Electricity Bill

HL Deb 05 July 1989 vol 509 cc1199-229

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 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 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 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 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 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 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 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.

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 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". 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 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 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 —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 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, 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 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 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.

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 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—

1. (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
2. (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
3. (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—

1. (a) the determination of any dispute referred to the committee under section 41(5) of this Act; or
2. (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—

1. (a) of any meeting of the committee which is open to the public; and
2. (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 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 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.

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 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.

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.

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 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 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 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. 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". 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 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 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 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, 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 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 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 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.