HL Deb 09 March 1992 vol 536 cc1173-81

3.15 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)

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.—(Lord Reay.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD CHANCELLOR in the Chair.]

[Amendment No. 106A had been withdrawn from the Marshalled List.]

Lord Hacking

My Lords—

Lord Williams of Elvel moved Amendment No. 106B: Before Clause 20, insert the following new clause:

("Consumer research: electricity

. The following paragraph shall be inserted in the Electricity Act 1989 after section 39(b)— (c) and after undertaking such empirical research into the views of customers as the Director-General thinks fit,".")

The noble Lord said: This amendment stands in my name and that of my noble friend Lord Desai. On the first day in Committee we debated the role of market research in helping the regulator of each individual utility to arrive at sensible standards and sensible decisions. The Minister was kind enough to say that he thought that there might be merit in that suggestion. Since we have already passed the section of the Bill dealing with telecommunications and gas, I have left this amendment on the Marshalled List because we are now dealing with the electricity industry. I hope that when the Minister replies he will make the same encouraging noises as he made last Thursday and that we may see a substantive amendment put forward by the Government. I beg to move.

Lord Hacking

The noble Lord, Lord Williams, in addressing the Committee, explained why he had left this amendment "on" the Marshalled List. That was the expression he used. I should be grateful if he could explain why he left so many amendments "off" the Marshalled List. I refer to the 26 amendments that he tabled for Committee stage which he has now withdrawn.

I have had the pleasure of sitting in a number of Committee stages on Bills with the noble Lord, Lord Williams, and he is noted for carefully considering amendments before tabling them. Once they are tabled, he presses the argument diligently and carefully in Committee, on Report and on Third Reading. Therefore, I am puzzled in this Bill as to why he has chosen to withdraw so many amendments—26 of them—and should be grateful if he would give the Committee an explanation.

Lord Williams of Elvel

I am speaking to Amendment No. 106B which is the object of the Committee's deliberations. If the noble Lord, Lord Hacking, had wished to speak to this point, he might have done so on the Motion, That the House do now again resolve itself into Committee. I see no reason at all to continue this discussion and I hope that the Minister will respond to my amendment.

Lord Hacking

But that is exactly the point. I have been criticised for not speaking at the time when the House was considering whether it should go into Committee. I stood up, as noble Lords may have noticed, and attempted to speak but unfortunately the noble Lord, Lord Williams, did not hear me and did not give way.

Lord Williams of Elvel

I am afraid that I only stood up when the amendment in my name was called by the noble and learned Lord the Lord Chancellor, who is in the Chair. That is all I can do, and I spoke to the amendment.

Lord Reay

The effect of this amendment would be to require the Director General of Electricity Supply to conduct research into the views of individual customers when setting standards of performance, in addition to the requirement that customer representative bodies be consulted.

This is a similar amendment to Amendments Nos. 5, 20, 83, 89 and 108, to which the noble Lord spoke on the previous day in Committee and withdrew after I had said that I would like to take them away with a view to coming back with proposals at the next stage. I confirm to the noble Lord and to the Committee that we intend to bring forward amendments on Report which will cover those amendments, including Amendment No. 106B. I am sure therefore that the noble Lord will be willing to withdraw his amendment.

Lord Williams of Elvel

I am most grateful to the noble Lord for his comments. On the basis of that assurance I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 106C to 110 had been withdrawn from the Marshalled List.]

Clauses 20 and 21 agreed to.

Clause 22 [Billing disputes]:

Baroness Gardner of Parkes moved Amendment No. 111: Page 21, line 26, at beginning insert ("Except in such circumstances (if any) as may be prescribed")

The noble Baroness said: As it currently stands, Clause 22 provides a complete prohibition of any proceedings before any court in respect of any charge in connection with the provision by a public electricity supplier of electricity supply services to a tariff customer. The kind of proceedings that are covered by the prohibition are proceedings before the court in respect of insolvency; applications for interim relief —for example, applications for injunctions to prevent assets being moved abroad; applications to a county court to enforce a determination under Clause 22(5); and proceedings in respect of amounts which cannot be the subject of a billing dispute, which means a dispute with a person who is not a prescribed person under Clause 22(5).

The Electricity Arbitration Association in particular foresees circumstances where it would be inappropriate to serve the notice either because the customer may have no rights under the clause or, alternatively, because urgent action is justified. If the amendment is accepted, the Secretary of State would have the opportunity in regulation to make such exceptions as he thinks appropriate. That would give flexibility, but parliamentary control would still be retained through the statutory instruments procedures. I beg to move.

Lord Reay

Clause 22, subsection (7) of the Bill requires a public electricity supplier, before commencing court procedures in respect of money owed to him, to give the customer concerned 28 days' notice of his intention to do so. It also requires the electricity supplier to inform the customer of his rights under the billing dispute procedures in the Bill. This amendment would make it possible for the Secretary of State to prescribe exceptions to these requirements. I should perhaps make it clear that the existing provision in the Bill would only apply where regulations had been made by the Secretary of State establishing a billing dispute procedure. At present the Secretary of State has no plans to do so for electricity.

However, where billing disputes regulations are made, the requirement on the public electricity supplier to give 28 days' notice of court proceedings and to inform customers of their rights provides an important layer of protection for the customer. If this requirement did not exist, court proceedings could be started by the supplier against a customer before the customer had been given any warning that this was the company's intention, or without the customer becoming aware of his or her right to have a dispute about a bill referred to the director general.

Moreover, the burden the requirement to give notice places upon public electricity suppliers should not be unduly onerous. I am aware of the concern that it would add another lengthy stage to the electricity supplier's debt recovery procedures during which customers could continue to run up bad debts. It should, however, be possible for a supplier to inform the customer at any early stage in the debt recovery procedure—for example, when the first reminder that payment is overdue is sent—that court proceedings will be set in hand if necessary. This would minimise the danger that customers would use the notice period as extra time in which to run up large bills.

As for the obligation to inform customers of their rights under billing dispute regulations, this would only apply where the supplier wished to commence court proceedings. Customers could be informed of their rights, again when the first reminder of overdue payment was sent, by means of a standard letter. I am also aware of the concern that customers could, on being informed of their rights, use the right to have a dispute over a bill referred to the director general as a deliberate tactic to postpone payment. The director general will, however, be able to ensure that frivolous or vexatious claims are not used in this way.

If the amendment of the noble Baroness were passed, the Secretary of State could, when making billing dispute regulations, come under pressure from electricity suppliers to prescribe large numbers of exceptions to the rule that customers should be given 28 days' notice of court proceedings and of their rights to refer disputes to the director general. It is, however, difficult to see in what circumstances such exceptions would be justified. The point of this Bill is to strengthen consumers' rights and I would not wish to include in it provisions which might lead to this objective being undermined. I hope that in the light of the explanation I have given, the noble Baroness will accept that the concerns underlying her amendment are largely unfounded and will therefore agree to withdraw it.

Baroness Gardner of Parkes

I have listened to what the Minister has said and I hope he is correct. However, I have mentioned specific examples where it would be highly relevant to have a degree of flexibility. When we are protecting consumers' rights it is important to realise that every consumer is disadvantaged if unscrupulous people get away with certain practices. I believe that matter needs to be looked at again. Perhaps between now and Report stage I will have the opportunity to study what the Minister has said. I hope that he will study the examples that I have mentioned and determine whether the amendment is appropriate in the light of those examples. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 112 to 113B had been withdrawn from the Marshalled List.]

Clause 22 agreed to.

Clauses 23 and 24 agreed to.

[Amendment No. 114 not moved.]

Lord Allen of Abbeydale moved Amendment No. 115: After Clause 24, insert the following new clause:

("Disputes over performance.

. The following section shall be inserted in the Electricity Act 1989, after section 39—

"Disputes over performance.

(1) The Director shall have the power, in the course of a dispute to which this section applies, to investigate and determine the dispute.

(2) This section applies to any dispute, not being a claim for personal injuries, between a customer and public electricity supplier who is seeking to render no performance at all or performance substantially different from that reasonably expected of him by virtue of reasons claimed to be beyond the supplier's control; where either party to the dispute has referred the matter to the Director for determination,".")

The noble Lord said: In rising to move Amendment No. 115 perhaps I should begin by saying there has been a slight mistake in the printing. This clause has always been in my name. I gather printing problems may affect tomorrow's proceedings as well as today's.

In moving this amendment I do so with no great optimism in view of the fate which has overtaken previous attempts in the Committee to enlarge the regulator's powers. It seems to me that there is a real problem here. It concerns the case which is perhaps somewhat unusual in its nature and falls outside the scope of the compensation scheme which applies where a public utility fails to meet certain guaranteed service standards and does so on the basis that the failure is due to reasons beyond its control.

There is a difficulty that can arise in any of the utilities. I raised this point on Second Reading in the context of BT and it is perhaps particularly appropriate to raise it today in the context of the supply of electricity. I am aware that the Electricity Act 1989 already contains the provision in Section 17(2)(a), that a supplier is not obliged to give a supply of electricity where, he is prevented from doing so by circumstances not within his control", and such an exclusion provision is incorporated by the electricity companies in their literature.

When I raised this general issue on Second Reading in the context of BT, the Minister said: In setting standards for the utilities, it would be for the director general to decide whether there should be any exemptions from paying compensation for certain circumstances".—[Official Report, 14/2/92; col. 960.]

I found those remarks a little cryptic at the time. I am still not absolutely sure that I have understood them. I hope that I am not doing the Minister an injustice if I suggest that what he said does not altogether dispose of the point which I tried to make about a utility arguing that there were circumstances beyond its control.

Perhaps I may illustrate my point by quoting an actual event. It concerns an individual who, over a two-year period, suffered 45 separate interruptions to his electricity supply, seemingly caused by equipment failure on his supply route. None of the interruptions lasted for the necessary length of time to qualify him for compensation under the guaranteed service scheme. After a prolonged exchange of correspondence with Seeboard, he was told that Seeboard could offer no compensation because the loss of supply was due to faults which were outside its direct control. The Office of Electricity Regulation was apparently sympathetic but felt that it could not go against Seeboard's decision.

If a case falls outside the guaranteed service scheme and is not suited to the arbitration procedure conducted by correspondence, the aggrieved customer will think a long time before taking on the embattled might of the electricity company in the courts. Nor is it an answer to suggest that such problems could be met by making a new standard. The regulator can hardly be expected to anticipate every difficulty which might conceivably arise. In addition, when one does crop up outside the guaranteed service scheme, it may well be that the circumstances are not likely to be often repeated, and that it would not be justifiable to set a new standard covering that particular point, such as, for example, the problem of intermittent faults in the instance which I quoted.

Therefore, I suggest that the regulator, as an independent adjudicator, should be given the power to ensure that the operator is not attempting simply to stonewall and hide behind the exclusion clause. I envisage that the power would need to be used only rarely; but the operator, when negotiating with the complainant, would always be aware that the power existed as a last resort.

It seems to me that the amendment would provide a simple and economical way of avoiding protracted and frustrating disputes over whether the reasons why things had gone wrong were or were not within the control of the utility. I beg to move.

3.30 p.m.

Baroness Oppenheim-Barnes

I have a certain amount of sympathy with the arguments which the noble Lord, Lord Allen of Abbeydale, put forward. A great deal of annoyance and often considerable loss is occasioned by interruptions of supply over a long period. That may not involve danger or loss of life but may result in the loss of a freezer full of food or be expensive.

Of course there has to be an exemption clause. However, the problem arises in relation to who will define what is an act of God and what has arisen as a result of negligent maintenance. In my experience, on a number of occasions when the electricity supply has been cut in the country the story has always been that a tree had fallen somewhere. If trees fall or the lines are near trees surely that is a problem of maintenance. Perhaps not in every case, but in some cases negligence could be alleged on the part of the operator. Therefore, I should have thought that if one was to consider giving the regulator that role he would also have to have access to a great deal of technical advice in order to determine difficult cases. However, as the exemption clause stands at present I am not entirely happy.

Lord Reay

The effect of the amendment would be to give the director general power to intervene, at the request of either party, in a very wide range of disputes between a customer and his or her electricity supplier. It contains no power for the director general to limit or specify the range of disputes which he can determine. The amendment as drafted also gives no indication of what the director general would have the power to do after deciding that one or other of the parties were right.

The director general already sets guaranteed service standards. In doing so he takes a view on which activities should be covered by the standards. He then monitors their operation and has the power to expand or strengthen the standards if he finds it necessary. So, if it comes to his notice that customers have cause for complaint in areas which fall outside the guaranteed service standards, he has the power to change the standards or introduce new ones to cover that area.

Under the Electricity Act the customer already has his potential complaints covered in two broad areas: first, under guaranteed service standards which, as I have said, the director general can amend at any time to cope with new problems; and, secondly, under the director general's dispute resolution powers concerning the terms on which electricity will be supplied. The customer also has the option of taking the electricity company to court to resolve disputes. In addition, the Bill makes provision in Clause 22 for the Secretary of State to make regulations which will establish a procedure to resolve billing disputes. We intend to make billing dispute regulations for telecommunications as soon as the Bill is enacted but have no plans to do so immediately for the other utilities, where we shall keep the situation under review.

Furthermore, the amendment would breach an important principle of general legal policy. The amendment gives the director general an extraordinarily wide discretion to intervene in almost any imaginable dispute, without the company or the customer knowing in advance what he will consider and on what basis he will arrive at his decision. That goes well beyond the norms of dispute resolution under our legal system whereby all disputes are settled by reference to known legal principles, such as contract law or the law of tort. It is axiomatic that a person should be able to find out in advance whether any action of his or hers is capable of leaving him or her liable to be taken to court or be ordered to pay compensation to someone else. By giving the director general such a wide and undefined discretion the amendment departs from that basic principle, and for that and the other reasons I have given I hope that the noble Lord will not press it.

Baroness Phillips

Before any of my noble friends on the Front Bench or those who have put their names to the amendment decide what to do, I should like to make an appeal on behalf of the customer.

We have brought in such complicated legislation that it is practically impossible for someone to understand his or her rights in a very simple dispute. I know that it is unpopular to make anecdotal comments, but I should like to give an example. Recently I wanted a replacement for an item of electrical equipment originally supplied by the London Electricity Board. I shall not weary the Committee with the long and protracted exchanges that took place. It was a very simple request. However, when I telephoned the company, I spoke to about 12 people—obviously the company is grossly over-staffed in its offices and under-staffed in terms of the people who supply the equipment.

The important point is that I know the ropes. My daughter, in another place, telephoned the chairman of the company who came up with an extraordinary explanation. He said, "Your mother should have called in a private electrician in the first place". My daughter took great pleasure in pointing out to him that he was a private electrician, and that in the second and third place he received a vast salary and did not seem to know what his function was.

We had the matter dealt with, after a long time. However, what if that had happened to some of my neighbours? A little lady living on her own who had that problem would not understand the position and would not want to go to law. She would not understand that there was somebody to protect her. I support the noble Baroness. Anything we can do to support the unfortunate consumer has to be right. It is a private monopoly. There is nothing else but electricity to use. One is totally at the mercy of these people and they know it. Anything that can make it possible for the law to be properly carried out to the benefit of the consumer must be right and useful.

The Earl of Selkirk

I should like to support the remarks of the noble Baroness. She made a very important point. I am in a curious position. My telephone has worked very well for 40 or 50 years but now the bell has broken down. I have telephoned the company and asked whether they would replace the bell. Naturally I want to hear it, but sometimes it is so light that it is hardly audible. I was told that the equipment was no longer made. What was to be done? It is essential to have a bell, otherwise one does not know when the telephone rings.

I was told that a replacement was not possible but that I could be supplied—I suppose at my expense —with a new telephone altogether. I do not need a new telephone. My telephone works perfectly well and I have been satisfied with it for many years. It is only the bell that has broken down but the company refuse to replace it. If the noble Lord says that the Bill covers that situation, I shall be delighted; if he cannot say that, I very much regret it.

The Earl of Onslow

One can in fact get a new telephone with a new bell for about £8. It can be plugged in. It is not very difficult. One does not have to have one of those instruments which are wound up with a handle; the ones where you take part of it out of a socket on the side and stick it into one's ear. For the benefit of my noble friend Lord Selkirk, it is quite possible very cheaply to obtain a new telephone which will solve his bell problem instantly.

Lady Saltoun of Abernethy

But only if there are modern sockets.

Baroness Phillips

I should like to ask the noble Earl whether the telephone he mentions comes from Taiwan. At that price it is certainly not of English manufacture.

The Earl of Onslow

The one that I bought came from the British Telecom shop in Guildford.

Lord Williams of Elvel

The Committee is indebted to the noble Lord, Lord Allen of Abbeydale, for bringing this matter before us. The Minister will recognise from the speeches made from around the Committee that there is a genuine problem. Accepting all the technical difficulties that the noble Lord puts in the way, the Government ought to reflect on how that problem should be met. It is not enough simply to say that consumers can be disadvantaged because one law or another does not work. Furthermore—this point returns to a discussion on the first day of Committee—any form of litigation is extremely expensive for the consumer. Many consumers simply cannot afford to go to law. I very much hope that the Government will reconsider this point.

My noble friend Lady Phillips quite rightly pointed out that although some people may have interests in certain quarters and some people may be millionaires and able to go through the courts, there are millions of people in this country who cannot afford to do so. They are the people who need help.

Lord Reay

Perhaps I may just add a few words. There will always be cases which fall outside guaranteed service standards. The noble Lord, Lord Allen of Abbeydale, gave one such example when the guaranteed service standard plainly did not apply to the situation in which many power cuts of short duration had occurred. But it is up to the director general to make the standard more strict. He has the powers to do so. The amendment does not affect that situation and is not therefore the answer to that problem.

Lord Allen of Abbeydale

I am grateful for the contributions to this short debate. They reflect the fact that there is a good deal of disquiet on the point that I tried to raise. I tried to anticipate (for once I use the word correctly) the explanation which the Government might offer on standards and explain why I thought it was not the answer to my point. Indeed, even if there is a new standard in the light of experience, it does not do much to help the people who have been suffering in the meantime.

I must confess to the Committee that I found it extremely difficult to relate the Minister's reply to the point that I was making. It is basically an extremely simple point: if the utility maintains that what went wrong was because of circumstances beyond its control, is that to be the last word or is the regulator to be given power to look behind the scenes and assess whether that was so? It is very much the point raised by the noble Baroness, Lady Oppenheim-Barnes.

I do not want to widen the debate, but perhaps it will be remembered that on Second Reading I mentioned the example of the Scarborough telephone exchange which burned out and for some days all the subscribers in the area were unable to use their telephones. In the end BT said that the fire was because of circumstances beyond its control. But no one was able to check whether that was right or to look behind that excuse.

That is the limited purpose of the amendment. Its use would arise rarely. I do not consider it right to say that the amendment goes very wide and opens up the field to all kinds of disputes. I have made the point. In the light of the parliamentary programme—if I may put it that way—I must reluctantly withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 115A to 115F had been withdrawn from the Marshalled List.]

Clauses 25 to 27 agreed to.

Earl Howe

I beg to move that the House do now resume.

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

House resumed.

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