HL Deb 05 June 1989 vol 508 cc590-651

2.54 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.— (Baroness Hooper.)

On Question, Motion agreed to.

House in Committee accordingly.


[Amendment No. 129A not moved.]

Lord Williams of Elvel moved manuscript Amendment No. 129B: Before Clause 11, insert the following new clause: ("Licence conditions for nuclear installations. Where a person authorised to generate electricity under section 6( 1 )(a) above proposes to do so by means of nuclear fission, it shall be a condition of the licence that the Secretary of State may at any time if he perceives that there is a matter affecting the safety of the public by order requisition and bring under its own control the relevant nuclear installations.")

The noble Lord said: It may be for the convenience of the Committee if I also speak to Amendments Nos. 233A to 233J inclusive. I must first apologise both to the Committee and to the noble Baroness for tabling my manuscript amendment rather late. The reasons for this were that when addressing the question of the safety of nuclear installations I tried initially to avoid a re-run in Committee of the debate that had taken place in Standing Committee in another place on the same subject. I tried to limit the amendment to the area boards, which in future will have the ability to apply for generating licences and also, we read in the press, to apply for generating licences using nuclear fission. Those reports may be right or wrong, but we read that.

When I further considered that, I moved on in my thinking to the possibility of private nuclear stations which would be outside the area boards, National Power and BNFL. In other words, it is conceivable under the new arrangements that some consortium might wish to set up a nuclear power station and would have the ability to be granted a licence and to feed the electricity into the grid. Thus confining the amendment simply to the area boards would not have been successful in achieving what I wanted.

Recently we have had a great deal of publicity about the problems associated with spent fuel from nuclear reactors. That subject has not yet been discussed in Committee here and I feel that it would be useful if we had some comment on the matter. The only solution therefore was to widen the amendment to include the whole nuclear industry. The manuscript amendment widens Amendment No. 129A and substitutes for the expression at the beginning of Amendment No. 129A, Where a public electricity supplier holding a licence which authorises him to generate electricity", the expression, Where a person authorised to generate electricity under section 6(1)(a) above". In other words that covers anybody who has a licence to generate electricity, whether he be a public electricity supplier or any other person. It is that amendment and the consequential amendments to Clause 92 to which I am speaking.

The question before the Committee is whether the Bill gives the public enough reassurance that public safety is, and in the future under privatisation can be, protected by the Government rather than by any arrangements that the Government might make to ensure that the various inspectorates and health and safety executives involved can make the proper rules.

Threats to public safety can arise from a number of sources. There can be an accident in a nuclear plant. We have had, alas, in the past few years a number of examples of such accidents which have been devastating in their consequences. I believe that those accidents would be covered by Clause 92, which refers to events, likely to disrupt electricity supplies".

It is rather difficult to imagine an accident in a nuclear plant that would not disrupt electricity supplies in one way or another. There was a debate in another place on that matter. It concentrated on what one might call the post-Chernobyl problem. There are still unanswered questions on which the noble Baroness may perhaps be able to comment about how far the Health and Safety Executive will issue regulations along the lines of regulations issued for the chemical industry after the Flixborough accident to deal with accidents of that nature.

There are also questions of how far the CEGB, even as an organisation capable of receiving directions from the Secretary of State, has succeeded in co-ordinating the various arrangements that it has for its different nuclear plants. It was argued in another place that there were some arrangements for Hinkley, there were some arrangements for Capenhurst and there were some arrangements for Chapel Cross but they were not identical. Nobody knew what was happening and the various county councils involved were perhaps inadequately organised. But these are no doubt questions to which the noble Baroness will wish to respond.

What is not covered by Clause 92 is any kind of accident that does not disrupt electricity supplies. The problems of spent fuel and radioactive waste are such issues. There is no evidence that a leak in wet storage of AGR spent fuel at Sellafield will disrupt electricity supplies. There is no evidence that discharges into the Irish Sea of radioactive material will disrupt electricity supplies. Nevertheless there is a point at which such leaks and such discharges could cause a public safety problem. It is that problem to which our amendments are directed.

We do not know much about nuclear accidents but we know that they are unpredictable. No Member of the Committee nor any expert can say where the next nuclear problem will occur. I venture to predict that if and when such an accident occurs there will inevitably be chaos and confusion, however many rehearsals of emergency operations have been carried out. I am afraid that that is a fact of life. However well prepared we are, certain things will always go wrong.

In the amendments we seek to ensure that the Government have the power, when such an accident occurs, to intervene, to take control and to say, "It is now our responsibility". That is not in consultation with the company involved, with the county councils or other people. The Government have the responsibility and the duty to take control and to issue such directions as they believe fit to make sure that the safety of the public is protected so far as that is possible.

The amendments deal with the licence. It has to be made clear that any licence for the generation of electricity must contain a provision which allows the Secretary of State to intervene if, in his perception, there is an issue affecting the safety of the public. In this case "intervention" means taking control of the installations which have caused the problem.

The amendments to Clause 92, which are grouped with Amendment No. 129B, amplify and put flesh on the bones of what is proposed should be contained in the licence. They do so by giving the Secretary of State power to issue directions where he perceives there to be a possibility of disruption to electricity supplies, not just in consultation with the company in question but as a matter of urgency without consultation if the Government decide that a major problem endangers the safety of the public.

It has always appeared to us on these Benches that at the end of the day, whatever arrangements are made for the ownership of the industry, the Secretary of State and the Government must be responsible for such matters. I am well aware that there is a Nuclear Installations Inspectorate. I am well aware that there is a Health and Safety Executive. I am well aware that there is now a world organisation of nuclear operators who have signed a major charter for the swapping of information. I am well aware of all that. However, I do not believe that when a dramatic incident occurs the Nuclear Installations Inspectorate, the Health and Safety Executive or any world organisation will have the powers to take the appropriate decisions to protect the safety of the public. For that reason we believe that such powers should be given to the Secretary of State. That is the thrust of these amendments. I beg to move.

Lord Renton

The noble Lord, Lord Williams, has raised a very important matter. Whether nuclear generation is carried out by a public authority or under the powers contained in the Bill by a private generator, surely it must be paramount that it is carried out safely and in a way that does not endanger the public.

In this country we have a great deal of experience in the generation of electricity by nuclear means as carried out by the Central Electricity Generating Board. I am sure that Members will agree that the board has a remarkably good record. Touch wood— we have never had a Chernobyl incident. And we do not wish to contemplate such a risk. I am sure that in passing this Bill we in Parliament should make provision for eliminating that risk so far as possible. We should enable such steps to be taken under statutory authority if, by some mischance and despite the best will in the world, a disaster should happen.

I do not believe that anyone could disagree with the broad objectives stated by the noble Lord. The question is how to carry them out. I agree that Clause 92 may be capable of being strengthened although it already contains valuable provisions. As stated in the explanatory note, the clause, enables the Secretary of State to give directions to persons authorised by a licence or exemption under Part I for the purpose of preserving the security of buildings used for or in connection with the generation, transmission or supply of electricity or of mitigating the effects of any civil emergency". That is a broad term. It will enable almost any steps to be taken by the Secretary of State, or under his direction, should the worst happen.

We also find a little effective help in Clause 9, which we have already passed, although perhaps not as much as the noble Lord would wish. There, the obligations of licence holders are stated under the heading, "General duties of licence holders". So there are a certain number of provisions in the Bill which will achieve the agreed common purpose. However, the noble Lord, Lord Williams, suggests that as a condition of the licence, the Secretary of State may at any time if he perceives that there is a matter affecting the safety of the public lay order requisition and bring under its own control"— I believe that "its" is not the right word— the relevant nuclear installations". That means that the noble Lord wants the Secretary of State to run the installation after it has already proved to be a disaster. I am not sure whether that is the best way of dealing with the matter. Admittedly it would be possible, but the Department of Energy does not have the staff or the means to begin to run a nuclear power station which has broken down. Therefore, if the Secretary of State must exercise his power he could do so only by getting someone other than the person licensed to take on the job.

Although I was interested to hear the noble Lord's comments I have doubts about our legislating in this way. I should have thought that having satisfied himself that the licence holder can command the expertise needed to generate electricity through nuclear power, and has at his command the people with the knowhow and expertise to deal with any emergency that should arise, it is best to continue to fasten that responsibility upon that person rather than to call in somebody else. To my simple mind, that is how I see this important matter; but I shall be very interested to hear what my noble friend on the Front Bench has to say.

3.15 p.m.

Baroness Hooper

Perhaps I may start by referring to the very good safety record of civil nuclear installations in the United Kingdom. That very much reflects the dedication, skill and painstaking care which the many thousands of workers in the nuclear industry bring to this aspect of their job. Anybody who has had the opportunity to visit a nuclear power plant, as I have, will recognise that.

The Government believe that safety is of paramount importance throughout the energy-creating industries, whether in the hostile conditions of the North Sea, the deepest workings of a coal mine or at any of the nuclear power stations currently operating in this country. Safety procedures and regulations are rigorous and taken very seriously in this country and perhaps I may say that that is something which we discussed in your Lordships' Chamber during the passage of the Atomic Energy Act. That is also a topic which had a high priority in the discussions in which I participated at a meeting of the governing board of the International Energy Agency last week. I should like to quote from the final communiqué which pledged Ministers to pursue in their respective energy policies a number of objectives including: where national decisions so contemplate the use of nuclear power, this will be facilitated by demonstrating that safety both in operation and in waste disposal has already been and will in the future be maintained and further improved". That is a commitment taken on by the Government.

The Government have taken action to ensure that the highest standards of safety can be seen to be enforced in the nuclear industry. For nearly 30 years the Nuclear Installations Inspectorate— a body wholly independent of the nuclear industry and now forming part of the Health and Safety Executive— has acted as the essential watchdog of the nuclear operator safety standards. Over the past two years that body has been substantially strengthened with its staff levels increased by over 30 per cent. and futher expansion is planned. The Nil has extensive powers. Its inspectors can require the operators to make improvements to the design or operation of a station if that is required in their view to ensure an appropriately high standard of safety. If necessary, they can require a station to be closed down until matters are to their satisfaction.

I believe that it is also important to remember that the operating companies therefore have a direct financial interest in maintaining the highest safety standards. After all, if generation has to be stopped for a time because of an accident or breach of safety rules, the generating company will suffer the resultant loss of revenue.

Of course, nuclear safety has been particularly in our minds since the Chernobyl accident some three years ago, to which the noble Lord, Lord Williams, referred. Nobody doubts the seriousness of that accident which taught us and the rest of the world invaluable lessons. However, neither the design weaknesses in the Chernobyl reactor nor the deliberate failures by station staff to observe prescribed safety procedures would have been tolerated here. Perhaps I may say that if that is an example of a nuclear power station operating in the public sector, then that is not an argument that can be used against the private sector operation of this industry.

All that describes the system now. What is important is not who owns the industry, but the strength of the regulatory framework to protect employees, consumers and the public; and privatisation will not affect that. The powers of the NII will be quite unaffected, and I have no doubt that it and the industry staff will continue to act in the responsible and effective way in which they have done in the past. I do not believe that the circumstances envisaged in the amendment would therefore arise. Before the Secretary of State or anyone else could perceive that there was a matter affecting the safety of the public, the NII would have acted to prevent that.

If there is a national emergency or natural disaster then that is where we come to Clause 92, as the noble Lord, Lord Williams, pointed out. The power in Clause 92 to give directions is aimed at fulfilling two specific objectives: maintaining the physical security of electricity installations, and planning for civil emergencies such as severe weather conditions or natural disasters. It does not cover civil defence planning because adequate powers already exist under the Civil Defence Act 1939, and those are being applied by the Bill to the privatised industry.

Nor does it cover measures which would need to be taken in the event of an actual civil emergency since adequate powers exist under the Energy Act 1976. It is not intended under those powers to deal with measures which may be required in the unlikely event of a nuclear accident. Nuclear emergency plans are provided for under licence conditions imposed on nuclear site operators under the Nuclear Installations Act 1965. Additionally, it has recently been announced that new health and safety executive regulations will place a formal requirement on local authorities to prepare integrated off-site plans for nuclear installations.

Discharges of radioactivity into the environment are subject to authorisations issued by authorising departments; and for Sellafield, to which the noble Lord, Lord Williams, referred, those are the Department of the Environment and the Ministery of Agriculture, Fisheries and Food. Those arrangements are not affected by privatisation.

It is important that action required in the unlikely event of a nuclear accident be taken expeditiously and effectively. My noble friend Lord Renton is right to say that the expertise to deal with the situation is not in fact in Whitehall, but in the local organisations; in particular, the police and emergency services and indeed in the Nuclear Installations Inspectorate.

The electricity supply industry at present co-operates fully with the Government on civil emergency planning and the physical security of electricity installations. We anticipate that that co-operation will continue after privatisation; but the power to give directions contained in Clause 92 will enable the Secretary of State to ensure that.

This is an important subject, and I hope that what I have said will have reassured those Members of the Committee who have anxieties that the amendments proposed are not necessary. I could deal in detail with each of the Amendments Nos. 333A to 333J, but since the noble Lord, Lord Williams, did not do so, I shall restrain myself to the general remarks which I have made in relation to these amendments.

Returning to Amendment No. 129B, that would place any Secretary of State in an impossible position. For example, if he seizes the assets of private individuals, what about compensation, and what would it achieve if he did so? As I said, the same statutes and regulations would apply to the stations whether in the public or private sector. The same regulatory authorities would be responsible for enforcing the same strict rules.

I am at a loss to see the benefit of this amendment. As my noble friend Lord Renton said, the Secretary of State does not have expertise in the day to day management of nuclear power stations and would be wholly dependent on the staff of the existing operators. Therefore, I ask the Committee to consider the fact that the amendment is neither necessary nor would it bring any useful benefits.

Viscount Hanworth

The safety of nuclear installations, whether generating or otherwise, is a real worry to the public and I do not think the Minister has satisfied us. Clause 92 is not sufficient. The Government have taken very far-ranging powers in this Bill, so why cannot they take this long stop amendment? It might never be needed because the existing powers might be sufficient, but they should have it nevertheless.

Lord Renton

Perhaps the noble Lord would be so good as to answer this point. If the Secretary of State is to bring this matter under his own control, whom does he expect to do the work, bearing in mind that his own department consists of civil servant officials who do not have the experience and expertise, or indeed the knowledge, to deal with these highly technical matters?

Lord Williams of Elvel

Perhaps I may reserve my response to the point made by the noble Lord, Lord Renton, for when I wind up on the amendment.

The Earl of Lauderdale

One point has occurred to me in listening to my noble friend the Minister. She said that everything is all right and issued a communiqué assuring us that everything will be all right. The fact is, as the noble Viscount, Lord Hanworth, said, that there is growing anxiety within the public— reasonable or unreasonable is of no matter— about accidents relating to energy of all sorts. The Piper Alpha affair is the most recent case which aroused horror and stirred everyone's imagination.

The point that bothers me in my noble friend's reply is that it appeared to be a stalling reply to say that everything is all right so far, and that the NII is quite sufficient. The fact is that the NII, and the apparatus that exists at present, was conceived for nuclear installations under state control. It is now proposed that the nuclear installations should not be under state control. That is the critical difference. That is what worries people, and that is what worries me. I cannot say that I am satisfied with my noble friend's answer in this regard. She has not spelt out, as I think we need to have it spelt out, that the NII does have the right powers and procedures to deal with, in effect, private enterprise nuclear power stations.

Rather than press this matter now, perhaps my noble friend the Minister will be willing to have another look at the amendment and come back at the next stage of the Bill.

Baroness Hooper

Perhaps I may respond to my noble friend and reiterate what I said earlier. Over the past two years, in response to the anxieties that have been expressed as a direct result of the Chernobyl accident, the NII has been substantially strengthened and its staff levels increased by over 30 per cent. I also said that further expansion is planned. Whether the NII is directing its attention to the public sector or to the private sector is neither here nor there. It will still impose its standards in the same rigorous way. The inspectors will still be able to require operators, whether in the public or the private sector, to make improvements to the design or operation of a station if that is required. As I said, if necessary the inspectors can require a station to be closed down. I do not know what further action my noble friend thinks is possible.

Lord Williams of Elvel

I am grateful to the noble Baroness for giving her response to this series of amendments; and the noble Lord, Lord Renton, was as always, very perspicacious, if I may be impertinent in saying so, in putting his finger on the essential point; as indeed was the noble Earl, Lord Lauderdale.

The essential points are these. Who is to own the nuclear plant in question? That point was made by the noble Earl, Lord Lauderdale. Until now we have the CEGB, which is a public body, which can be directed by the Secretary of State; whatever his legitimate purpose is, the Secretary of State decides. When the industry is privatised, that power of direction, other than in Clause 92, will no longer exist.

The next question is whether the Department of Energy or any public body— the Secretary of State or otherwise— has the expertise. I believe that the noble Baroness responded to that particular point by saying that it is in the interests of the licence holder to make sure that the station, or whatever installation it may be, operates to its proper capacity and proper safety as soon as possible— it is to be hoped, immediately after an accident has occurred. That must therefore lead to the conclusion that any licence holder in his senses will co-operate with the Government authorities as the CEGB now co-operates with the county councils, the police, the ambulance services and everyone else. Therefore, I do not believe that we will need armies of civil servants trained to operate nuclear power stations in order to implement my amendments. The noble Baroness answered that question perfectly well.

This goes back to the problem raised by the noble Earl, Lord Lauderdale. We have always had a very good safety record, and I join the noble Baroness in paying tribute to those people within the electricity authorities who have maintained that safety record. We have a system, which the noble Baroness properly described, where the NII lays down the rules and can enforce those rules. That will continue after privatisation. However, the area boards who may in the future be licensed to generate electricity will be owned by we know not who after 1995 when the special share lapses. National Power. which will have the main licence to generate electricity by nuclear fission, will be owned by we know not who if the Secretary of State decides to ask for the redemption of the special share, which he is entitled to do at any moment after privatisation.

BNFL is a plc, owned by the Government admittedly; but the Government have no powers to direct because the Government cannot direct a plc other than through legislation specifically for that purpose. UK NIREX, which is responsible for the disposal of intermediate and low-level radioactive waste, is half owned by the CEGB and the South of Scotland Electricity Board and hence will be half privatised when these two bodies are privatised. Therefore, if there is any sort of accident a great chunk of the nuclear industry will be; in hands whose interests are not necessarily those of the body politic at large.

Are the Government to play no other role than simply saying that there is an inspectorate which sets the rules? Will the Government then be a passive bystander if there is a major accident? Will the Government restrict themselves to the power of intervention, as in Clause 92, only after consultation with the company— not as of right, but after consultation with the company? Even then, will Parliament not see the direction that the Secretary of State issues if it would be— again I quote from Clause 92— against… the commercial interests of any person"? Is that the way we are to handle nuclear emergencies? How seriously will the Government take their responsibilities? What these amendments propose is a firm and clear understanding that the Government have an absolute right to take over any installation in order to protect the safety of the public. That is the duty of the Government. These amendments are designed to ensure that they are both able and willing to fulfil that duty.

Lord Renton

Before the noble Lord sits down, I wonder whether he will answer the question which I put to the noble Viscount, Lord Hanworth, and which is fundamental to his amendment. I refer to the amendment which states: …the Secretary of State may … if he perceives that there is a matter affecting the safety of the public by order requisition"— that means actually to possess— and bring under"— it is meant to be "his"— own control the relevant nuclear installations". How is he going to do that himself or through his department when neither he nor the department has the means to do so? They have neither the trained staff nor the expertise. Who is going to do it?

Lord Williams of Elvel

I can answer the noble Lord very easily. First, I agree with the noble Baroness that any licence holder will co-operate. Secondly, the thrust of the amendments to Clause 92 will actually allow the Secretary of State to make such direction as he feels fit. He can direct the licence holder to co-operate, and that is the point of the amendments.

3.31 p.m.

On Question, Whether the said amendment (No. 129B) shall be agreed to?

Their Lordships divided: Contents, 112; Not-Contents, 104.

Addington, L. Carter, L.
Airedale, L. Chandos, V.
Allen of Abbeydale, L. Cledwyn of Penrhos, L.
Amherst, E. Cocks of Hartcliffe, L.
Ardwick, L. Dainton, L.
Attlee, E. David, B.
Aylestone, L. Davies of Penrhys, L.
Birk, B. Dean of Beswick, L.
Bottomley, L. Denington, B.
Brain, L. Donaldson of Kingsbridge, L.
Bramall, L. Dormand of Easington, L.
Briginshaw, L. Elwyn-Jones, L.
Bruce of Donington, L. Ewart-Biggs, B.
Burton of Coventry, B. Falkender, B.
Callaghan of Cardiff, L. Falkland, V.
Carmichael of Kelvingrove, L. Fisher of Rednal, B.
Flowers, L.
Foot, L. Northfield, L.
Gallacher, L. Ogmore, L.
Galpern, L. Peston, L.
Gladwyn, L. Phillips, B.
Graham of Edmonton, L. Pitt of Hampstead, L.
Gregson, L. Ponsonby of Shulbrede, L. [Teller.]
Grey, E.
Grimond, L. Porritt, L.
Halsbury, E. Prys-Davies, L.
Hanworth, V. Rathcreedan, L.
Harris of Greenwich, L. Reilly, L.
Hatch of Lusby, L. Ritchie of Dundee, L.
Houghton of Sowerby, L. Rochester, L.
Howie of Troon, L. Sainsbury, L.
Hughes, L. Saint Brides, L.
Irving of Dartford, L. Saltoun of Abernethy, Ly.
Jacques, L. Scanlon, L.
Jay, L. Seear, B.
Jeger, B. Seebohm, L.
Jenkins of Putney, L. Sefton of Garston, L.
John-Mackie, L. Serota, B.
Kilmarnock, L. Shackleton, L.
Kinloss, Ly. Shepherd, L.
Kirkhill, L. Soper, L.
Leatherland, L. Stallard, L.
Listowel, E. Stedman, B.
Lloyd of Kilgerran, L. Stoddart of Swindon, L.
Lockwood, B. Strabolgi, L.
Lovell-Davis, L. Taylor of Blackburn, L.
Macaulay of Bragar, L. Taylor of Gryfe, L.
McCarthy, L. Taylor of Mansfield, L.
McIntosh of Haringey, L. Tordoff, L. [Teller.]
McNair, L. Turner of Camden, B.
Mason of Barnsley, L. Underhill L.
Mayhew, L. Wallace of Coslany, L.
Mishcon, L. Walston, L.
Molloy, L. White, B.
Monson, L. Williams of Elvel, L.
Murray of Epping Forest, L Wilson of Langside, L.
Nicol, B. Wilson of Rievaulx, L.
Alexander of Tunis, E. Hailsham of Saint Marylebone, L.
Allerton, L.
Arran, E. Harmar-Nicholls, L.
Balfour, E. Henley, L.
Beaverbrook, L. Hesketh, L.
Belhaven and Stenton, L. Hives, L.
Birdwood, L. Holderness, L.
Blyth, L. Hood, V.
Borthwick, L. Hooper, B.
Boyd-Carpenter, L. Hylton-Foster, B.
Brougham and Vaux, L. Ironside, L.
Butterworth, L. Johnston of Rockport, L.
Caithness, E. Kimball, L.
Campbell of Alloway, L. Kinnoull, E.
Campbell of Croy, L. Long, V.
Carnock, L. Lovat, L.
Carver, L. Lyell, L.
Constantine of Stanmore, L. McAlpine of Moffat, L.
Cottesloe, L. McFadzean, L.
Dacre of Glanton, L. Mackay of Clashfern, L
Davidson, V. [Teller.] Malmesbury, E.
De Freyne, L. Margadale, L.
Denham, L. [Teller.] Merrivale, L.
Dormer, L. Mersey, V.
Dudley, B. Middleton, L.
Dundee, E. Monteagle of Brandon, L.
Effingham, E. Munster, E.
Elibank, L. Murton of Lindisfarne, L.
Ellenborough, L. Napier and Ettrick, L.
Elliot of Harwood, B. Nelson, E.
Elliott of Morpeth, L. Nelson of Stafford, L.
Erne, E. Norrie, L.
Erroll of Hale, L. Northesk, E.
Foley, L. Nugent of Guildford, L.
Fraser of Kilmorack, L. Onslow, E.
Gardner of Parkes, B. Orkney, E.
Glenarthur, L. Oxfuird, V.
Gray of Contin, L. Pender, L.
Grimthorpe, L. Penrhyn, L.
Platt of Writtle, B. Somers, L.
Plummer of St. Marylebone. L. Stanley of Alderley, L.
Strathcarron, L.
Portland, D. Strathclyde, L.
Portsmouth, E. Strathspey, L.
Pym, L. Sudeley, L.
Reigate, L. Swansea, L.
Renton, L. Terrington, L.
Rippon of Hexham, L. Thomas of Gwydir, L.
St. Davids, V. Trumpington, B.
Sanderson of Bowden, L. Vaux of Harrowden, L.
Sharpies, B. Westbury, L.
Skelmersdale, L. Windlesham, L.
Slim, V. Wise, L.

Resolved in the affirmative, and amendment agreed to accordingly.

3.40 p.m.

Clause 11 [Modification by Agreement]:

Lord Peston moved Amendment No. 130: Page 8, line 47, at end insert— ("(2A) In the case of any such objections which are made and not withdrawn, the Secretary of State shall cause an inquiry to be held under the provisions of section 59 of this Act.").

The noble Lord said: Amendment No. 130 is the first of several amendments that deal with the modification of licences. Under Clause 11 we are discussing where the director proposes to modify the licence and where the holder of the licence consents to the modification being made. The question arises as to how we ought to proceed in dealing with such modifications which obviously will be necessary on occasions.

Subsection (2) starts off extremely sensibly. It refers to the director giving notice of what he is proposing to do and stating the reasons. Paragraph (c) refers to representations. Should we read the clause to mean that the director general should regard himself as being obliged to seek representations, or is the clause passive in the sense that the director general is simply obliged to wait and see if any representations occur? More generally, as on some of these matters of changing licences issues of broad public interest may arise, we felt that we ought to press the point that Clause 59 refers to the possibility of public inquiries into relevant matters. Do the Government agree that in certain matters to do with modification of licences a public inquiry may well be relevant?

My third point is a little technical but is not far-fetched. Objections to matters relating to the award of a licence may have occurred earlier than the award of the licence. These may have been unresolved. The director general may have gone ahead and awarded the licence without resolving those objections. Under this heading we ought at least to be considering whether those unresolved objections are meant to be and could be incorporated into these modifications. It has been drawn to my attention, although I hasten to add that I do not wish to open up this subject again in its entirety, that environmental aspects to the awarding of licences may have been left unresolved. These might cause the director general at least to modify what he is doing with the licence.

My final point is for information and is not one of criticism. When the director general announces that he is considering modification of the licence and gives reasons, will the representations that are then to be allowed be confined to the modifications that he is putting forward at that point, or can representations be made on broader issues at the moment the director general has opened up the licence? I raise these matters under this heading. I argued on an earlier occasion in Committee that the licences are so important that they require full exploration in all their dimensions. Modification is clearly a matter of importance. This is the easiest part of modification because it is modification where the licensee consents to what is happening. There are more complicated aspects of this to come. I look forward to hearing the noble Baroness's answers on these points.

Lord Renton

Has the noble Lord considered whether it is right to compel the Secretary of State to hold an inquiry, bearing in mind that some of the objections may relate to very minor matters or may be trivial or even frivolous?

Lord Peston

With the permission of the Committee, this is always a difficult matter. On the occasions when I had experience of government I was always in favour of governing and was much less on the side of those who wished to object to governing and who wanted to be consulted and so on. It is easy to argue— and psychologically I tend to be on that side— that those who object are being trivial, frivolous and so on. In my experience of these matters, the people who object and wish to make representations take great offence if it is suggested that what to one person may seem a minor matter is actually minor, trivial or frivolous.

The noble Lord makes a not irrelevant point and it is relevant elsewhere in the Bill in considering representations. It is a matter of balance. When I sit on this side of the Chamber perhaps I am rather more in favour of representations and objections than I would be if I were sitting on the government side trying to move things ahead. I well understand the tensions that arise. As someone who naturally wants to go ahead with things, I have to lean over backwards not to argue that those who object are being frivolous. That is the best answer I can possibly give.

Lord Harmar-Nicholls

The noble Lord was vague on another part of my noble friend's question. He seemed to indicate that the director general ought to ask for representations to be made if someone genuinely thought that there was something to make representations about. Is he in favour— I hope that he is not, but if he is I trust that my noble friend will not agree to it— of encouraging the authorities to ask for people to make representations against a point that is put forward in all good faith in the first place?

Lord Peston

With the Committee's permission, perhaps I may clarify that point. Again I tend to sit on the fence a little. I clearly do not believe in encouraging frivolous or trivial objections. When I said that the director general should go out of his way to get representations, I wanted to ensure that the views of relevant bodies such as consumer bodies and one or two of the more serious environmental groups were sought. I am certain that the noble Lord would then say that those are the kind of bodies that one does not need to seek out because they will seek out the director general. Perhaps there is very little between us on this matter. I am not one to encourage the waste of time in important areas. We are discussing the serious matter of the supply of electricity. It is a matter of getting the balance right.

Baroness Hooper

I believe that at an earlier stage in the Committee's discussions we touched on the question of whether the director general has or should have the power to vary or revoke a licence. This point arose on Amendment No. 70. Clause 11 enables the director to modify the conditions of a licence only if the licensee consents. The director is obliged under the clause to publish notice of his proposals and to allow a period for representations and objections. That is his duty in bringing the matter to the attention of the public or persons likely to be affected. He then waits, but I do not regard that as being a passive way of carrying the matter forward.

The procedure as set out in Clause 11 will enable a sensible outcome to be negotiated without undue procedural fuss and, hopefully, with the minimum of red tape. I believe that the amendment before us would in fact introduce a bureaucratic and wholly unnecessary tier of complication.

In any event, if the director cannot modify a licence by agreement, he may make a reference to the Monopolies and Mergers Commission. He may of course do so in any case. We see this as the appropriate vehicle for inquiring into licence modifications from the public interest point of view, rather than by the holding of separate public inquiries. The procedures as outlined in Clause 11 are well-precedented and have worked well in other privatisations.

The noble Lord, Lord Peston, asked one or two specific questions about whether public inquiries under Clause 59 are relevant to Clause 11. The answer is no; it is for the director to consider any objections or representations made. Further, the representations under Clause 11 should be specific in relation to the matter which has been published by the director. However, it almost goes without saying that anyone can make general representations about anything at any time.

The noble Lord also asked about the kind of matter which may be involved. He referred to the possibility of environmental matters being put under this heading. I should like to give him an example of where we would not want any change and therefore the involvement of the Secretary of State is necessary. That would occur, for example, where a licence condition requires the setting up of consultation machinery on safety,.

We believe that the Secretary of State should have an involvement in that type of situation. After all, it is the Secretary of State who is involved in issuing the initial licences, which, as Members of the Committee will know, are currently available in draft form and have been since the beginning of January. They have been the subject of considerable consultation and anyone can make representations on the licences in general. Therefore by vesting day they will have been in the public domain for 12 months. We believe that great care is being taken but that Clause 11 is necessary in case anything in the light of experience requires a change. In view of those remarks, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Peston

I thank the noble Baroness for her answer. As she knows, I devote all my spare time to reading the draft licence documents and cannot wait for more to appear. However, perhaps I may ask her to clarify one part of her answer which I think I understood. Did she in fact say that the representations would be limited to the precise licence modifications that the director general is discussing and that it would not be— this relates to earlier interventions— an invitation to general representations on the behaviour of the licence holder in toto? I think that she said that it would be specific but I should like to have that point clarified.

Baroness Hooper

I shall be delighted to try to clarify the point further. Certainly the representations and objections considered would be in relation to the specific modification, although, as I continued to say, no one can stop a person from making general representations if he or she wishes to do so.

Lord Peston

I fully understand that explanation for which I thank the noble Baroness. Accordingly, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Peyton of Yeovil moved Amendment No. 131: Page 9, line 8, leave out from ("State") to end of line 10.

The noble Lord said: It is my belief that the question of the relationship between the Secretary of State and the director will be of great importance in the newly formed supply industry. I think that it could be a source of real difficulty. Therefore I hope that the Government will have second thoughts as to what the arrangements should be.

As regards the director general, we are told that this almost supreme being has been identified but as yet the terms and conditions of his employment remain a subject of difficulty. We long to hear further news as to who this person will be and I hope that my noble friend will be able to help us on the matter. However, whoever the appointed person turns out to be, he will need to be in very close touch with the Secretary of State and he will need all the authority that he can muster. Therefore he will wish to avoid, so far as is possible, the harassment which would arise from a public difference of opinion with the Secretary of State.

I cannot help feeling that even in what is likely to be a very difficult area of public affairs the relationship between the director general and the Secretary of State will be a fairly close one. Therefore I cannot believe that it will be helped along by the Secretary of State having formal power to give directions to someone who in essence reports to him and who he has appointed or who will in due course be appointed. I hope that the Government will look at this point, because I am sure, as I said at the beginning of my remarks, and I have no intention of dwelling for too long on the subject, that this relationship is one which will be of great importance. I am equally certain that the Government may well be setting a snare for themselves by giving the Secretary of State such powers.

Baroness Hooper

Perhaps I may begin by saying how sorry I am that, despite the interest which my noble friend Lord Peyton has shown as regards the appointment of the Director General of Electricity Supply, he seems to have missed the announcement which was made on 22nd May. The appointment, subject to Parliament's approval of the Electricity Bill, has in fact been made. Professor Stephen Littlechild is the designated director general. I can of course arrange for my noble friend to receive a copy of the press release, which goes into considerably more detail.

I turn now to the points raised by my noble friend Lord Peyton by way of this amendment. It appears that he is content for subsection (4) of Clause 11, which requires the director to send a copy of a notice under subsection (2) to the Secretary of State, to continue. However, he does not wish the Secretary of State to have any further say in the matter. I should perhaps reassure my noble friend that we see it as highly unlikely that the Secretary of State would ever wish to block a licence modification which the director may seek to make. For that matter, it is also highly unlikely that the director would wish to make a licence modification that the Secretary of State might wish to block. The idea of a public confrontation, as described by my noble friend, would be a consideration here.

However, we feel that it is necessary to provide some sort of flexibility to deal with any eventuality where there could be good and valid reasons not to change, or not to change in a particular way, a licence modification suggested by the director. We believe that it is important that the Secretary of State should be free to act in that way for some of the reasons that I gave in relation to the previous amendment. Whether he uses his power under subsection (4) will of course depend upon the circumstances. I hope that it is appreciated that the Secretary of State should have discretion to judge when action may be necessary in that respect. I hope that my noble friend will feel able not to press his amendment.

4 p.m.

Lord Lloyd of Kilgerran

I support the amendment, without unduly prolonging the debate, for three reasons. First, from these Benches we always like to see the powers of the Secretary of State, as a general matter, reduced or limited wherever possible. This is an example of where the Secretary of State's powers seem to be unnecessary.

My second reason is the general one that the amendment will shorten the Bill by two and a half lines. To shorten any Bill by that amount is always acceptable.

The third and main reason, as the Minister said, is that we do not want a confrontation between the Secretary of State and the director. As the noble Lord, Lord Peyton of Yeovil, said, the director and the Secretary of State will be in close association and both will know what is going on. It is therefore unnecessary to have those words in the clause. The Minister said that we want to avoid confrontation between the director and the Secretary of State. In normal circumstances there would be no confrontation. The amendment should be supported.

Lord Peston

I rise partly for clarification again. Am I right in believing that we are dealing with Amendments Nos. 131 and 132? My groupings say that we are, but, if so, I did not hear the Minister's reply to Amendment No. 132. I believe I heard the Minister say that she would send the press release about the appointment to the noble Lord, Lord Peyton. My second question is; will she send me a copy of the press release? I was aware of the appointment but I should like to know more of the details.

I come to my third question. The Minister said that theoretically she could see a role for the Secretary of State here. On other occasions when we have discussed these matters, as on the previous amendment, she was able to give an example. I should be interested to know in what circumstances the noble Baroness considers— following upon what the noble Lord, Lord Peyton, said— the Secretary of State would overrule the director on an agreed modification of the licence. I would find the overruling odd. If the department has thought it through, I should like to know the kind of case that it has in mind.

Lord Harmar-Nicholls

My noble friend Lord Peyton has a point. As it stands, it looks as though the Government expect that there will be differences of view between the Secretary of State and the director. It would be better to have it made clear that we expect the director's authority to be real and that the Secretary of State would not want unnecessarily to intervene. As it stands, the wording makes it look as though we expect the opposite to happen. I do not believe that that is good.

Baroness Hooper

It would clarify the position if we were to deal with Amendments Nos. 131 and 132 together. I understood my noble friend to be speaking only to Amendment No. 131; so I responded in the light of that. It is important to bear in mind that although he takes away the Secretary of State's power to block in Amendment No. 131, my noble friend then gives the power of referral to the Secretary of State in Amendment No. 132.

Lord Peston

If the Minister will forgive me, I intervened precisely to distinguish what happens in Clause 12 from what happens in Clause 11. When we get around to discussing the amendment tabled by the noble Lord, Lord Peyton, to Clause 12, the Minister will find that there are other arguments which need to be developed. It is precisely to what the noble Lords, Lord Peyton, Lord Lloyd and Lord Harmar-Nicholls, said on Clause 11(4) that one seeks an answer. I was not party to the groupings. I do not see that Amendment No. 132 goes with Amendment No. 131. It is a different debate, as we shall see in a moment. I should like to know what the Government have in mind as to what might happen under subsection (4).

Lord Peyton of Yeovil

Perhaps I may help the Committee. I failed to refer to Amendment No. 132. It covers a different point from that covered by Amendment No. 131.I hope that we might deal with it without prolonging the discussion.

Baroness Hooper

If the Committee so wishes, I am happy to stick to Amendment No. 131 and to respond to the questions asked about where it is envisaged that the power would be used and why we therefore believe that it is necessary. Although the Secretary of State and the director are subject to the same duties under Clause 3, the Secretary of State will nevertheless always have his perception of the requirements of the wider national interest. That may lead him to form a view different from that of the director, although, as I said in my initial response, I believe that that is highly unlikely.

Examples of licence conditions which the Government would not wish to see changed but which might be subject to agreement between the director general and the licensee could include, for example, those on the health and safety of employees, on special services for the elderly and disabled, or on fuel security. We believe that it is important that the Secretary of State should be able to ensure that such provisions are maintained in a particular form.

Lord Peyton of Yeovil

Perhaps I may apologise to my noble friend. Somehow or another I missed the important announcement of who is to be the Director General of Electricity Supply. My only excuse is that I was out of the country at the time. I had confidently expected that when the Government were able to identify a person of such tremendous stature and heroic character, he or she would be welcomed with a blaze of publicity. I regard it as somewhat unfortunate that that noble person was not greeted with the enthusiasm and wonder as I do not doubt his character deserves.

In replying to the amendment, my noble friend used the words "highly unlikely" in describing when the power would be used. They are words which cause me a hostile vibration. When Ministers say that it is highly unlikely that a power will ever be used in justifying a power they are putting into a Bill, I believe that they should think again and not grab at it. Piling up powers which Ministers say they will not use always seems to me dangerous.

Perhaps I may prevail upon my noble friend, without any commitment at all, to take another look at the matter and to see whether there is something in what has been said in Committee today which merits further study.

Lord Dean of Beswick

Part of the debate seems to centre around the appointment of this almighty person with all the virtues to carry out a very difficult job. I managed to read of the appointment myself last week but it was certainly not made in the form of a general announcement in a public sense. Even people over here may well have missed it. However, if the Government are not careful there is a danger that they will be accused of being more than a little discourteous on the subject. It was only the previous week that Members of all sections of your Lordships' House, even government supporters, were asking who the person was. It seems strange that the Government waited until both Houses were in recess before the announcement was made. I should have thought that it might have been better for the Government to have waited a few days for it to be announced in your Lordships' Chamber so that people with a vital interest in the Bill, who have sat here through long hours and who will certainly sit through even more before the Bill goes on the statute book, would have been the first to know and would not have had to pick it up generally.

Baroness Hooper

On that latter point, I should say to Members of the Committee that the information was released in answer to a parliamentary Question and appeared in Hansard. It was a parliamentary Question tabled in another place.

Lord Dean of Beswick

I am grateful to the noble Baroness for giving way. The Written Question was made available almost as both Houses went to sleep for the Whit week break. I know that that has happened in the past with successive governments of both colours. However, I do not believe that it is the best and most courteous way of conducting business, when people have been pressing in your Lordships' House for an answer, for that answer to arrive by what appears to to have been the sleight of hand, which is over-used, of a Written Question by a government supporter.

Baroness Hooper

I apologise to anybody who feels that the announcement was in any way attempted in an underhand manner. I believe that it was made through the normal parliamentary method. The anouncement was made on 22nd May. If I have it right, that was the Monday of the week before the recess began, so it was in the public domain before both Houses, as it were, went to sleep.

In relation to Amendment No. 131, as I have tried to explain we see the provision very much as a fallback position to cover the kinds of matters which I believe are extremely important. We feel that the Secretary of State should have some right in protecting people as regards health and safety and also in respect of special services for the elderly, the disabled and so on.

As I have tried to point out, the whole question of the relationship between the Secretary of State and the director general is one of checks and balances. My noble friend Lord Peyton has tabled a series of amendments which refer to many aspects of the relationship. I fear that if we were to agree to the amendment, far from simply reducing the Bill by two-and-a-half lines, as was suggested by the noble Lord, Lord Lloyd of Kilgerran, it might add quite considerably to the Bill through the various other repercussions that might be involved.

However, I do not wish to be unreasonable. Of course I shall look at the arguments that have been put forward, but without commitment and subject to the very real problem of having the delicately balanced relationship seen in other privatisations. In many ways we are building on the experience gained from other privatisations where this type of provision has operated. It seems only right and reasonable that it should do so in this case. Nevertheless, I agree to look at the arguments.

Lord Peston

Perhaps I may intervene yet again. One is delighted to hear that the noble Baroness will think about the amendment again. I am bound to say that one reason why I hope that she will do so and why she might well consider following the line indicated by the noble Lord, Lord Peyton, is that her examples have exactly the opposite effect in my mind to what she intended. I find it inconceivable that a director, appropriately appointed— even one as committed to privatisation and biased as this particular person— should not take those matters into account at all times.

The idea that we might find ourselves with a director who did not look at matters such as health and safety at all times I find impossible to believe. I take it that that is what the noble Lord, Lord Peyton, is saying. It is precisely because one cannot come up with an example of where the director would differ from the Secretary of State— I am glad like others to hear that the noble Baroness is thinking about this again— that I see no reason not to accept what the noble Lord has said.

Lord Peyton of Yeovil

It would be churlish in the extreme if I did not say to my noble friend that I greatly appreciate her courtesy in undertaking, albeit without commitment, to look at the point raised which has had some support from both sides of the Committee. I am grateful to my noble friend. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

4.15 p.m.

Clause 12 [Modification references to Monopolies Commission]:

Lord Peyton of Yeovil moved Amendment No. 132: Page 9, line, 11, leave out ("Director may") and insert ("Secretary of State may on the advice of the Director").

The noble Lord said: I can make this point very briefly. Clause 12 gives the director power to make a reference to the Monopolies and Mergers Commission. I wish to make clear at the start that I myself do not share the opinion that the Monopolies and Mergers Commission is a body possessed of so much acumen and wisdom that it never errs. I believe that it very frequently errs. Therefore I do not think that it can be relied upon in this or any other context to produce perfect, unchallengeable and always reliable and sensible answers.

However, in my view it has always been a matter for Ministers to make such references. I wish to know from my noble friend— I am seeking information— in what other statutes powers are given to people other than Ministers to refer questions such as this to the Monopolies and Mergers Commission. I believe that it is a matter which should very much reside with Ministers. Even though precedents may have been set elsewhere, of which I am unaware, I do not believe that this power is one which should be handed out at all freely to others. The Monopolies and Mergers Commission can be an extremely disturbing element in anyone's existence. I hope that there will not be too many occasions when the commission's assistance and advice will be called upon within this industry. I am very hopeful that, on second thoughts, my noble friend may decide that the power should be reserved to the Secretary of State and not be given to the director.

Lord Lloyd of Kilgerran

I wish to support what the noble Lord has just said in support of his amendment. I wish to make a confession. In the course of my own experience, I always thought that the power to refer matters to the Monopolies and Mergers Commission rested with Ministers and not with any employee of the Government. The director would be such an employee. I should be glad to know of any instances where such directions have been made by employees rather than Ministers.

Lord Harmar-Nicholls

I agree with the words of my noble friend, as he expressed them in moving the amendment, rather more than with the words of the amendment itself. I agree absolutely with my noble friend that the decision to refer a matter to the Monopolies and Mergers Commission should rest with the Secretary of State. The amendment states that, the Secretary of State may on the advice of the Director make references to the Monopolies and Mergers Commission. Those words give a power to the director that he should not have as regards whether the Monopolies and Mergers Commission should examine certain matters. I would accept wording which stated, "The Secretary of State after consulting the director may advise". Such wording would leave the matter more in the hands of the Secretary of State without even sharing the responsibility with the director.

However, I hope that my noble friend who is to reply will accept the general argument of my noble friend as regards preserving the power to refer certain matters to the Monopolies and Mergers Commission in the hands of the Secretary of State rather than placing it in the hands of someone else.

Baroness Hooper

I am afraid that I am unable to satisfy my noble friend Lord Harmar-Nicholls on that last point. First of all, we believe that the proposed amendment would upset the careful balance of powers— I referred to this on the previous amendment— which has been developed as regards the relationship between the director and the Secretary of State throughout the Bill.

I believe it is right and wholly appropriate for the director to be the person who is responsible for referring the question of whether conditions in a licence should be modified to the Monopolies and Mergers Commission. That follows his role under Clause 11 where it is the director who may have tried to agree procedure for licence modification by agreement, but the licence holder has not given his consent to the proposed modification. Or indeed it may be that as a result of representations made to the director in the course of the procedures envisaged under Clause 11, he decides that he will in any event refer the matter to the Monopolies and Mergers Commission. This clause therefore enables him to take the matter a step further, if he so wishes, by referring the matter to the Monopolies and Mergers Commission. The clause expressly exists to deal with those cases where the director has been unable to reach agreement on licence modifications with the licensee under Clause 11.

However, I can give some good news to my noble friends. The provision in this clause is well precedented. It follows Section 13 of the Telecommunications Act 1984 and Section 24 of the Gas Act 1986. These provisions give the power to make licence modification references solely to the director, and not to the Secretary of State. I trust I have therefore been able to convince my noble friend that this amendment is not necessary.

Lord Peston

Will the noble Baroness clarify something which convinces me that I do not understand the Bill? Is she saying that the general powers that the Secretary of State has under various Acts of Parliament as regards monopolies and mergers will not apply to this industry? Is she saying that the power of the Secretary of State to refer a matter to the Monopolies and Mergers Commission does not apply in the case of electricity? In other words is that somehow written out of his powers in ways which I do not understand? I had assumed that all this provision does is to leave the powers of the Secretary of State where they are with respect to monopolies and mergers— that includes this industry— but to give further powers to the director. That does not detract necessarily from what the noble Lord, Lord Peyton, is saying. Am I right in saying that this Bill does not take away the powers that the Secretary of State for Trade and Industry has with respect to monopolies and mergers?

Baroness Hooper

The noble Lord is perfectly right in the assumption that the general powers of the Secretary of State are not affected. This provision exists to deal with those cases where the director has been unable to reach agreement on licence modifications with the licensee.

Lord Peyton of Yeovil

I can only apologise to my noble friend for my ignorance in that it had escaped me that there were already two precedents on the statute book which gave powers to an official, rather than to a Minister, to make a reference to the Monopolies and Mergers Commission. I am sure the Chamber will sympathise with my excuse. In the flood of legislation which inundates us these days, sometimes it is difficult to catch up even with important items. If my noble friend detects therefore some vein of irony in my apology, she would not be all that far wrong. It would appear to me from what my noble friend has said that there have been two recent precedents. That does not, in my view, deal with the fact that they are bad precedents and now we have—

Lord Mulley

Does not the noble Lord agree that this is a perhaps a third mistake?

Lord Peyton of Yeovil

The noble Lord, Lord Mulley, may express the matter as he wishes. I was about to say to the Committee that these two precedents are, in my view, bad ones. They have now fathered a bad habit. I hope that my noble friend will take that message back to her right honourable friend. I hope she will say that because something bad has been done on two previous occasions, it should not necessarily be regarded as a water-proof, copper-bottomed excuse for perpetrating the same action again. My acceptance of the argument of my noble friend is tinged with dismay. In the circumstances I shall not trouble the Chamber by dividing the Committee on so small a point. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.30 p.m.

Lord Peston moved Amendment No. 132A: Page 9, line 20, after ("interest") insert ("as defined in section 84 of the 1973 Act").

The noble Lord said: With the permission of the Committee, I shall also speak to Amendment No. 132C. What I have to say follows very much on what we have just debated under the earlier amendment of the noble Lord, Lord Peyton of Yeovil. As always what I am about to say may indicate more my lack of understanding than anything substantive.

To put the matter simply. I had understood paragraph 12 and consequential paragraphs and sections to raise monopolies and mergers matters. I thought that the issues before us concerned anti-competitive practices and monopolies. It therefore seemed to me and my noble friend Lord Williams of Elvel that we ought to write into the Bill immediately the specific criteria which the Monopolies and Mergers Commission is obliged to look at under Section 84 of the 1974 Act.

My difficulty is that, having listened to the comments of the noble Baroness on the earlier amendments, I feel that the Monopolies and Mergers Commission is being used here for non-monopolies and mergers matters. In other words, to put it in as nasty a way as I can, the Government clearly need a body to look at licence modifications which are not agreed; but they do not have such a body because they have gone out of their way to abolish relevant bodies which might have done that. The Government do not wish to invent a quango, because they say that they do not like them. Therefore they look around for whatever body is left in existence. Practically the only one left in existence is the MMC, so the Government say that although these are not MMC matters, that is the only body there is and it will look at the licences.

To take the example which the noble Baroness gave in respect of an earlier amendment, one of the issues might concern health and safety. It could well be that the director would raise an issue under health and safety. Under this clause if the licence holder does not agree, the director has to refer the matter to the Monopolies and Mergers Commission. I think that that must be the correct interpretation, although I have only just worked out that that is what it must mean. If that is true, my argument under the amendment that the commission must also consider the competition criteria does not carry the weight that I thought it did when I put down the amendment.

I should now like to know what criteria the MMC should look at. It cannot operate in an entirely ad hoc manner in an area in which it is not organised to act. This is a very good example of why it is worth scrutinising legislation in great detail in this Chamber because it throws great light on what is happening.

I did look at the Notes on Clauses and, although I was not present when we privatised the gas industry and telecommunications, and therefore can have no responsibility for those matters, I saw the sentence which said that this had been done before and therefore it would be done again. I fully accept the logic of the view that that is not the most rational argument that one could dream up.

I should like to ask whether the equivalent powers for those two industries have yet been used. Have the directors for those industries yet referred any issues of this kind to the Monopolies and Mergers Commission, and do we have any experience of these matters which we can build on?

Lord Harmar-Nicholls

I hope that my noble friend can give a satisfactory reply to the main point raised by the noble Lord. The only reason why I made a point of being present in the Committee when these issues were discussed was because I do not share the supreme confidence that the Monopolies and Mergers Commission has the special knowledge and aptitude required. Anybody who has had contact with the commission on such matters, as I have, knows that it can be far from perfect.

If what the noble Lord has said is anything like true, I should not like to think that we were handing over to the commission a decision which ought to be in the hands of the Government or the director of this particular industry. I therefore hope that my noble friend has a good reply and that this provision is not, as the noble Lord suggested, an alternative to setting up a distinct authority or examining body which would know what it was about rather better than the Monopolies and Mergers Commission, whose legalistic approach to so many matters seems to divorce it from the practical considerations that ought to be taken into account.

Baroness Hooper

In view of the wider issues which have been raised, I should say that it is the Government's policy that the electricity industry, as we propose to recognise it, should be fully subject to competition law. By competition law I mean mainly the Fair Trading Act 1973, the Restrictive Trade Practices Act 1976 and the Competition Act 1980. There will have to be some exemptions, but we intend that those should so far as possible be transitional in nature. We shall no doubt go into more detail on this later, when the Committee discusses later clauses of the Bill— particularly Clauses 41 and 95.

Simply subjecting the industry to competition law would not be sufficient. There are some areas where a degree of monopoly will remain for the foreseeable future. The most obvious of these is the conveyance of electricity by means of electric lines. So we cannot leave it to competition— to market forces— to protect the interests of the consumer; we have to have the system of regulation through licensing which we are now considering.

A degree of flexibility is required, and so we have in Clause 11 a provision for licence modifications by agreement between the director and the licensee; and in Clauses 12 to 14 provisions for modifications where there is no agreement but there are public interest reasons why the director thinks a modification should be imposed on the licensee. In the interests of the licensee, we have followed the examples of telecommunications and gas and provided that licence modifications may only be imposed on a licensee following a report to that effect from the Monopolies and Mergers Commission.

So we get to the position where the commission and the public interest have entered the picture. If nothing else were said, there would be some doubt whether Section 84 of the Fair Trading Act applies, because subsection (2) of that section limits its application to functions of the commission under that Act. But if Section 84 does not apply, by what standard is the commission to determine whether or not a matter referred to it operates, or may be expected to operate, against the public interest? Subsection (7) of Clause 12 supplies part of the answer to that question, and requires the commission to have regard to the matters set out in Clause 3— matters such as securing that reasonable demands for supply are met, and the others which we have already discussed.

Subsection (8) supplies the remainder of the answer to the question. It specifies which provisions of the 1973 Act are to apply in relation to references to the commission under Clause 12. Members of the Committee will see that Section 84 is not mentioned. Therefore, the effect of subsections (7) and (8) in this respect is to require the commission, when looking into a reference made under Clause 12 by the director, to have regard to the electricity matters set out in Clause 3 of the Bill, and not to the more general public interest matters set out in Section 84 of the Fair Trading Act 1973.

Not only is this in accordance with what has been done in previous cases, but it is appropriate in the context. We are here discussing references to the Monopolies and Mergers Commission of matters relating to the generation, transmission or supply of electricity pursuant to a licence. Those are— self evidently— electricity matters. It is right therefore that the commission should reach its decision in the light of the provision set out in Clause 3 of the Bill— a clause which, if I may borrow a phrase from my noble friend, Lord Peyton, in an earlier discussion, expressed the purpose behind Part I of the Bill. My reply to these amendments is concerned only with references to the commission under Clause 12. As I have said, we shall discover, when we reach Clause 41, that there may be other circumstances in which part or parts of the electricity industry may become involved in references to the commission. Any such reference would be handled by the commission in accordance with the terms of the 1973 Act, including Section 84.

In relation to the examples requested by the noble Lord, Lord Peston, so far as I am aware only two licence modification references have been made following previous privatisation legislation. They are chat lines under the Telecommunications Act and Manchester Airport under the Airports Act.

In giving this wider explanation, I hope that I have helped the Committee to consider the amendment in the correct context.

Lord Peston

I should like to thank the noble Baroness. In all ways she is extremely helpful. Nonetheless, I am not satisfied. As I understand it, Section 84 criteria will apply as and when competition issues arise. In that sense, my amendment may be unnecessary for that purpose.

What concerns me is a matter that I should like to warn the Committee that I shall feel obliged to return to. The Monopolies and Mergers Commission will be dealing with electricity matters, as the noble Baroness has pointed out. I agree with what the noble Lord, Lord Harmar-Nicholls, says about the commission dealing with competition matters. I am not at all happy about that. I think that the noble Lord's use of the word "legalistic" is correct. It is not entirly satisfactory.

It is not obvious to me that the Monopolies and Mergers Commission is the correct body to interpret the very wide and vague purposes of the Bill, along Section 12 lines, which concern modification of licences. The noble Baroness has clarified what the Bill is about, but in doing so she has shown that the Bill is unsatisfactory in relation to modifying licences against the will of those of those who hold licences. I do not believe that the Monopolies and Mergers Commission is the right body to deal with this. I am of the opinion that we need a body which would develop the relevant expertise and deal with these matters in the correct terms. In giving a warning, as a result of listening to the excellent exposition that the noble Baroness has given—

Lord Harmar-Nicholls

I gather that the noble Lord is going to withdraw the amendment. I do not know whether I would have wanted to support the amendment and I cannot say that I altogether understand it. With the noble Lord's permission, I should like to ask the Minister to keep in mind that the wording of the Bill is very clumsy, if we want the right results to flow from it.

The noble Baroness seemed to rely on subsection (3) and (7) of Clause 12. Under subsection (7) the director and the Minister will tell the Monopolies and Mergers Commission what they must look at. In subsection (3) they are laying down the kind of ingredients that must be taken into account before the Monopolies and Mergers Commission or anybody else could give any report on what is right and what is wrong. I agree with the noble Lord, I do not like the fact that the Monopolies and Mergers Commission will be under such explicit and close instruction, as indicated by the two subsections that the noble Baroness relied upon. I do not think that it is the right body. It has a legalistic approach and routines which it follows rigidly. There are one or two situations outside this Bill where the Monopolies and Mergers Commission has created a little bit of a furore, which is not to the general good of the commercial world.

The noble Lord says that he is going to withdraw the amendment, but I believe that subsections (7) and (3) are a very clumsy way of dealing with this matter.

Lord Peston

I think that the noble Lord, Lord Harmar-Nicholls, would be entirely wrong to support this amendment. I accept, on the basis of the noble Baroness's explanation, that the amendment is misplaced; but it does not mean that the ideas underlying the amendment are mistaken. I am simply giving notice that a different kind of amendment is required. I should like to give an example. I was unaware of the Monopolies and Mergers Commission's work on chat lines. I am a very imaginative person but I find it difficult to work out what expertise the Monopolies and Mergers Commission has which would qualify it to advise the Secretary of State on chat lines. That is precisely my point. We need a body that could advise the Secretary of State on electricity matters in these areas. I beg leave to withdraw the amendment.

4.45 p.m.

Lord Peston moved Amendment No. 132B: Page 10, line 15, after ("matters") insert ("including the collection of evidence from the relevant consumer committee or committees").

The noble Lord said: This amendment is somewhat locked in to the earlier amendment. I hope that the relevant body which will be looking at the kinds of issues that might be referred by the director, or the Secretary of State if we changed the rules slightly, will be aware that, in considering any matters that involve the public interest, we in the Committee would expect that evidence would be collected from the relevant consumer committees. I hope that the noble Baroness will be able to say that there can be no doubt that this is how the matter will proceed. That is the reason for the amendment.

Baroness Hooper

Under Clause 43, the director will have a duty to investigate any complaint which deals with any of the public electricity suppliers' duties or obligations under the Bill or licence— that is an "enforcement matter" which might require the director to consider taking action under Clauses 25 to 28 of the Bill. The consumers' committees must refer any complaint which appears to them to be an enforcement matter to the director, while the director is able to delegate his duty under this clause to a consumers' committee and require it to investigate and report to him on an enforcement matter.

It is, of course, possible, not to say probable, that the director may decide that an enforcement matter which had been investigated and reported upon by a consumers' committee was operating against the public interest and ought therefore to be referred to the MMC. In such a situation, it would be entirely right and sensible that any evidence uncovered by a consumers' committee about a public electricity supplier should be passed by the director to the MMC under subsection (6) of this clause, to assist the MMC in their investigations.

I draw the attention of the Committee to the fact that subsection (6) places a duty on the director to provide information and assistance to the MMC. In a situation such as I have described, the evidence supplied by the committee to the director would in all probability be information likely to assist the MMC in their investigation. If so, it would be squarely within paragraph (a) of the subsection, and the director would be obliged to pass it on to the MMC. Consumers' committees like any other body with a relevant interest, will be free to submit evidence directly to the MMC.

I hope that this explanation has answered the noble Lord's concerns and that he will feel able to withdraw his amendment.

Lord Peston

I beg leave to withdraw the amendment.

Amendment, be leave, withdrawn.

[Amendments Nos. 132C and 132D not moved.]

Lord Peston moved Amendment No. 132E: Page 10, line 44, after ("eight") insert ("properly qualified").

The noble Lord said: With the permission of the Committee, in moving this amendment I should like to speak also to Amendments Nos. 132F and 132G. Again, I do not want to delay the Committee on this point. These matters can no doubt in due course be raised with an amendment at Report stage.

Very simply, the purpose of the amendments has been made clear in my earlier comments. This additional group of people under the MMC will not, as I see it, be considering an MMC matter. I think that has now been made abundantly clear. They will be looking at more specific public interest matters connected with the electricity industry. On reflection, my view is that this would be done better by a body which was not the MMC. However, should the Government persist in arguing that the MMC should undertake this task, it seems to me that it is absolutely fundamental, on the one hand to the interests of the industry itself and on the other hand, and much more importantly, to the interests of consumers that the Monopolies and Mergers Commission should appoint people who know something about the electricity industry and who are properly qualified.

I do not want to stir up old troubles, but the Committee will recall that a fortnight or so ago when we were discussing the appointment of the director some Members of the Committee were rather keen to have appointed a director who knew something about electricity. The Government were unable to give any assurance on that point. The result is that they have appointed someone who knows nothing about electricity. So far as I can tell from the public statement that I read in the press, he knows nothing about this Bill or the provisions that he is proposing to implement. No doubt he will receive some education on the matter in due course.

We are dealing with matters of a very important financial kind, apart from anything else, and it is apparent to me that if licences are to be modified we must have some assurance from the Government that the eight additional people will have appropriate qualfications for the work. The words I use are "properly qualified". I should be perfectly happy to write a schedule of what I regard as properly qualified with respect to electricity, but I shall not trouble the Committee with it at this time. What is not wanted is a bunch of amateurs who are ignorant of the industry pronouncing on matters which are fundamental to its survival. I beg to move.

Baroness Hooper

I regret that the noble Lord, Lord Peston, without having had full details and information of the appointment of Professor Littlechild— and the noble Lord acknowledged that— should feel able to denounce him in advance.

Lord Peston

Perhaps I may interrupt the Minister. I was not seeking to denounce Professor Littlechild, but as an economist myself I think that the noble Baroness ought to accept that I know something about the writings of most of my colleagues. I am unaware of the contributions that Professor Littlechild has made to the economics of the electricity industry— that is the only point I am making— or to any other aspect of the electricity industry. So far as I understand he is perfectly qualified as an economist, but that was not my point. My point repeats that which I made in the earlier debate: is he someone who knows anything about this industry? I am fairly certain the answer is that he is not.

Baroness Hooper

We believe that he is admirably qualified for the post. He has had extensive experience of regulatory issues both in the United Kingdom and abroad; he has worked on the regulatory regime for British Telecom; and in fact he has been a member of the Monopolies and Mergers Commission for six years. He has a wide knowledge of regulatory systems both here and in the United States of America. His job will be primarily regulating the industry and that experience will therefore be invaluable.

As regards the amendments we are discussing, and indeed the whole question of appointing properly qualified persons for the task, the wording of this amendment is somewhat vague. It is not always clear what "properly qualified" should mean, although the noble Lord, Lord Peston, has attempted to clarify the phrase today.

Clearly it will be the function of the people appointed to investigate what are often quite complex matters relating to the regulation of the electricity industry, and therefore it would obviously be helpful for some of the members to have had some experience of or possibly even in the industry. But we do not think that it is essential for all to be so qualified because, as the Government have said several times when discussing the various appointments to be made under the Bill, what counts is to have people of high quality and ability. After all, the outsider can often offer fresh and valuable insights into a problem which might escape those more closely acquainted with it.

The Government naturally hope that it will not be necessary to refer to the MMC any matters relating to the privatised electricity supply industry since it is possible that any such references might involve the commission in a significant burden of additional work. The reason for this subsection is to enable the Secretary of State to appoint not less than eight additional members to help with that work. However, we expect that the members of this electricity panel would be part time and would be called upon only as and when required to assist with a reference. I trust that those explanations will enable the noble Lord to withdraw his amendment.

The Earl of Lauderdale

Before the Committee leaves this point, my noble friend has just said that very often the outsider who is a sufficiently competent man has a better view and a better capacity to tackle a completely new subject than has someone who has been immersed in that subject for a great part of his life. She will be the first to admit that this Bill comes from a team of Ministers not one of whom had any experience of electricity before. No doubt that fact speaks for itself.

However, is it quite satisfactory to leave the matter where it is now? I am a layman and I make mistakes all the time. I am not ashamed to admit it. But laymen may not be sufficient for these purposes. This is a very complicated industry and one on which the community and industry as a whole depend tremendously and will still depend 10 years hence when the present team of Ministers has disappeared together with the present Department of Energy, followed by the DTI, and when all those responsible for this legislation are no longer in sight. Therefore, the make-up of the personnel who are to support the director general is very important.

I should like to repeat something that I have said several times already. Can the Government not consent to have another look at this matter and not simply say, "It is no good; we will not do it. We have given you all the answers"? The answers that we have had so far for the most part seem to give us the same information. Will the Government please give a thought again to this matter? I plead with them because otherwise we shall continue to have negative advice all the time and the pattern of voting is going to change quite significantly. I hope that my noble friend will take to heart what I have been trying to put to her.

Baroness Seear

I should like to support the remarks of the noble Earl, Lord Lauderdale. When we speak of eight people being properly qualified, the fact of the matter is that there is a very wide range of expertise needed among those people. No one person or two persons will have all that expertise. A team of eight persons is needed who between them will possess the degree of specialist knowledge which the generalist simply does not have.

At present we are suffering deeply from Green Papers and so on written by generalists. We want to have a good mix— a team of specialists with different specialisms, all of which are relevant to the work that must be done. It should be a team and not eight individuals, and the picking of the team should ensure that they are people with complementary specialisations.

Baroness Phillips

This is a genuine inquiry on my part. Is the act of appointing directly by the Secretary of State to the Monopolies and Mergers Commission peculiar to this Bill? As I understand it, appointment to the Monopolies and Mergers Commission in the first instance came from a totally different department. With similar provisions for privatisations in the Water Bill, will persons be appointed directly to the monopolies commission by the Secretary of State? I ask only because it is very relevant to the people who are at present on the monopolies commission. It is very much linked with whether such people have the expertise not only for this but for other matters that they will be handling.

5 p.m.

Baroness Hooper

We believe that this is an important matter. That is why the power has been given to the Secretary of State to make these appointments. As I said, it is most probable that the appointments will involve people who have a specific knowledge of the electricity industry. However, that should not be essential for all members.

We believe that it is essential that the commission should be given the maximum degree of flexibility and independence as to how it carries out its investigations into any electricity references. This applies more in relation to Amendments Nos. 132F and 132G, to which the noble Lord, Lord Peston, also spoke. The purpose of referring a matter to the MMC is to gain an independent and disinterested view— this is only fair to both sides. We think that it is best for the chairman of the MMC to be left to decide the composition of the group in the light of his assessment of the issues raised by the reference to be considered by the group. Giving the director a role in selecting the members for a special group could be seen as undermining the independence of the commission. We must also remember that it is the director who will have made the reference to the MMC, and he could be said to have an interest in its outcome. It would clearly be wrong for him to have a say in the composition of the groups set up to consider his reference.

In relation to the specific question raised by the noble Baroness, Lady Phillips, similar provision is already made for newspaper and telecommunications references as is proposed for water.

Lord Peston

Before bringing this discussion to an end, perhaps I may say that there is a difference of philosophy between us. I do not wish to prolong the debate. On the argument about lay people who are able to give judgments on any matter under the sun, such power stems from our Civil Service, which is largely unqualified and can justify its own existence only on the same basis. Some of us think that there is some strength in the argument so long as it is not taken too far. The problem in our country is that we undervalue expertise and people who know about issues.

I am not seeking to undermine the independence of the MMC— although I reiterate that it is not the MMC in its normal role but in its electricity role— nor the value of lay people. As the noble Earl, Lord Lauderdale, said, he is a lay person, and I have spent my life giving advice as a lay person. I am not saying that people who are inexpert are completely valueless. I was trying to argue the reverse: that people who know about something have a certain value.

Following the matter raised by the noble Baroness, Lady Seear, I should like simply to point out the range of expertise that we may require. I have given warning that I shall return to this theme at Report stage in a different way. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 132F and 132G not moved.]

Clause 12 agreed to.

Clause 13 [Reports on modification references]:

[Amendments Nos. 132H to 132L not moved.]

The Deputy Chairman of Committees (Lord Strabolgi)

Amendment No. 133 is in the name of the noble Lord, Lord Peston. I apologise. It is the noble Lord, Lord Peyton.

Lord Peyton of Yeovil had given notice of his intention to move Amendment No. 133: Page 11, line 34, leave out ("Director") and insert ("Secretary of State").

The noble Lord said: Our names are very similar. Any minor error on that ground could be well forgiven. I could never object to being associated very closely with the noble Lord opposite.

I do not like immediately to say that I shall not move the amendment, because it has the support of the noble Lord, Lord Williams of Elvel. Perhaps the noble Lord, Lord Peston, could indicate whether he has any great objection to my not moving the amendment. The point has already been aired with rather disappointing results. I doubt whether any purpose would be served by my moving it. I therefore do not move the amendment.

[Amendment No. 133 not moved.]

[Amendments Nos. 133A to 133E not moved.]

Clause 13 agreed to.

Clause 14 [Modification following report]:

[Amendment No. 133F not moved.]

Lord Peyton of Yeovil moved Amendment No. 134: Page 12, line 17, leave out subsection (2).

The noble Lord said: The words that I wish to leave out are these: Before making modifications under this section, the Director shall have regard to the modifications specified in the report".

The director himself will have made the reference. It is surely very unlikely that he would not read the report which was addressed to him as a result of a reference that he had himself made. I believe that these words are otiose. They are not required. They add nothing to the needs of the Government. I hope that in the interests of good composition, brevity and common sense— I know that those qualities are not always all that close to the Government's heart— my noble friend may find it in her heart to accept this amendment. I do not wish to detain the Committee on what is a very small point. However, I long to hear my noble friend say that she agrees.

Lord Renton

I should like to support my noble friend and I hope that he will make many more such small points which too few of us dare to make.

Baroness Hooper

The present wording of this clause gives the director a degree of discretion in the licence modifications that are to be made. It is this element of discretion that these amendments seek to remove. It seems to me to make sense that he should not be bound to the small print of the modifications specified in the report since he will have the expertise to decide the best wording of the modifications necessary to remedy or prevent the effects adverse to the public interest that have been identified. Therefore I think that there is a value in the wording and I regret that I fail to be persuaded by my noble friend's arguments.

Lord Peyton of Yeovil

I wish that I had understood a word of what my noble friend has just said. I am afraid that the sense of it wholly escaped me.

Perhaps I may briefly say that having been informed at an earlier stage by my noble friend that I had somehow missed the earth-shaking announcement of the appointment of the new Director General of Electricity Supply, I hastened like a semi-crippled rabbit to the Printed Paper Office and obtained a copy of Hansard of 22nd May, and read the great announcement that Professor Littlechild had been appointed. At an earlier stage I delivered myself of the opinion, quite wrong evidently, that it would be unlikely that any man who was not greatly familiar with the affairs of this complicated industry would be able to summon up the resources of courage to accept the appointment.

I do not wish to add anything to the difficulties and the problems which Professor Littlechild will doubtless encounter. I pay tribute to Professor Littlechild. If a gentleman of his learning makes a reference to the Monopolies and Mergers Commission and then receives its report, I have little doubt that he will read it and have regard to any modifications that may be contained in it. Am I being very unreasonable? Am I being too generous to Professor Littlechild? I believe that if the Government do not accept the amendment, they will be saying that Professor Littlechild, their own chosen appointee, is someone who is very short when it comes to common sense.

Please will my noble friend not agree— she could have done so so easily— to take this nonsense out of the Bill?

Lord Dean of Beswick

The noble Lord, Lord Peyton, has referred once again to the appointment of Professor Littlechild and the fact that he will go through certain exercises in reading the pieces that the noble Lord referred to before he makes any reference. I too have a copy of Hansard for 22nd May, which means that it would not be available in print before 23rd May and possibly would not be available to the press until 24th May. However, I am not arguing about that.

This post will by any standards, I think the Committee will agree, be a tremendous job to carry out. It is complex and completely one off. But I see in the Written Answer that the Secretary of State referred to the fact that Professor Littlechild worked on the regulatory team for British Telecom and has been a member of the Monopolies and Mergers Commission for six years. Bearing in mind that this will be a highly salaried job because of its complexity and the responsibility involved in it, will Professor Littlechild divest himself or otherwise be divested of the other positions that he holds? The Government seem to have a penchant for appointing certain people to jobs while they still hold a variety of other jobs at the same time. The Committee may recall that a few weeks ago there was a debate in the Chamber on the appointment of people to non-elected bodies. The point I am trying to make is will Professor Littlechild be expected to place the whole of his time and his emphasis at the disposal of this new job? Will he therefore be asked, requested or ordered to give up the other positions to enable him to concentrate on this job?

5.15 p.m.

Baroness Hooper

I assure the noble Lord that the appointment of Director General of Electricity Supply will be a very full-time job for Professor Littlechild. It is in that light that he has accepted it. I should say further that as well as the admirable general qualifications to which I referred and to which the noble Lord, Lord Dean, has now added, Professor Littlechild, has also been advising the Secretary of State on electricity privatisation since 1987, so he has an extremely good background knowledge of what is involved in the job. He will, as I said, be regarding it as a full-time job, and he will give up any other appointments which would conflict with his role as director general. I believe that almost goes without saying.

However, I return to the amendment. I must tell my noble friend Lord Peyton that the effect of his amendment would, as I understand it, be to remove any obligation from the director to take into account the modifications specified in the MMC's report before making any modifications himself. That would make the entire referral process meaningless. I feel that the procedure set out in these clauses offers the best means of fairly resolving any disagreement between a licensee and the director.

In view of the remarks that have been made on this front, I almost hesitate to say that this kind of arrangement is precedented in the Gas Act and the Telecommunications Act. It has been seen to work effectively in the regulation of the gas and telecommunications industries. It is on those grounds that I feel unable to accept.

The Earl of Lauderdale

May I just add one small point? Are we taking from what my noble friend said about it being a full-time job— full time is full time is full time— that the director general will also divest himself or exclude himself from any investment in the electricity industry when it is privatised? Can we take that for granted?

Baroness Hooper

I believe that he would have to, yes.

Lord Peston

On that theme, although we seem to have gone a little way from the amendment, I assume that all conflicts of interest will simply not be allowed to occur. I cannot imagine that Professor Littlechild, or any other subsequent director, will allow a conflict of interest to arise.

I have sat here listening to the discussion on the amendment and have not joined in; but I am now even more mystified than the noble Lord, Lord Peyton. Reference is made to the Monopolies and Mergers Commission by the director. We ask why the director does this. I assume that the answer is that he would like to know the Monopolies and Mergers Commission's opinion. The director is not in the business of guaranteeing full employment for the Monopolies and Mergers Commission or anything of that kind. Obviously, having asked its opinion, he will take some notice of it. It therefore follows, as the noble Lord, Lord Peyton, has put quite logically, that subsection (2) is quite otiose. It has no relevance. It implies almost a kind of wilful madness on the part of the director, but I shall not discuss the matter ad hominem; but any director would not surely be so crazy, as it were, wilfully to disregard a report sent to him. However, I feel that the noble Baroness has invented a kind of fiction of the most bizarre kind of director that I find it hard to believe we could ever have. I hate to press her ever to listen to her noble friends— indeed, the more mischief I can make the better— but on this occasion I feel that she might give a sympathetic ear to her noble friends on this matter.

Baroness Hooper

I find it difficult to follow the argument that disagrees with a provision which enables the director, in making any modifications following a report, to have some freedom in the precise wording of the modifications that he makes. He should not have to follow the precise wording of the Monopolies and Mergers Commission's report. But as there seems to be considerable confusion now as a result of our discussion on this amendment, perhaps it would be best if I read the arguments that have been put forward and come back later.

Lord Peyton of Yeovil

The argument is that, having made a reference to the commission, no director general would be so stark, staring, plumb crazy wholly to disregard the report when he received it. You do not have to be very charitable to make that assumption.

I am exceedingly grateful to my noble friend for her undertaking to look at the matter again. I believe that she is wise to do so and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 134A not moved.]

Clause 14 agreed to.

Clause 15 [Modification by order under other enactments]:

On Question, Whether Clause 15 shall stand part of the Bill?

Lord Peston

My noble friend Lord Williams and I have given notice that we shall be querying Clause 15 in the hope of having clarification of this most obscure clause. The Committee is still dealing with the general section of the Bill headed "Modification of licences". However, in this area we are clearly within the ambit of the Fair Trading Act 1973 and the Competition Act 1980. Are we discussing competition matters but not other licence amendments?

The main reason for querying Clause 15 is for enlightenment about why such a clause is necessary. Why does not the competition legislation apply in any event? I devote myself to notes on clauses and I am certain that buried somewhere in the Bill will be a statement that such a provision is already contained in another privatisation Act. Nonetheless, that does not convince me of its correctness.

I understand that the Fair Trading Act 1973 and the Competition Act 1980 apply to the electricity industry except, as the noble Baroness said, in respect of one or two transitional arrangements. They must apply a fortiori to the supply companies, which are private monopolies created by statute. Having created those private monopolies, there is no doubt that the least the Government can do is to make them subject to the competition legislation. That legislation will leave the Secretary of State for Industry with many powers which we hope he will use to promote competition and to act in the national interest.

I should like to have explained the necessity of writing into the Bill the applicability of those powers; or is it that I should smell a rat because Clause 15 limits the powers rather than stating that the Bill applies? I know that it is a technical question and I do not wish to delay the Committee. I shall be happy if the noble Baroness wishes to write to me and other noble Lords in due course. However, it is a serious matter. I wish to know why such a complex clause appears in this part of the Bill and I argue that the competition issue is simple and straightforward.

Baroness Hooper

I shall try to give an explanation but if it does not go far enough I shall endeavour to supplement it by writing to the noble Lord. The previous three clauses deal with modification of licences in circumstances where a particular matter relating to the generation, transmission or supply of electricity is referred to the Monopolies and Mergers Commission and is found to operate against the public interest. The purport of Clause 15 is to provide for modification of a licence following a report from the Monopolies and Mergers Commission under other legislation about a monopolies or merger reference or an anti-competitive practice relating to the generation, transmission or supply of electricity.

Clause 15 is similar to Section 27 of the Gas Act 1986. It extends the powers conferred by the Fair Trading Act and the Competition Act mentioned in subsection (1). Therefore, an order may be appropriate if made under any of those powers in any of the circumstances specified in subsection (2). The equivalent section of the Gas Act was used to modify British Gas's authorisation following the Monopolies and Mergers Commission investigation under the Fair Trading Act into the supply of gas to large customers. We believe that the provisions of this clause are an important complement to those in Clauses 12, 13 and 14. Their equivalent has already been used to promote customer interests.

The noble Lord asked specifically whether we were discussing competition matters, and the answer is yes. The clause is necessary because the 1973 and 1980 Acts do not specify that licence modifications can be made. Therefore the clause covers that point and does not limit the powers of the MMC in the other areas.

Lord Peston

I thank the noble Baroness for that answer. She has said in terms that the clause does not limit the competition legislation, and that is the important answer which I am glad to hear it. It is a technical question. In my view the 1973 and 1980 Acts enable the Secretary of State to modify licences. However, I am not a lawyer in any of those areas and I accept the department's view that it is necessary to have a paragraph stating that the Secretary of State must do so. I note en passant that the Secretary of State to whom we are now referring is the Secretary of State for Energy. However, when we are discussing the Secretary of State in relation to competition legislation, it is the Secretary of State for Industry. I hope that we are not creating endless; employment for lawyers in deciding which Secretary of State is meant. It is clear that in this provision we must be referring to the Secretary of State for Energy.

Clause 15 agreed to.

Clause 16 [Duty to supply on request]:

Lord Peston moved Amendment No. 134B: Page 13, line 24, at end insert ("at reasonable cost").

The noble Lord said: We now have a change of subject. I assume that we are discussing a public electricity supplier in the technical sense used in the Bill and therefore not a generator or transmitter. In tabling the amendment I hope to receive the kind of reassurance which the noble Baroness has given to me in respect of this and other Bills; I hope that she will tell me that the Bill clearly means "at reasonable or least cost" and that no such amendment is required. Given the monopoly power of the suppliers, unless one can point to the fact that the Bill clearly means that, my amendment is necessary.

I have stated "at reasonable cost". Knowing me, I am sure that the noble Baroness understands that I mean "least cost". The amendment is tabled in part so that I can be guided to where I am convinced it is not necessary to go. If I cannot be convinced of that, I believe that the provision should be written on the face of the Bill. I beg to move.

5.30 p.m.

Baroness Hooper

The noble Lord, Lord Peston, explained the purpose in introducing this amendment, and that is a purpose which the Government share. That is why we have made specific provision in Clause 19 of the Bill to establish what charges the supplier can recover from the consumer in respect of making a connection. The clause makes clear that the consumer may be required to defray only the expenses reasonably incurred in providing the supply, to such extent as is reasonable in the circumstances. Thus there is already a reasonableness criterion applied to what expenses can be incurred in providing the connection.

The provision also prevents, for example, charges being levied for work on the general system of supply beyond that portion which might reasonably be allocated to the provision of the new supply. If there is any dispute over the charges which the supplier wishes to make for providing a supply the consumer would have the right to seek a determination of the matter from the director general under Clause 23— in effect, an appeal procedure.

There is therefore already in the Bill precisely the protection that the noble Lord is trying to provide. I hope that in view of this explanation he will accept that his amendment is unnecessary and will withdraw it.

Lord Peston

I thank the noble Baroness for that reply. Although I am in danger of boring Members of the Committee, may I ask whether "reasonable" includes comparison with what other suppliers are charging? We created these local supply monopolies, which were the area boards, and they clearly do not compete with each other. One cannot go to an area board outside one's own area and say, "I want electricity from you". That is one reason why regulation is so important. The one benefit of the Bill is that there are several suppliers and that therefore in theory one should be able to say, "Well, look, it seems to cost this much to be connected with that area board"— and I shall stick to that term because it is one which I understand better— "and here I am being charged a lot more and that looks unreasonable to me". Do I understand that the general set of concepts would allow a consumer to make those comparisons and to press for a determination of comparison of area boards, because that would seem to me to be one basis for reaching reasonableness?

Baroness Gardner of Parkes

Would it not be a problem to try to assess how reasonable something is in comparing one area board with another, because conditions in different areas will be quite different? I believe that even within an area there will be a difference between supplying 50 houses within two blocks or 50 houses spread over a large area. Therefore I do not accept that it should be possible to compare one area with another.

I know that historically the London board area has always had much higher costs in the past than areas outside London. Yet in recent years, in the time in which I have served on the board, we have been able to increase our costs by much less than other area boards and so there has gradually been a levelling out. Therefore the basis of costs varies according to the area.

Lord Peston

The noble Baroness touches on a classic matter of consumer protection. If I were on her side, which is speaking for the industry, I should produce her arguments. However, I am on the consumer's side and I do not accept those arguments at all. You can always think of excuses as to why your high costs correspond to your problem rather than your inefficiency. Almost the only database that we shall have will be comparisons. I am not saying that it will be an invalid reply to say, "We have bigger problems connecting you and therefore we have to charge you more". I simply make the point that it is a relevant consideration to say, "I do not accept that it is expensive to make my connection. I am arguing that you are inefficient compared with other area boards".

I must say to the noble Baroness that I do not wish to defend this Bill because I do not like it. However, if comparisons between area boards are not allowed and are regarded as completely invalid, this Bill loses a great deal of its rationale. There has to be area board or supplier comparison; otherwise there is no other data on which to work because there is no competition at the supply point.

Baroness Hooper

I believe that what should help greatly in arriving at a determination of what is reasonable in all the circumstances is the transparency of costs. I believe that it is probably inevitable that not only consumers but also consumer committees will look at costs on a comparative basis. Of course, they will need to show that they are comparing like with like and I believe that that covers the point made by my noble friend. Indeed, it will be open to the consumer to bring those circumstances to the attention of the director general in making his appeal or application if he feels that such considerations have not been taken fully into account.

Lord Peston

I do not believe that there is any difference between us on this matter and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Strabolgi)

Before calling Amendment No. 135, I should inform the Committee that if this amendment is agreed to I cannot call Amendment No. 135A.

Lord Ezra moved Amendment No. 135: Page 13, line 30, leave out paragraph (c) and insert— ("(c) the type of appliances for which power is required;).

The noble Lord said: As the noble Lord, Lord Peston, mentioned in moving his amendment, Clause 16 deals with the duty to supply on request. Subsection (2), to which this amendment refers, specifies the details which any person requesting a supply has to provide in order to obtain that supply.

I take it that "person" includes a potential domestic consumer. In that case, it seems to me that subsection (2)(c), which requires that person, being a domestic consumer, to provide an indication of the maximum power which may be required at any time is asking for something which is very difficult to provide. All Members of the Committee are users of electricity, and how many can say what is the maximum amount of electricity which may be required at any one time? What one does know is what appliances one has. Therefore I should like to propose that instead of subsection (2)(c) requiring the intended consumer to specify the maximum power required at any time, which is very difficult for a domestic consumer to calculate, what should be required is to indicate the type of appliance for which power is required. I beg to move.

Baroness Gardner of Parkes

I oppose this amendment. I believe that the wording is interesting and I believe that the way in which the noble Lord explained it makes it sound very sensible. At present, when one applies for a supply one is asked what appliances are to be used, whether it is an electric cooker, electric bar heaters or a system of total heating by electricity, or whether there will be a gas supply. Therefore it is an approximation, and the boards only wish to establish whether some sort of special supply is required instead of a normal domestic supply. If so, it would not be appropriate to supply that which is only suitable for domestic demand.

At present, anyone who applies for an electricity supply is asked what is to be run on it, so that in practice the system works in exactly the way the noble Lord has said. What is relevant to the supplying authority is to know what will be the maximum power required because this could apply to a commercial customer or a larger consumer. A power supply may be required in excess of ordinary domestic demand. As I see it, this part of the Bill does not apply only to domestic consumers. Therefore I believe that the current drafting is better.

Lord Renton

I agree with my noble friend on that. I would merely add that surely it is only fair that the supplier of electricity should know what voltage is going to be required. That is the important information. The maximum power must be expressed in voltage and watts, and I should have thought that that is the right way to do it. The types of appliances for which it is required may vary very much in the power that they use and may vary from time to time, so it is only fair on the supplier that he should know the watts and voltage to be required.

The Earl of Lauderdale

May I ask the noble Lord, Lord Ezra, whether this has any bearing on houses or groups of houses which have combined heat and power systems, or has that no relevance at all?

Lord Ezra

I was interested to hear the comments made on this proposed amendment. The difficulty is that this appears to apply to all consumers, whereas I believe there is a distinction to be made between domestic and other consumers. In the case of domestic consumers, I should have thought it reasonable, as the noble Baroness, Lady Gardner, pointed out, to ask what sort of appliances they are likely to use. If they have whole house electricity heating, that will require one sort of supply; but if they are to have a normal supply which excludes a basic heating requirement, then another sort is required.

Therefore, I should have thought that the noble Baroness, Lady Hooper, might well take this matter away to see whether an amendment could be made to cover domestic consumers in addition to industrial consumers. I agree that in the case of commercial or industrial consumers the supplier needs to know the maximum amount likely to be required at any one time. However, I am anxious to cover the interests of domestic consumers who might be confused or misled, and I therefore hope that will be taken into consideration.

Baroness Phillips

I support the noble Lord, Lord Ezra. I am interested in the assumption— I have not sat on a board as the noble Baroness has— that now one is actually asked these questions. That is not my experience. I recently had an extension to my house in which extra points were installed. It was discovered that there was not the right amp mains, or something, leading, I gather, to a dangerous state.

The electrician said that it was because he did not assume I would be using two appliances in different rooms at the same time. How he came to that assumption, I do not know. One does not have points put in for decoration, but presumably to be used. Therefore, it seems to me essential to have this information. If one is to be asked about other matters, then this information must surely be supplied; and we are particularly talking about domestic consumers.

Lord Somers

The noble Lord, Iord Renton, mentioned voltage. Surely voltage does not come into it because everyone has to accept the voltage on the grid at the time. I hope that situation is not going to be altered. What does matter of course is the amperage. One cannot tell simply by assessing the equipment in a single house what the amount of current is going to be at any time. One can only obtain a rough estimate of what may be needed as a maximum. Therefore, I think the amendment is a far more appropriate way to do it.

5.45 p.m.

Lord Dean of Beswick

Perhaps I may make a brief contribution. This is a reasonable amendment for the consumer. Demand for electricity can change pretty quickly. For example, people can decide on a house improvement, and as a result the total load of electricity required can dramatically change. A householder may decide to change from one type of heating to another, and that can alter the situation. I should not have thought that it was asking much of the Minister to look at what the noble Lord, Lord Ezra, said. It is worthy of consideration. The Government have nothing at all to lose. We support the amendment.

Baroness Gardner of Parkes

In listening to the noble Baroness, Lady Phillips, I think there is a slight misunderstanding. Supply goes into a domestic property at the same power. Whether or not you have enough power to run your kitchen appliances might depend on the wiring within the house; but that is not relevant to the main supply which is connected. The supply to your meter is the responsibility of the area board. The supply after the meter and the wiring within the house is a matter for your own electrician. Of course, the boards will check to see whether it has been done safely and whether the loading is correct.

I agree with the noble Baroness that some people could be using every appliance at the same time. I have exactly the reverse experience in my dental surgery. At the time when commercial premises were assessed according to the number of power points and appliances I was told that I would be put on the maximum tariff because of all the equipment I had. In fact, each piece of dental equipment uses a minimal amount of power and the drain on power was extremely low.

This is a complicated subject. I can appreciate the point made that perhaps some consideration should be given to the non-understanding of domestic customers, but I believe that all the boards now have an excellent practice in this respect. In the past one could sign on for a supply over the telephone or in some other way; but because of the growth in bad debts and the need to identify customers as real people, it is necessary to visit a showroom and sign on for an initial supply. At that time the potential customer receives a considerable amount of attention from the counter staff who go into what appliances are likely to be used and assesses what the maximum supply will be. Provided that maximum is not over the domestic norm, there would be no need for any special supply.

Baroness Hooper

We have had an interesting debate; but it is important to establish that the purpose of this information is to enable the supplier to decide on what changes, if any, he might need to make in his distribution network and contracts for supply to meet requests from consumers. The contractual situation that is to emerge is that the supplier will be obliged to supply up to the maximum requested and the consumer can only contractually demand that amount. Of course, he can consume less. To that extent therefore he is setting a maximum which the public electricity supplier needs to be aware of for practical purposes in order to install whatever plant or line is required and to ensure that he himself contracts for the necessary amount of supply.

Therefore, it will be in the interests of the supplier to assist the consumer in answering the question by, for example, indicating the standard demand levels. I understand that it is now common practice, as my noble friend Lady Gardner pointed out, for checklists to be issued asking people to mark off the sort of appliances they have, or hope to have, in order to achieve that. Simply asking for information as to the types of appliances for which the power is to be used without asking for the maximum supply Figure may be useful for advice on an appropriate tariff, but it would not fully meet the needs of the supplier in being able to guarantee the supply. In addition, the knowledge of the types of appliances to be used does not, of itself, give information on the maximum power demand that is likely to be made because that depends on patterns of usage of the appliances.

Finally, the information provided on types of appliances can only be true in terms of what is being used or what it is intended should be used at a given time. It gives no information on likely usage for the future. It may well be that a customer wishes to have provision for a larger supply than he uses at present against the eventuality that more will be required in the future. By way of further reassurance, the requirement is the same as that which currently exists in legislation. It has not caused any of the difficulties that have been suggested and that has been true since 1899.

Baroness Seear

One understands entirely if we are talking about an industrial consumer and if it has to say how much power it will use. But the situation is different for the domestic consumer. I dare say that the noble Baroness is a much better housewife than I, for I could not possibly say how much electricity I shall use over the next quarter or half year. If you go out into the street and ask the first hundred women what power they shall be using over the next year I doubt very much whether more than 10 per cent. will have a shot at the figure. Of those, 9 per cent. of them will get it wrong. It does not make sense at all. I ask the noble Baroness to take the question back for further consideration as regards the domestic consumer. The requirement is fair enough for the industrial consumer.

Baroness Hooper

Perhaps I did not express myself sufficiently clearly when I explained that it was common practice currently for area boards to help consumers in estimating their consumption, whether they are domestic or industrial consumers. From her own personal experience my noble friend Lady Gardner of Parkes said that is so, and in providing this information or in reaching a solution regard is had for the kind of appliances in use.

Baroness Seear

The noble Baroness told us that this has been going on since 1882 or some such time. Whatever it is, it is long enough. Perhaps I may ask the noble Baroness whether she has ever been asked to make such an estimate. In all the years that I have been using electricity no one has ever asked me to make an estimate. It may have been the practice since 1899, but it has been going on in places which most of us know nothing about.

Baroness Hooper

I raised this as a personal problem and said that I had never been asked for such information. I would find it difficult to produce unaided details of my maximum requirements. I am told that is why the procedure has evolved. I understand from people who have recently moved home that they are supplied with a checklist and asked to complete it. Whatever the mechanics are, I would not wish to get distracted too much from the main issue. Suffice it to say that I had hoped to explain that it is in the interests of the supply company to help to obtain the right kind of figure in terms of maximum demand. That is for the reasons that I have stated as regards its own needs for contracting supplies as well as for the types of connections, lines and pipes that would be required.

Therefore whatever the mechanics of assisting the domestic consumer, whom we are all agreed may need some help, the provisions will be adequate. But that does not detract from the argument that simply having a list of appliances would meet the needs and ensure the security of supply that we all wish to have.

Lord Peston

Perhaps I may intervene briefly because it may assist me not to move my own amendments in a moment. I accept the noble Baroness's point that most of us have no experience of this procedure because we do not request a supply. We live in premises where the supply has already been installed, as the noble Baroness, Lady Gardner of Parkes, pointed out. There is no question that arises from our point of view because our interests begin on this side of the mains. This point concerns those whose interests begin on the other side of the mains.

I am extremely sympathetic to what the noble Lord, Lord Ezra, said. Perhaps the noble Baroness can clarify what she meant by supply as regards premises. Does it refer entirely to premises where there is no supply in the sense in which we are discussing it and a request is made for such a supply? Is that all this subsection is about or does it also apply to a situation where you are aware that you are going to use a great deal more electricity? Are we here dealing with a situation where one is changing the present condition, which is precisely what motivates the noble Lord, Lord Ezra? Although you have an electricity supply, in another sense— I speak as a lay person— you want something rather bigger or stronger on the other side of the mains.

It is not clear to me whether that is covered by this subsection. In other words, supply also means the enlargement of the supply on the far side of the mains. If that is so, I believe that the point made by the noble Lord, Lord Ezra, is germane; namely, that it would be more helpful for the domestic consumer if the subsection were written explicitly to include the appliances rather than in terms that would essentially require a knowledge of thermodynamics if one were to write in "maximum power". That depends on what is meant by supply.

As regards my amendments, it would help me a great deal if the noble Baroness could tell us whether supply also means more supply on the far side of the mains.

Baroness Gardner of Parkes

I believe that it will be better if I say something on this point as I seem to have raised all the problems in the first instance. The position is that most domestic homes have a 20-kilowatt supply which covers practically everything in the home. If you were the kind of person who was suddenly developing in your own basement some new high technology which you thought was going to take a fantastic additional supply, surely you would go back—

Lord Peston

What I have in mind is my role as Dr. Frankenstein building a monster that requires a massive machine.

Baroness Gardner of Parkes

We would certainly wish to know about it if you were doing that. It would be desirable for you to go back to the board and say, "I am intending to create a monster in my basement". I do not know what powers the board would have to prevent you doing that. We are here entering the realms of fantasy. However, without doubt the board would wish to know that you were proposing to do something quite exceptional in your house. That would take you way outside the net of the ordinary domestic consumer. For the ordinary domestic consumer pretty well everyone would be covered by the normal domestic supply. However, if you require an abnormal heavy load supply the area board or the supply company would need to know.

Another point that has not been raised is that if a consumer is asked what appliances she intends to have and she says that she is going to have an electric fire, she will then be asked whether it is a large one or a small one, whether it is one kilowatt or three kilowatts. She may be inquiring about a toaster and she may be asked whether it is to be a pop-up toaster or for thick or thin slices. One can go into all these things and spend hours doing so, but at the end the consumer will be told that she is fully covered by the normal domestic supply.

The supply company has to know the maximum supply required and it will treat your maximum as the domestic norm. The company has to know the maximum because if every person is to be given a slice of cake one has to be sure that the cake is big enough. There is a duty to provide a supply. People like ourselves have all grown used to electricity always being there, and it is an alarming situation if there is a failure of supply for any reason, such as there was during that terrible storm. Therefore it is necessary to know the maximum required. It does not matter if people do not use it all. But if the maximum is not known there will not be enough supply to ensure a continuous supply of electricity to people.

Viscount Hanworth

Does the noble Baroness appreciate that in a certain number of cases it is not only the maximum that you wish to know about but the time at which it is used? The electricity company tries to balance three phases. If the situation concerns the normal consumer leading a normal life one can assume that one place is much like another, but it is not always so. Therefore the electricity supply company would be a good deal better off anyway knowing what the consumer had in the way of appliances and, if necessary, in finding out how they are used. Otherwise balancing the three phases, which is very important, may be impossible.

6 p.m.

Baroness Hooper

We have to try to strike a proper balance. We clearly want to make things easier for the average consumer— not just the domestic consumer— but it must be taken in the context that Clause 16 places a specific duty on the public electricity supplier to supply electricity on request to any premises within his authorised area. The effect of this is to give all owners and occupiers of premises the right to require a supply and therefore there is the duty on the supplier to produce it. That has to be taken within certain limits of expectation. The supplier and the consumer between them have to agree what they think will be the maximum supply.

To answer the specific question raised by the noble Lord, Lord Peston, this will apply to all premises where a connection is being requested. It will therefore apply to all new premises. If a supply is already in existence but more is required, an application must be made specifying that. The same process must then be gone through in order to ascertain what the maximum demand will be. This is to ensure that the supplier can fulfil his duty and provide the consumer with a ready supply of electricity, which is, after all, what he wants.

Lord Brain

We have been going round in circles. Maximum power is measured in kilowatts. It is universally known and can be understood by the technicians. But if one says to the customer, "Your supply is for one washing machine, one cooker, three hair dryers, two toasters, an electric kettle and a tumble dryer" and then he changes the mix— who is to know whether they are one kilowatt or 500 watt units?— the result will be nonsense. If one changes one's mix of domestic applicances, the supplier will have no idea whether you are within the limit. Fifty kilowatts is a figure that he knows and everybody else knows. That can be converted into the various appliances by using a checklist which is sent out with the demand form. I have given this information in the past when moving into an older house because I needed to get the kilowattage right. I was helped, as the noble Baroness explained. This amendment will cause more complications if it is accepted.

Lord Ezra

The noble Baroness, Lady Hooper, said that we must endeavour in legislation to make life as easy as possible for people and not more complicated. We gathered from the noble Baroness, Lady Gardner of Parkes, who is familiar with these matters, that when a new house has to be connected to electricity people are asked what appliances they use. That information is converted by the skill of the electricty board into what they need to be supplied with. It will know roughly what the figure is. What worries me about the present wording of the Bill is that a duty is put on all potential users to indicate precisely the maximum amount of electricity they are likely to require. I do not believe that the ordinary domestic consumer should be put under that obligation. He might feel that if he does not meet that commitment his supply will be cut off because he has failed to give the information required. I would be happier if the noble Baroness would take this away and think about it from the point of view of making life easier for the ordinary domestic consumer, bearing in mind that what we have heard is done already. Why not mention it in the legislation.

Baroness Hooper

I am sorry that I have been unable to convince the noble Lord. There are obviously two schools of thought. It seems to me that by accepting the amendment, or even agreeing to take it back, I would not necessarily be helping the domestic consumer. We have to ensure that the domestic consumer is helped through the advice of the public electricity supply companies and the advice given by the consumer committees so that a sensible solution can be arrived at for the maximum supply required. As I said at the outset, we are talking about a maximum figure. It will not oblige the consumer to consume up to that amount.

Lord Ezra

I do not wish to divide the Committee on this issue. However, the point remains that it must be our aim and object to make life easy, especially for the domestic consumer of electricity. I reserve the right to come back to the matter at a later stage and think about the advice and assistance that should be given to the domestic consumer to comply with this requirement. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 135A to 136 not moved.]

The Earl of Dundee moved Amendment No. 136A: Page 14, line 13, leave out ("18") and insert ("17").

The noble Earl said: This amendment is primarily a matter of clarification. As presently drafted, Clause 16(5)(a) establishes that references to giving a supply in Clause 16 and Clauses 18 to 22 also include continuing to give a supply where one is already provided. It is clear from the context of Clause 17 that the same meaning should apply to the term in that clause. Indeed it would be unreasonable to seek to argue that under Clause 17(2)(a) the supplier should be under an obligation to continue to give a supply when he is prevented from doing so for reasons beyond his control. The provision in Clause 17(3) also makes clear that the clause is to apply to continuing supplies. The amendment that we have proposed would have the effect of ensuring that there is no ambiguity on the point and that the Bill is consistent in its use of terms. I commend it to the Committee. I beg to move.

On Question, amendment agreed to.

[Amendment No. 137 not moved.]

Clause 16, as amended, agreed to.

Clause 17 [Exceptions from duty to supply]:

Lord Ezra moved Amendment No. 138: Page 14, line 31, at end insert— ("( ) Where supply is withheld unreasonably, such as to prejudice the interests of an alternative supplier, then the Director shall intervene to set a reasonable rate for supply accordingly").

The noble Lord said: This amendment relates to the exemptions from the duty to supply and raises the position of small private suppliers. As the Bill is presently drafted, it looks as though a small supplier who gets into difficulty with his supply would not be able to have stand-by arrangements. That would jeopardise his whole position. A large number of small suppliers of 50 megawatts or less are presently operating. Under existing arrangements they have no difficulty in continuing to operate. However, with this clause as drafted their position could be jeopardised. The purpose of Amendments Nos. 138 and 139 is to ensure that these people have a reasonable recourse to stand-by arrangements. If they are left without such facilities their position could be very much worse than it is now. I beg to move.

Baroness Hooper

I have listened carefully to the reasons given by the noble Lord, Lord Ezra, for introducing the amendments. However, I must say that I do not believe that they will achieve what he sets out to achieve. In so far as the public electricity supplier is exempted from the need to provide a supply to premises which are already receiving supplies from someone else down his lines, then it cannot be unreasonable to withhold a supply. We do, however, understand the anxieties expressed by the noble Lord, and indeed we have already taken steps to meet such anxieties. Perhaps it would assist Members of the Committee if I were to explain some of them.

Where a supply is being given to premises by a private supplier but using the public electricity supplier's lines, under Clause 17(1) the public electricity supplier would be exempted from the obligation to meet a request for a supply to those premises. However, under the terms of its licence, the public electricity supplier would be required to offer terms for the provision of top-up or stand-by supplies or sales of electricity to the private electricity supplier. In that way those who purchase supplies from someone other than the public electricity supplier will have indirect access to the public electricity supplier for the security of the supply. In other words, the small or independent generator which cannot fulfil by itself the total requirements of the consumer can under the licence arrangement oblige the public electricity supplier to top-up or provide stand-by supplies to it; but the consumer cannot demand that arrangement directly.

We accept that in some cases the final consumer may wish to arrange for part of his supplies to be provided by one or more private suppliers and to contract direct with the public electricity supplier for the remainder. We have already discussed those concerns with the CBI and indeed with other groups, organisations and individuals.

I realise that some doubts or fears have been raised about the attitude of the future public electricity supply companies. However, the area boards have assured us that they and their successor companies will be prepared to negotiate contracts with such customers for the provision of part supplies. Such contracts would reflect reasonable commercial terms, including the provision of appropriate metering and information to enable reconciliation of inputs and consumption. That will ensure that the supplies of electricity to all customers are adequately protected.

Therefore there is no question of the area boards and their successors adopting an all or nothing approach. We believe that the licence provisions which I have explained, together with that assurance from the area boards, should meet the concerns expressed by the noble Lord, Lord Ezra, as regards problems being caused to new entrants in the market. In view of that explanation, I hope that the noble Lord will feel able to withdraw the amendment.

Baroness Phillips

Before the noble Lord responds, perhaps I may intervene for a moment. I am becoming a little concerned and somewhat confused in this matter. Unlike the noble Lord, I am not so well-informed as regards kilowatts and various other matters. I find increasingly that when one wishes to purchase an item one is expected to give an answer to all kinds of questions. Indeed, it is becoming increasingly a do-it-yourself world. I notice that the Minister refers each time to the "public electricity supplier". Surely the Bill is all about the industry not being publicly owned any more; it is going to be privately owned. Plcs are not public— unless I have a total misunderstanding of the words.

Baroness Hooper

Plc literally means a public limited company.

Baroness Phillips

That is right!

Baroness Hooper

That means that the shares are owned by the public. Nevertheless, the name "public electricity supplier" (as defined in the Bill relating to what we now call the area boards) refers to those people who will have a duty to supply the public. That is the reason for the name.

6.15 p.m.

Lord Peston

Before we conclude this issue, I wonder whether there is one matter which could be clarified here. It concerns the issue which I understood to be behind Amendment No. 138. The case I have in mind is this. The lines belong to what we call the public electricity supplier; but I (who almost certainly would be a firm rather than a householder) would want my electricity to be generated from the private producer's power station. Therefore that electricity must be sent through those supply lines. As I understand it, that is what is happening.

It seems to me that in such cirumstances the public electricity supplier could then threaten the consumer by saying, "You can do that if you wish and not do it my way, but if anything goes wrong I shall not bail you out." That seems to me to be the point. As I understand it, Lord Ezra is saying that it ought to be the duty of the public electricity supplier to limit such threatening behaviour.

That is my interpretation of the amendment. If that interpretation is correct, then I feel that there is a certain validity in it. It is particularly valid from the Government's point of view as regards their anxiety to promote competition. Indeed, it would be a most unfair practice to say, "Of course I am in principle the back-up supplier, but I am afraid that you cannot rely on me if you do not use me in the first place." Such behaviour is usually regarded in competition matters as being not acceptable.

Therefore the enlightenment we require, and why I think one ought to be somewhat sympathetic towards the noble Lord's amendment, is necessary to avoid precisely that particular practice.

Baroness Hooper

I believe that I gave the answer to this particular issue by referring to the terms of the licence which will require a public electricity supplier to provide top-up or stand-by supplies to the individual generator. In this clause we are talking about a duty to supply the end customer or consumer. It seems unfair if the consumer chooses to use some other supplier— which he is perfectly entitled to do and which we wish to encourage him to do— that the public electricity supplier should also have the duty to supply that consumer. Since any gap that exists will be made up under the licence arrangements which will be enforceable, there is no problem— or at least there should be no problem.

Lord Ezra

As I understand it, the position is that notwithstanding what is said in Clause 17, the licence terms will oblige the public electricity supplier to provide stand-by or back-up supplies in such circumstances. That is what I understood the noble Baroness to have said. All I can say is that I am a little concerned that that should not be written on the face of the Bill. It seems to me to be quite an important issue.

I should have preferred to have seen such a provision written down so that it could be included in the legislation. After all, licence terms can be changed by the director or by whatever other means. Such measures do not come to this Chamber for approval; but legislation must go through the normal parliamentary processes.

I should like to examine carefully what is specified in the licence terms so as to try to be clear about what validity that could have in the long term— because these arrangements for the supply of electricity can be for a long term— and then if need be to return to the matter at a later stage. However, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 139 and 139A not moved.]

Clause 17 agreed to.

Clause 18 [Power to recover charges]:

Lord Stanley of Alderley moved Amendment No. 140: Page 15, line 5, leave out ("areas").

The noble Lord said: I ask the Committee's permission to speak also to Amendments Nos. 142, 142A and 144. The amendments ensure that the rural user of electricity will pay the same price as his town cousin. As the Bill is written, it will be possible for the new plcs to charge higher prices to users of electricity in rural or difficult areas, such as the Scilly Isles, than elsewhere. That fact was made clear by the Minister in another place in Committee on 26th January (cols. 506 and 508). I trust therefore that my noble friend will agree with that fact and not waste the Committee's time arguing about it. It is similar to the Water Bill. In the end, I received an assurance from my noble friend Lord Caithness that the plcs could charge differently for water.

I dislike the ability to discriminate against the less well off, rural consumer for the following main reason: it would put further pressure on the small local communities which are so vital to our national and social wellbeing and stability. My noble friend may say that it will not happen because it has not happened in the past. The new electricity suppliers are to be commercially driven. Their main concern will be profit, not service. Of course they will increase their charges when they can. I should do so if I were in their position. The easiest place for them to do so will be in the rural areas where there is probably no other form of power. There is unlikely to be gas or any other form of power because few rural areas have a gas pipeline.

Moreover, the very fact that such plcs will have to compete with other forms of power in the main conurbations may even mean that they will make those areas loss leaders so as to compete. As anyone who has been in a supermarket will know, loss leaders result in excessive profit margins elsewhere. The areas concerned are likely to be the rural areas. Whatever my noble friend says about such profits being subject to the restriction provisions in this clause, or the previous clause, and controlled by the director, she will have to admit that, as the Bill is written, it would be possible to charge extra for those less privileged users. I hope that my noble friend and the Committee will look sympathetically at the amendment. I beg to move.

Lord Carter

I was pleased to add my name to a number of the amendments in the group. As the noble Lord, Lord Stanley of Alderley, pointed out, we are dealing with the danger of differential charging ending up as a penalty to those who live in rural areas. In addition to the poverty about which we hear in inner cities, there is poverty in rural areas. It is estimated that 25 per cent. of the rural population lives on or near the margin of poverty.

There are other cases where there is equalisation of charges; for example, postal charges are equalised irrespective of the area in which a person lives. Outside the public sector, for many years the Milk Marketing Board has equalised transport charges for the collection of milk in different parts of the country. I understand that a tariff structure is operated in the north of Scotland by the hydro-electric board, and as a result there has been an increase in the number of premises connected to the electricity supply. The Government should accept the amendments, to avoid the danger of a penalty falling on people who live in rural areas.

Lord Renton

I too wish strongly to support at any rate the principle of the amendments. I do not know whether technically they achieve exactly what my noble friend requires. Surely it is essential that in each area there should be a common tariff for all domestic consumers. There always has been, so far as I know. If it can be done by the North of Scotland Hydro-Electric Board, which has about as widespread a disparity of domestic consumers as one could find almost anywhere in Europe, it should be easily done anywhere else.

I am a keen supporter of the Bill, as the Committee knows, but I would go so far as to say that, if we fail to ensure that there is a common domestic tariff in each area, people in the countryside will regard the Bill as a retrograde step. I press my noble friends on the Front Bench to do something about that.

Lord Ezra

My noble friend Lord Hanworth and I have tabled one of the amendments in the group. I too should like to support the point of principle. The legislation will suffer enormously if, as has just been said, it were shown immediately to react against those who live in rural communities. If we were all starting from scratch and choosing where we lived according to what electricity, water and so on were to cost, that would be different. We live in a situation in which those discriminations do not exist. It is important that that situation be continued and that suitable safeguards are incorporated into the legislation.

Lord Peyton of Yeovil

I too support this series of amendments. The burden which could be placed on rural communities, if their interests were not safeguarded, would result in a major blot on the legislation. I cannot entirely restrain my curiosity. I inquire of my noble friend as to the meaning of the word "undue". Amendment No. 143 tabled by my noble friend Lord Stanley of Alderley seeks to delete the word "undue" from subsection (4), where it is attached to "preference" and "discrimination". I wonder whether when preference and discrimination become undue. I hope that my noble friend will be able to enlighten me.

Baroness Elliot of Harwood

I strongly support the amendment. I live in the Border area, where we obtained electricity much later than they did in the Highlands. Living without electricity was extremely exhausting, unpleasant and inconvenient. Electricity made all the difference to people who had never had it before. It is now vital. It would be most unfair if there were any variation in the cost because we live in rural areas. I hope that the Government will be adamant and say that there will be the same charges and opportunities for electricity on farms.

Lord Wise

I support the amendment moved by my noble friend. I believe that it is recognised that in practice, with the possible exception of the Scilly Isles, there is now a common tariff throughout the country. I believe that it will remain so in the north of Scotland. It is considered relevant and useful there, and so one can surely ask why it is unnecessary and undesirable elsewhere.

The restriction imposed in subsection (4) is limited and will in no way protect rural customers. I hope that my noble friend on the Front Bench will look favourably on this amendment.

6.30 p.m.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

I am well aware that many Members of the Committee would like to see public electricity suppliers under an obligation to operate a system of common tariffs within their area. However, I have to point out that it is important that we recognise that the provisions in Clause 18(1) do not impose a requirement on public electricity suppliers to charge differential tariffs but merely allow the possibility of their development at some time in the future. That is no different from the position which applies in England and Wales under the existing law as set out in the Electricity Act 1947. The provisions of that Act neither require nor prohibit area boards from operating different tariffs in different areas.

The requirements on a public electricity supplier not to show undue preference or exercise undue discrimination are an essential element of the tariff provisions. Again, however, these requirements are not new but are part of existing legislation. Let me explain why this is necessary for the protection of consumers. It is our intention that the Bill will introduce real and effective competition into the electricity supply industry in order to create the best deal for the consumer. At least we are at one on that purpose. If we impose restrictions on public electricity suppliers which do not apply to their competitors— for example, if we prevent them from charging on the basis of true cost— it would mean that public electricity suppliers would have to charge at higher levels in the lower cost parts of their designated area than was justified. This would prevent them from competing with other suppliers supplying in only those parts of the area. Equally, restraining prices in higher cost areas to an unduly low level would put up barriers to competition in those areas. None of this would be in the best interests of consumers. Only by allowing flexibility to meet competition can its real benefits be gained.

I noted that my noble friend Lord Stanley of Alderley mentioned the Scilly Isles. Perhaps I may take that example as a clear indication of what we feel to be the best way forward for the future. The agreement which was made between the South West Electricity Board and the European Commission to part-fund the construction of a mains link between the Scilly Isles and the mainland requires that for the economic lifetime of the link, tariffs operated on the islands should be the same as those in operation on the mainland. This recognises that for that time all SWEB's consumers will be able to benefit from being supplied through the grid.

I should remind the Committee that the Electricity Bill has not changed the supplier's power to charge different tariffs in different circumstances, where justified, but has merely clarified it. The effect of the condition attaching to the grant will not therefore change as a result of the Bill. The provisions of the Bill, however, which prohibit undue preference and undue discrimination will continue to protect all consumers from unfair pricing practices.

Any variation in tariffs will require to be justified by reference to costs and having regard to the tariffs charged to other customers in comparable circumstances. Any consumer who feels that a public electricity supplier has not adhered to those criteria in individual cases will be able to take his grievance to the director general. If, having investigated the matter, the director general concludes that the criteria have not been met, he may take enforcement proceedings against the public electricity supplier.

As the Committee will be well aware, in the case of the licences and the conditions which attach to any licence, it is forbidden under Condition 2.3 that the licensee should cross-subsidise any of its businesses from any other businesses. I am well aware of the sensitivity of this difficult area and I am also aware— before I am asked about it— of the situation relative to the North of Scotland Hydro-Electric Board. This matter has already been debated under a different amendment. As concerns the North of Scotland Hydro-Electric Board, one of the principal reasons why the geographical area, which is very extensive, with problems very different from those of any other parts of the United Kingdom, has been treated in the way that it has is in effect because 50 per cent. of the electricity generated there comes from the hydro power which is contained within that area virtually alone.

The Earl of Lauderdale

Perhaps my noble friend can tell me one thing. Are we to infer from what he has said that the meaning of the words "due" and "undue" will ultimately be decided by the director general?

Lord Sanderson of Bowden

Yes. If there is a grievance raised by any group of people or person on this matter, the decision would be made by the director general.

Lord Renton

I think we shall have to consider very carefully what my noble friend has said, especially as he is relying upon existing legislation. I am not at all sure that the existing legislation will serve in these new circumstances. We shall have more competition and greater freedom on the part of suppliers. Although it may not be the generality, there will be those who try to make up their accounts and achieve their profits— which is laudable— by finding loopholes in the existing legislation. Indeed, there is a loophole in this clause which we are considering. My noble friend Lord Stanley of Alderley suggests in his first amendment that in Clause 18(1), page 15, line 5, the word "areas" should be left out, so that it would not be possible in a particular area for domestic consumers to have other than a common tariff— that is, if my noble friend's amendment were accepted, as I think it should be.

My noble friend Lord Sanderson will no doubt correct me if I am wrong, but another factor that is relevant to this is that I am glad to say that the area boards will be retained. I am particularly glad because in 1957 I had to pilot the Bill in which those boards were established. They will be responsible for their part of the national grid. The area boards should have pretty strong control over the situation in their area. Whatever the other factors resulting from competition which will enter into it, they should be in a position to ensure that in each of their areas there is a common domestic tariff.

Therefore I very much hope that my noble friend will not resist these amendments at this stage. I think that what he has said should make us a little careful, because the existing legislation will perhaps need to be even more closely examined than it has been in order to ensure that there are no loopholes. Let us not in any way have a loophole in the Bill. My noble friend Lord Stanley has suggested that we should close the loophole by leaving out the word "areas" in line 5 of page 15.I think that that should be done anyway.

Lord Peyton of Yeovil

I hesitate to delay the passage of the Bill further but I had not expected that my noble friend's reply would bring us face to face quite so abruptly with competition. That is one of the really divisive issues in the Bill. I know that the Government sincerely and genuinely believe that one of the major benefits to flow from competition will be lower prices, with great benefit to the consumer. They feel that the amendments now proposed would somehow get in the way— as undoubtedly they would, if that competition were real, genuine and bringing the expected benefits with it. I do not believe that, basically because it is difficult to imagine competition producing large and not very well defined benefits where there is no large surplus available to play with. There will not be a large surplus, at least in England and Wales. I fear that the Government, in opposing these amendments on the grounds that they would frustrate the benefits, are taking a ground which seems to me to be unreal.

A further source of anxiety arises from what my noble friend referred to when he said that any variation in tariff would have to be justified according to costs. That goes to the root of the matter. It is precisely in the deep rural areas which do not have many privileges where the variation in costs will occur. I believe it is very important that the Bill should produce adequate safeguards. I hope very much that the Government will take full account of the anxieties which were very eloquently expressed by my noble friend Lord Stanley of Alderley. Those anxieties represent the interests of a vital element of the community which does not always get the fair share it is so often promised.

Lord Peston

I did not intend to intervene on this amendment because I took it for granted that the Government would accept it. I do not expect the Government to listen to me with any sympathy, but I should have thought the noble Lord, Lord Sanderson of Bowden, would listen to one or two of his noble friends. I did not understand the noble Lord, Lord Sanderson, to be accepting the amendment or expressing the slightest sympathy towards it. I did not hear him say that he would take the amendment away and redraft it. Therefore, I believe he is against the amendment. I think that is rather unfortunate.

As regards the word "undue" in line 25 of page 15, all we are discussing here are weasel words. The drafters of the Bill do not have the guts to draft it in straightforward terms such as, "preference will not be shown". So, in order to protect consumers from all kinds of unforeseen contingencies, the drafters have inserted words such as "undue". I belong to those who think one should say what one means. The word "undue" is not a meaningful modifier here. I entirely agree with the Members of the Committee who say that it should be omitted.

However, the real point here concerns how the consumer is to be protected. As the noble Lord, Lord Peyton of Yeovil, said, it is hopelessly far-fectched to refer to the suppliers in this connection. We are discussing the area boards; the statutory local monopolies. The public suppliers are simply not competing. It is hopelessly far-fetched to argue that an element of competition is introduced here. It may be introduced at the generating level. One can invent one or two other esoteric areas where there may be some competition. Nevertheless, the idea that the consumer is protected by competition in supply is simply wrong.

How, then, is the consumer protected? I well understand the argument that one can approach the consumer with a cost analysis and tell him that he is paying about eight times what everyone else is paying, but that as a full analysis has been made the consumer concerned should pay that because of the costs involved in his supply. The Government could explain how they are protecting that consumer by such means. They could say they are protecting that consumer by charging him a good deal more than other people because he is so much more expensive to supply. The difficulty here relates to an amendment that I shall discuss later. However, I have raised it before. To the average consumer, all these matters are extremely esoteric. All the consumer understands is that in certain areas he is in danger of being charged a rather high price for the supply of electricity.

As I understand it, this amendment states in a fairly simple way that it would not be wholly unreasonable within a particular area for consumers to be reassured that, broadly speaking, they would meet the same tariff. I agree that one could think of all kinds of complications where some people may be considered to be slightly better off than others. However, that is the nature of the world we live in. One cannot fine tune these things perfectly. I do not wish to raise the usual hilarity that occurs whenever I say anything in favour of rural areas. Nonetheless, it seems to me perfectly reasonable for this amendment to go forward, even if we simply remove the word "areas" rather than go into the matter of rural areas.

I hesitate to speak on other grounds because I know that the noble Lord, Lord Sanderson, would think that if I were supporting the provision all his noble friends must simply be mistaken. However, for once, there is a genuine consumer protection point here which the noble Lord should at least be willing to reflect upon. I know that in certain rural areas— for example, the north of Scotland— it is still enormously expensive to connect one or two households to the system. However, viewed in terms of the billions of pounds that this industry is worth, it would be fairly de minimis even to instruct the boards to meet those costs. I regard it as perfectly reasonable for everyone more or less to feel that, within their normal income, they could expect a supply of electricity. I believe that is what the noble Baroness, Lady Elliot of Harwood, said.

I would even go a little further than this amendment. However, the amendment should be taken extremely seriously. As Members of the Committee have said, if one turns it on its head one could say that the ability to carry out this provision already exists, but in practice I believe the provision is rarely used, if at all. If I lived in a rural area, I would smell a rat as regards the Government having gone out of their way to write the provision into the legislation in this form. One or two Members of the Committee have implied that it is suspicious that the Government have gone to all this trouble to write the provision into the legislation if there is absolutely no possibility of it being used.

6.45 p.m.

Lord Renton

I wish to follow up the point about the existing law. The fact that it is not being used under the existing law does not mean that it would not be used under the new law.

Lord Ezra

I wish to support what the noble Lords, Lord Peyton of Yeovil and Lord Peston, have just said about competition in rural areas. That is surely an illusion. If there is to be competition under this Bill, it will occur at the generating end to some degree and it could also occur in the supply to big industrial consumers. However, what we have been saying here in relation to domestic consumers is that there will be public supply companies which will have a private monopoly. It is of vital importance that they be curbed in the use of that private monopoly.

Those who live in rural areas and who have so far been protected in that regard should continue to be protected. We are all concerned about this. I have not so far noted such unanimity during the debates in the Committee stage of this Bill. We are all concerned that there should be adequate safeguards under these private monopoly arrangements for those consumers who will not be able to turn anywhere else for alternative supplies. Therefore, I very much hope that the noble Lord will be persuaded by what has been said to him from all sides of the Committee.

Lord Brain

It is not the cost of electricity that we are talking about; it is the cost of distributing the electricity and the cost of the wires. I support the noble Lord in this amendment, in that rural areas are much more costly as regards distributing electricity. Are we to have a different price for houses that are situated a mile away from a town as compared with a house that is situated 10 miles away? Will the legislation go into that detail? Are we to end up with British Telecom charging people on different exchanges different prices for their phone calls because their respective wires are different distances away from the exchange?

Lord Sanderson of Bowden

This is an extremely important subject. I am very pleased that my noble friend Lord Stanley of Alderley has raised it. I fully appreciate his own particular interest. It seems incredible that there is clear unanimity on all sides of the Chamber that downward pressure on prices is what we are all trying to achieve as a result of the passing of this Bill. When 70 to 80 per cent. of the cost lies in generation, that is understandable.

I understand very clearly that adequate safeguards should be written into any legislation. What I am concerned to do however is to ensure that all of us have studied the terms of the licence, which in some respects is not exactly easy to follow, but which the noble Lord, Lord Peston, and I have tried to understand as we proceed with the Bill. I made one point about cross-subsidisation, but I say genuinely to my noble friend that I, and I hope he too, would prefer to look very closely at what I have said and at what we intend in the best interests of the consumer, particularly in the rural areas. Perhaps between now and the next stage of the Bill I can, without any commitment, look carefully to see whether we can do anything which may meet some of the reservations of my noble friend as regards what he would term inadequate safeguards.

Lord Kirkhill

Perhaps I may intervene very briefly to suggest to the Minister that he might look northwards to the present practice of the North of Scotland Hydro-Electric Board.

Lord Sanderson of Bowden

In answer to the noble Lord, Lord Kirkhill, I have already looked northwards. As he will know, as a past chairman of the North of Scotland Hydro-Electric Board, the problems are writ very much larger in that area than they are in the rest of the United Kingdom. Of that there is no doubt. With my responsibility for the Highlands and Islands I know it only too well. The other point is that hydro-electricity generation is a major part of the electricity generation in that area. Fifty per cent. of the power comes from that source.

It is relatively cheap power, and it has been written into legislation for a very long time that the advantages should be spread across the board geographically.

I understand what the noble Lord says. By the same token, we have to be very clear about what we are aiming at, which is to bring downward pressure on prices. I should not like, without very serious consideration, to move from the position written into the Bill for the rest of the United Kingdom without being absolutely certain that it would do good and not evil.

Lord Kirkhill

I accept all that the noble Lord says. I thought that his noble friends Lord Peyton, Lord Stanley, and others might think it a good idea were he to look northwards once again.

Lord Stanley of Alderley

Before making my concluding speech I ask my noble friend: is he or is he not giving me an undertaking to come back at Report with some form of government amendment to help consumers in rural areas?

Lord Sanderson of Bowden

I have to say to my noble friend Lord Stanley that that is asking too much. I have said that, without commitment, I shall look very carefully at the matter— as I have asked him to do. I am very happy that he should have discussions with us between now and the next stage of the Bill. What I cannot do is give him a commitment that the Government will come forward with an amendment at Report.

Lord Stanley of Alderley

I thank my noble friend for that reply. At least I know where I stand. I should like to thank noble Lords on all sides of the Chamber who took part in the debate. I believe that all Members of the Committee understand what I and the noble Lord, Lord Ezra, are trying to achieve with these amendments. I take the point made by my noble friend Lord Renton that we should perhaps look at existing legislation and change that. I am afraid that I have not done that, as my noble friend knows, but perhaps that represents another solution.

My main concern is the question of profit before service. I believe, in an old-fashioned way, that service should come before profit. I think that that is where I part company with some Members of the Committee.

My noble friend Lord Peyton raised the question of the word "undue". I think that that point was answered very nicely by the noble Lord, Lord Peston. I took the word out because we had had trouble with it in the Water Bill. I was advised that it gave great scope for any future plc to do more or less what it liked. I am not a lawyer but I took that point. That is why I took out the word "undue". I hope that that answers that question.

My noble friend Lord Sanderson said, quite correctly, that there is nothing in this Bill that would force plcs to charge different prices. The corollary is that there is nothing to prevent them from doing so. I was surprised that he brought up that point because he must have realised that I have read fairly carefully— as have other noble Lords— the discussion in another place in which that argument was cut down to size.

My noble friend Lord Sanderson also pointed out that we were all trying to give the consumer real and effective protection in the form of competition. I am sorry; we do not have competition in the villages or remote areas, as has been pointed out time and time again, particularly by the noble Lord, Lord Ezra. I do not believe that my noble friend grasped my fairy tale about loss leaders. The effect in villages and rural areas will be the opposite. There will be competition in the conurbations, where plcs will drop their prices in order to compete with gas, but in the villages there is no need for them to do so because there is no gas or other alternative. I am afraid that I cannot wear that argument.

The noble Lord, Lord Carter, raised the question of Scotland. My noble friend on the Front Bench said that Scotland was different; it had hydro-electric power. What is the difference between Scotland and Wales?

Lord Sanderson of Bowden

Perhaps I may be permitted to intervene in this interesting discussion. The fact is that the North of Scotland Hydro-Electric Board area is the only area where common tariffs exist as of right on a geographical basis— not the whole of Scotland.

Lord Stanley of Alderley

I am terribly sorry; I meant to say the north of Scotland. I shall ask: what is the difference between the north of Scotland and the north of Wales? In fact, that suits me better because in the north of Wales we have two nuclear power stations; so we provide quite a lot of power, just as the north of Scotland provides a lot in the form of hydro-electric power.

I have no doubt that my amendment is not drafted 100 per cent. correctly. I have no doubt that it ought to be changed. But, in all seriousness, my noble friend has given me nothing. If I were to be unkind— which I am quite often, and perhaps brutal— in my words (because I am a farmer) I should say that he may have been just a little shaken by the support I have received from the rest of the Committee, so he tried to palm me off with some very nice words. They were nice, but I am afraid that I want more. If the Committee accepts the amendment and the drafting is wrong I shall remove it at Report and put in something far better which would meet the point made by my noble friend Lord Renton. In the meantime, I believe that I cannot detain the Commmittee any longer.

6.57 p.m.

On Question, Whether the said amendment (No. 140) shall be agreed to?

Their Lordships divided: Contents, 65; Not-Contents, 67.

Airedale, L. Carmichael of Kelvingrove, L.
Amherst, E.
Brain, L. L. Carter, L. [Teller.]
Brooks of Tremorfa, L. Cledwyn of Penrhos, L.
Cocks of Hartcliffe, L. Monson, L.
Davies of Penrhys, L. Nicol, B.
Dean of Beswick, L. Northbourne, L.
Dormand of Easington, L. Ogmore, L.
Elliot of Harwood, B. O'Neill of the Maine, L.
Elwyn-Jones, L. Peston, L.
Ewart-Biggs, B. Peyton of Yeovil, L.
Ezra, L. Pitt of Hampstead, L.
Fisher of Rednal, B. Renton, L.
Grey, E. Rochester, L
Halsbury, E. Saltoun of Abernethy, Ly.
Hanworth, V. Seear, B.
Harrowby, E. Shannon, E.
Houghton of Sowerby, L. Sharples, B.
Irving of Dartford, L. Stanley of Alderley, L. [Teller.]
Jay, L.
Kinloss, Ly. Stedman, B.
Kirkhill, L. Taylor of Blackburn, L.
Lauderdale, E. Taylor of Gryfe, L.
Lawrence, L. Taylor of Mansfield, L.
Listowel, E. Underhill, L.
Lloyd of Kilgerran, L. Wallace of Coslany, L.
Lockwood, B. Weir, V.
Macaulay of Bragar, L. Whaddon, L.
McNair, L. White, B.
Malmesbury, E. Winchilsea and Nottingham, E.
Masham of Ilton, B.
Mason of Barnsley, L. Winstanley, L.
Mishcon, L. Winterbottorn, L.
Monk Bretton, L. Wise, L.
Arran, E. Johnston of Rockport, L.
Balfour, E. Joseph, L.
Beaverbrook, L. Kimball, L.
Borthwick, L. Long, V.
Brabazon of Tara, L. Lyell, L.
Bridgeman, V. Mackay of Clashfern, L.
Brougham and Vaux, L. Macleod of Borve, B.
Caithness, E. Margadale, L.
Campbell of Croy, L. Marshall of Leeds, L.
Carnock, L. Mersey, V.
Colwyn, L. Monteagle of Brandon, L.
Constantine of Stanmore, L. Mottistone, L.
Craigavon, V. Munster, E.
Craigmyle, L. Murton of Lindisfarne, L.
Davidson, V. [Teller.] Nelson, E.
Denham, L. [Teller.] Nelson of Stafford, L.
Dundee, E. Norrie, L.
Eden of Winton, L. Northesk, E.
Elibank, L. Orkney, E.
Elliott of Morpeth, L. Pender, L.
Ferrers, E. Penrhyn, L.
Fraser of Carmyllie, L. Portsmouth, E.
Gardner of Parkes, B. Redesdale, L.
Glenarthur, L. Sanderson of Bowden, L.
Grantchester, L. Selkirk, E.
Gray of Contin, L. Skelmersdale, L.
Greenway, L. Strathclyde, L.
Harmar-Nicholls, L. Thomas of Gwydir, L.
Havers, L. Torrington, V.
Henley, L. Trumpington, B.
Hesketh, L. Vaux of Harrowden, L.
Hives, L. Wynford, L.
Hooper, B. Young of Graffham, L.
Hylton-Foster, B.

Resolved in the negative, and amendment disagreed to accordingly.

The Earl of Dundee

The Committee may feel that we have reached a suitable moment to break. We shall return to this Bill in an hour's time, at five past eight. I beg to move that the house do now resume.

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

House resumed.

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