. It is by no means clear that it is public expenditure. The Minister may wish to reflect on those words. I am not saying that it makes his remarks on Treasury control erroneous; but, as a matter of interest, I think that it is not public expenditure. Having said that and having thanked the Minister for a very clear and informative answer, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 9 and 10 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 11:
Page 74, line 34, after ("such") insert ("remuneration and").
The noble Lord said: My Lords, this amendment stands in my name and that of my noble friend Lord Peston. It may be for the convenience of the House if I also speak to Amendments Nos. 12, 20 and 21, although, I hasten to add, I do not regard these amendments as being consequential one upon another.
As are all our amendments to Schedule 2, these are probing amendments. They were tabled in
1214
Committee but for reasons of time were not moved. They are therefore purely exploratory, to find out a little more what the Government have in mind on certain aspects of the consumers' committees.
Amendment No. 11 is intended to deal with the question of loss of remuneration. That is taken up in Amendment No. 12. Amendment No. 20 refers again to the question of loss of remuneration.
If the consumers' committees are to have a correct balance, not unlike local authorities, a ere should be some arrangement for those who cannot afford to take the day or afternoon off to sit on these committees, whereby they do not suffer loss of earnings if they do so. We would certainly press on the Government the thought that these committees should not simply be full of middle class ladies who have nothing better to do. We should like to see a wide spread of people who are in business and who earn their own living and can represent the views of the consumer. I beg to move.
Baroness Gardner of Parkes: My Lords, I cannot resist rising to that challenge. However, I have been asked on other bodies to bring up the point that many women are disadvantaged by phraseology such as has been employed here. "Loss of remuneration" provides only for a person in paid employment. If a woman has small children or an elderly relative to be cared for, and she has to pay someone to look after the child or relative, that is covered only by a phrase that is used in the magistrates' courts claim, "other expenses necessarily incurred". I could not accept the amendment without such a phrase as "other expenses necessarily incurred", which covers women in those circumstances. It is either both or neither phrase.
Lord Sanderson of Bowden: My Lords, it is clear that the noble Lord, Lord Williams of Elvel, is looking for clarification with these amendments. I hope that I am able to satisfy him. It is the Government's intention that the consumers' committees should provide real effective lay representation for all electricity consumers. It is clearly inappropriate that members of committees should be remunerated in the same way as chairmen. It is to be expected that some, like the chairmen of the existing consultative councils, will have to make a greater commitment than other members of time and effort in running the committees. It is therefore only right that they should receive adequate recompense for so doing. However, as is accepted practice in other bodies of this country. the members will receive allowances when engaged on committee business. The expression "allowance" in Schedule 2 already covers allowances for loss of remuneration. This is clear from the context and contrast between the word "allowance" in paragraph 3 and the words "such of their out of pocket expenses as do not relate to loss of remuneration". Therefore, I believe that the noble Lord's amendment in this case is superfluous.
This approach to remuneration is well precedented in other consumer representative bodies, such as the Gas Consumers Council and the proposed customer service committees for the water industry.

1215
To create salaried committees would undermine the basic voluntary approach to consumer representation which has been followed in this country since the War by successive governments. It could lead to committees losing their distinctive lay character, and becoming indistinguishable from the rest of the staff of the director's office, so depriving him of a valuable source of independent advice. I am sure the noble Lord would agree that this would be quite inappropriate.
Paragraph 6 of Schedule 2 enables consumers' committees, with the approval of the director, to set up local and other sub-committees. These may be created to ensure that all consumers in extensive, sparsely populated areas, like North Wales, should have a locally available representative body, or it may be decided that a sub-committee should be appointed to look at a particular policy area, for example, concerning the handling of complaints.
The Government have provided for the members of such sub-committees to be reimbursed for their travelling expenses and such of their out-of-pocket expenses as do not relate to loss of earnings. The noble Lords' amendment would mean that the members of sub-committees could be reimbursed for loss of earnings. The Government believe that it is right that the members of the consumers' committees should be reimbursed for loss of earnings, given their status as members of a statutory body.
But the role of the sub-committee members will be rather different, as they will be set up at the discretion of the chairmen of the committees and the director, and they may not necessarily be members of the committees. Their role will necessarily be more restricted, and we have therefore followed established precedent in dealing with their allowances.
Lord Williams of Elvel: My Lords, I am sorry to intervene. I am grateful to the noble Lord for giving way. Am I to understand that paragraph 3 of Schedule 2 allows loss of remuneration as an expense for members of a committee, and paragraph 6 debars loss of remuneration for members of a sub-committee?
Lord Sanderson of Bowden: My Lords, yes, that is correct. That is why I have gone into this aspect. We have looked at it very closely in relation to other Bills with which we have been dealing. The noble Lord will find it precedented in the Water Bill which has just passed through this House.
I must reply to my noble friend on the question that she raises. The compensation provisions simply make up for loss of existing remuneration. It is not the intention to provide new remuneration. I understand what my noble friend is aiming at in that regard, but that is the answer, however unsatisfactory, that I have to give.
Baroness Gardner of Parkes: My Lords, before the noble Lord sits down, as I understand it the phrase "out-of-pocket expenses" might well cover the point that I have made.
Lord Sanderson of Bowden: My Lords, with the leave of the House, yes, that may very well be so.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for his explanation. I was slightly mystified by his last answer to his noble friend, that "that may very well be so". It is either so or it is not so. Perhaps the noble Lord would like to clarify that point and convey in writing to his noble friend the final Government view on the matter.
Lord Sanderson of Bowden: My Lords, again with the leave of the House, I shall sew the matter up with my noble friend.
Lord Williams of Elvel: My Lords, I am most grateful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 12 to 15 not moved.]
6.15 p.m.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 16:
Page 74, line 42, at end insert—
("5A.—(l) Subject to sub-paragraphs (2) and (3) below, meetings of the committee shall be open to the public.
(2) The public shall be excluded during any item of business where—

(a) it is likely, were members of the public to be present during that item, that information furnished in confidence to the committee by the Director would be disclosed in breach of the obligation of confidence; or

(b) the committee have resolved that, by reason of the confidential nature of the item or for other special reasons stated in the resolution, it is desirable in the public interest that the public be excluded; or

(c) the item relates to a proposal to refer any matter to the Director in pursuance of section 46(3) or 47(1)(a) or (4) of this Act.

(3) Except to the extent that the Director otherwise directs (whether generally or in relation to the particular case), the public shall be excluded during any item of business which relates to—

(a) the determination of any dispute referred to the committee under section 41(5) of this Act; or

(b) the investigation by the committee of any matter in pursuance of section 46(2) or 47(1)(b) of this Act.

(4) The committee shall give such notice—

(a) of any meeting of the committee which is open to the public; and

(b) of the business to be taken at that meeting (other than items during which the public is to be excluded),

as they consider appropriate for the purpose of bringing the meeting to the attention of interested members of the public.").
The noble Lord said: My Lords, my noble friend Lord Glenarthur undertook in Committee to consider the amendments proposed by the noble Lords, Lord Peston, Lord Williams, Lord Ezra and the noble Viscount, Lord Hanworth on the question of public access to the meetings of the new consumers' committees. As my noble friend made clear, it has always been the Government's intention that there should be some meetings of the consumers' committees which are open to the public. This will help to spread awareness of their work, and provide direct access to grass roots feeling. In the light of what your Lordships have said, we are now persuaded that

1217
there should be a specific provision in the Bill and have therefore brought forward this amendment, which I am sure that noble Lords who have taken part in these debates will welcome.
We believe there should be a general presumption in favour of open access. But as the House recognised during the earlier discussions, in carrying out many of their specific duties, the consumers' committees will have access to commercially confidential information and, indeed, to the personal details of individual complaints. It would clearly not be right for meetings of the committees considering such matters to be open to the public. This amendment has been drafted to take account of this.
Noble Lords will note that the form differs from the amendment that they originally proposed, which would have brought the new consumers' committees under the ambit of the Public Bodies (Admission to Meetings) Act 1960. However, the amendment before the House has been drafted to give substantially the same effect as the 1960 Act, but tailored specifically to the consumers' committees which this Bill will create. It will allow the committees the discretion to exclude members of the public where they consider confidentiality might be breached. The public will also be excluded when the committees are dealing with information furnished to them on a confidential basis by the director, or where they are considering any matters which fall within the committees' duties under Clauses 46 and 47, which come to the committee directly from individual consumers.
Where the committees will be acting on behalf of the director or where a matter has been referred to them by the director—for example, in determining disputes under Clause 41(5) or investigating certain types of complaint under Clauses 46 and 47—we have thought it proper to allow the director some discretion, so that he may decide that a matter is of such general interest that the meeting at which it will be discussed should be open to the public.
We have also provided for the committees to take such steps as are necessary to bring to the attention of interested members of the public notice of any meeting open to the public and the business to be discussed at that meeting.
I am sure that noble Lords will agree that the safeguards I have outlined are necessary to protect the interests of complainants. I hope they will agree to accept this amendment, which we believe to be a helpful step forward in ensuring that the committees are both accessible to the ordinary consumer, and will accurately reflect his views. I beg to move.
Lord Williams of Elvel: My Lords, we are grateful to the Minister for bringing forward this amendment which in part meets the concerns we expressed in Committee. I have just two questions on the amendment. Will he please explain to the House what items are to be considered to be in confidence? Will he also assure us in some suitable manner that the director, who will have to receive notices of all consumer committee meetings (whether they be in public or not, presumably, under the amendment) will have the appropriate staff to process the notices
1218
he receives and to decide whether or not they deal with matters of confidence or any matter which the director believes should not be revealed to the general public? The director's tasks are hard enough as they are with the small staff he is being allowed, but that would impose an extra burden on him.
Lord Renton: My Lords, the intention here is sound and it is welcome. The machinery is very complicated. In addition to the question asked by the noble Lord, Lord Williams, I wonder whether my noble friend will explain this to me. It arises on subsection (2)(a) and (b):
"The public shall be excluded during any item of business where … it is likely, were members of the public to be present … that information furnished in confidence … would be disclosed in breach of [that] obligation".
It does not say who is to decide the likelihood. That is rather important. We all know that the committee will be advised by its clerk, that the chairman will take a decision or the committee will make a resolution. But under subsection (2)(b) we find that it is specifically provided that the committee should resolve the matter. This is an alternative to paragraph (a), not in addition to it or part of it.
Paragraph (b) reads:
"The public shall be excluded during any item of business where —the committee have resolved that, by reason of the confidential nature of the item or for other special reasons stated in the resolution, it is desirable in the public interest that the public be excluded".
I am trying hard to correlate paragraphs (a) and (b) in my simple mind. I should have thought that it would be much better to turn them into one paragraph so that we have it clear that it will be for the committee to resolve that the public be excluded in the circumstances arising either under paragraph (a) or (b). There would then be no difficulty. But unless we have something like that and the committee find the Bill as drafted with this amendment added to it, it will wonder who is to decide on the likelihood.
Lord Ezra: My Lords, I welcome the amendment because it accepts in broad terms what we were seeking to achieve, but like other noble Lords who have spoken I am a bit dismayed at the complicated procedure. It is difficult to know at what stage the public will be allowed to stay and at what stage they will have to move out. There could be a good deal of time wasted on this whole issue. I wonder whether it is not asking too much if this could be simplified at a later stage so that people could know whether they were allowed in or not, without having to work their way through the whole Bill, a course which I feel would be necessary under this proposal.
Lord Sanderson of Bowden: My Lords, of course, in answer to the noble Lord, Lord Ezra, and my noble friend Lord Renton, I shall study very carefully what has been said. I shall look particularly at what my noble friend Lord Renton has said in relation to the two paragraphs that he mentioned, to see whether any improvement could be made or is necessary to make it more intelligible. I believe that: the proposed drafting changes would leave the effect, as my noble friend said, exactly as at present, but I am quite willing to consider the matter again.

1219
The noble Lord, Lord Williams, asked what are confidential items. They are confidential if the director gives them to the committee on that basis, if the committee feels they are confidential or if individual consumer's affairs are discussed. The committee will decide that by resolution.
The noble Lord, Lord Williams, also asked whether the director would have enough staff. The answer which I know he will expect me to give and which I give him is: yes, there will be a specific provision within OFEL to deal with this matter.
I should like to study what my noble friend Lord Renton and the noble Lord, Lord Williams, have said. If I need to give any further explanation to noble Lords I shall write to them, and if necessary will come back at a later stage with a further amendment, should that be necessary.
On Question, amendment agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 17:
Page 75, line 2, leave out ("with the approval of the Director").
The noble Lord said: My Lords, it may be for the convenience of the House if I also speak to Amendments Nos. 18 and 19. These small amendments are probing amendments, as always when concerned with a schedule. They concern the establishment of sub-committees. I am seeking from the Government some reason why the director has to be involved in the establishment of sub-committees. If a committee decides that it wishes to establish a sub-committee, why should it have to refer to OFEL or OFAL, or whatever the expression is—
The Earl of Dundee: Offer, my Lords.
Lord Williams of Elvel: I thank the noble Earl. My second amendment, Amendment No. 18, seeks to find out what other sub-committees the Government have in mind that these committees should establish.
Amendment No. 19, if Amendment No. 17 is removed, gives the director power to ensure that unsuitable people—if I may use that expression—are not appointed to these sub-committees. As I say, these are probing amendments to explore what the Government have in mind. I should be grateful if the noble Lord will give us a proper response. I beg to move.
6.30 p.m.
Lord Sanderson of Bowden: My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, and again I shall try to explain the matter. Paragraph 6(1) (a) of Schedule 2 provides for the consumers' committees to appoint, with the approval of the director, local and other sub-committees through which the committees may carry out such of their functions as they may determine. In that respect he is right.
The ability of the committees to set up local sub-committees will mean that even in extensive, sparsely populated areas consumers can benefit from effective local representation. We have covered this ground already.
1220
However, it is equally important that the committees are able to evolve sensible working arrangements for the wide variety of tasks that they will have to perform. This is why provision has been made to allow the committees to establish, for example, small working groups to deal with subjects of particular importance. For example, it may be sensible to have a sub-committee charged specifically with dealing with complaints or looking at other defined areas of a committee's work. As I am sure noble Lords will recognise, there may well be occasions where it would not be practicable to engage the whole committee in looking at particular topics.
These amendments, however, would remove their ability to appoint the other types of sub-committee which I have outlined. I hope that the noble Lord will on reflection agree that this ability is important in order that the committee can carry out its work under the powers that it has.
Turning to the proposed amendments dealing with the relationship between the director and the committees, these would allow the committees to set up sub-committees without reference to the director, while subjecting the appointments to those sub-committees to the director's effective veto. This is hardly logical, as the director could by employing this veto effectively block the setting up of a sub-committee in the first place.
In any case, it is entirely appropriate that the director's approval should be sought when it is proposed to set up sub-committees. Not only is it ultimately the director's duty to protect the interests of consumers, but this is an area where the national co-ordination of policy which he will be able to provide is likely to be relevant. Furthermore, the director will have the responsibility of financing such sub-committees. As the noble Lord knows only too well, the money comes from the Government and has been voted by Parliament. We believe that that is the best way to proceed. I hope that in the light of that explanation he will understand why we have taken this line at this stage.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for that explanation and I should like to ask one or two supplementary questions. In my view it would be normal for the committees to set up a sub-committee consisting of members of the committee, in the same way as the board of a company does. That would appear to be perfectly rational. It would be reasonable to delegate to the sub-committee the powers of the committee in the way that the board of a company would delegate to a sub-committee its full powers.
The situation begins to look a little odd where a committee can set up a sub-committee, the membership of which can be different to the membership of the main committee, as under paragraph 6(1)(b). Yet apparently that sub-committee can exercise exactly the same powers as the committee in the area in which it has been set up. I could understand that situation if it were the case that the sub-committee had to refer back to the main committee but that does not appear to be the case in the schedule as drafted.

1221
Secondly, I understand that local sub-committees may be needed. The noble Lord has indicated that, for instance, there may be a sub-committee dealing with consumer complaints. My problem with that is more or less the same. I understand that in the schedule as drafted a different set of people could meet in a different part of the world in order to deal with that important matter. I do not wish to pursue the argument but to place it before the noble Lord so that he may be able to respond.
Lord Sanderson of Bowden: My Lords, with the leave of the House, I fully understand what the noble Lord is saying. It is that the sub-committees, members of which need not necessarily be members of the committee, could go off at a tangent and do exactly what they wanted. I understand that that will not happen because, in setting up the committee, the director obviously has a say and, as is normal in any company, the report from a sub-committee will go to the main committee for an ultimate decision.
The noble Lord says that there is nothing in the Bill to suggest that. Of course I shall look at the Bill to see whether there is a loophole through which a sub-committee could go off at a tangent. If that is the case, we shall close the loophole. However, I do not believe that it will be the case in practice, but I agree to see whether his point is valid.
Lord Trafford: My Lords, before my noble friend sits down I wish to ask whether the point is covered by paragraph 6(1)(c), which states that:
"The committee may … regulate the procedure of any such sub-committee.
Lord Sanderson of Bowden: My Lords, with leave of the House yet again, I have said the director has an input into the matter. He will be interested in the practicality of the working of the sub-committee. However, I have undertaken to see whether the Bill is watertight and if not I shall make sure that it is.
Lord Williams of Elvel: My Lords, I am grateful to the Minister and I do not wish to pursue the argument. In response to the noble Lord, Lord Trafford, it is clear that the committee may regulate the procedure of any such sub-committee with the approval of the director, but the committee may say that any sub-committee can go off and do whatever it wants. That would be perfectly within the ambit of the schedule as drafted.
However, I do not wish to prolong the argument. The Minister has kindly undertaken to look at the matter and perhaps I can look forward to another elegant letter from him. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 18 to 21 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 22:
Page 75, line 20, leave out ("financial") and insert ("calendar").
The noble Lord said: My Lords, this is a relatively small matter. It is necessary for public accounts to be drawn up on the financial year. I do not wish to
1222
embark on a long debate about the origin of the financial year, although I shall explain it a little in a moment. However, it appears that committees of this nature would be happier in drawing up accounts on a calendar-year basis.
The financial year was a medieval invention. If I may digress I shall explain that 5th April was fixed in relation to Christmas. Christmas, 25th December, was the centerpoint of the medieval year and the conception of Our Lord was deemed to take place nine months earlier, on 5th April. As a result, the financial year was fixed. In the modern day that appears to be something of an oddity. I do not wish to enter the argument about whether the Government should now change to a calendar year. Nevertheless I believe that consumers' committees should be allowed the privilege of producing their accounts in a calendar year as does everyone else. I beg to move.
Lord Sanderson of Bowden: My Lords, the amendment would have the effect of making the financial statements which the committees must produce cover calendar years instead of financial years. It would clearly be wholly illogical for these reports to be drawn up on a different basis from the rest of those accounts, and indeed from the accounts of the rest of the public and private sectors.
The noble Lord is well aware that governments work to 5th April, as do companies. We believe that it is sensible to take the same year so that the events of that year can be covered in the report which the consumers' committees must put forward. It may well be that he would prefer to see this on a calendar basis—and I was interested in his exposition of that matter—but from a practical point of view we see great advantage in sticking to the same year as the financial year of the bodies concerned.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord. I understand that the Government feel very attached to medieval tradition and, therefore, do not wish to change. In the light of the noble Lord's explanation that he insists on that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 23:
Page 75, line 23, leave out sub-paragraph (3).
The noble Lord said: My Lords, it is customary in probing amendments of this nature where we do not understand quite what is involved simply to invite the Government to leave out a certain sub-paragraph. That is the object of this amendment which is purely probing.
I should like the noble Lord to explain the sort of circumstances the Government envisage under which the director may approve a statement or approve it with modification and what modifications he might consider appropriate. I am not sure that I understand the purport of this sub-paragraph. I should be most grateful if the noble Lord could explain it.
Lord Sanderson of Bowden: My Lords, I hope that the noble Lord will find comfort in my explanation.

1223
The consumers' committees will be appointed by the director and will carry out certain of their duties on his behalf or jointly with him. It is therefore appropriate that he should approve their financial statements. It is the director who will receive the necessary moneys by vote from Parliament and will have to answer for their use. He would not be able to discharge this duty if part of his expenditure were outwith his control in the way suggested. It would be quite improper to exempt the consumers' committees from the normal rules of financial propriety in the way suggested. I believe that the effect of the noble Lord's amendment, which he says is probing, would be to remove the requirement for the director to approve statements of the committees' expenses submitted to him.
The noble Lord asked about circumstances for approval. That simply means that the director should be satisfied that the committees have incurred expenditure for the proper purposes; that is, the functions under the Bill. I do not believe that I can give the noble Lord any further explanation of that. It is something which will transpire between the director and the committees which operate with him.
Lord Williams of Elvel: My Lords, before the noble Lord sits down, can he say what sort of modifications the director might consider appropriate? Is he going to cook the figures? What will happen?
Lord Sanderson of Bowden: My Lords, with the leave of the House, the director has the power to look at the figures of a particular committee and he is of course given the power to say what can and cannot take place with the moneys provided.
Lord Williams of Elvel: My Lords, I still do not have a proper answer, if I may say so in the kindest possible way, to what is the entitlement of the director to modify a financial statement provided by a responsible consumer committee. It has worked on, has decided to pass and will have forwarded the statement to the director. The director can approve it, or not approve it, on the grounds mentioned by the noble Lord. But what sort of modifications can he introduce?
Lord Sanderson of Bowden: My Lords, with the leave of the House, of course he can modify. He can have the report from the committee and can say yes or no to it. However, in saying no, he can modify by saying that in view of the budget to which it must operate the committee can do certain things and not do others. The powers in the clause give him the power to modify. Of course, in reality that will be for discussion between the director and the committee concerned. It could be that he asks the committee to cut its budget. He has the power to say no and also to make other suggestions.
Lord Williams of Elvel: My Lords, I do not wish to continue the argument. As the noble Lord says, in reality there would be a discussion between the director and the consumer committee. However, that is not what the schedule says. It says that the director can approve the statement,
"with such modifications as he considers appropriate".
1224
and not as he considers appropriate in consultation with the committee. That is quite a different matter. Perhaps the noble Lord will consider this point again and write to me. It is a very minor point but we must have it right if we are to scrutinise the Bill properly. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.45 p.m.
Clause 3 [Efficient use of electricity]:
Lord Shepherd Lord Shepherd moved Amendment No. 24:
Page 2, line 39, after ("State"), leave out (", shall, after consultation with the Director,") and insert ("and the Director shall").
The noble Lord said: My Lords, I am tempted to move this amendment formally as a drafting amendment because it neither adds to nor subtracts from the purpose of the amendment of your Lordships' Committee which now appears as Clause 3 of the Bill. However, as a consequence and on reflection, we think that there is an imperfection in the drafting. In Clauses 38 and 39 it is clear that the responsibility for generating stations is a matter for the Secretary of State whereas responsibility for the fixing and adjustment of tariffs is a matter for the director general. Therefore, it seems appropriate that we should amend the clause to establish that it is not the Secretary of State who is responsible if action has to be taken on tariffs; it is the director general. I beg to move.
Baroness Hooper: My Lords, of course, I am not going to ask the House to oppose the amendment. However, in saying that, I should make it clear that that does not tie the hands of the Government in another place.
Lord Shepherd: My Lords, perhaps I may say that that is rather more warming than what I have read in the newspapers. However, I shall take what has been given to us. I commend the amendment.
On Question, amendment agreed to.
Clause 4 [General duties of Secretary of State and Director]:
[Amendment No. 25 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 26:
Page 3, line 9, at end insert—
("Providing always that, in the fulfilment of their functions, they take steps to ensure that the impact of electricity generation, transmission and supply on the environment is kept to a minimum.").
The noble Lord said: My Lords, this is an important point of principle and I am sad that it has come up at a rather late stage of your Lordships' proceedings today.
The whole question of the duties in Clause 4 and the relation between those duties and the environment is one which has exercised both ourselves and, indeed to be fair, the Government over the course of our deliberations on the Bill. The Government seem to have set their face against a

1225
general duty of the Secretary of State and the director to ensure that, in the words of the amendment:
"the impact of electricity generation, transmission and supply on the environment is kept to a minimum".
I should have preferred—I say this in the mildest possible language—the Government to have introduced a general duty under Clause 4, because that is the proper place to deal with the environmental issues raised by electricity generation, transmission and supply. I am not going into the generality of those issues. They have been discussed at considerable length and no doubt will be discussed again. They are the object of almost daily attention in the newspapers and the Government have announced that they are concerned in every way about environmental protection. Therefore it seems to me odd that the Government have set their face—I understand that negotiations have taken place to which I was not a party—against any insertion in Clause 4.
What impact does electricity generation have on the environment? Obviously it is enormous, taken from the global environment right down to the environment in our back gardens. What impact does transmission have on the environment? Again, obviously enormous, with major pylons built across the landscape and lines all over the place. What impact does supply have on the environment? Again, a major impact.
I should like the Government to think carefully and closely about this amendment. I believe that Clause 4 is the right place to embody in the Bill a position of principle such as this amendment proposes. Unless there is such a point of principle in an early clause in the Bill—particularly under the general duties of the Secretary of State and director—I am bound to say that I think the Government's commitment to environmental protection is open to doubt. I beg to move.
Lord Norrie: My Lords, I agree with the intention of this amendment to Clause 4 moved by the noble Lord, Lord Williams. Related to the amendments are amendments to Schedule 9 in the name of my noble friend the Minister. I welcome these amendments and I shall welcome them fully tomorrow when we discuss Schedule 9 in detail. Today I want to concentrate on the issues of principle affecting electricity and the environment. They are issues that I have raised repeatedly during the passage of the Bill.
The environment is not something that we can treat lightly in this day and age. If anything reinforced that message, it was the huge "green" vote on 15th June, a vote which I am sure we agree said little about the voters' attitudes to the policies of the Green Party and a lot about a large section of the public's concern for the environment. Dare I say that it also displayed a measure of discontent for the environmental policies on offer from any of the main political parties? For that reason alone it is important to get across the environmental message.
When the public knows how great an impact the electricity supply industry has on the environment,
1226
when it has heard the Prime Minister herself describe global warming as the greatest challenge that man faces in the late 20th century and when it expects the Government to seize opportunities to put flesh on its "green" bones, to find the environment tucked away in a schedule at the back of such a major Bill is not good public relations. However, this is of course more than an issue about public relations. There are sound reasons why the environment should be mentioned in Clause 4 and treated as one of the Secretary of State's key strategic responsibilities.
The Secretary of State and the Director General of Electricity Supply will be taking decisions which are bound to affect the environment: on a whole range of issues under their duties to promote competition and to satisfy electricity demand. It is false not to recognise that. I am not wholly convinced that the amendment moved by the noble Lord, Lord Williams, achieves this in the best possible way, but I believe that the intention behind it is the right one. I sincerely hope that my noble friend the Minister will consider whether she can find a way of mentioning the environment in Clause 4. In doing so, I hope that she will not simply reply that her amendments to Schedule 9 meet this concern. They do not. The Secretary of State's duties in the revised Schedule 9 are confined to his role in granting, or refusing, consent for power stations and overhead lines.
Important though that role is, it excludes a range of other responsibilities which he and the director have under Clause 4—ensuring security of supply to consumers, protecting their interests and promoting competition. In each of these areas decisions taken can have a significant effect on the environment. For example, questions will arise about overcapacity and whether we have more power stations than are necessary. Another example is the extent to which encouragement is specifically given to the new, cleaner technologies and to energy efficiency. A further example is the effect which electricity pricing has on demand and capacity requirements.
I maintain that these environmental implications should be specifically accounted for in the Bill. The Minister knows, because we have had repeated and helpful discussions on this point, that she would receive acclaim from the principal voluntary and environmental organisations and from the Government's statutory advisers—the Countryside Commission and the Nature Conservancy Council—if she were to accept the case for an amendment to Clause 4.
In her reply to the noble Lord, Lord Williams, will my noble friend say whether she will consider an amendment to Clause 4(3) giving a duty to the Secretary of State and the director to exercise their functions in a manner best calculated to mitigate the effects of the industry on flora, fauna and other features of the countryside? What that would achieve in simple terms is that the environment would be rated as of equal importance to other public interests that are protected by the Bill. It would be on a par with consumer interests, health and safety, protecting the public from danger and promoting efficiency and economy in the use of electricity. I do

1227
not believe that that is asking for much. Whether or not the case for an amendment to Clause 4 is accepted today, I believe that it will ultimately prove necessary.
The Minister has hinted that the Government's promised "green" Bill might, in effect, achieve what I am now urging. However, I believe that it would be wrong to wait for a "green" Bill to amend the Electricity Bill when we have a chance to get it right from the start. One thing that we can be sure of is that the problems of electricity and the environment cannot be swept under the carpet. I hope that the Minister will give serious consideration to this amendment or bring forward an amendment of her own on Third Reading.
Lord Ezra: My Lords, I add my support to the amendment moved by the noble Lord, Lord Williams, and on which the noble Lord, Lord Norrie, has just spoken. Although when we come to Schedule 9 we shall be dealing in more detail with the impact on the environment of electricity generation, transmission and supply, this is now a matter of such overriding importance that it must surely be stated right at the beginning of the Bill where the duties of the Secretary of State and the director are specified. If that is not done, the Bill will suffer from a fundamental weakness in not recognising our present position.
There is increasing concern, voiced not least by the Prime Minister herself, about the impact of energy on the environment. The greenhouse effect is the subject of continued study. The Select Committee on Energy in another place is quickly bringing out a document on the subject so that it can inform the rest of our debates here. All this adds up to an overwhelming case that the reasonably modest wording proposed by the noble Lord, Lord Williams, supported by the noble Lord, Lord Peston, should be included in Clause 4.
Lord Trafford: My Lords, I do not disgree with the comments made by my noble friend Lord Norrie or the noble Lord, Lord Ezra. I would be the last to suggest that the environment is not of overwhelming importance; it needs to be mentioned in the Bill and, as my noble friend said, not lost in a schedule. I do not wish to prejudge any discussions that we may have subsequently on Schedule 9, but I am concerned that I am not sure what this amendment actually means:
"in the fulfilment of their functions, they take steps".
What steps? How many steps? At how much cost? And at what range? It does not tell us about those things. We all know about the greenhouse effect and the contribution of electricity generation to that, and we have heard other arguments about the value of renewables, nuclear power and other forms of generation. Therefore, it is obviously significant; it is of huge cost, of huge importance. Merely to say "steps" is a little vague. Also, what is being kept to a minimum? A minimum is not really a very good definition as to what the duties of the Secretary of State or the director should be.
If the amendment read much more simply, as both the noble Lord, Lord Ezra, and my noble friend Lord
1228
Norrie put it, that the impact on the environment should be considered, or taken into account, it would have the same effect but would not—with all respect, be as meaningless.
I am puzzled, as I am sure are others, about what steps, what cost, and what is minimum. Therefore, although I am sure that the spirit behind it is correct and the aim is most laudable, I do not believe that it is the right amendment.
7 p.m.
Baroness Hooper: My Lords, the noble Lord, Lord Williams of Elvel, has explained the reasons behind his amendment, and these have been echoed by contributions from others of your Lordships. As I have frequently said before, the Government have every sympathy with the principle of being environmentally friendly in what we do. We believe that the electricity supply industry like other industrial undertakings should show proper concern for the environmental consequences in what they do. On previous occasions I have quoted the 15 Acts of Parliament and 14 European Community directives which already apply to and regulate the electricity supply industry in environmental matters, and particularly in relation to pollution control, which I think we all agree is the main area where the electricity industry impinges upon the environment.
Nevertheless, I have also acknowledged that there are many of your Lordships who feel that the Bill gives an opportunity to do more. So we have tried to do more, and in our considerations and the consultations that we have had with various interested parties we have always emphasised that we want to avoid general statements of principle and concentrate on getting appropriate and effective provisions into the Bill.
We have come forward with an extensive package of amendments to Schedules 8 and 9 which we will be considering in more detail tomorrow but which, for example, say that licence holders and exempt generators and suppliers will have to have regard to the desirability of preserving natural beauty, and do what they reasonably can to mitigate the effects of proposed developments in the light of that duty. A duty to mitigate the effects is much more precise and pointed than the wording it replaces, which was "shall take into account". We have also made it a statutory obligation on all licence holders, both existing and future, to produce a statement of environmental guidelines. I have already announced that the CEGB successor companies intended to do that on a voluntary basis, and that was widely welcomed; but we have gone substantially further by making this a statutory duty. I think many other concerns that have been expressed in previous debates on this subject are also covered by the package of amendments that the Government have brought forwrd.
I believe that we have made a great effort and have introduced real changes. We are now being asked to go further. This puts me in a difficult position. I say this more in sorow than in anger since, as I have said, we have tried very hard to meet many of your Lordships' concerns and to consult

1229
with bodies that include the Nature Conservancy Council, the Countryside Commission and the Council for the Preservation of Rural England. I had thought and hoped that we had a consensus of agreement on our package of amendments, but I realise from today's debate that that is not so. That is what puts me in a difficult position.
I cannot accept the amendment as it stands. In the first place, I am not sure that it is placed in the right part of the clause. My noble friend Lord Norrie made a point about this. Further, the wording could cause difficulties. I believe my noble friend Lord Trafford quoted some very telling examples, but I would add to them by saying that the word "environment" itself must be explained more fully in order to be technically effective as well as consistent with other parts of the Bill.
In view of the strong feelings expressed, I can only say that I will take the amendment back and undertake to return to the House at Third Reading with an amendment to Clause 4 that will embody as far as possible the spirit of this amendment and, indeed, the spirit of the debate, but will correct the technical difficulties. I hope that the noble Lord, Lord Williams, will be able to take that undertaking in the spirit in which it is offered, which is a very green spirit.
Lord Williams of Elvel: My Lords, I am most grateful to the noble and "green" Baroness for her undertaking, and of course I shall shortly beg leave to withdraw the amendment. However, I cannot help reflecting on the Government's and the noble Baroness's view that they are being pushed, pushed and pushed again and they have always had to concede to pressure. I thought that the Government were in favour of all those matters, and to have to be pushed by the Opposition and by the noble Lord, Lord Norrie, seems to be beating a rather curious and ragged retreat.
Having said that, as always, I am grateful at having pushed the Government a little further than they had hoped to go. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Dundee: My Lords, I beg to move that further consideration on Report be now adjourned until 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.

International Parliamentary Organisations (Registration) Bill
7.8 p.m.
Read a third time.
Viscount Montgomery of Alamein: My Lords, I beg to move that the Bill do now pass.
As this measure now completes its passage through your Lordships' House, I should like to thank those who have given support, particularly the noble Lord, Lord Cledwyn, and my noble friend Lord Glenarthur.
1230
The Bill came from another place with several defects. We have been able to straighten them out, which is a good example of the valuable revising role of the Upper House. The Bill returns to another place in good shape, and serves to draw attention to the useful and important work of the Interparliamentary Union and the Commonwealth Parliamentary Association, two parliamentary organisations working for international understanding, which is a worthwhile cause. I wish them and the Bill a swift and safe passage. My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Viscount Montgomery of Alamein.)
Lord Glenarthur: My Lords, I should like to thank my noble friend for his words. I am glad that all sides of your Lordships' House have been able to support my noble friend's measure. I very much endorse what he has said, and I would add that it has been something of a model for short speeches.
Lord Cledwyn of Penrhos: My Lords, perhaps I may also endorse what the noble Lord, Lord Glenarthur, has said, and thank the noble Viscount for the skilful way in which he has piloted the Bill without any difficulty whatsoever throughout all its stages. We now say farewell to the Bill, and we wish the IPU and CPA great success over the next 100 years.
Lord Lloyd of Kilgerran: My Lords, allow me also to congratulate the noble Viscount on the skilful way in which he has proceeded with the Bill, and to support what the noble Lord, Lord Cledwyn, has said. I hope that the organisations with which this Bill is concerned will have every success in the future.
On Question, Bill passed, and returned to the Commons.
Lord Henley: My Lords, I beg to move that the House do adjourn during pleasure until 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.10 to 8.10 p.m.]

Electricity Bill
Consideration of amendments on Report resumed.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 27:
Page 3, line 22, leave out ("Subject to subsections (1) and (2) above,").
The noble Lord said: My Lords, the object of this amendment, which was discussed in Committee, is to ensure that the duty to promote competition in the generation and supply of electricity is given proper weight but does not have priority over the duty to protect the interests of consumers of electricity. It is also to ensure that the duty to promote competition in the generation and supply of electricity and the duty to secure the financial

1231
integrity of the companies cannot take priority or be used as an excuse for failing both to protect the public from dangers and to secure the establishment of a sensible machinery for promoting health and safety.
We are dealing here with the priority of the duties. As we said in Committee, it is understood that the priority of the Government is to promote competition, however that may be achieved. But it seems unreasonable, and certainly not in the best interests of consumers, that the subsidiary duties in the clause, if I may so describe them, are not given rights pari passu with the primary duties.
There has been a great deal of discussion and argument about what exactly the Bill as drafted means. I bring this matter back on Report because I was unhappy with the Government's answer in Committee. There is a serious danger that the duties which are outlined in the subsection with which we are dealing could in a number of circumstances be subservient to the primary duties set out earlier in the clause.
This subject will be familiar to noble Lords. I have to point out that we have taken further legal advice on the nature of subsection (3) as opposed to subsections (1) and (2). Our advice is that, whatever the Government may have said in Committee, in court proceedings the expression,
"Subject to subsections (1) and (2) above",
would certainly imply that the criteria in Clause 4(3) would be subordinate to the criteria in Clause 4(2). If our legal advice is right, the concept of the protection of the consumer is damaged. I should like to argue this out again because I was not satisfied with what the Government said in Committee. I beg to move.
Lord Lloyd of Kilgerran: My Lords, as a matter of telepathy which exists between Celts, as everybody well knows, I put down exactly the same amendment as that tabled by the noble Lord, Lord Williams, and therefore my name appears on the amendment. I would put the case more strongly than the noble Lord. He talked about questions of principle in relation to those matters set out in subsection (3). He mentioned their importance. I should like strongly to support his legal approach to this matter and the advice he has been given. Subsections (1) and (2) of Clause 4 start with the words:
"The Secretary of State and the Director shall each have a duty to exercise the functions assigned or transferred to him"
putting the Secretary of State and the director as one person—
"by this Part in the manner which he considers is best calculated".
One then looks at the matters in paragraphs (a), (b) and (c) in subsection (1) and in paragraphs (a) and (b) in subsection (2) in regard to what are his general duties. When one comes to subsection (3) there is a qualification which uses more or less the same words as those used in subsections (1) and (2) but which then adds,
"Subject to subsections (1) and (2)".
Therefore the duties following in subsection (3) must be subordinate in some way to the general duties outlined in subsections (1) and (2).
1232
When one reads the duties in subsection (3) one finds that they are of equal importance. Why should they be subject to any dilution, if that is the correct word, by those introductory words? With the leave of the House, perhaps I may refer to an amendment to be introduced later on by the noble Baroness, Lady Hooper. It relates to research activities. If that amendment is adopted and is inserted into Clause 3, it will be an important matter in relation to research and will justify further the removal of the introductory words,
"Subject to subsections (1) and (2) above".
8.15 p.m.
Baroness Hooper: My Lords, the structure of Clause 4, with some duties being made subject to others, is well precedented. The three primary duties in subsection (1) are all about protecting the interests of customers. There is an inherent logic in the fact that the subsequent provisions of the clause in effect cascade down. I can assure the House of the strength of the Government's commitment to the protection of consumers' interests, the promotion of the efficient use of electricity and the protection of public safety and the health and safety of those working in the industry. Perhaps I may quote an example of how we see the provisions working. Licence holders will be required to comply with regulations made under Clause 31 relating to safety. They will not be able to plead that the competition requirements in their licences excuse them from this obligation. Although in the terminology of the clause subsection (3) is subject to subsections (1) and (2), clearly they have to be taken together and are complementary.
Lord Williams of Elvel: My Lords, I am sorry to interrupt the noble Baroness, but she said that the subsections are complementary. However, what happens if they are in conflict?
Baroness Hooper: My Lords, the Clause 4 duty, which is to protect the public from dangers arising from the generation, transmission and supply of electricity, will apply to economic regulation, as well as to all the other functions of the Secretary of State and the director under Part I of the Bill. It will ensure that the director and the Secretary of State will bear in mind the needs of public safety at all times and therefore there will not be a conflict.
As I said, it is a well-precedented structure and we believe that it is logical for the Secretary of State and the director to have a primary duty to secure that all reasonable demands for electricity are satisfied. While the protection of consumer interests will be central to the director's duty, it has to be subject to securing that all reasonable demands for electricity are satisfied—otherwise there would be no consumers to protect.
Lord Williams of Elvel: My Lords, I apologise for interrupting the noble Baroness yet again. However, I shall not do so too often. The argument here is about Clause 4(1)(c), which lays on the Secretary of State and the director (each of them) a duty,
"subject to subsection (2) below, to promote competition in the generation and supply of electricity".

1233
I am advised legally that conflicts may well appear between that duty and the duty set out in subsection (3) which we are now discussing.
Baroness Hooper: My Lords, I believe that there is no single answer to this point. In any one situation a balance has to be struck between the general duties and the subsidiary duties. Consumers will in fact benefit from increased competition which will exert a downward pressure on costs, which will be passed on to the final consumer through the price control mechanism in the licensing regime.
Therefore I believe that we can reassure the noble Lord that his concerns are satisfied and that he need be in no doubt about our determination in this legislation to protect consumers; to protect the efficient use of electricity; to protect the safety of the public and those working in the industry; and, indeed, as we shall come to shortly, to be involved in the research and development. I believe that the noble Lord's concerns are in fact unfounded.
Lord Williams of Elvel: My Lords, if my concerns are unfounded, why does Section 4(2) of the Gas Act 1986 give competition and public safety equal emphasis? Why should we not in this legislation give consumer protection and competition equal emphasis?
Baroness Hooper: My Lords, as I understand it, the two precedents on which this particular provision is founded are Section 4 of the Gas Act 1986 and Section 3 of the Telecommunications Act 1984. However, having said that, I must re-emphasise that we believe, as we have said many times—indeed, it was a basic premise of the White Paper—that competition is the best protection of consumers' interests.
Lord Williams of Elvel: My Lords, we have had a short debate on this rather important subject and I do not wish to pursue the matter at this stage. However, I do not believe that there will be competition in the electricity supply industry, and I do not believe that there will be competition in the supply of electricity to domestic consumers. Therefore I do not believe that competition will in any sense be a protection of the consumer. In my view it should be for the Government to say that the protection of the consumer should rank pari passu with the other primary obligations of the Secretary of State and the director.
We have been over this ground before and no doubt we shall go over it again. However, for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
Baroness Hooper Baroness Hooper moved Amendment No. 29:
Page 3, line 34, at end insert—
("(bb) to promote research into, and the development and use of, new techniques by or on behalf of persons authorised by a licence to generate, transmit or supply electricity;").
The noble Baroness said: My Lords, I believe that in moving Amendment No. 29 we can also speak to
1234
Amendments Nos. 34 and 174. I see that some noble Lords are not in agreement with the grouping so we should perhaps clarify the position now. Initially I understood that the grouping had been agreed without Amendment No. 34. I was then led to understand that it was to include that amendment. I am not sure whether the noble Lord, Lord Ezra, wishes to comment on the matter, but in any event I am quite happy to deal with the amendments separately if that is the preferred procedure.
At any rate, perhaps I may deal with Amendment No. 29 at this point. In line with my undertaking given on 16th May in Committee, when I undertook to see whether a possible government amendment could be brought forward on Report which would acknowledge the concerns expressed on the suject, after careful consideration and indeed discussion with, among others, the movers of the amendment, we believe that we have been able to meet those concerns and make a concession in this area. It comprises two elements: a new clause and an addition to Clause 4.
The addition to Clause 4 concerns research and development into, and the use of, new techniques that pertain to the generation, transmission and supply of electricity. The effect of adding this provision to Clause 4(3) is that the Secretary of State and the director would have to take these matters into account when exercising their functions under Part I of this Bill. The most important such function concerns licensing. Thus, the addition would require the Secretary of State and the Director General of Electricity Supply to take into account applicants' R&D programmes, or their espousal of new techniques, when issuing licences. It would also provide the enabling powers if they wished to insert conditions on research and development in licences.
This addition recognises an amendment which was not moved by my noble friends Lord Stanley, Lord Monk Bretton and Lord Wise who wished to encourage,
"the generation of electricity by small scale generators and research into novel techniques of generating electricity".
The noble Lords referred to "novel techniques", although the amendment before us refers to "new techniques". I hope, therefore, that I shall have the support of my noble friends on this amendment.
The "new techniques" in question need not directly concern the generation, transmission or supply of electricity, but they should not be too distant from these activities. Thus the amendment would cover research and development into safety or environmental aspects of the generation, transmission or supply of electricity; but it would not cover R&D into totally unrelated matters, such as the design of motor car engines. I say this by way of clarification of the interpretation of the words in the amendment, since, if one takes no account of the context, they would, I recognise, appear to cover absolutely any new techniques for anything.
The essence of the new clause is to be found in subsection (1). As I explained in Committee, under the Science and Technology Act 196:5 the Secretary of State already has the power to support research and development, and it is that Act which provides the legal vires for the Department of Energy's existing

1235
programmes of expenditure in support of research and development. The new clause takes the form of a duty on the Secretary of State to use that power for the purpose of promoting such research into the development of new techniques relating to the generation, transmission or supply of electricity as appears to him to be necessary in the national interest.
To discharge that duty the Secretary of State will need to know what the industry is doing. Subsections (2) and (3) are therefore concerned with the provision of information by licensees to the Secretary of State. They enable the Secretary of State to serve a notice on a licence holder, or anyone authorised by an exemption to generate or supply electricity, to require that person to furnish such information about that person's business as may be specified in the notice. It may appear to noble Lords that this is an extraordinarily wide power that could, for example, be used to require information about absolutely any aspect of the business in question; but I can assure your Lordships that this is not so: as a matter of law, subsection (3) must be construed in the context of the clause as a whole, and that means by reference to the duty on the Secretary of State in subsection (1). In that context, therefore, the information-gathering power in subsections (2) and (3) can relate only to research and development that is relevant to the generation, transmission or supply of electricity.
Subsection (4) of the new clause then deals with the confidentiality of information so provided and enforcement. Taking confidentiality first, much of the information to which the information-gathering power would apply would be commercially sensitive, and it is therefore right that there should be provisions to ensure that it is properly safeguarded.
Turning now to enforcement, subsection (4) applies for the purposes of this clause subsections (7), (8) and (9) of Clause 97. They provide that any person who deliberately fails to comply with a notice requiring information about his R&D activities, who knowingly furnishes false information about those activities or who breaches the confidentiality requirements shall be guilty of an offence.
The new clause will ensure in an explicit and unambiguous way that after privatisation there will be a clearly defined long-stop responsibility for ensuring that R&D which is essential in the national interest is carried out. It will do that by providing statutory underpinning to the present informal arrangements by which National Power and Power Gen, the two main successor power generating companies, will continue to co-operate with ACORD so that the latter can advise the Secretary of State whether there are any research and development gaps which it is essential he should fill in the national interest. It would then require the Secretary of State to fill those gaps if it appeared to him that they should be filled in the national interest.
In Committee various concerns about research and development were expressed and I believe that the new clause meets those new concernes. However, by providing the Secretary of State with an associated information gathering power, by providing for the
1236
confidentiality of the information so provided, and by providing for enforcement arrangements, it does so in what in technical terms I hope is a somewhat more satisfactory manner. I beg to move.
8.30 p.m.
Lord Williams of Elvel: My Lords, perhaps I may first ask the noble Lord, Lord Ezra, whether we are discussing his Amendment No. 34 in this group.
Lord Ezra: I am glad that we can discuss it, because if the noble Lord were to move Amendment No. 34 we would probably go over the same ground again. I therefore speak to Amendments Nos. 29 and 174, which is the new clause to which the Minister referred.
In general it seems to us that the Government have moved three-quarters of the way along the path that the noble Lord, Lord Sherfield, outlined when he moved his amendment in Committee. I am not sure that they have moved the whole way. I was reassured when the Minister said, towards the end of her introduction, that the Secretary of State had an obligation under the new clause: if there were any gaps in research and development that the privatised companies did not fill, he had an obligation to fill those gaps. If that is the case, the Government have moved, technically I am sure, in the right direction and probably philosophically in the direction that we would wish. I would have hoped that the Government might have laid upon the Secretary of State an overall duty—
Baroness Gardner of Parkes: My Lords, perhaps I may seek clarification. I thought that the noble Lord mentioned Amendment No. 174 when he spoke of the amendment of the noble Lord, Lord Ezra.
Lord Williams of Elvel: My Lords, I asked the noble Lord, Lord Ezra, about Amendment No. 34.
Viscount Hanworth: It is mine actually.
Lord Williams of Elvel: I am sorry. It is the amendment tabled by the noble Viscount, Lord Hanworth. We are speaking to a grouping which consists of government Amendment No. 29, Amendment No. 34 tabled by the noble Viscount, Lord Hanworth and government Amendment No. 174.
I believe that I have said all that I need to say for the moment on this amendment. I am sure that the noble Viscount, Lord Hanworth, and the noble Lord, Lord Ezra, will wish to intervene. We have gone some way towards rationality by ensuring that the Government are the last resort to ensure that research and development in the industry is carried out in a proper manner. Until I hear clarification after the debate, I am not sure whether we have gone the whole way.
Viscount Hanworth: My Lords, I thank the Minister for moving the amendment. Of course I would not think of moving Amendment No. 34. However, I think, unkindly, one might ask, bearing in mind how important future research is and that under privatisation long-term research is not likely

1237
to be given the priority that it should be, why the Government did not take that point on board when drafting the Bill. One is left with the impression that the Bill, like so many other Bills that come before us, has not been properly considered, and it should have been.
Lord Nelson of Stafford: My Lords, I too support the amendment. It fills an important gap in the duties being imposed on the Secretary of State. Concerns have been expressed on all sides of the House about the need to ensure that there is an adequate long-term research programme to maintain security of supply of economic power in the years ahead. Your Lordships' Select Committee on Science and Technology took a keen interest in the subject and pressed strongly for the Government to look at it.
I thank my noble friend for the trouble that she has taken in bringing forward Amendments Nos. 29 and 174. If we take the two together, they meet the requirement that we had in mind and impose a duty upon the Secretary of State to ensure that an adequate programme of research is undertaken through one source or another. We must take the two together and I am glad we are doing so. I very much welcome this and commend the amendments to your Lordships.
There is one small point which puzzles me about the wording. It is not quite clear from the wording whether the last part of Amendment No. 29 relates to the first part, namely:
"to promote research into, and the development and use of, new techiques … to generate, transmit or supply electricity"
or whether it is to promote research on new techniques
"by or on behalf of persons authorised by a licence to generate, transmit or supply electricity".
It seems to me that it could be interpreted both ways.
On the other hand, Amendment No. 174 is quite clear when it refers to,
"such development of, new techniques relating to the generation, transmission or supply of electricity".
The matter is clarified in the subsequent amendment. Although there may be need for a little redrafting, I commend the amendment and I thank my noble friend the Minister for putting it forward.
Lord Peston: My Lords, I apologise to the noble Baroness. I missed her opening sentence. However, I heard the rest of what she had to say. I have a few questions to add to those of my noble friend Lord Williams of Elvel unless they were dealt with in the opening remarks of the noble Baroness.
To use my noble friend's remark when referring to the Secretary of State essentially as being the researcher of last resort, do the Government agree that what they would most like is for the relevant research to be done by the industry? In other words, the reason for the fallback powers, we hope, is very much a fallback position. We want to see that the industry carries out the appropriate research, if possible. The noble Baroness used the word "promote" and I wish to ask whether "promote" means trying to persuade the industry to do the
1238
relevant research, only to step in subsequently. That is the main question I wish to ask.
My comment—and I do not say this in a mean spirit—is that I prefer the amendment of the noble Viscount, Lord Hanworth, and the noble Lord, Lord Ezra, because it is rather more explicit as to what the research might be. I agree that it is perhaps late in the Bill but the noble Baroness might wish to examine Amendment No. 34 at least with a view to asking herself and the Government asking themselves whether what appears under (a), (b) and (c) would not improve the Government's own amendment. I take it that those are largely the areas in which they would like the research to take place. However, I would find it more reassuring if I saw these areas on the face of the Bill. I do not think there can be anything between us on the areas of research in respect of efficiency in a general sense, new techniques, and with regard to the environment and so on.
The noble Lord, Lord Ezra, and the noble Viscount, Lord Hanworth, will make up their own minds on whether to press the amendment. I would find it more attractive if the Government could find a way of using their form of words. I do not wish to be churlish. I accept, as the noble Lord, Lord Nelson, and others have said, that the Government have moved in the right direction as regards research.
8.45 p.m.
Lord Lloyd of Kilgerran: My Lords, I wish to endorse what the noble Lord, Lord Nelson of Stafford, has said. He has great experience in research matters and I also feel, as the Minister said, that the new clause covers most of 1 he concerns of the people involved in research.
I wish to ask the Minister for one point of clarification. That is on the scope of the words,
"and the development and use of, new techniques".
The Prime Minister has indicated more than once, particularly in the foreword to the Green Paper of 1985 entitled Innovation and Intellectual Property that in this country we are very good at research but there is often a lacuna in relation to marketing. We all know about it. The Prime Minister said that it is essential, when research is undertaken, to consider whether the research can be protected and how it can be exploited internationally for the creation of wealth for the benefit of UK industry.
With the leave of the House I wish to refer to two small amendments in my name, Amendments Nos. 120 and 164. Amendment No. 120 suggests that the words in Amendment No. 29,
"the development and use of new techniques"
should include the development of intellectual property, for several purposes, mainly to protect the research but also to exploit it for the purposes of creating wealth for the country.
Amendment No. 164 is a definition of the word "property". Throughout the Bill it is not clear what is meant by "property". The matter was raised previously and the noble Lord, Lord Sanderson of Bowden, kindly wrote to me. Amendment No. 164 suggests that the word "property" in the definition clause should include "intellectual property". This

1239
is a practical matter. It is well known that we are very successful in a great deal of research in this country. But it is not marketed properly. The main way in which to market it is through the ability to understand what is meant by "intellectual property" and to use, as subtly as one can, the rights given to a person in intellectual property; that is to say, a person's rights under patents, trade marks, know-how, copyright, and designs. I wonder whether even at this late hour the Minister is able to consider assuring the House that,
"the development and use of, new techniques",
will include the use and development of intellectual property rights.
Baroness Hooper: My Lords, perhaps first of all I may deal with Amendment No. 34 and, in doing so, respond to some of the questions raised in the course of the debate. I wish to say how delighted I am that so many of your Lordships have felt able to give a welcome to this effort on the Government's part to meet the concerns expressed at the Committee stage.
We neither wish nor intend to derogate from the clear responsibilty for security of supply which the Bill places on the supply companies. We do not wish to give the privatised electricity companies an undesirable signal that they need not concern themselves with research in these areas.
The government amendments have been carefully drafted so as not to compromise either of these points. As I explained previously and as was accepted earlier by the noble Lord, Lord Williams, the essence of the Government's amendment would be to place on the Secretary of State a long-stop responsibility for ensuring that the research and development that is essential in the national interest is carried out, as the noble Viscount accepted.
By contrast, the effect of Amendment No. 34 is that it would impose the main responsibility on the Secretary of State and we wish to ensure that the industry carries out its part in all this. To that extent, as regards the request by the noble Lord, Lord Peston, that we should examine the words of Amendment No. 34 for use in the government amendment, we believe it is not necessary because subsection (1) of the new clause is already widely drafted. As I explained, it refers to the new techniques relating to the generation, transmission or supply of electricity. It does not, in other words, concern only research on these matters. Therefore, the new techniques need not directly concern the generation, transmission or supply of electricity. However, they should not be too distant from these activities. In the context of the question, what does the word "promote" mean, I should say that it means both to encourage other people to carry out research, and/or to commission research.
I shall now turn to the somewhat unexpected consideration of Amendments Nos. 129 and 164. I understand that it is agreeable to the House to discuss these amendments at this stage. I should say to the noble Lord, Lord Lloyd of Kilgerran, that intellectual property rights are essentially private matters, whereas the new duty on the Secretary of State in relation to research and development is essentially
1240
related to the national interest. To extend the duty in the new clause, or indeed the new research and development duty on the Secretary of State and the director in Clause 4 in the way envisaged by the noble Lord's amendments, would be to widen them beyond recognition. It would confuse the distinction between purely commercial matters and the Secretary of State's entirely proper longstop responsibilities in the national interest, in precisely the way the Government have been so anxious to avoid. I hope the noble Lord will understand when I say we feel that we cannot accept the amendments to which he referred. I hope I have covered all the queries that were raised.
Baroness Seear: My Lords, perhaps I am being extremely stupid, but I cannot see that simply adding the words "includes intellectual property rights" changes the situation in any way. That merely slightly expands and explains what is meant. How does it make such a fundamental change? I am not at all clear on that matter. Will the noble Baroness clarify it a little more? Perhaps I am at fault, but I do not understand what was said.
Baroness Hooper: My Lords, I had hoped that I had made it clear that the duties of the Secretary of State in this matter are longstop duties in the national interest. I hoped also that I had made it clear that intellectual property rights are essentially private matters, and therefore do not come into that category.
Lord Lloyd of Kilgerran: My Lords, is the noble Baroness suggesting that the marketing of intellectual property rights is not in the national interest?
Baroness Hooper: No, my Lords. However, I should say that they are internal matters and, in that sense, private matters. However, if I may consider this particular matter again, I shall write to the noble Lord and perhaps clarify anything that seems to be outstanding.
Lord Lloyd of Kilgerran: My Lords, I am very much obliged to the noble Baroness.
Viscount Hanworth: My Lords, we have talked about Amendment No. 34. Amendment No. 29, which we are in fact discussing, goes a long way to meeting the point that research and development is vital. However, it does not spell out at all the direction in which this should go. As it stands, the provision is a pious hope. I am afraid I have to say that, having considered Amendment No. 34, I am not satisfied with the reasons given for this research. I think that under paragraph (a) in the proposed new clause we should talk about generating electricity as cheaply as possible. Paragraphs (b) and (c) could also usefully be reworded.
However, the Government's amendment is simply nothing more than a pious hope. I hope that the Government will consider saying exactly what they mean so that we get this research, because otherwise in a private enterprise research will be carried out on a short-term basis. We really ought to spell out how we want this research to be carried out.
Lord Nelson of Stafford: My Lords, looking at this proposal by the Government, it seems to me that the points raised under Amendment No. 34—
The Earl of Dundee: My Lords, I am sorry to interrupt my noble friend, but I must remind him that as we are on Report one can speak only once.
On Question, amendment agreed to.
Lord Peston Lord Peston moved Amendment No. 30:
Page 3, line 34, at end insert—
("(bb) to set standards of performance and to ensure that customers are compensated for failure to meet those standards").
The noble Lord said: My Lords, earlier when I was much aggrieved that the noble Lord, Lord Sanderson, accepted the amendment of the noble Lord, Lord Peyton, and not mine, I said to myself that a moment would come when I moved an amendment which the noble Lord would be only too delighted to accept in order to secure a degree of evenhandedness in those moving amendments. It seems to me, particularly having considered Amendment No. 29, that Amendment No. 30 should commend itself to noble Lords along the same lines. Amendment No. 30 also derives from the words at the beginning of the clause which state that:
"The Secretary of State and the Director shall each have a duty".
We have just discussed that they should each have the duty to promote research and other matters. With respect to the noble Viscount, Lord Hanworth, I personally did not read that remotely as a pious hope. I read it as a very definite duty. That is why I felt able to support it. However, given that the Government have decided, in our view quite rightly, to articulate this aspect of the behaviour of the director and the Secretary of State, it seems to me that it is just as compelling to articulate this further aspect of the behaviour of the director and the Secretary of State.
My whole reading of the Bill is that the Secretary of State and the director have an implicit duty to set standards of performance along these lines. I and my noble friend Lord Williams of Elvel feel that this matter is a very good example of where making the duty explicit can only help to achieve the ends we all require, which is that this industry should achieve appropriate standards of performance, but that the consumer should be compensated if it fails. Therefore, I commend this particular amendment most strongly to your Lordships. I believe it will very much help in reassuring people and in making the Bill rather more attractive to those who are currently considering it. I beg to move.
Baroness Gardner of Parkes: My Lords, the industry, as noble Lords may already know, has already agreed to standards of service and penalty payments for domestic premises. However, I think the industry feels that commercial customers should be able to pursue their own remedies without such assistance where the industry has been negligent. On the whole, this amendment is one that I cannot support.
9 p.m.
The Earl of Dundee: My Lords, Clause 41 of the Bill already provides for a new system of guaranteed standards whereby domestic customers will have the right to be compensated if their local electricity supply company does not meet certain standards of performance laid down by the director.
The director will put this scheme in place by making regulations, with the consent of the Secretary of State, prescribing the standards of performance which he believes the public electricity suppliers should meet in the electricity supply services which they provide to their domestic customers.
The regulations will also set the level of compensation which customers will receive if the companies fail to meet those standards. They may also cover how public electricity suppliers are to inform customers of their rights and the circumstances in which it would be unreasonable to penalise a supplier for events beyond his control; for example, freak weather conditions.
The noble Lord's amendment attempts to make the Secretary of State and the director equally responsible for setting standards of performance. The amendment as drafted would not work in so far as it applies to the Secretary of State, since Clause 41 gives powers to the director, not the Secretary of State, to make the regulations. That apart, I believe that this job should be one for the director and for him alone. He will be ideally placed to make regulations concerning the standards of performance. He will be in a position, through the Office of Electricity Regulation and the advice of the consumers' committees, to assess the particular circumstances of the various supply companies and take account of regional variations if necessary. Of course, as the Bill makes clear, the director must in any case seek the approval of the Secretary of State before making his regulations.
Under our proposals Clause 42 will also enable the director to determine standards of overall performance which is his opinion should be achieved by public electricity suppliers. Those standards will in effect be statutory performance indicators of how well the supply companies are living up to their responsibilities in dealing with the consumers.
The overall standards in Clause 42 will cover those aspects of performance where awards of compensation to individual consumers provided for in Clause 41 would not be appropriate or practical. Such overall standards might include, for example, the expectation that the supply companies would deal with 100 per cent. of certain types of written inquiry within a set number of days. It will be for the director, after consultation with suppliers and consumer representatives, to determine what the standards should be and the targets at which the companies should be aiming. He will also have a duty under Clause 43 to collect and publish information on their performance against the standards.
The provisions in Clause 42 will provide a strong incentive, additional to the companies' natural desire to avoid paying compensation for breaches of individual standards, for the supply companies to

1243
keep up their overall standards. It would clearly be very damaging for a supply company's repeated poor performance continually to be made public in this way.
I should also remind your Lordships that the companies are already under an obligation to do their best to achieve the standards set. Condition 17 of the public electricity supply licence will require the companies to conduct their business in the manner they consider to be best calculated to achieve the standards. If they fail to comply with that condition, the whole panoply of enforcement procedures available to the director will apply. For example, under Clause 27 he can order them to comply. In extreme cases, under Clause 24 the director could refer the company to the MMC in order to amend the licence in an appropriate manner.
Therefore, the Bill already provides a framework for compensation to be paid where standards of performance have not been met. I hope that in the light of what I have said the noble Lord will feel able to withdraw the amendment.
Lord Peston: My Lords, I thank the noble Earl. I am not a little disappointed at his reply. I am perfectly well aware of what appears in other parts of the Bill. My intention was to follow in the spirit of what I thought we were doing in respect of this part of the Bill in relation to the general duties of the Secretary of State and the director. Later in the Bill that is spelt out in more detail. It was my judgment, and still is, that, since we were adding the duty to promote research, to specify the general duty with regard to standards of performance at this point would make matters clearer and more reassuring. This section of the Bill seemed a suitable place to put it.
However, having done my best to improve the Bill, if the noble Earl refuses to be helped there is not much that I can do about it. Having tried to make my contribution, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ezra Lord Ezra moved Amendment No. 31:
Page 3, line 34, at end insert—
("( ) to promote activities connected with the supply to any premises of heat produced in association with electricity and steam produced from and air and water heated by such heat.").
The noble Lord said: My Lords, Amendment No. 31 could, if your Lordships agree, conveniently be taken in conjunction with Amendments Nos. 118 and 119. All the amendments refer to combined heat and power. That may not emerge from the rather convoluted wording of the amendment, but I am told that that is the way it has to be represented in the Bill.
Noble Lords may recall that I moved an amendment on combined heat and power at Committee stage and that, because of the massive contribution of combined heat and power to the increased efficiency of power stations and to benefiting the environment, I pressed very hard for this form of energy to come within the non-fossil fuel arrangements. However, in view of the lack of
1244
support from the noble Baroness, I withdrew the amendment but said that I would come back to the matter.
In the meantime my noble friend Lord Hanworth and I have had correspondence with the noble Baroness. We asked that combined heat and power should at least be mentioned in the Bill, which hitherto it has not been. As a result she very kindly put forward Amendment No. 118. However, that amendment, as your Lordships will see, simply lays down that the director shall record development in this connection and do no more. Quite honestly, I feel that that does not go far enough.
I should like to remind your Lordships that under the Energy Act 1983 very strong support was given to combined heat and power schemes. Section 19 of that Act states:
"It shall be the duty of every Electricity Board to adopt and support schemes—

(a) For the combined production of heat and electricity, and

(b) For the use of heat produced in combination with electricity, or incidentally from its generation, for the heating of buildings or for other useful purposes".

That was a very precise and specific commitment which was placed on the electricity boards, which will soon become the distribution companies.
So I believe that in this legislation there should at the very least be rather more than an obligation on the part of the director to record developments in that field. It is for that reason that, in addition to welcoming the amendment proposed by the noble Baroness, I should like to propose Amendment No. 31, whose aim is to promote activities connected with the supply of premises by combined heat and power. We have accepted an amendment to promote research. There are other objectives that must be promoted. This proposal is on all fours with that intention. I therefore beg to move.
Lord Peston: My Lords, I shall intervene briefly in this matter. It seems to me that, on more than one occasion, the noble Lord, Lord Ezra, has made an overwhelming case for taking much more seriously than we have done the general activity called combined heat and power. Certainly, as a result of listening to the noble Lord and doing a certain amount of reading, I—who started on the Bill both rather ignorant about CHP and thinking that it was something rather far out—am now convinced that this is one of the matter of the greatest importance for the electricity industry. It does not solve all our problems, but, clearly, in so far as we are strongly committed to efficiency and, equally, are all trying to take due account of environmental problems and other such matters, this is at least something that needs promotion. I suppose the relevant word is "promotion".
Again, when we consider a major Act of Parliament, not to take the chance of making quite explicit the promotion of matters of this sort under the general duties of the Secretary of State and the director—that applies notably to the director, but it is not a trivial matter for the Secretary of State either—would be to miss a great opportunity. I strongly support the noble Lord, Lord Ezra, on this matter.

1245
I am in some slight difficulty because we seem to have developed a new habit of discussing amendments that are not even remotely likely to be considered today, so I am not yet entirely ready to say what I shall have to say on the amendment of the noble Baroness. I hope that she will forgive me for that. We shall deal with that amendment later. In the meantime, I wish to support Amendment No.31.
Viscount Hanworth: My Lords, I know that the noble Baroness has moved in some direction to help on this point, but I still cannot understand why it cannot be spelt out much more clearly. We have had the arguments before and they are centred around energy efficiency and the need to help or promote CHP schemes. I still cannot understand why the Government simply do not go all out in the Bill to say so.
The arguments that we have heard are almost irrelevant and of no weight whatsoever. Perhaps the noble Baroness will try once more to convince us of the reasons why the Government cannot support the proposal in the way they should. We should not forget that they have, I believe, given 1.5 million for large city schemes.
We shall now land up with much smaller power stations. If they use gas turbines, it is so easy to use the waste heat from them, but there is the problem of digging up the city streets and providing mains and so on. The matter therefore needs some help from the director in order to promote it—"promote" is the word that I should like to use—but, for some extraordinary reason, the Government hold back
9.15 p.m.
Baroness Hooper: My Lords, I fully agree with the noble Lord, Lord Ezra, that heat and steam co-generated with electricity is an important potential source of energy which should be utilised as far as possible. I should point out that this Government have done more than any other to promote energy efficiency in all its forms. As the noble Viscount, Lord Hanworth, has reminded us, the Department of Energy has funded an extensive programme in the field of combined heat and power to seek to establish the potential for CHP both on a city-wide and a local basis. As we have been reminded, too, we are, in bringing forward Amendments Nos. 116 and 118 to Clause 48 of the Bill, specifically drawing attention to combined heat and power.
I should like to point out with regard to Amendment No. 31 that our privatisation proposals are specifically designed to encourage competition in generation and to ensure that all economic sources of electricity supply will have fair access to the market. So all generators, including CHP operators, will have fair and equal access to the transmission and distribution systems after privatisation. The new transmission company will have every incentive to promote competition in generation. We shall also ensure through licence conditions that terms for the use of the grid will be transparent, thereby allowing
1246
first-time generators to compete on art equal footing with the two major generators being created from the CEGB.
Furthermore, after privatisation the supply companies will be under an obligation to purchase their electricity supplies from the most economic source. This will be overseen by the Director General of Electricity Supply, who will also have powers to investigate anti-competitive practices, such as predatory pricing, and these will also be subject to general competition law.
The whole framework that is being created is therefore designed to encourage new competitive sources of electricity to enter the market. With the savings represented by the more efficient use of fuel, we believe that CHP operators—and I know that this is the argument put forward by the noble Lord, Lord Ezra—should be well placed to take advantage of these new opportunities.
We have in addition looked carefully at the legislative framework within which CHP plant has to operate. Here, too, we have been anxious to dispose of any administrative obstacles which may be in the way of CHP developments. In particular, CHP operators have complained—indeed with some justification in the past—that they are at a disadvantage compared with the electricity boards over the laying of heat mains, for example. The boards, as public utilities, have the powers to break streets in order to lay electricity cables and, where necessary, heat mains for the distribution of hot water. Up to now these powers have not been available to independent CHP operators. However, under Clause 11(3) of the Bill, CHP operators may now have the same powers to break streets as are currently being enjoyed by the utilities.
Further, the purpose of our proposals in Amendments Nos. 116 and 118, to which I am happy to refer although, like the noble Lord, Lord Peston, I was taken a little by surprise, is to ensure that, in carrying out his functions to keep under review the carrying on both in Great Britain and elsewhere of activities connected with the generation, transmission and supply of electricity, the director also keeps under review in particular activities connected with the supply to any premises of heat produced in association with electricity and steam produced from air and water heated by such heat; or, in plainer English perhaps, combined heat and power. I hope that, when we come to them, the House will be able to welcome those amendments, which, as the noble Viscount has indicated, are a step in the right direction.
Taken together, I believe that our proposals go to considerable lengths, both in terms of promoting competition and of overcoming legislative obstacles, to improve the position and ensure that CHP operators have every opportunity to bring forward economic schemes. However, as I said at a previous stage when discussing this subject, we do not believe that it is the role of government to subsidise uneconomic schemes. If there is a place for combined heat and power schemes we feel that they should and will be capable of paying their own way. The test of any successful CHP scheme must therefore be its ability to attract private sector finance. To do

1247
that, a scheme must be able to compete effectively with other forms of electricity generation, space heating and heating for industrial processes.
The noble Lord, Lord Ezra, specifically asked why the "adopt and support" provisions of the Energy Act 1983 were not being continued. I must point out that the duty placed on electricity boards by Section 19 of the Energy Act 1983 was framed in very different circumstances from those which will apply in the privatised industry. The 1983 Act sought to create new market opportunities within an industry which was still totally dominated by the CEGB and its close relationship with the area boards. Given the absence of effective competition and the monopoly position enjoyed by the CEGB, it was felt necessary to place the boards under a direct duty to consider proposals for this important and energy efficient alternative source of generation. It was also felt necessary, again to counter-balance the dominance of the CEGB, to require boards to adopt and to support all such viable schemes. As I have already tried to explain, our privatisation proposals are designed to overcome the obstacles to CHP development at source.
The generating industry is being restructured to promote real competition and the area boards' successors will be under an obligation to purchase the most economic supply of electricity and not just to do business with their old favourites. The dominance of the CEGB will go and there will be strong commercial incentives on area boards' successors to purchase their power competitively.
With these radical changes to the structure of the industry, we believe that it would be inappropriate to continue a duty which was conceived as a spur to a monolithic monopoly in order to encourage competition. Circumstances have changed for the better and it would be wrong to look to remedies that have outlived their usefulness.
In the light of my explanations, I trust that the movers of the amendment will feel able to take solace from the government amendments which are to come and will withdraw the amendment.
Viscount Hanworth: My Lords, before the noble Baroness sits down, perhaps I may ask her three questions. First, when she considers financial viability, will she consider it over the life of any CHP project? Secondly, will she make comparisons with the success that has occurred overseas? Thirdly, will she give some bias towards energy efficiency, which is so important in our future, and not just to present economic financial viability?
Baroness Hooper: My Lords, with the leave of the House, I believe that to some extent I have already responded to those concerns. At the outset of my remarks on this amendment I said that we believed this Government have done more for energy efficiency than any other. We have broken new ground in the Bill on energy efficiency in imposing duties on the Secretary of State and the director to take energy efficiency into account. We therefore expect energy efficiency to take its rightful place in all the considerations that have to concern us.
1248
On financial viability, we believe that by providing equal footing, by removing the obstacles, and because we believe—as indeed do the noble Viscount, the noble Lord, Lord Ezra, and others—that CHP systems are intrinsically more efficient and therefore should be more cost efficient, such a system will prove itself, given the removal of the obstacles to which I have referred. Obviously, in looking at experience overseas we take these factors into account, and the different factors that apply in some of the overseas areas where CHP systems have been more developed.
Lord Ezra: My Lords, I cannot hide my disappointment at that response, however kindly the words were uttered. I am very sorry that the Government are not giving CHP a greater push and greater support. The word "promote" means simply to stimulate and to encourage. I find it very surprising that the Government are not even prepared to say that they wish to stimulate and encourage a process which will almost double the effective efficiency of power stations, where it can be appropriately introduced, and which will enormously add to the environmental benefits.
What can be more environmentally attractive from the point of view of energy than transmitting hot water in pipes underground? What conceivable harmful environmental effect could that have? On the contrary, it has very beneficial environmental effects, because the more this otherwise wasted heat is conveyed underground in pipes, the less generation there will have to be in newly-built power stations which will have an adverse impact on the atmosphere.
In the light of these circumstances, I find it most extraordinary that the Government are not even prepared to say that the director should encourage and stimulate the development. As I made clear in the remarks that I uttered at Committee stage, the reason why there has not been more development of CHP in this country is that there is considerable initial capital expenditure. It takes a number of years before the benefits can be realised. The reason that it has been developed more on the Continent is that the process has received government support there. They are now reaping the benefit because the money has been paid back and the rest is pure benefit. Sooner or later we shall have to come to terms with the whole environmental question associated with energy.
Here we have at our disposal a means of going a long way towards solving the environmental question associated with energy. I would have been tempted to have asked the opinion of the House, except that this is a late hour, and so I shall ask the House for leave to withdraw the amendment, but I shall come back to it at the next stage.
Amendment, by leave, withdrawn.
Lord Carter Lord Carter moved Amendment No. 32:
Page 3, line 39, at end insert—
("(3A) In performing his duty under subsection (3)(a)(i) above, the Secretary of State or the Director shall take into account in particular the protection of the interests of consumers of electricity in rural areas.").
The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 33 and 34 not moved.]
Clause 5 [Prohibition on unlicensed supply etc.]:
Lord Peston Lord Peston moved Amendment No. 35:
Page 4, line 5, after ("electricity") insert ("in Great Britain").
The noble Lord said: My Lords, with the permission of your Lordships I should like to speak also to Amendment No. 36. The purpose of the amendment again is to try to get some clarification of precisely what the section means. What overall this part of the Bill is about is licensing and making it clear that someone cannot generate, transmit or supply without a licence unless that person is given an exemption. An exemption is the alternative. Someone cannot just—as at least one noble Baroness was under the impression could be done—announce that he is going to construct a generating station to compete with existing people. One can do nothing without a licence, as I read the Bill, unless one has an exemption, which is another kind of permission.
I remind noble Lords that this is not competition in any sense in which those of us who have spent our lives studying the market mechanism would use the term. "Competition" means that I decide to enter this line of business and I simply do so and compete. This is not competition.
The key matter which the amendment seeks to clarify—and I hope that we can sort it out fairly quickly—is in what sense there is a prohibition. I should like a final reassurance that the transmission or supply of electricity generated in another country—obviously we have in mind the EC—will not require a licence. How could it? It is none of our business to issue licences to people producing electricity in, say, France. Also, that there will be no question of any guilt of an offence, not merely in respect of the generator but also the transmitter or supplier. That is the main purpose of the amendment.
I fully accept the fact that I have no expertise in drafting or in the law. I can only say that my reading of the words—and noble Lords may think that it is foolhardy of me to rely merely on the words—appears to suggest that a French power station without a British licence would in some peculiar sense be guilty of an offence. I can see nothing in the words that tells me that that is not so.
I ask only for an explanation from those who are much more expert than I on legal matters as to whether the clause is satisfactory, in the sense that it does the job that the Government want it to do. To say the least, it would not be attractive if the Government were to discover that their drafting of a clause put them in certain difficulties, especially bearing in mind that, curiously enough, electricity has become internationally traded.
That is the purpose of the amendment. I am sorry to raise a matter of such technicality at this late hour, but I do not believe that it is entirely trivial.
9.30 p.m.
Lord Ezra: My Lords, the noble Lord, Lord Peston, is right to raise these issues because we form part of the European Community. We are moving into the single market and preparing for 1992. Electricity is being traded internationally more and more. England and Wales, which are the subject of the Bill, are linked with Scotland on the one hand and with France on the other. Through that French link we could be connected with electricity produced anywhere else on the Continent. I believe that the issue needs to be clarified.
The Earl of Dundee: My Lords, I am grateful to the noble Lords, Lord Peston and Lord Ezra. I believe that one of the concerns of the noble Lord, Lord Peston, is to ensure that Clause 5 of the Bill does not in some way prevent the importation of electricity from, say, France or any other country. I assure your Lordships that in no way does the clause prevent the importation of electricity. After Committee we wrote to the noble Lord, Lord Peston, about the matter.
It is our intention that those persons generating, transmitting or supplying electricity in Great Britain should be required to hold a licence or exemption. We cannot legislate for or regulate activities which are taking place in other countries and that is not our intention.
Overseas generators will not need to hold a generation licence or exemption. Those supplying electricity to premises in Great Britain who may purchase electricity from overseas generators will need to hold a supply licence or exemption. Those transmitting electricity in Great Britain will need a licence from wherever the electricity that they are transmitting originated.
I should also say to your Lordships that the Government plan to make use of the power conferred by Clause 6 to exempt certain classes or groups of operator from the requirement to hold a licence. Our present plans are to exempt those who generate little, generate for on-site consumption or export less than 50 megawatts to the public supply system. We shall be formally consulting the operators concerned on those criteria and will listen carefully to their views before drawing up the necessary order.
Lord Peston: My Lords, I thank the noble Earl for his answer and the uncovenanted extra answer about exemptions. I found that particularly interesting and helpful. Of course, I wanted the noble Earl to be on record as saying what he has just said. I am indebted to him for saying what he thinks the clause means. I am still rather puzzled that Clause 5(1)(a) does not get into difficulties in terms of overseas purchase but I must accept that, if that is his advice which he has now given me, then that is so. It does not read like that to me but I am glad that he had made this statement. I am particularly grateful for his additional, remarks on how the Government propose to use the exemptions, which had puzzled me. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 36 and 37 not moved.]
Clause 7 [Licences authorising supply etc.]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 38:
Page 6, line 3, leave out first ("the") and insert ("any").
The noble Earl said: My Lords, I shall speak also to Amendment No. 175. These amendments clarify the procedures for second tier supply licensing. The Bill requires the granting of a second tier supply licence to be notified to the public electricity supplier in whose authorised area the premises to be supplied may be located. The first amendment recognises that the premises to be supplied may not all fall into the area of a single PES.
The amendment thus provides for any PES affected by such a licence to be notified of the granting of that licence. This is designed to help each public electricity supplier concerned to judge the degree to which he will face competition from second tier suppliers.
The second amendment, Amendment No. 175, provides for the premises which are to be supplied under a second tier licence to be described in any suitable way. It is designed to ensure that the licensing procedures may operate in a practical and sensible way.
Clause 7(2) at present allows a person to seek, and be granted, a licence to supply such premises or descriptions of premises as are specified in the licence. This would allow an applicant to seek a licence to supply certain types of premises, whether within a specified area or more generally. The licence might, for example, refer to premises used for residential or industrial purposes; or those at which a given level of maximum electrical demand is to be supplied.
Equally, it might make sense for a licence to be couched in terms of supply to specific consumers or descriptions of consumer; for example, the premises owned or occupied by, say, a bank or banks with multiple retail outlets. In those circumstances, it would clearly be more practical and less administratively cumbersome to define the licence in terms of the consumer or consumer groups concerned. The amendment makes it clear that the types of description I have given as examples would be in accordance with the requirements of the Bill for licensing purposes. I beg to move.
On Question, amendment agreed to.
Clause 8 [Conditions of licences: general]:
[Amendment No. 39 not moved.]
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 40:
Page 6, line 49, leave out from ("specified") to ("the") in line 2 on page 7 and insert—
("(c) to refer for determination by the Director such questions arising under the licence as are specified in the licence or are of a description so specified; and
(d) to refer for approval by the Director such things falling to be done under the licence, and such contracts or agreements made before the grant of").
The noble Lord said: My Lords, this amendment remodels subsection (3) of Clause 8 and expands the scope of conditions which the Secretary of State or the director may include in electricity licences
1252
granted under the Bill. The purpose of the amendment is to ensure that the Secretary of State or the DGES can specify in a licence condition certain contracts or agreements as requiring DGES approval, whether entered into before or after the licence is granted.
Paragraph (c), as amended, would allow licence conditions to require the licence holder to refer for determination by the director questions as specified in the licence. Paragaph (d) would allow things falling to be done under the licence, and such contracts or agreements as are specified in the licence and made before the licence is granted, to be referred for approval by the director. This latter expansion of the provisions will cater for pre-existing contracts. What we have in mind is, for example, the restructuring contracts which the successor companies in Scotland will inherit.
Such contracts will play a central role in the operation of the privatised industry in Scotland and it is considered essential that they should be referred to the DGES for his approval. It is equally important to ensure that agreements between the companies to amend these contracts or to enter into completely new contracts are also covered. The requirement to obtain the approval of the director before entering into such agreements or future contracts is already covered by paragraph (b) of subsection (3), the text of which remains as it is in the Bill. In assessing any contracts or agreements under the licence the DGES will of course take into account his duties under the Bill.
This is a sensible amendment which reflects the Government's concern to ensure that the director has a role in relation to such contracts entered into between the two Scottish utilities. This part of the Bill of course applies to Great Britain. It is possible that this provision may be required in the future in England and Wales. I beg to move.
Baroness Carnegy of Lour: My Lords, I am not sure whether this is an appropriate moment to raise this matter with my noble friend. At an earlier stage of our proceedings my noble friend Lord Campbell of Croy asked about the headquarters of the North Board. Has my noble friend anything to report in that connection?
Lord Sanderson of Bowden: My Lords, with the leave of the House, I am happy to respond to my noble friend. It may be helpful if in this context I make a short statement which fulfils the undertaking I gave on 19th June that I would have discussions with the chairman of the North of Scotland Hydro-Electric Board about the location of the board's headquarters and that I would return to the matter on Report.
I have had a useful meeting with the chairman of the board, who has followed the debate in the House with interest. The subject is not a new one. As recently as 1985 the Monopolies and Mergers Commission addressed the issue in its report on the efficiency and costs of the hydro board. The report recorded that the MMC had not observed any serious inefficiencies arising from the separation of activities in different locations, particularly in Edinburgh and

1253
Aberdeen. It also recorded that no problems had been identified which would justify the substantial cost and other penalties of moving the head office. Nevertheless, it suggested that the board should undertake periodic reviews to ensure that the structure remained appropriate in changing conditions
It is against that background that my discussions with Mr. Joughin, the chairman, have taken place. The board considers that it would be appropriate for the new north company's flotation prospectus to make reference to the headquarters. It has agreed to record in the prospectus the fact that the company's staff is split evenly between the headquarters building in Edinburgh and other locations within its licence area. It has also agreed that the prospectus will record that the company will keep the location of its headquarters building under review with the intention of maximising benefits to shareholders and customers. These arrangements will ensure that the issue is not lost sight of as the company moves into the private sector. The board will also ensure that responsibility rests properly with the company for any decisions affecting its headquarters.
I regard this as an entirely satisfactory outcome to my discussions and to the debate on this matter on 19th June. I hope that my noble friend will understand the situation and be able to convey that message to my noble friend Lord Campbell of Croy who is unable to be here.
On Question, amendment agreed to.
Schedule 4 [Other powers etc. of licence holders]:
9.45 p.m.
[Amendments Nos. 41 to 45 not moved.]
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 46:
Page 84, line 32, at beginning insert ("any relevant pipe (within the meaning of Schedule 19 to the Water Act 1989) under the control of the National Rivers Authority, a water undertaker or a sewerage undertaker or, in Scotland,").
The noble Lord said: My Lords, in moving this amendment I should also like to speak to Amendments Nos. 47 to 51. This group of six amendments is concerned simply with ensuring that there is conformity between this Bill and others which are currently before Parliament. They all relate to the powers given by paragraphs 3 and 4 of Schedule 4 for electricity licence holders to alter the position of other undertakers' works where this is necessary in order for them to carry out the functions assigned to them under their licences.
The amendments have two purposes. The first is to bring the terms used for a water pipe and for those authorised to have control of such a pipe into conformity with the equivalent terms as defined in the Water Bill, which has already been considered by your Lordships. The second is to incorporate within the works which can be altered and within the list of undertakers who have reciprocal rights in respect of electricity licence holders' works, system apparatus of the operator of a driver information
1254
system and such operators. These terms are defined in the Road Traffic (Driver Licensing and Information Systems) Bill which has also been considered earlier by your Lordships.
The powers to alter works is essential to enable licence holders to provide a supply. These amendments are an improvement to the Bill. I beg to move.
On Question, amendment agreed to.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendments Nos. 47 to 51:
Page 84, line 33, leave out ("or").
Page 84, line 36, at end insert ("; or
(e) any system apparatus (within the meaning of Part II of the Road Traffic (Driver Licensing and Information Systems) Act 1989) of an operator of a driver information system who is licensed under Part II of that Act.").
Page 85, line 52, at beginning insert ("the National Rivers Authority, any water undertaker or any sewerage undertaker or, in Scotland,").
Page 85, line 52, leave out ("and").
Page 86, line I, at end insert ("; and
(d) any operator of a driver information system who is licensed under Part II of the Road Traffic (Driver Licensing and Information Systems) Act 1989),").
On Question, amendment agreed to.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 52:
Page 86, line 12, at end insert—
("Protection from interference
4A.—(1) Subject to sub-paragraph (2) below, a licence holder who installs or alters, or changes the mode of operation of, any electric line or electrical plant shall take all reasonable precautions for securing that the operation of that line or plant does not interfere with the operation of any telecommunication apparatus which—

(a) is under the control of a person to whom the telecommunications code applies; and

(b) is not unusually sensitive to interference with its operation.

(2) In the case of any telecommunication apparatus which is subsequently installed or altered or whose mode of operation is subsequently changed, the duty imposed by sub-paragraph (1) above shall not apply in relation to—

(a) any momentary interference with its operation; or

(b) where it is installed in unreasonably close proximity to the electric line or electrical plant, any other interference with its operation.

(3) Sub-paragraphs (1) and (2) above shall be read as also applying in the converse case of a person to whom the telecommunications code applies who installs or alters, or changes the mode of operation of, any telecommunication apparatus, and in such a case shall have effect as if

(a) any reference to the licence holder were a reference to that person;

(b) any reference to an electric line or electrical plant were a reference to such apparatus; and

(c) any reference to such apparatus under the control of a person to whom that code applies were a reference to such a line or such plant under the control of a licence holder.

(4) Any difference arising under this paragraph between a licence holder and a person to whom the telecommunications code applies shall be referred to arbitration by an arbitrator or, in Scotland, arbiter appointed, in default of agreement between the parties, by the President of the Chartered Institute of Arbitrators.
(5) In this paragraph "momentary interference" means any interference of momentary duration which is not a regular occurrence (whether caused by physical contact or otherwise).").
The noble Lord said: My Lords, this is a detailed technical amendment dealing with the necessary provisions to govern the approach of the telecommunications and electricity industries to interference between their respective operations. Your Lordships will appreciate that the use by both industries of wires carrying electricity as an intrinsic part of their operations, albeit on vastly different scales in terms of signal voltage and power, gives rise to a particular risk of interaction and interference between the two networks.
The need for measures to prevent interference was recognised in legislation as long ago as 1882. Over the years the relevant statutory provisions have been further reinforced through joint agreements between the two industries. In preparing the present amendment the Government entered into long and detailed consultation with both the telecommunications and electricity industries. The provisions that it contains reflect that consultation and essentially continue the approach which had been developed by the industries under the existing legislation. I beg to move.
On Question, amendment agreed to.
[Amendment No. 53 not moved.]
Clause 13 [Modification by agreement]:
[Amendment No. 54 not moved.]
Clause 14 [Modification references to Monopolies Commission]:
[Amendments Nos. 55 and 56 not moved.]
Clause 16 [Modification following report]:
[Amendment No. 57 not moved.]
Clause 18 [Duty to supply on request]:
[Amendments Nos. 58 and 59 not moved.]
Clause 20 [Power to recover charges]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendments Nos. 60 and 61:
Page 16, line 7, leave out ("undue").
Page 16, line 8, at end insert ("particularly consumers in rural areas").
The noble Lord said: My Lords, I beg to move Amendments Nos. 60 and 61 en bloc. They were spoken to and decided on in a Division earlier today.
On Question, amendments agreed to.
Clause 24 [Special agreements with respect to supply]:
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 62:
Page 18, line 16, leave out from ("who") to end of line 17 and insert ("requires a supply of electricity in pursuance of section 18(1) above and is supplied by the public electricity supplier otherwise than on the terms specified in").
The noble Lord said: My Lords, in the discussion of this clause in Committee the noble Lord, Lord
1256
Williams of Elvel, proposed an amendment to the definition that it contains of "tariff customer". I said at that time that we believed that an amendment along the lines proposed could help to clarify the position.
Lord Williams of Elvel: My Lords, may I interrupt the noble Lord? Is he speaking to Amendments Nos. 63, 64, 66, 67, 70 and 72?
Lord Sanderson of Bowden: No, I am speaking only to Amendment No. 62, which is not grouped on my list with that group of amendments, to which we shall come later.
I said at that time that we believed that an amendment along the lines proposed could help to clarify the position and I undertook to consider the point further. The amendment we are now considering achieves that clarification by specifying that, for the purposes of the Bill, a tariff customer is one who requires a supply under Clause 18(1) otherwise than on the terms specified in Clause 24(1). In other words, we are fulfilling the noble Lord's desire. I beg to move.
Lord Williams of Elvel: My Lords, I am most grateful to the noble Lord, I apologise for intervening. I think I had an earlier version of the groupings.
On Question, amendment agreed to.
Schedule 6 [The public electricity supply code]:
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 63:
Page 93, line 25, leave out ("supplying and fixing") and insert ("provision").
The noble Lord said: My Lords, I should like to speak also to Amendments Nos. 64, 66, 67, 70 and 72. This group of amendments serves two purposes. It makes one substantive change to the provisions of the Bill, and also makes some changes to the drafting to ensure that there is consistency within the Bill on the terms used to describe the same point.
I shall start, if I may, with the point of substance. During discussion of Schedule 6 in Committee, the noble Lord, Lord Dean of Beswick, moved an amendment to paragraph 1(5) of the schedule. This would have had the effect of extending the period which is allowed under the Bill for the payment of charges due in respect of a supply to 28 days from the presentation of a demand for payment by the public electricity supplier. He argued that the period prescribed in the Bill was inconsistent with that allowed to gas consumers and was too short.
I explained at the time that what was provided for was a minimum period for the payment of charges. In setting such a period it is right and proper that account be taken of the billing practices within the industry—which are different from those in the gas industry—and the need to ensure that ordinary customers who pay their bills on time are protected from cost penalties as a result of bad debts. I did, however, agree to look at the points made in debate and consider the matter further.
In that earlier debate the clear feeling was expressed that the proposed minimum period could cause particular difficulties for domestic consumers if it were to be rigidly enforced. I am pleased to say that the amendments we are now considering would extend the time allowed to domestic customers to 20 working days. That is, of course, at least the equivalent of the four calendar weeks allowed by the Gas Act 1986. The 15 working day period will be retained for other customers. This approach meets the concerns which had been expressed over the position of the domestic consumer while retaining the necessary degree of protection against large debts accumulating for other customers with large demands who would generally be billed more frequently. It will, I am sure, be welcomed by your Lordships.
As I said earlier these amendments also make some changes to the drafting of paragraph 1 of Schedule 6 to ensure there is consistency of terminology within the Bill. To that end the references to fixing and installing of electric lines, electricity meters and electrical plant are changed to references to provision of such items in line with the equivalent references in Clauses 18, 21 and 22 of
1258
the Bill. Similarly where paragraph 1(4) currently refers to the charges in respect of the supply these will be spelled out in full as in the present paragraph 1(5) to avoid any ambiguity.
I commend these amendments to your Lordships both for the substantive change which they make in improving the position of domestic consumers and for the improvements they bring in the drafting of the Bill. I beg to move.
Lord Dean of Beswick: My Lords, I should like to express my appreciation for the concession announced by the Minister of an increase to 20 days. Naturally, I should have liked it to be longer, but we are grateful for the concession.
On Question, amendment agreed to.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 64:
Page 93, line 41, leave out from ("paying") to second ("the") in line 42 an insert ("all charges due from him in respect of the supply or the provision of any electricity meter, electric line or electrical plant for the purposes of the supply,").
On Question, amendment agreed to.
Baroness Seear Baroness Seear moved Amendment No. 65:
Page 93, line 43, after ("electricity") insert ("otherwise than through a pre-payment meter").
The noble Baroness said: My Lords, with the leave of the House, in moving this amendment I shall speak also to Amendment No. 68. These two amendments are very similar to amendments which were moved in Committee, but with slight alterations to meet some of the objections raised by the Government at that time. The objective is exactly the same as it was in the amendment moved in Committee: it is to make it as unlikely as possible that there will be a disconnection, having regard to the very serious problems which arise, to domestic consumers when disconnection takes place.
As I understand it, the Government had two objections to the amendments moved in Committee. One was that in the amendment moved, and in the amendment being moved now, the Government wish to distinguish between people who would not pay and people who could not pay. In our view that is a distinction which it is extremely difficult to make. It may of course be possible to make it in extreme cases at either end of the spectrum, so to speak. There are a small number of cases where no doubt it is quite easy to see that someone is deliberately trying not to pay. However, there are a great many more cases where it would be extremely difficult to determine whether in reality a person is unable to pay or is unwilling to do so. Therefore it seems to us that the bureaucracy which would go into trying to make that distinction is simply not worth the expenditure in time and money involved. Therefore we reject that objection and hope that the Government will reconsider the matter.
The Government also said that it would be an invasion of privacy if a pre-payment meter was automatically installed as an alternative to disconnection. Therefore, in the amendment we move this evening we suggest that it should always be an option to disconnection that a pre-payment meter should be installed; but it should only be an option and not an automatic process, as previously suggested in connection with the installation of a pre-payment meter instead of disconnection.
I repeat that the disadvantages of disconnection, the harm done to families, the difficulties which arise as a result of it and the cost of the whole process, make it highly desirable that it should be avoided in every possible case. In view of the changes which have been made in the amendment since a similar amendment was put forward in Committee, we hope that the Government will be able to accept it. I beg to move.
Baroness Oppenheim-Barnes: My Lords, I rise to support the case put forward by the noble Baroness, Lady Seear.
Baroness Gardner of Parkes: My Lords, I oppose this amendment because, as no doubt the noble Baroness heard me say at a previous stage of the Bill's proceedings, in the London board area there are 200,000 cases a year of people threatened with disconnection. That is because they do not wish to
1260
pay their bill, are slow about so doing or are reluctant to pay and are building up huge arrears. The actual number of disconnections is only 14,000.
If we remove the disconnection and replace it with the option suggested by the noble Baroness, is that option for the board or for the customer? I say that because the board regularly exercises an option of offering a pre-payment meter or a budget meter. If terms can be agreed for back payment of the money outstanding, to be made up over a period of time, then the board will do so. Every effort is made to help the genuine customer who is in genuine difficulties.
However, bearing in mind the difference between the 14,000 disconnections and the 200,000 potential disconnections, if you remove the sanction then you are taking away a great weapon in terms of keeping down the level of debt. The bad debt figure in the London area is now well over £6 million a year. That is £6 million which all the other consumers and customers have to pay for through their charges. It is not on to take away the board's right to disconnect by insisting on the amendment. If the noble Baroness is suggesting that the area boards should have the option, I should be happy. I interpret her remark as meaning that the consumer would have the option.
10 p.m.
Baroness Seear: My Lords, with the leave of the House, our previous amendment proposed that the meter should be installed automatically. As I understood it, it was to that proposal that the Government objected. If they were prepared to accept it, we should be pleased. We modified the amendment to meet that objection.
Baroness Gardner of Parkes: My Lords, before the noble Baroness sits down, will she clarify whose option she is talking about?
Baroness Seear: My Lords, I tried to explain to the noble Baroness that we originally wished to provide that the board could automatically impose the installation. As I understand it, it was to that proposal that the Government objected. We therefore produced this modified amendment which does not enforce that action on the person required to pay. That was because the Government were not prepared to have an automatic installation of the meter.
Lord Dean of Beswick: My Lords, the noble Baroness, Lady Seear, is right. The amendment is worthy of serious consideration. As the noble Baroness, Lady Gardner of Parkes, said, she made the same point in Committee. I do not find that the logic she expressed can be transferred into human terms. The main basis of her argument is that the threat of disconnection is better than the option of a meter. Giving people the option of a meter might well avoid 200,000 people owing money. That is the point of the exercise.
People will be able to resolve their own troubles by mutually agreeing the installation of a meter. It will give them the right to redeem their debt through the meter and then enable them, in colloquial terms,

1261
to keep their heads above water. On balance, my party favours what the noble Baroness, Lady Seear, said. It is workable and more humane and in the long-term it will be better for everyone involved. We support the noble Baroness.
Lord Sanderson of Bowden: My Lords, I listened with great care to the point made by the noble Baroness, Lady Seear, in support of the amendment. As I said on several previous amendments, I think that we have been here before. I understand that the noble Baroness's intention in moving the amendments is that the public electricity supplier will have the power to install a pre-payment meter when the customer is in debt. Underlying that is the intention to ensure that no one who is in difficulty over the payment of their bills as a result of genuine hardship should be disconnected. The electricity industry shares her desire to avoid unnecessary disconnection. There is no commercial advantage in losing custom if an arrangement can be reached for paying for future supplies and recovery of the outstanding debt.
That principle is embodied in the codes of practice which are currently operated on a voluntary basis by the electricity boards. They guarantee that if a payment arrangement covering both recovery of debt and charges for future consumption can be agreed and is kept to, then the customer in question will not be disconnected. As an alternative, it guarantees that where it is safe and practical to fit a pre-payment meter, then if the customer accepts such a meter he will not be disconnected.
The approach has already been a factor in the downward trend of disconnections. The figures for disconnection may be well known but I should like to repeat them. In England and Wales in the 12 months ending 31st May there were 74,695, the lowest since such figures started to be kept in 1976, and a fall of 13·9 per cent. on the 12-month period ending 31st May 1988. In Scotland the figures fell by more than 19 per cent. during the same period.
The Government have fully recognised the value of the approach set out in the code of practice. A condition has been included in the public electricity supply licence requiring that the holders produce such a code (in consultation with the relevant consumers' committee) and obtain the agreement of the director general to it within three months of the licence being issued.
We have also included in the public electricity supply licence a further condition on treatment of tariff customers in default along the lines of that introduced in the British Gas authorisation. This condition requires the licence holder to prepare, in consultation with the relevant consumers' committee, methods for dealing with customers in default because of misfortune or inability to cope with electricity supplies on credit. These methods have to be agreed with the director general and adopted within three months of the licence being issued. Any failure by the public electricity supplier
1262
to adopt such methods will be a matter where the director would be able to use his enforcement powers to require compliance with the licence condition.
The code of practice already provides that supply will not be disconnected where it is safe and practical to provide a prepayment meter. The new licence condition requires that the methods to be adopted must include the provision of a prepayment meter as a last resort. The difference between our proposals and those of the noble Baroness is that there is one extra ingredient necessary—that is, the agreement of the consumer. We believe that not only is it right that this agreement be obtained; its requirement is also an essential protection of the consumer's civil liberties. We take the matter very seriously. I know that the noble Baroness does too, but we slightly differ on this point.
It is not just the Government who take that view. It has also been taken by the Director General of Gas Supply in respect of the British Gas authorisation. He has of course a statutory duty to protect the interests of consumers of gas. The proposal of the noble Baroness could result in a situation in which customers had prepayment meters forced upon them. That is my reading of the amendment she has placed before us. I believe it is totally contrary to the approach set out in the code of practice and the new licence condition. In addition, under the terms of the Bill the consumer would then be faced with paying the charges incurred in supplying and installing the meter, over and above those that might be recovered through the use of a tariff appropriate to such a meter.
It may, of course, be the intent of the noble Baroness that the costs of supply and installation of the meter should be met by a levy on other customers. If so, it would hardly be protecting the interests of such consumers, some of whom may also be experiencing difficulty in meeting their bills, to saddle them with these extra costs. We believe that the amendment would introduce an unnecessary power. It would be an unwarranted intrusion, as has been said, on the liberties of the individual. The noble Baroness mentioned the "can't pay, won't pay" issue. We believe that the objections to the necessity under the new conditions to distinguish between those customers who are in debt through genuine hardship do exist. I understand that the concern of the noble Baroness is with just such customers and that she fears that the process will be less than satisfactory. We share her concern for the less fortunate but it is incumbent on the Government and this House to protect the interests of all consumers. We should be failing in this duty were we not to take account of the possibility that there will be customers who do not pay when they are perfectly able so to do.
Another matter was raised by the noble Baroness at a previous stage and it is worth repeating on this issue. The electricity industry already makes efforts to inform customers in difficulty of arrangements that are available, in many cases drawing the code of practice to customers' attention on each bill issued. Copies of the code itself are also readily available. I know very well that the people whom the noble

1263
Baroness has in mind may not read such codes but we hope that through the advice form, citizens' advice bureaux or other places to which those customers may go the necessary information will be disseminated.
It has been suggested that public electricity suppliers should have the right to require their customers to accept prepayment meters. When a supply is requested, it is open to the supplier to specify in a notice given under Clause 18(4) that a prepayment tariff should apply. In cases where a supply is already being given on credit and the supplier determines that this is an unreasonable basis for continued supply, he can use the powers set out in Clause 19(2)(c). In both these cases, however, it is open to the consumer to seek a determination from the director under Clause 25. Once again the Bill gives the customer the opportunity to have a say in the terms of his supply.
I have to say that I have looked very closely at this particular matter. It is a question of balance. It is a question of trying to get the right balance as regards what should be done to protect those in the community who are less able than others perhaps to appreciate the difficulties that this whole matter raises. However, I have to say, much as I dislike doing it, that I think on this occasion we have to stick by the terms of the Bill as drafted. I shall, of course, consider what the noble Baroness has to say in relation to the meaning that we interpret from the amendment she has tabled. I shall also study what the noble Baroness has said in the debate this evening. With that assurance that I shall consider without commitment what has been said, I am afraid I have to say that on the present reading of the amendments I have to reject them.
Baroness Seear: My Lords, I listened with great attention to what the Minister said. It seems to me that on this occasion, as on so many previous occasions, we are told that everything is in the code of practice or that it will be incorporated into the licence. However, there are many occasions when—I think this is one of them—we want the provision not in the code of practice but on the face of the Bill. Therefore, I feel I must test the opinion of the House.
10.11 p.m.
On Question, Whether the said amendment (No. 65) shall be agreed to?
Their Lordships divided: Contents, 13; Not-Contents, 33.

DIVISION NO. 2

CONTENTS

Addington, L.

Oppenheim-Barnes, B

Airedale, L.

Peston, L.

Dean of Beswick, L. [Teller.]

Seear, B.

Hanworth, V.

Tordoff, L. [Teller.]

Hatch of Lusby, L.

Whaddon, L.

Lockwood, B.

Williams of Elvel, L.

McNair, L.

1264

NOT-CONTENTS

Ampthill, L.

Hesketh, L.

Arran, E.

Hooper, B.

Belstead, L.

Joseph, L.

Blatch, B.

Mackay of Clashfern, L.

Borthwick, L.

Mersey, V.

Brougham and Vaux, L.

Montgomery of Alamein, V

Caithness, E.

Morris, L.

Cork and Orrery, E.

Nelson, E.

Cowley, E.

Saint Levan, L.

Craigmyle, L.

Sanderson of Bowden, L.

Davidson, V. [Teller.]

Skelmersdale, L.

Denham, L. [Teller.]

Stanley of Alderley, L.

Dundee, E.

Strathclyde, L.

Ferrers, E.

Thomas of Gwydir, L.

Gardner of Parkes, B.

Trafford, L.

Glenarthur, L.

Ullswater, V.

Henley, L.

Resolved in the negative, and amendment disagreed to accordingly.
10.18 p.m.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 66:
Page 93, line 44, leave out ("so").
The noble Lord said: My Lords, I have already spoken to Amendment No. 66. I beg to move.
On Question, amendment agreed to.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 67:
Page 94, line 1, leave out from ("not,") to first ("the") in line 5 and insert ("within the requisite period, paid all charges due from him to a public electricity supplier in respect of the supply of electricity to any premises, or the provision of any electricity meter, electric line or electrical plant for the purposes of that supply,").
The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 68 and 69 not moved.]
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 70:
Page 94, line 9, at end insert—
("(5A) In sub-paragraph (5) above "the requisite period" means—

(a) in the case of premises which are used wholly or mainly for domestic purposes, the period of 20 working days after the making by the supplier of a demand in writing for payment of the charges due; and

(b) in the case of any other premises, the period of 15 working days after the making of such a demand.").

The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Baroness Oppenheim-Barnes Baroness Oppenheim-Barnes moved Amendment No. 71:
Page 94, line 16, at end insert—
("( ) Unless with the express agreement of the customer, pre-payment meters shall not be calibrated other than to recover the customer's liability for charges set under section 20 for the period beginning on the date the pre-payment meter was installed.").
The noble Baroness said: My Lords, I think that I can explain the amendment most swiftly by means of analogy. If a customer who has a charge account,

1265
for example, with Marks and Spencer, is in arrears with that charge account, no one stops that customer going into Marks and Spencer and buying goods for cash. When he does so, the company does not put a percentage on the price of those goods in order to retrieve part of the arrears.
I am not saying that the electricity companies should not pursue their arrears vigorously in the way that all other companies would and should do, both for the sake of the company and for consumers in general. What I am saying is that it is not correct to put consumers of electricity of a monopoly supplier in a different position—a disadvantageous position—from those throughout practically the whole of the rest of British industry. In other words, if they are willing to pay cash and to pay in advance for goods, they should not be penalised because they are in arrears by calibration of their meters, which means that they are paying off their debt. That would not be the case if they were shopping anywhere else except with a monopoly supplier. That is the logic of the amendment which I hope will commend itself to your Lordships. I beg to move.
Baroness Gardner of Parkes: My Lords, I think that the amendment perhaps misunderstands the situation. The purpose of calibrating the meter—it is always done in a sensible way—is to enable the person gradually to pay off the amount owing. The boards take a sympathetic view if an effort is made to make up the arrears. It is a way of preventing disconnection. The alternative would be that the person would have to be disconnected from the supply. I believe that it is an advantage—not a disadvantage—to the customer to have the opportunity to calibrate in that way.
As to the analogy with Marks and Spencer, a statement was made that if one has an account one can go in and pay cash. No mention was made of the fact that, if one has an account, one can be charged interest every month on the amount that one has not paid. That mounts up very quickly and it would be wrong for the interest on those amounts to be charged to a consumer unnecessarily. I believe that all boards make every effort to reach an agreement with the consumer. If accepted, the amendment would be a disadvantage to people.
Viscount Hanworth: My Lords, the amendment does not prevent agreement on how the debt is to be agreed on the meter. There is nothing to prevent that, but the amendment states that it should not be done without the agreement of the person concerned. I do not think that what we have just heard is a reasoned argument against it.
Lord Sanderson of Bowden: My Lords, I understand the purpose that my noble friend has in mind in moving the amendment. However, I happen to believe that her amendment is unnecessary.
Your Lordships will be aware that paragraph 12(2) of Schedule 7 already prohibits the recovery of charges other than those in respect of electricity supply through a prepayment meter. It is not the case, however, that the Bill provides the power for
1266
the supplier to calibrate a prepayment meter to recover amounts in excess of that due For electricity being supplied through it. In the absence of any specific power, the supplier would have no right unilaterally to calibrate the meter to recover charges for outstanding debt. I hope that the noble Viscount appreciates that point. The only sanction the Bill provides in such cases is disconnection.
In view of this, any recalibration of a meter to recover more than the charges due for electricity supplied through it without the prior consent of the consumer would be unlawful and punishable under the appropriate statutes. In the light of that explanation, I hope that my noble friend will consider withdrawing her amendment.
Baroness Oppenheim-Barnes: My Lords, I should like to consider what my noble friend the Minister has said. I think that he may have gone a long way to convince me. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Sanderson of Bowden Lord Sanderson of Bowden moved Amendment No. 72:
Page 94, line 20, at end insert—
("(8) In this paragraph a reference to the provision of any electric line or item of electrical plant is a reference to the provision of such a line or item by the installation of a new one or by the modification of an existing one,").
On Question, amendment agreed to.
[Amendment No. 73 not moved.]
Clause 27 [Orders for securing compliance]:
[Amendment No. 74 not moved.]
Schedule 7 [Use etc. of electricity meters]:
[Amendment No. 75 not moved.]
The Earl of Dundee: My Lords, I beg to move that consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Road Traffic (Driver Licensing and Information Systems) Bill [H.L.]
Returned from the Commons agreed to with amendments and with a privilege amendment; the amendments ordered to be printed.

Wesleyan Assurance Society Bill
Returned from the Commons with the amendments agreed to.
House adjourned at twenty-six minutes past ten o'clock.