Gas Bill

HL Deb 28 June 1995 vol 565 cc824-60

House again in Committee on Schedule 3.

Lord Clinton-Davis moved Amendment No. 105A:

Page 37, leave out line 15 and insert: ("8. For section 14 of the 1986 Act the following section shall be substituted—

"Obligation to publish prices and other services.

14.—(1) The prices to be charged to domestic consumers for the supply of gas and the provision of services (hereafter referred to as Terms of Supply) shall be published in such manner as in the opinion of the supplier, after consultation with the Director and the Council, will secure adequate publicity for them.

(2) The manner in which the terms of supply are to be published shall be such as to enable domestic gas consumers or potential consumers accurately to compare prices and services when choosing a supplier.

(3) Suppliers shall be under a duty to send copies of their Terms of Supply to the Director and the Council not later than the time of publication or announcement of their implementation.

(4) In this section "services" shall be taken to mean standards of service or services which shall include the supply gas fittings to be used by the consumer supplied with gas by the supplier or any other meaning to be determined by the Director in consultation with gas suppliers and persons or bodies representative of those likely to be affected by his decision.".").

The noble Lord said: This amendment is about transparency and the need for consumers to be given the information that is necessary to enable them to make informed choices. In order to make those informed choices it is essential that there should be statutory protection to require each company's prices to be published. There was an obligation on the part of British Gas to do that under the 1986 Act and I can see no reason why that requirement should not be imposed on the companies that are involved in this market. After all, it seems self-evident almost that the ability to be able to compare services and prices that may be available to consumers when they are choosing a supplier is of paramount importance. Coupled with that there is not only the question of prices and services but a whole range of packages that are also in need of publication. I refer to gas fittings, supply incentives that might be available to customers if they adhere to their relationship with the gas company, and so on.

Despite the arguments to the contrary adduced by the Minister in Committee in another place, we believe that there remains a clear need for this provision. We are not content that the matter should be left to the discretion of the director general, albeit that she would perform her duty together with the Secretary of State. After all, if that situation were to remain, it is not beyond the bounds of possibility—even probability—that the standard supply conditions could be altered. There would be no real parliamentary accountability. Although it is true that there would have to be consultation, as set out in the Bill, before a modification of the standard licence conditions, there is no guarantee that the results of the consultation would be other than a denial really of the complaints that might have been made on behalf of consumers. Consumers might be waylaid. There is no protection.

Unless the Minister can come forward with some rather better arguments than those adduced by Mr. Eggar in another place, we shall not be convinced. Perhaps the Minister and his colleagues have had time to reflect on this point. The amendment seeks to arm the consumer, in the interests of the consumer, with the necessary information to enable him to make an informed choice. In a nutshell, that is what the amendment is all about. I beg to move.

Lord Ezra

We are back on the fundamental issue, which has been raised many times during the consideration of this Bill, of safeguarding the interests of consumers. It is the opinion of noble Lords on this side of the Committee, and, I hope, a number on the other side, that this an issue of fundamental importance. There are certain safeguards which it is not sufficient to put in the licence and which should be in the Bill itself. The publication of prices and conditions of sale are among those safeguards.

It is not satisfactory to say that at some future point in time the consumer would perhaps be able to shop around. Shopping around for gas supplies is totally different from shopping around from one supermarket and another. Until it can be proved beyond any shadow of doubt that the publication of prices and conditions of sale are not necessary to safeguard consumers, that should be done by obligations written into the Bill itself and not left to the licence. This is an issue of very great importance. It would demonstrate whether the Government are seriously interested in safeguarding the interests of consumers in this change in the market situation or whether that is purely incidental.

We had the argument about whether the protection of the interests of consumers should be put among the prime responsibilities of the Secretary of State and director general. The Government argued against that. We divided, and we lost. It is still our opinion, however, that not sufficient emphasis has been given on the face of the Bill to the overriding consideration of safeguarding the interests of consumers. The publication of prices is paramount in that respect.

Lord Clinton-Davis

Before the Minister replies, perhaps I may put myself in order. For the convenience of the Committee I note that we are debating not only Amendment No. 105A but also Amendments Nos. 106 and 149. I apologise.

Lord Skelmersdale

As noble Lords will remember, I was one of those who zeroed in on this problem at Second Reading. I asked where the liberalisation of the telecommunications market would be without the publication of prices. I am absolutely certain that that applies equally well to the liberalisation of the gas supply market and in exactly the same way. Since then I have been doing a little research. I have discovered—the point has already been made—that there is sufficient emphasis in the draft supply licence to make certain that this will happen in the way that I and other Members of the Committee would like it to happen and, I am sure, the Government would like it to happen too.

I have heard the remarks, particularly of the noble Lord, Lord Ezra, and to some extent those of the noble Lord, Lord Clinton-Davis. They feel that the licence can be varied in such a way that, because this matter is so important, it should be fully statutory and therefore written into the Bill. The safeguards on the changes of licences are perfectly adequate. I am very happy that they should continue to be in the licence.

8 p.m.

Earl Ferrers

I know that the noble Lord, Lord Clinton-Davis, is very adept at these matters. I congratulate him for writing such an amendment for the Committee's consideration. My guess is that it might have emanated from the Gas Consumers Council. It is curious that, within two days of Ofgas setting 400,000 large and medium-sized customers free to negotiate prices with British Gas, the Gas Consumers Council, via the noble Lord, Lord Clinton-Davis, invites us to write into the Bill the requirement to price only according to schedules.

I understand the concerns of the noble Lords, Lord Clinton-Davis and Lord Ezra. I am happy to reiterate that the Government consider that it is important, at least in the early stages of the market, that there should be published prices. That is why price schedules are provided for in draft standard condition 3 of the supply licence. That is just as binding on suppliers as if it were in the Bill. I made some remarks about that in relation to the amendment we were discussing before dinner, proposed by my noble friend Lady Gardner of Parkes.

But I believe that there is a real risk that publishing prices in the long term—we are asking the Committee to look to the future and not only to the immediate stage—could work against the consumers' benefit. In the same way in the industrial market, schedules are not considered to be beneficial. That could also apply to the domestic market. People may want to negotiate their own prices. That does not mean that they will do so immediately. We want to leave flexibility for that to happen. Obviously, not all domestic consumers will want to do that.

Sometimes formal price schedules can operate to the disadvantage of the consumer. For example, if everyone knows a certain price level has been published, every competitor is almost certainly to be invited to go up to or very near that price. That means that that provision militates against the consumer. Some will say that consumers will not want to haggle, and that may be true. I do not believe that many will. However, it is not impossible and in future they may wish to do so. We ought to leave the arrangements as they are. Certainly in the immediate future prices will be published, but we want to leave the possibility open that when conditions change—I am not suggesting that they are changing or that they are going to change, but they may—it should be open to suppliers and consumers to make their own arrangements if that is in the interests of both.

Lord Clinton-Davis

With great respect, that answer is founded on a great deal of conjecture. The consumer is entitled to something better. We are not talking about people going into a shop to buy a bag of sweets or even a consumer item which is rather more valuable. We are talking about something which will relate to them for a very long time. It will be a very important contractual operation in their lives. I respect the argument which the noble Earl has put forward, but I do not find the answer a compelling one.

The Minister said that it may be important in the early stages for prices to be published. I do not know what he means by "early stages". How long will that last? The noble Earl is against publication in the long term, but what is the "long term" in this regard? No definition has been given at all. Probably the Minister does not know and I do not believe that the department has thought this out. We have a pig in a poke. I do not believe that it is in the consumers' interests to go down the route suggested by the Minister.

He seemed to convey the view that publication of prices was important. I believe that he said that more than once. If that is right in the early stages—and I ask him to be a little more precise about that—why should it not remain important in the longer term?

As regards flexibility, if there were some provision that this matter could he invoked by way of statutory instrument I would be reasonably happy. On behalf of this side of the Committee I want some form of parliamentary control and accountability. We do not want the regulator deciding these matters, perhaps in a capricious manner. I said before in an earlier debate that the relationship between the regulator and the Gas Consumers Council could be better. I do not know who is to blame for it and neither do I want to suggest an indictment here. The reality is that the relationship is not as good as it should be.

Consequently, I return to the argument that what the Minister is suggesting is far from revealing the transparency that is required. I ask the Minister to reflect further on this matter. I do not believe that I can ask him to do more than that tonight. It is a perfectly reasonable request.

Earl Ferrers

The noble Lord, Lord Clinton-Davis, has asked me to reflect on this and I shall do so. I ask him to reflect, possibly back 15 or 20 years. When one went to buy petrol it was at a constant price wherever one went. Eventually petrol companies were allowed to adopt a flexible market and to place prices where they wanted. I remember that time well. It seemed tremendously avant-garde and almost disreputable. The whole market would go to glory, but it did not. Now we are used to paying different prices at petrol stations and one tends to shop around.

I am not saying that that is a direct comparison. However, at the moment I agree with the noble Lords, Lord Clinton-Davis and Lord Ezra, that there is a need for stability. People want to know where they are going. If it is said that, for the purposes of consumer benefit, "There shall be published a list of prices which will not be movable or negotiable", that is quite a static position.

While in the near future, and as long as is necessary, these prices will be fixed, I do not believe that in the longer term that may necessarily hold. Just before the dinner break I gave the example of people who use 3,000 therms who are entitled to negotiate. What about someone who uses 2,000 therms? Why should not that person be allowed to negotiate? I ask the Committee to look at this issue not from the point of view of the immediate future-because I agree with noble Lords that we now want to know what the prices are—but we should look further ahead and allow for flexibility. That is all I am asking. I shall certainly consider the point made by the noble Lord, Lord Clinton-Davis, and indeed all that Members of the Committee have said.

Lord Clinton-Davis

Over what period?

Lord Ezra

Perhaps I may make it clear that I was asked by the noble Baroness, Lady Gardner of Parkes, to speak on her behalf as regards Amendment No. 106, which is being taken at the same time. She cannot be here.

Perhaps I may answer two of the points which the noble Earl has just made. As regards the petrol stations, I made a point in support of the opposite argument. I said that they publish their prices in the sense that they display them. We can then make a choice and drive around and select on the basis of the published prices. The petrol stations are now obliged by law to show the prices.

To say that the price schedules will he immutable is totally wrong. Publication does not mean that they are published for ever and a day. In my time in the coal industry, I was used to the coal trade and all merchants published their prices. How could you deal with a merchant if you did not know his prices? Indeed, how could you use a supermarket unless it showed you its prices? I do not see why prices should be concealed from consumers. It is such an obvious matter for the requirement for transparency that I cannot understand why we are having this argument. It is so fundamental that, in our opinion, this provision should certainly be in the Bill. Unless domestic consumers know what prices they are to be charged, how can they do business? It is different for ICI or a large industrial concern. They have purchasing departments and staff who can go out, look around and negotiate until the cows come home. That is what they have to do, but the ordinary domestic consumer needs to know prices. Suppliers have complete freedom to change their price schedules as often as they like so long as they publish them, just as a filling station can change its petrol prices as often as it likes. As long as people know what the prices are, they can make a choice.

Lord Clinton-Davis

I am obliged to the noble Lord, Lord Ezra, and to the Minister who has indicated that he is prepared to look again at this matter, without of course any commitment. That is fair enough. However, the argument about resale price maintenance is very different. As the noble Lord, Lord Ezra, said, there is nothing immutable about the situation. In relation to the example that he gave, there are frequent changes—sometimes justified and sometimes not, but the fact is that there are frequent changes. In this instance, there is no reason why indicative prices could not be suggested. One could cite many examples of goods on the market to which that applies. It is not simply a question of petrol; there are many other instances. We are talking about a long-term transaction hut, with respect, I think that the principle remains the same whether we are talking about the short or the long term. However, the Minister has clarified the position to some extent and is to reconsider the matter. In those circumstances, I am obliged to him and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 106 not moved.]

Earl Ferrers moved Amendment No. 107:

Page 43, line 23, leave out ("conveyance by the pipe-line") and insert ("efficient operation of the pipe-line system, or the conveyance by the").

The noble Earl said: In moving Amendment No. 107, I should like to speak also to Amendments Nos. 108 and 109. The amendments merely refine the director's power to require public gas transporters to allow people to make use of their pipelines. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendments Nos. 108 and 109:

Page 43, line 40, leave out from ("and") to ("gas") in line 41 and insert ("in the quantities so specified or determined by or under the directions,").

Page 43, line 48, after ("applicant") insert ("such ancillary or incidental rights as the Director considers necessary or expedient, which may include").

On Question, amendments agreed to.

[Amendment No. 110 not moved.]

Earl Ferrers moved Amendment No. 111:

Page 45, line 31, after ("pipe-line;") insert: ("() he has consulted with that transporter as to exactly where in that area the proposed pipe-line is to be located, having regard to the location of other pipe-lines in that area;").

The noble Earl said: This is a technical amendment. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendments Nos. 112 and 113:

Page 46, line 21, leave out ("a standard condition") and insert ("standard conditions").

Page 46, line 25, leave out ("that condition for the purposes of its") and insert ("those conditions for the purposes of their").

The noble Lord said: I should like to speak also to Amendments Nos. 115, 121 to 130 inclusive; 133 and 134. These are technical amendments which relate to the standard condition provisions in the Bill and turn the singular into the plural. I beg to move.

On Question, amendments agreed to.

[Amendment No. 114 not moved.]

Lord Inglewood moved Amendment No. 115:

Page 47, line 13, leave out ("a standard condition") and insert ("standard conditions").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

[Amendment No. 116 not moved.]

8.15 p.m.

Lord Inglewood moved Amendment No. 117:

Page 47, line 23, leave out from ("unless") to end of line 36 and insert:

1. ("(a) the percentage given by each of subsections (8) and (9) below is not less than 90 per cent;
2. (b) the percentage given by subsection (8) below is not less than 90 per cent and no relevant activities have been carried on by relevant licence holders; or
3. (c) subsection (9A) below applies.").

The noble Lord said: In speaking to Amendment No. 117, I should like to speak also to Amendment No. 119. These are technical amendments relating to the provisions in amended Section 23(7) which restrict the director's ability to modify the standard conditions of licences. I beg to move.

The Deputy Chairman of Committees (The Viscount of Oxfuird)

I must advise the Committee that, if agreed to, this amendment pre-empts Amendment No. 118.

On Question, amendment agreed to.

[Amendment No. 118 not moved.]

Lord Inglewood moved Amendment No. 119:

Page 48, line 7, at end insert: ("(9A) This subsection applies where the Director is of the opinion—

1. (a) that the effect of the standard conditions is such as to impose a burden affecting relevant licence holders in the carrying on of activities to which the modifications relate;
2. (b) that the modifications would remove or reduce the burden without removing any necessary protection; and
3. (c) in the case of a licence under subsection (1) or (2) of section 7A above, that the modifications are such that no holder of such a licence would be unduly disadvantaged in competing with other holders of such licences.").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 120:

Page 48, line 7, at end insert: ("() Where at any time the Director modifies a standard condition under subsection (2) (a) above for the purposes of its incorporation in licences under section 7 or 7A(1) or (2) above granted after that time, he shall publish the modifications in such manner as he considers appropriate.").

The noble Lord said: In moving this amendment, I should like to speak also to Amendments Nos. 132 and 136. These are technical amendments which provide for the publication of modifications of standard conditions. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendments Nos. 121 to 130:

Page 48, line 8, leave out ("the modification of a condition") and insert ("modifications of standard conditions").

Page 48, line 11, leave out ("modification") and insert ("modifications").

Page 48, line 14, leave out ("condition relates") and insert ("modifications relate").

Page 48, line 17, leave out ("modification") and insert ("modifications").

Page 48, line 19, leave out ("condition") and insert ("standard conditions").

Page 49, line 25, leave out ("condition") and insert ("conditions").

Page 49, line 30, leave out ("the modification of a relevant condition") and insert ("modification of relevant conditions").

Page 49, line 32, leave out ("condition") and insert ("conditions").

Page 49, line 40, leave out from ("subsection") to end of line 42 and insert ("(5) (a) of that section, for the words "such a report, send a copy of it to the public gas supplier" there shall be substituted the words "a report on a reference under section 24(1) above, send a copy of it to the licence holder". () After that subsection there shall be inserted the following subsection— (5A) Subject to subsection (6) below, the Director shall—

1. (a) on receiving a report on a reference under section 24(1 A) above, send a copy of it to the Secretary of State; and
2. (b) not less than 14 days after that copy is received by the Secretary of State—
   1. (i) send another copy to the Council and to each relevant licence holder; and
   2. (ii) not less than 24 hours after complying with sub-paragraph (i) above, publish the copy sent to the Council in such manner as he considers appropriate for bringing the report to the attention of persons likely to be affected by it."

() In subsection (6) of that section—

1. (a) after the words "subsection (5)" there shall be inserted the words "or (5A)"; and
2. (b) for the words from "the copy of the report" to the end there shall be substituted the words "the copy of the report, or (as the case may be) each copy of the report, to be sent and published as mentioned in paragraph (b) of that subsection".").

Page 50, line 2, leave out ("a standard condition") and insert ("standard conditions").

Page 50, line 6, leave out ("that condition for the purposes of its") and insert ("those conditions for the purposes of their").

On Question, amendments agreed to.

Lord Inglewood moved Amendment No. 131:

Page 50, line 11, at end insert: ("and the above reference to subsection (1) above is a reference to that subsection as it applies in relation to a report on a reference under section 24(1 A) above"").

The noble Lord said: This is a technical amendment which relates to circumstances when a particular licence is amended by the director following an MMC report. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 132:

Page 50, line 14, at end insert: ("(4) After that subsection there shall be inserted the following subsection— (5) Where at any time the Director modifies a standard condition under subsection (1A) (a) above for the purposes of its incorporation in licences under section 7 or 7A(1) or (2) above granted after that time, he shall publish the modifications in such manner as he considers appropriate.'"').

On Question, amendment agreed to.

The Deputy Chairman of Committees

The Question is that Amendment No. 128A, which has been missed, be agreed to? As many as are of that opinion say "Content"—

Lord Inglewood moved Amendment No. 128A:

Page 49, line 40, leave out from ("subsection") to end of line 42 and insert ("(5) (a) of that section, for the words "such a report, send a copy of it to the public gas supplier" there shall be substituted the words "a report on a reference under section 24(1) above, send a copy of it to the licence holder". () After that subsection there shall be inserted the following subsection— (5A) Subject to subsection (6) below, the Director shall—

1. (a) on receiving a report on a reference under section 24(1A) above, send a copy of it to the Secretary of State; and
2. (b) not less than 14 days after that copy is received by the Secretary of State—
   1. (i) send another copy to the Council and to each relevant licence holder; and
   2. (ii) not less than 24 hours after complying with sub-paragraph (i) above, publish the copy sent to the Council in such manner as he considers appropriate for bringing the report to the attention of persons likely to be affected by it."

() In subsection (6) of that section—

1. (a) after the words "subsection (5)" there shall be inserted the words "or (5A)"; and
2. (b) for the words from "the copy of the report" to the end there shall be substituted the words "the copy of the report, or (as the case may be) each copy of the report, to be sent and published as mentioned in paragraph (b) of that subsection".").

The noble Lord said: This is a technical amendment which is intended to bring the procedural treatment of MMC reports which have general application to licence holders into line with the treatment under the Fair Trading Act of MMC reports on other industries where competition is taking place. I beg to move.

Lord Skelmersdale

Although my noble friend has just moved this amendment, I am now totally confused because I had thought that earlier my noble friend moved Amendments Nos. 121 to 130 en bloc. Therefore, we are having a belt-and-braces exercise for which I do not see the need.

Lord Inglewood

If it is unnecessary, then it is unnecessary and if it is not necessary, I wish to move it.

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 133:

Page 50, line 25, leave out ("a standard condition") and insert ("standard conditions").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 134:

Page 50, line 29, leave out ("that condition for the purposes of its") and insert ("those conditions for the purposes of their").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 135:

Page 50, line 32, after ("may") insert (", after consultation with the Director,").

The noble Lord said: This is another technical amendment which, for practical purposes, is to improve co-operation between the Secretary of State and the director. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 136:

Page 50, line 48, at end insert: ("4) After that subsection there shall be inserted the following subsection— (2A) Where at any time the Secretary of State modifies a standard condition under subsection (1A) (a) above for the purposes of its incorporation in licences under section 7 or 7A(1) or (2) above granted after that time, he shall publish the modifications in such manner as he considers appropriate."").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 136A:

Page 52, line 41, after ("10(2)") insert ("or (2A)").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 137:

Page 52, line 41, after ("12(1)") insert ("or (5)").

On Question, amendment agreed to.

Lord Inglewood moved Amendments Nos. 138, 139 and 140:

Page 53, line 15, at end insert:

("Duty of Director to investigate certain matters

.—(1) In subsections (1) and (2) of section 31 of the 1986 Act (duty of Director to investigate certain matters), for the words "an enforcement matter" there shall be substituted the words "a reserved matter".

(2) For subsection (3) of that section there shall be substituted the following subsections

"(3) In this section and section 32 below "reserved matter" means any matter—

1. (a) in respect of which any functions of the Director under section 28 above are or may be exercisable; and
2. (b) which has not been designated by the Director as a matter which is to be investigated by the Council.

(4) A designation under subsection (3) above may be made—

1. (a) either generally or in relation to matters of a particular class or a particular matter; and
2. (b) either unconditionally or subject to such conditions as may be specified in the designation.

(5) Conditions specified in a designation under subsection (3) above may contain provision for the designation to cease to have effect, either generally or in relation to matters of a particular class or a particular matter, in such circumstances as may be determined by or under the conditions." ").

Page 53, line 17, leave out ("In") and insert ("For").

Page 53, line 18, leave out from ("matters)") to end of line 21 and insert ("there shall be substituted the following subsection— (2) This subsection applies to any matter (not being a reserved matter) in respect of which any functions of the Director under this Part are or may be exercisable. () In subsections (3) and (5) of that section, the words "paragraph (a) of—shall cease to have effect.").

The noble Lord said: These are technical amendments which have been made in response to the desire of the director and the Gas Consumers Council to introduce some flexibility into the division of labour between them. I beg to move.

On Question, amendments agreed to.

Lord Clinton-Davis moved Amendment No. 140A:

Page 53, line 39, at end insert: ("(5) The Council shall have a duty to the extent requested by the Director General of Fair Trading under section 124(3) of the Fair Trading Act 1973 as regards the promotion and keeping under review of Codes of Practice designed to promote high standards of service in the sale, installation, maintenance and repair of gas appliances.".").

The noble Lord said: With this amendment we are seeking to place an obligation on the Gas Consumers Council to promote the publication of codes of practice for retailers within certain categories; for example, about delivery times and conduct before and after sales—the latter point is of course of great importance—but only if that is requested by the Director General of Fair Trading.

There are too many examples of companies which use foot-in-the-door sales techniques which have brought an element of selling into disrepute. One needs to ensure that the customer is not neglected in a post-sale situation.

If the Minister were to say that it is not in the interests of business to engage in sharp practice, I would say that the trouble is that there are too many instances of businesses succeeding while adopting plainly immoral standards.

There are too many instances also of customers, after a sale has been promoted, being forgotten about or neglected. We believe therefore that it is right that that obligation should be assumed by the Gas Consumers Council. It would enable codes to be distributed relating to manufacturers and the supply of spare parts, which is an important issue, and to cover the other points that I have made. I beg to move.

Lord Inglewood

The question of industry codes of practice overseen by the Director-General of Fair Trading is an interesting one. To date, the gas appliance industry has not produced such a code of practice, perhaps because the nature of the market allows consumers to choose effectively and because of the large numbers of small firms in the repair sector. The decision is, however, one for the gas appliance industry, and we are happy to leave it to it.

Where government do accept a role is in enforcing safety-related standards for installation, maintenance and repair of gas appliances. The Gas Safety (Installation and Use) Regulations 1994 already require that only competent persons may do work on any gas fitting. That includes all service and repair work on gas appliances. The regulations further specify that all companies and self-employed persons doing work on gas fittings must be members of an approved class of persons. At present, that means that they must be members of CORGI. The performance of installers is routinely monitored to help ensure standards are maintained.

In any event, we believe that the Gas Consumers Council has adequate powers under Section 33 of the Act to investigate any matter relating to the gas appliances and their servicing and that a specific duty in that area is unnecessary. It would be wrong for the council to be required to give priority to codes of practice over other matters which it is empowered to consider.

Lord Clinton-Davis

I do not understand that brief at all. It is as though somehow or other this kind of thing does not happen. We know, as a matter of practice, that codes of practice are imposed on all sorts of goods. We know, for example, when it comes to double glazing, holidays, vehicle repairs and so forth, provisions are made for trade associations to impose a code of discipline on those who fall short of the requirements of the code of practice.

The purpose of the requirement is not to be bureaucratic; it is to ensure that there is available a constantly enhanced standard. Again, it is a question of customers having the right to know what is going on and to feel that someone is there to protect them in relation to these issues. Perhaps the Minister will deal with that point rather more clearly than I think he did. It might be my fault. It is getting late. One is getting tired. One had to cancel one's so-called dinner to be back in time. All those things have an effect on one's mental capacity. I do not believe that those points were met sufficiently by the Minister. Perhaps he will help me on them.

Lord Inglewood

As I hope I had made clear in my remarks, it is not as though this is a market where the cowboys operate indiscriminately. I explained that the Government accept a role in enforcing safety-related standards for installation, maintenance and repair of gas appliances. As we have always said, safety is the paramount consideration when looking at these matters.

So far as concerns the wider issues, this is currently an unregulated and competitive market. Levels of customer service are a matter for competition between companies. Retailers cannot hope to win business by treating customers badly, and dissatisfied customers can always turn to alternative suppliers.

The noble Lord referred to codes of practice which have been imposed in other sectors of the economy. Just because they apply in one sector it does not follow automatically that it is the right thing to do in a different sector. Of course it is always open to the director-general to recommend to the relevant trade association that some form of voluntary code of conduct would be appropriate. We believe that is the appropriate situation for the industry to be in.

Lord Clinton-Davis

I find that argument less than convincing. The Minister says that it is not a market in which the cowboys will operate indiscriminately. How does he know? The market is, in many respects, a new market. Opportunities will exist which are different from those existing today. How does he know? Because the situation is unknown at present, the consumer is entitled to know why the burden which, as I understand it, the Gas Consumers Council is happy to pick up—I hope that I am not wrong about that; I believe it to be the case—should not be imposed upon it.

The Minister says that this situation is different from all the other instances I cited. Why? He did not explain that. He just asserted it. One is concerned to ensure that the consumer should have the information that he requires so as to have the security in his mind that his interests are being looked after, and that if a supplier departs from the standards expected of him, that will, if necessary, be looked after appropriately by disciplinary procedures, by the trade association or, in this instance, the Gas Consumers Council.

It is absurd to say that one can just leave things to the market in the absolute knowledge that everything will go well because it is in the supplier's interests to play according to the rules. That is to defy what happens in the real world.

Many people apply high standards and obtain advantages from doing so. But surely the Minister knows from his own experience that that is not always the case. When we are dealing with issues of such importance to consumers, surely he will reflect on the matter again. I invite him to do what the noble Earl did on a previous occasion. This is another issue that affects the interests of consumers and I ask him to reflect further upon it.

Lord Inglewood

I am grateful to the noble Lord, Lord Clinton-Davis, for expanding his comments. I wish to take up only two points. I found a certain degree of contradiction in his comments about this being a new market. I recall that before the dinner break the noble Lord, Lord Peston, referred to a depot not far from where he comes from that carries spare parts for the very market that we are describing. There appears to be an internal contradiction in their comments.

Of course, we will reflect on what has been said. Indeed, we always reflect on the comments that are made in the Chamber. We will consider the matter further but I can give no commitment that anything will follow from that.

Lord Clinton-Davis

I am obliged to the Minister. I do not ask him to give any commitment because, after all, who knows what will happen after next Tuesday? How can he enter into any binding commitments? I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.30 p.m.

The Deputy Chairman of Committees (Viscount Allenby of Megiddo)

I must inform the Committee that if Amendment No. 141 is agreed to I cannot call Amendment No. 142.

Lord Haskel moved Amendment No. 141:

Page 54, line 36, leave out ("the promotion of') and insert ("securing").

The noble Lord said: In moving Amendment No. 141 I shall speak also to amendments Nos. 142 to 146A. The amendments in the group relate to energy efficiency and affordable warmth. There is a strong argument in favour of encouraging energy efficiency, affordable warmth and lower fuel bills, especially for the poorest and least energy efficient pensioner households. The argument is distinct from the environmental arguments relating to CO₂ emissions and the Rio commitments.

There is enormous scope for this improvement. Poorer pensioner households cannot fund the energy efficiency improvements which achieve affordable warmth and lower fuel bills. The 1994 Budget contained a measure to provide basic insulation. That was estimated by the building research energy conservation support unit to save an average of only £9 per year on the annual fuel bills of those households which improved under this scheme. That is not very much.

The duty to promote efficiency and economy on the part of the licence holders refers to the efficient use of gas conveyed through pipes. Does that mean that the duty to be efficient applies only to gas that is conveyed through pipes? What about energy efficiency in the home when the gas is being burnt in heaters and cookers?

Obviously, it is being left to the market to deliver such energy efficiency improvements. But can the market be relied on to deliver them? We must remember that the competition is based on the price per unit and not on the total cost. I do not believe that that does very much to promote efficient use. Perhaps I may also remind the Minister that, in contrast to the director general of the gas company, the director general of electricity supply has fixed targets for reductions in consumption. I beg to move.

Lord Ezra

The noble Lord, Lord Haskel, has raised an important issue and I support the thrust of the amendments. We are talking about promoting energy efficiency, in particular among those who cannot afford to spend the necessary money. The noble Lord referred to the extra sums made available for basic insulation. I am involved in the organisation Neighbourhood Energy Action which handles those sums. Indeed, the homes of almost 2 million people on low incomes have been insulated.

However, as the noble Lord, Lord Haskel, pointed out, they are basic forms of energy saving and much more could be done. The legislation provides us with a unique opportunity to ensure that such further action is taken. We have the framework by which that can be done. The director general is in a position to create the necessary conditions. We also have the Energy Savings Trust, which was intended to do much more than it is presently financed to do. The mechanisms, the need and the opportunity exist. We ask the Government to bring all those together and to do something that is highly desirable not only as regards helping people on low incomes and the elderly but also as regards saving energy.

Lord Cochrane of Cults

I believe that this group of amendments is somewhat misguided. Amendment No. 146 refers to the means by which certain people can be helped to improve the efficiency with which gas is consumed. The difficulty is that gas is consumed at the moment it is burnt. What happens afterwards is different and has nothing to do with the consumption of gas. The noble Lord, Lord Haskel, referred to the necessity for insulation. To some extent, that is a red herring, although not a total red herring. If one wants to make a house warmer one must adopt a practical method of stopping the draughts. That will improve fuel efficiency. The whole tenor of the campaign to achieve that should first be dictated by the necessity to reduce the draughts in a house before one deals with anything more elaborate. It is an educational problem and to that extent I have sympathy with the noble Lord's amendment.

Lord Ezra

The noble Lord, Lord Cochrane, with whom I almost always entirely agree, suggested that there are no ways in which one can improve the efficiency with which gas is burnt. But, of course, there are vast numbers of appliances and some are more efficient than others. There are many ways of burning gas with an efficiency that could rise to 70 per cent. or to 90 and 95 per cent. I believe that all those areas need investigating. Insulation is important but the way in which gas is consumed is equally important.

Lord Cochrane of Cults

I willingly accept the noble Lord's gentle reprimand. Of course, he is right, but the majority of appliances have a fairly standard level of efficiency. I do not propose to pursue the matter further.

Lord Inglewood

I understand and very much support the need to promote cost effective energy efficiency. I suspect that few Members of the Committee would disagree with that general proposition. I must begin by explaining that in general terms I agree with the approach of my noble friend Lord Cochrane of Cults. The Bill will, I believe, do a great deal for energy efficiency by harnessing the forces of competition to work in favour of, rather than against, energy efficiency.

A monopolist in an energy market will very rarely have any commercial benefit from energy efficiency; all he would be doing is shrinking the size of his market. In a competitive market, individual players can use energy efficiency to differentiate their product and win business, although the total size of the market may fall.

I see energy efficiency playing a key role in two ways. First, suppliers will tend to compete in selling warm houses and not just gas. The Bill enables suppliers to bundle gas and, say, a high efficiency boiler on a long-term contract, which is protected from the normal termination provisions in the licence. Secondly, suppliers may offer home energy audits as a benefit for switching supplier. For example, "Come to us and we'll show you how to cut your bill by 10 per cent." might be the message.

However, I do not believe that the amendments here proposed would be an effective way of building on these positive incentives. In fact, they could distort the market and perhaps work to undermine those very principles of the Bill which will, in the way 1 have described, work to harness the profit motive to the benefit of energy efficiency.

I turn briefly to Amendments Nos. 141 and 142, which seek by regulatory means to secure energy efficiency by consumers. We have previously discussed the promotion as opposed to the achievement of energy efficiency. The director is not in a position—I return to the points made by my noble friend Lord Cochrane—to ensure that customers use energy efficiently. Nor is a gas supplier entitled to enter premises for the purpose of closing windows and turning down thermostats. The very idea seems comical. All that either of them can do is to make sure that the incentives and the means are in place to encourage consumers to use gas efficiently.

Turning to Amendments Nos. 144 and 146, the Government are well aware of the importance of gas to pensioners and disabled customers. That is why we propose in the standard conditions of licences to provide for special services to them. However, we need to ask whether the provision of help to such persons with energy efficiency is properly a matter for the economic regulation of the gas market or whether it is a job better discharged by groups such as Neighbourhood Energy Action, to which the noble Lord, Lord Ezra, referred. The Government have a very high view of that organisation, which is an example to other similar non-governmental organisations. It is through funding such groups and organisations like the Energy Savings Trust that real gains can be made. If we over-regulate so that pensioners and disabled people are unreasonably expensive to serve there is a risk that they will not benefit from competition as much as they should.

Lord Haskel

I thank the noble Lord, Lord Ezra, for his support for the amendment and the Minister for his response. Obviously we all support energy efficiency, as the Minister said. Where we disagree is on whether the market will or will not deliver efficiency. If one is to have pricing and competition based on costs per therm or costs per unit rather than on the total cost, I cannot see how there is any incentive to gas suppliers to improve the efficiency of the use of gas. There may be home audits and other offers to persuade customers to change, but at the end of the day that will not provide more energy efficiency.

This is an important matter. Obviously I shall not divide the Committee. However, we shall probably return to the matter at Report stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 142 to 146A not moved.]

Earl Ferrers moved Amendment No. 147:

Page 55, line 42, at end insert: ("() In subsection (4) of that section, after the words "function of the Director" there shall be inserted the words "or the Secretary of State."").

The noble Earl said: I spoke to the amendment with Amendment No. 67. I beg to move.

On Question, amendment agreed to.

8.45 p.m.

The Earl of Caithness moved Amendment No. 148:

Page 55, line 42, at end insert: ("() After subsection (2) of that section there shall be inserted the following subsection— (2A) When taking any decision or action in the exercise of the functions assigned to him by or under this Act, the Director shall specify to persons materially affected the reasons for that decision or action in sufficient detail to enable such persons to plan for the future with a reasonable degree of assurance; and this subsection shall be construed to cover decisions to take no action."").

The noble Earl said: Throughout our discussion of the Bill it has been clear that the role and functions of the gas industry regulator are greatly increased. Moreover, the regulator is given wide discretion to decide a range of issues, in many cases with no need to consult Ministers and with no requirement to give reasons for decisions, even to those directly affected. Some of those powers are no doubt necessary to provide the flexibility and timely decision-making required in a competitive market. For that reason they are supported. However, a balance needs to be struck. I put it to my noble friend that the Bill has not got it right yet.

My amendment seeks to balance the increases in discretionary decision-making powers with a duty to give reasons in sufficient detail to enable persons materially affected to plan for the future with a degree of assurance. As well as providing a more open system it would also introduce an element of continuity and consistency in decision-making.

Before looking at the effect of the amendment it is worth reminding ourselves of a few of the new powers being transferred to the regulator to demonstrate the need for some checks and balances. The responsibility for granting the licences passes to the regulator, together with a power to attach conditions to those licences. The regulator is also given powers to make regulations—for example, statutory instruments—subject only to negative resolution. The regulator is able to initiate prosecutions, a function previously reserved for the Secretary of State and the Director of Public Prosecutions. There is also a new power for the regulator not only to impose fines but also to decide their level.

Those are a few but, I believe, sufficient examples to make the point that powers have been increased. My amendment seeks to make sure that they do not go completely unchecked. I am supported by the fact that the Government have recognised in the past that the uncertainty created by the regulatory regime could have a discouraging effect on those thinking of entering the new market. I do not believe that that is a situation that my noble friends on the Front Bench want. It is not what I want. Indeed, all the comments of my noble friend Lord Ferrers indicate that that is the case. My noble friend Lord Inglewood said a moment ago in connection with Amendment No. 141 that customers would not benefit from competition as much as they should. If we do not get competition into the market they will not receive the benefits that are available.

I am encouraged by that well-known and well-respected Act, the Railways Act 1993. I remember it quite well. We saw a need there to make some provision in legislation. I draw my noble friend's attention to Section 4(1) (d) which requires the Secretary of State and the regulator to promote competition in the provision of railway services. That is exactly the same point as I am trying to make now. However, I do not find a similar subsection in this Bill.

I believe that my amendment would reassure all players that regulatory decisions will not be arbitrary, will not be unreasonably inconsistent over time, and will ensure that explanations of decisions would be given. The wording of the amendment also recognises that consumers and their representatives, as well as industry participants, have a legitimate interest in reasonable transparency and consistency of regulatory decision-making.

In passing, it would not be fair if I did not stress that the current regulator publishes a considerable amount of information. That is to be welcomed. However, it should not be left to the personal discretion of the regulator. I recall that a previous regulator did not behave in such a way, and often delivered a fait accompli with little explanation. I believe that this piece of transparency will help to promote the market that my noble friends so much want to see. I beg to move.

Lord Peston

This is an extremely important amendment, and one which the noble Earl, Lord Caithness, has put clearly and cogently. I keep referring to what the Bill does as an experiment. It is an experiment in regulated competition. The new entrants, and for that matter British Gas in situ, are faced with big enough risks without also having to cope with regulatory risk. We have seen in other regulated industries that occasionally some regulators' decisions have appeared to be capricious and riot to have been thought through. In my judgment on at least one occasion a regulator has managed to damage the firms, the consumer and the taxpayer. That is intolerable, even if we say that in regulation it is still early days.

It seems to me that the new entrants to this market and British Gas will have enough problems without also having to invest in staff who will have to predict what the regulator is likely to do. I hope that the Government will accept the amendment. In all my years in this Chamber I have never been able to work out what determines whether or not an amendment is accepted. Certainly, its correctness seems to have no bearing. If the Government cannot accept the amendment I hope that at the very least the noble Earl will say that the matter is so important that he will come back with an amendment of his own which covers exactly the same ground.

As someone who in many ways now accepts regulation as the path to dealing with what were the public utilities, I cannot emphasise too strongly that we must look very carefully at what regulators do. We must learn from past experience. Regulators are meant to help; they are not meant to impose costs with no recognisable benefit. I support the amendment most strongly.

Lord Ezra

I, too, should like to support the amendment so ably moved by the noble Earl, Lord Caithness. He is absolutely right in saying that under the proposed legislation the discretionary powers of the regulator are enormously increased. The decisions taken could substantially affect those who are either operating in the market or who wish to come into the market. In my Second Reading speech I drew attention to the need for greater transparency in the activities of the regulator; and, indeed, I even said that attention should be given to some sort of appeals procedure in certain circumstances. The need for transparency is something that applies right through the Bill—that is, as regards transparency in conditions, in prices and in the actions of the regulator. I hope that we may hear from the Minister in this instance that he agrees with his noble friend.

Lord Skelmersdale

Unless my noble friend should think that this is a tripartite cabal, perhaps I may say that that is most certainly not the case. I do not find such a very ably drafted and moved amendment extreme in the least. After all, the director can still act as before. The only difference is that the amendment would make him or her say why. I should like such a consideration to apply not only to the gas regulator but to all regulators.

Lord Cochrane of Cults

I rise to speak with a degree of diffidence because we are now dealing with matters which are somewhat outside my main field of interest in the gas industry. However, I must point out that I am possibly the only person in the Chamber who, as chairman or director of a company, was threatened with prosecution by the then director for complaining that he exercised his powers in a disgracefully arbitrary manner. Eventually a letter conceded that perhaps I had a point, although it did so grudgingly.

However, to pick up a point made by the noble Lord, Lord Ezra, I believe that there must be an obvious route of appeal. When I complained bitterly about that director's appalling behaviour—and Members of the Committee will note that I use the word "his"—I was told, "Well you can have a judicial appeal". At that time we had 141 customers and the minimum charge at that time for such an appeal was, according to my lawyers, about £15,000 in this country and somewhat less on the other side of Hadrian's Wall. The point is that, if we are to establish generalised competition in the industry, some of the suppliers will be small. They cannot afford to be treated in such a way. Indeed, it would be disgraceful, underhand and would inhibit competition and initiative. For that reason, I support the amendment in general terms.

Earl Ferrers

The noble Lord, Lord Peston, expressed bewilderment as to the reasons why any amendment would or would not be acceptable to the Government. However, I should tell the noble Lord that there is one fairly good reason; namely, that they are always acceptable to the Government if they are good amendments. Therefore, I would certainly be only too willing to consider and, if possible, accept any amendment which is a good one.

However, I must agree with the noble Lord that what we are discussing is, up to a point, an experiment. The noble Lord is quite right in that respect. I do not believe that anyone has a monopoly of wisdom in such matters. When my noble friend Lord Caithness moves such an amendment, obviously one takes it most seriously. Of course, the amendment is most attractive in principle. We all believe in regulation being as open as possible. However, despite what my noble friend said, I believe that regulators are, on the whole, responsible people.

The noble Lord, Lord Ezra, said that the discretionary powers of regulators are being increased. Of course, the noble Lord is quite right. That has been done for a purpose; namely, that it is important not to let suppliers and others tread all over consumers. Therefore, in order to prevent that from happening we give the regulators some fairly hefty powers. I do not believe that that is wrong, provided that the regulator carries out his powers in the correct way.

As my noble friend Lord Caithness said, there is a balance to be struck. No one can say that the balance is absolutely right. Indeed, my noble friend believes that the balance is too far the other way. I actually think that the amendment would tilt the balance too far in favour of the regulated company. It would allow regulated companies to hire hosts of lawyers to cross-examine the director with the aim, I believe, of forcing her to give statements which would tie her hands in the future. I do not believe that that would be in the public interest. That is why I believe that we have the balance right.

As I said, no one has a monopoly of wisdom in the matter. Indeed, some Members of the Committee might think that it goes too far in one direction. However, we believe that we have got it about right. My noble friend Lord Cochrane said that there should be an appeals procedure. But, of course, one could go on having appeals. One says that there ought to be a commercial market; so a regulator is set up in order to ensure that those involved with commerce do not ride roughshod over consumers. But then one says, "If that happens, then we must have an appeal procedure". One can go on and on in that respect.

In fact, my noble friend Lord Cochrane gave the answer that I would have given him. He said that if people are concerned that the director has gone over the top—to use a colloquialism—there is always the possibility of going to judicial review if it is thought that the director has not exercised her powers correctly. I do not believe that that is an unreasonable course to take. However, I shall certainly reflect upon what has been said. I should like to be able to tell my noble friend that he has a simply smashing amendment and that I would love to accept it. However, I cannot say that because it would not be quite right for me to do so. But, as I said, I shall certainly consider what has been said.

Lord Clinton-Davis

When the Minister reflects further on the matter, perhaps the principle of natural justice will appeal to him. It should not always be a question of having to opt for judicial review in order to remedy a situation. There should be the possibility of being able to negotiate the solution to a problem with the director. However, one cannot do so unless one knows the reasons for a decision that has been made. That is an additional argument that I hope will appeal to the noble Earl, Lord Caithness, in persuading the Minister to accept the amendment. The Minister has been most generous by saying that he will reflect on the matter, and Members of the Committee are grateful to him for that. However, I merely wanted to put forward that additional argument into the scale.

Lord Brightman

I had not intended to speak on the amendment, but, reflecting upon it, it seems to me that it seeks nothing except to require a person who makes a decision to give his reasons for it. In my experience, it is very seldom that it can be wrong to require a person who reaches a decision to state why.

Earl Ferrers

The noble and learned Lord, Lord Brightman, always has the capacity to put things very simply. When he puts the case like that, I am bound to admit that I would find it very difficult to say that it is unreasonable for a person to stipulate his reasons. However, the noble Lord, Lord Clinton-Davis, really hit the nail on the head, although he did not mean to do so. He said that what we need to do is negotiate. In other words, the director says, "I think that is wrong and therefore this should happen", and along come all the batteries of lawyers, and so on, who say, "No, we want to negotiate. We do not want to accept the director's explanation, we want to ask questions". Thus they would push the director into a corner. I do not believe that that would be right. It is one thing to give a reason but it is another thing, having given your reasons, to say, "Now boys, come on, we want to argue about it so that we can get you to change your mind". That is where the difficulty would arise. However, as I said, I shall certainly reflect on what has been said.

Lord Clinton-Davis

With respect to the Minister, I believe that he misinterpreted what I said. It is possible that I did not express my arguments sufficiently well. I entirely adopt the point made by the noble and learned Lord, Lord Brightman. Indeed, it is quintessentially right that people who make decisions should give reasons for them. In talking about negotiating, what I really mean is, for example, that if one knows the reasons underlying a decision, one should be able to go to the director and say, "With respect I think you have the wrong end of the stick. You have made an error here." We are not always talking about lawyers. I am a lawyer myself. Lawyers frequently like to achieve settlements rather than engage in litigation, curiously enough. I think the noble Lord, Lord Inglewood, would confirm that. I do not believe that it would be right to interpret what I said in the way the Minister did. As I said, I hope that the arguments that have been adduced will appeal to him and that he will reflect further. Indeed I hope that he will come forward with his own amendment.

9 p.m.

The Earl of Caithness

I wish that the noble and learned Lord, Lord Brightman, had moved the amendment instead of me: he would have been much more concise and punchier and would have taken up a great deal less time. I am grateful for his support, as indeed I am grateful to all Members of the Committee who have spoken and who have supported me, except for my noble friend on the Front Bench. That is a little sad. I thought that the noble and learned Lord had almost persuaded my noble friend. He concluded by saying that he would look again at this matter. I believe that it merits careful consideration. This is a good and valid point. There surely can be no harm in giving reasons. What is and has been damaging to our privatisation process, which is such a good idea and has worked so well in many cases—to such an extent that we have the noble Lord, Lord Peston, supporting it—is the arbitrary decisions of the regulator taken for no apparent reason. My noble friend Lord Cochrane of Cults has suffered at first hand. It is unacceptable.

It would be to the great credit of the Government if we added to the Bill the few words of my amendment. I am grateful to my noble friend Lord Ferrers for taking the measure away to have another look at it. I am always willing to discuss it with him between now and another stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 148A and 149 not moved.]

Earl Ferrers moved Amendment No. 149A:

Page 59, line 6, after ("etc.),") insert ("(a)").

The noble Earl said: In moving Amendment No. 149A I wish to speak also to Amendments Nos. I49B, 149D and 157A. These amendments are technical amendments. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 149B:

Page 59, line 7, at end insert ("and

• (b) the words from "but no person" to the end shall cease to have effect.

(2) After that subsection there shall be inserted the following subsections— (1A) Where a licence has been or is to be revoked or suspended, or has expired or is about to expire by effluxion of time, and it appears to the Director, having regard to the duties imposed by section 4 or 4A above, to he requisite or expedient to do so for any purpose connected with the revocation, suspension or expiry, the Director may, with the consent of the Secretary of State, by notice signed by him—

1. (a) require the licence holder to produce, at a time and place specified in the notice, to the Director, or to any person so specified, any records which are specified or described in the notice and are in the licence holder's custody or under his control; or
2. (b) require the licence holder to furnish to the Director, or to any person specified in the notice, such information as may be specified or described in the notice, and specify the time, the manner and the form in which any such information is to be furnished.

(1B) No person shall be compelled for any such purpose as is mentioned subsection (1) or (1A) above to produce any documents or records which he could not be compelled to produce in civil proceedings before the court or, in complying with any requirement for the furnishing of information, to give any information which he could not be compelled to give in evidence in such proceedings. (3) In subsections (2) and (4) of that section, after the words "subsection (1)" there shall be inserted the words "or (1A)".").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 149C:

Page 59, line 7, at end insert:

("Annual and other reports

. After subsection (2) of section 39 of the 1986 Act (annual and other reports) there shall be inserted the following subsection—

"(2A) Every such report shall also include—

1. (a) a general statement as to the extent to which, during the year to which it relates, there has been effective competition in the carrying on of activities the carrying on of which is required to be licensed under section 7A above; and
2. (b) a general survey of developments during that year in respect of such competition." ").

The noble Earl said: I am bound to say that I hope the noble Lord, Lord Peston, will feel pleased and happy with life as it is so important to feel that way, particularly as this amendment follows up discussion we had on 22nd June when the noble Lord expressed a wish for an 'annual report on the state of competition in the gas supply and shipping market.

I explained that the director is already under a duty, in Section 39 of the 1986 Gas Act, to report on her activities during the year, including the exercise of her functions to secure effective competition. However, I accepted that this existing provision would not necessarily allow the report to cover the progress made in achieving that goal.

Amendment No. 149C makes it a specific requirement that the director's annual report, which is laid before Parliament, must include a general statement as to the extent of effective competition and a general survey of developments in respect of such competition. This wording is intended to allow the director's report to cover both the extent of competition—the number of companies competing and their market shares, and so on—but also wider developments, including, for example, the impact of this competition on prices. The amendment will also, I believe, provide an appropriate means by which the director could report annually to the Secretary of State and Parliament on the progress of the transitional phases. I am grateful to the noble Lord, Lord Peston, for having drawn this matter to our attention. I hope that that at least has made him a happy man. I beg to move.

Lord Peston

I thank the noble Earl. Second only to my hope that Arsenal will buy a decent midfield player one day, this has pleased me no end. I must admit that I did not expect such a rapid response from the noble Earl. I believe that the amendment will be of benefit to the regulator. It will focus the mind of the regulator on what I regard as the essence of the Bill; namely, competition. The regulator will he asked to provide a judgment on what has been happening as regards competition. The noble Earl is aware that I did not like the term, "her view of effectiveness". However, this measure is all to the good and I thank the noble Earl for it. I shall say "Content" when the Question is put.

Lord Skelmersdale

As one who supported the noble Lord, Lord Peston, last week, I am tremendously grateful that my noble friend has not only taken on board the original idea of the noble Lord but also, in this amendment, my amendment to his original idea. I am grateful.

Earl Ferrers

I told the noble Lord, Lord Peston, only a short while ago that when he produced good amendments the Government were always ready to accept them. The fact that I have pleased the noble Lord opposite and the noble Lord behind me constitutes a double barrel in both directions. That is satisfactory.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 149D:

Page 59, line 15, leave out ("is made by one licence holder to another if') and insert ("is required by a notice under section 38 above, or which is made by one licence holder to another where").

The noble Earl said: This amendment was discussed with Amendment No. 149A. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 149E

Page 61, line 9, leave out from second ("pipe") to end of line 10 and insert (", other than a distribution main of a public gas transporter, which is used for the purpose of conveying gas from such a").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 150:

Page 61, line 21, after ("therms") insert (", and references in this Part to therms or kilowatt hours,").

The noble Earl said: This amendment was spoken to with Amendment No. 101. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 151:

Page 61, line 31, at end insert ("or, in the case of a modification under section 27 above, as would be so mentioned if the references to the Director in subsection (4) (a), (b) and (d) of section 7B were references to the Secretary of State'"').

The noble Earl said: This is a technical amendment to iron out an anomaly in respect of the Secretary of State's powers under Section 27 of the 1986 Act. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 151A:

Page 62, line 2, at end insert: ("(2) In paragraph 1(1) of that Schedule, for the words from "placing in" to the end there shall be substituted the following paragraphs—

1. "(a) placing pipes, conduits, service pipes, cables, sewers and other works, and pressure governors, ventilators and other apparatus, in or under any street; and
2. (b) from time to time repairing, altering or removing any such works or apparatus placed in or under any street (whether by him or by any other person."

(3) In paragraph 3(2) of that Schedule, for the words "giving a supply of there shall be substituted the word "conveying".").

The noble Earl said: This amendment was spoken to with Amendment No. 99A. I beg to move.

On Question, amendment agreed to.

Schedule 3, as amended, agreed to.

Schedule 4 [Minor and consequential amendments]:

Earl Ferrers moved Amendments Nos. 151 B to 151 D:

Page 63, line 19, at end insert: ("() the Local Government (Omnibus Shelters and Queue Barriers) (Scotland) Act 1958;").

Page 63, line 22, at end insert: ("() section 204(2) (a) of the Town and Country Planning (Scotland) Act 1972;).

Page 63, leave out lines 36 to 42 and insert: ("() The reference in Schedule 4 to the Public Health Act 1961 to gas undertakers shall have effect as a reference to a public gas transporter.").

The noble Earl said: These are technical amendments to ensure that the new regulatory framework can continue to apply to other legislation previously drawn up in the context of previous regulatory systems for the gas industry. I beg to move the amendments en bloc.

On Question, amendments agreed to.

Earl Ferrers moved Amendments Nos. 151E and 151F:

Page 65, line 4, leave out ("in relation to a gas operator or electricity supplier, means") and insert ("means—

1. (a) in relation to a gas operator, an officer, servant or agent of the operator and any servant or officer of such an agent; and
2. (b) in relation to an electricity supplier,"). Page 65, line 5, leave out ("operator or").

The noble Earl said: These are technical amendments. I beg to move.

On Question, amendments agreed to.

Earl Ferrers moved Amendments Nos. 151 G to 151K:

Page 66, line 10, leave out ("service").

Page 66, line 14, leave out ("service").

Page 66, line 18, leave out ("service").

Page 66, line 19, leave out ("a service pipe by which gas is") and insert ("any pipe—

1. (a) by which any premises are proposed to be connected to a distribution main of a public gas transporter; and
2. (b) by which gas is proposed to be").

The noble Earl said: These amendments were spoken to with Amendment No. 99A. I beg to move the amendments en bloc.

On Question, amendments agreed to.

Earl Ferrers moved Amendment No. 151L:

Page 66, line 39, leave out ("`public gas transporter' and 'service pipe") and insert ("'distribution main' and public gas transporter.'").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 152:

Page 67, line 24, at end insert ("and different days may be appointed for different purposes").

The noble Earl said: This amendment ensures that the Secretary of State is able to hand over to the Health and Safety Executive enforcement responsibilities for certain provisions of the Bill as and when the HSE is ready to deal with each one. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 153:

Page 67, line 26, leave out ("In section 12 of the Energy Act 1976") and insert: ("(1) In subsection (1) of section 9 of the Energy Act 1976 (liquefaction of offshore natural gas), for the words from "except" to the end there shall be substituted the words "except where—

1. (a) methane or ethane is liquified for the purpose of enabling it to be stored;
2. (b) the process of liquefaction is carried out by a public gas transporter within the meaning of Part I of the Gas Act 1986; or
3. (c) small quantities of liquid methane or ethane are produced in the course of a gas processing operation within the meaning of section 12 of the Gas Act 1995."

(2) In subsection (2) of section 12 of that Act").

The noble Earl said: This amendment is intended to ensure that the Secretary of State's consent under the Energy Act 1976 is not required for the liquefaction of natural gas in certain circumstances. I beg to move.

On Question, amendment agreed to.

Lord Ezra moved Amendment No. 154:

Page 69, leave out lines 29 to 32.

The noble Lord said: In moving the amendment, I should like to say that this is an important issue. However, I can also be brief.

The question that I wish to put to the noble Earl is this. Why, so soon after the Deregulation and Contracting Out Act 1994, have the Government inserted this clause into the Gas Bill when it was expressly stated that the former Bill was not for subsequent legislation? That point was made in the report of the Delegated Powers Scrutiny Committee. Therefore an issue of some legislative importance is raised. I beg to move.

Lord Peston

This is an enormously important amendment. Indeed, I cannot emphasise too strongly how important the matter is.

If noble Lords will cast their minds back to when we debated the Deregulation and Contracting Out Bill (as it then was) I specifically raised the point: could the Bill be used in a forward looking way? I was told categorically that it could not be so used. I do not mean that I was simply told; I was told categorically that it could not. I set out all the dangers. I was discontented enough with that Bill, but the thought that it might reach forward appalled me because it meant that no legislation passed in Parliament would be safe from the ad hoc procedures of that Bill, now an Act.

I must admit—and I do so parenthetically—that I had not noticed paragraph 20 on page 69 of the Bill until the noble Lord, Lord Ezra, put down his amendment. If I had noticed it, I would have had a tremendous row at Second Reading because I regard this as an act of had faith on the part of the Government. I have to put it as bluntly as I can. The Government said in terms that this could not possibly happen. In replying to the Second Reading debate, the Minister stated that it could not happen.

I have endeavoured to treat the Gas Bill as a Bill which needs amending but with which I agree in principle. However, unless the Government take out this paragraph, I shall feel obliged to raise the matter on Report, not simply as an issue relating to the Bill but with regard to the whole of the Government's approach. In other words, I shall find it impossible to have a normal Report stage and will simply demand that we have further time. I can only hope that the noble Earl will tell me that it is simply a mistake. I cannot emphasise how serious the matter is. If the Committee lets the clause go through, we have no protection against a similar clause in any other Bill which comes before your Lordships.

It is absurd in an empty Chamber at 9.15 at night that I have to speak so strongly. It is my fault that I did not spot the matter early enough to raise it when I should have done on Second Reading. I regard the proposal as disgraceful, quite unacceptable and not something I could accept for the future of the Bill. Since it is not my desire to sabotage the Bill, I hope that the Government will say that it is a mistake, that they cannot go against what they said before, and that they are taking the proposal out of the Bill.

9.15 p.m.

Lord Skelmersdale

I have to speak more in sorrow than in anger because I suspect that there is a total misunderstanding of the position as expressed by both noble Lords, Lord Ezra and Lord Peston, especially with the latter's forcefulness.

When, with the Deregulation and Contracting Out Bill, as it was then, we were told that the Bill was retrospective but was not prospective, it was absolutely accurate and remains accurate. That is why we need paragraph 20 in Schedule 4. We are talking about this Bill. I am sure my noble friend will explain why the Government see the need to make the Bill, as a special exercise, subject to the Deregulation and Contracting Out Act. If Members of the Committee do not like it, they can take the usual course of disagreeing with the Government in a Division. However, I cannot accept the argument of the noble Lord, Lord Peston, that categoric assurances which he received—and I was there when he received them—on the Deregulation and Contracting Out Bill were invalid and should never have been given. I cannot accept it.

Lord Peston

Before we proceed, is the Bill taking place in the 1995 Session of Parliament? The answer must be yes. When we were dealing with the legislation in 1994, my question was: could it apply to any Bill coming forward later? The answer was no. Therefore, although I am always willing to accept that I missed some subtle point, I cannot see how the noble Lord, Lord Skelmersdale, can remotely argue that, having been told that that legislation could not apply to a later Bill, it applies to this. It is not a matter of saying, "Amend it or divide on it". I regard it as a deeper issue than that.

The Minister may say in reply: "I don't understand, this has nothing to do with what I think the Bill concerns". However, if the clause treats the Bill as if it had been passed last year, then I repeat my point that it is not a matter of amendment but of bad faith, going against the word of a Minister given to me and other noble Lords in the House. That is unacceptable in any circumstances. It is not a matter of divide or argue. I shall not take part in proceedings that are conducted in that way. I shall not do so.

Lord Skelmersdale

It is not for me to defend my noble friend on the Front Bench; but since, by imputation, I have been attacked for the speech that I have just made, I should like to respond. My understanding of the assurance given at that time in the context of the previous Bill is that that Bill was not prospective. Given that it was not, if we wish to bring any future Bill which subsequently becomes an Act of Parliament within the ambit of the Deregulation and Contracting Out Act, we have to do it in the future Bill. That is what is being done now.

Lord Ezra

It is difficult to reconcile what the noble Lord, Lord Skelmersdale, has just said with what is written in the report of the Delegated Powers Scrutiny Committee in relation to the Bill. The report says in black print on page 3: This would appear to be a departure from the principles of the Deregulation and Contracting Out Act; and the Committee accordingly draws this power to the attention of the House as the House may wish to consider why, so soon after the passing of the Act, it is now necessary to extend its deregulation provisions in this way.

Earl Ferrers

Perhaps I may try to help the noble Lord, Lord Peston. I believe I understand his main anxiety and I do not like him to feel that there has been ill-faith or bad faith on behalf of the Government. He is quite right. When the Deregulation and Contracting Out Bill was introduced last year it referred to any Bills that existed then and to previous Bills. It is right that the deregulation order-making power did not apply to future legislation because Section 1(5) defined the legislation to which it applied as being all the existing legislation up to and including the 1994 Session. That was the position and the noble Lord is quite right about it.

I shall go into this in more detail later. Here we are asking Parliament to approve the fact that the principle could be used for this legislation as well. That is not the same as saying that the Deregulation and Contracting Out Act refers to all Bills in the future. It does not. It referred to those Bills and Acts of Parliament up to and including 1994.

The order-making power in the Deregulation and Contracting Out Act was limited to the application of Acts of Parliament that had been passed up to and including the last Session, because we realised that Parliament would not know whether it would apply to future legislation. It did not mean that the Government thought that the principles of deregulation were in some way inappropriate to future legislation—but rather that each case of future legislation should be considered on its individual merits. The purpose of this clause in the Bill is to give Parliament an opportunity to consider whether the deregulation power would be appropriate in this case.

This Bill is full of regulations and detail, and we took the view that, as in other areas, circumstances could well change in the future in such a way that there may be a need for a simplified procedure to repeal or amend legislative provisions where they become outdated or where, for example, technological advances mean that legislative provisions introduced in an earlier age (which is now) and overtaken by events or by technology, might no longer be appropriate. For example, remote meter reading by electronic means might become universal in future, such that provisions allowing for rights of entry to read meters would no longer be needed. Another example might be the provision for regulating the assessment of calorific value, which might become redundant if, for instance, devices for measurement in individual homes were to be available cheaply.

Parliament has already accepted that the provisions of the Deregulation and Contracting Out Act are appropriate for the 1986 Gas Act. The noble Lord's amendment, were it to be accepted, would have a very strange effect. It would mean that the deregulation provisions could apply to certain parts of the 1986 Act but not to those parts which are amended by this Act. The Deregulation and Contracting Out Act provides for such a power. However, the power is subject to stringent checks and balances. These include, as the noble Lord, Lord Peston, knows only too well, a requirement that the use of the order-making power must not remove any necessary protection; a requirement for special scrutiny of interested parties; and a requirement for consideration of any proposal by Select Committee in each House for 60 parliamentary days, and then by affirmative resolution of both Houses. These are very strong safeguards, and they were recognised as such by your Lordships when we approved this power a year ago and the very wide application that it has.

The point that I would make to the noble Lord—and this is where there could be a misunderstanding—is that he was right that that Act referred to what happened in 1994, and to what happened previously. What we are doing in this Act is not to abuse that, but to put it for Parliament to approve that there could be circumstances in the future where the application of that Act in this Bill would not be inappropriate. I do not think that that is bad faith. It is straightforward, one might say, honesty, in bringing to Parliament the suggestion that that Act has a purpose in this Bill, subject to your Lordships' approval.

Lord Peston

I am sure that the noble Earl is doing the best that he can, and we have conducted our proceedings most amicably. But it will not do. I went through the whole of that Act. I know exactly how it was argued. I raised the fears. I said that it was a constitutional outrage, and I made other remarks of that sort. I said that I thought it was wrong. But in particular I warned about the phenomenon that we have before us at the moment. I expressed my fear as to what would happen, and I repeat my point. I said that no Act would then be safe from these ad hoc powers. I was told that I was wrong. And I was not just mildly told, I was strongly told that I was wrong. If any Members of the Committee were present, they will remember how strongly I was told.

I must tell the noble Earl that if he is unhappy about some of the developments his duty is to bring before this Chamber an amendment to the Deregulation and Contracting Out Act. It should not be done in this manner. I will not have it. I repeat that I did not fight that Bill on constitutional grounds so strongly as I did fight it only for this provision to be slipped into this Bill and for anybody to accept the argument here that that clause can be put into any other Bill that ever comes before Parliament. That is just not acceptable.

I do not believe that the noble Lord, Lord Ezra, will divide the Chamber tonight on the amendment. I hope that he does not do so. But between now and Report stage this matter has to be dealt with at the highest possible level. Never mind everything else that we have done—we have argued in terms of whether we do or do not agree and I can live with defeat there—I cannot accept that this amendment is in any way other than crucial. I cannot understand how the noble Earl even remotely let his officials proceed in that manner. It is beyond me, given the Government's commitment and the commitment of other Ministers, the noble Earl's friends, in the debates. It simply must not be allowed to go ahead.

Half past nine on a summer evening is not the time to go into the issue. But between now and Report I intend to have this whole subject debated, either within the Gas Bill for a whole day or as a separate debate. On constitutional grounds this provision must not be allowed to go ahead. Those are the warnings that I place on the record. I wait to hear what the noble Lord, Lord Ezra, has to say.

Lord Ezra

Certainly this has turned out to be a most serious issue. The wording of the paragraph definitely gives cause for concern. The wording that is used could be used in any subsequent Act to get away from what was very clearly agreed. It says that: The provisions of this Act shall be treated for the purposes of sections 1 and 5 of the Deregulation and Contracting Out Act…as if they were contained in an Act passed in the same Session as that Act". Every single subsequent Bill that comes before this Chamber could have that same pretence: put the clock back, put the calendar back and pretend that the measure was passed in the same Session, so that the undertaking that was then given would be met.

I do not believe that that is a subterfuge that can easily be accepted. As the noble Lord, Lord Peston, said, the hour is late. Certainly, we cannot divide on this issue now. It is an issue that has to be debated in much more depth. It raises a very serious constitutional issue. Therefore, on the assumption that we shall come back to this matter in a big way at the next stage of the Bill, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 4 agreed to.

Schedule 5 [Transitional provisions and savings]:

Earl Ferrers moved Amendments Nos. 154A to 154J:

Page 70, line 14, leave out from ("mentioned") to ("and") in line 17.

Page 70, line 19, leave out from ("above") to end of line 21.

Page 70, line 24, leave out ("or, if the supplier thinks fit, such two").

Page 70, line 26, leave out ("nominated associates") and insert ("the nominated associate").

Page 70, line 36, leave out ("or nominations").

Page 70, line 43, leave out ("a particular") and insert ("the").

Page 71, line 2, leave out ("or any, or by or against both or all") and insert (", or by or against both").

Page 71, line 4, leave out ("any one") and insert ("either").

Page 71, line 6, leave out ("any") and insert ("the").

The noble Earl said: In formally moving these amendments, I shall speak also on Amendment No. 155: that is, the amendment of the noble and learned Lord, Lord Brightman. Before the Motion is put, it might perhaps be convenient for the noble and learned Lord to speak first to his amendment, Amendment No. 155, and for me to reply to it. My amendments are really in lieu of his. I beg to move.

9.30 p.m.

Lord Skelmersdale

It may help the Committee if my noble friend explains the substantial changes that the Government are making to this schedule. It will then be easier for the noble and learned Lord, Lord Brightman, to respond.

Lord Brightman

I shall deal with this matter as briefly as I can. The point is that if British Gas enters into a contract to purchase gas from a gas field and then transfers the contract to another company, under the ordinary law British Gas would remain liable to the gas field in the event of default by the transferee company.

Schedule 5 appears to me to disregard that principle by enabling British Gas to hive off contracts without remaining liable in the event of default by the transferee company. What is more, Schedule 5 enables British Gas to transfer contracts to either of two companies of its own choice. British Gas is in theory therefore in a position to pass good contracts over to company A and unprofitable contracts to company B. If it wished it could then walk away from company B. Amendment No. 155 is designed to meet that risk by providing that nothing in the schedule should relieve British Gas of its liability under a transferred contract in the event of default by one of the two nominated associates, as the transferee companies are called.

Amendment No. 154C, which has been tabled but not yet moved by the Government, only permits contracts by British Gas to be assigned to a single trading entity. The result is that the risk that worried me seems to have been reduced and perhaps eliminated altogether. If there is only one associated nominated company, only one trading entity, then it is almost inconceivable that British Gas would allow that company to go bankrupt.

Amendment No. 154C, which is the amendment which allays my anxiety, arrived somewhat late in the day, although I was greatly helped by an explanatory letter which I received from the noble Earl this afternoon. However, I have not had time to consider it in the depth I should have liked. I expect to find that my worries are over. In the circumstances, it is not my present intention to move Amendment No. 155. I express my grateful thanks to the noble Earl for considering my Amendment No. 155 and for making many amendments to Schedule 5 which go so far to meet my point.

Lord Gisborough

Two or three years ago, certain companies entered into long-term agreements with British Gas to buy its gas. On the back of those contracts those companies entered further contracts to sell the gas and had arrangements with their customers. The Bill, which is retrospective, seriously interferes with, if not negates, those contracts for purchasing gas and leaves those companies with outstanding contracts to sell the gas. It is a dangerous situation because it sets a precedent which may make future companies buying contracts wonder whether the rules will be changed during the tenure of those contracts. However, I am extremely grateful to my noble friend the Minister for agreeing, as he did, to see the company representatives concerned. I know that he understands the matter a great deal better than I do and I hope that when he comes to speak he will be able to give some comfort and perhaps put forward proposals for dealing with the damage that would appear to have been done to those companies.

Lord Peston

Before the noble Earl outlines his view of all these matters, I really would like to change my mood and congratulate the Government on what they seem to have done. The noble Lord, Lord Gisborough, raised the matter at Second Reading. The noble and learned Lord, Lord Brightman, has been very concerned about contracts. The Government have had the rather difficult task of providing a balance as regards the interests of British Gas, bearing in mind, in particular, that when it was a public utility it was obliged to sign long-term contracts for supply at what now are very uneconomic prices.

I cannot believe that it is the Government's desire to bankrupt British Gas as a result of the Bill. But, equally, a contract is a contract. Other concerns are getting into this business and some degree of fairness must apply to them. In looking at the amendment of the noble and learned Lord, Lord Brightman, I thought that this was an impossible state of affairs. I have to congratulate the noble Earl. In so far as anything could possibly be done, it looks as though his amendment just about does it, within the imperfections of the world in which we live. As I understand it, the noble and learned Lord, Lord Brightman, has said that he is content. I have been subject to pressures from all sides and I can only say that I am content. I hope, therefore, that the amendment in the noble Earl's name will work. I assume it will and I wish it good speed.

Lord Skelmersdale

It is my feeling that my noble friend and his department have squared the circle in a most elegant way. I congratulate them on it.

The Earl of Caithness

Having raised this matter at Second Reading, I, too, would like to congratulate my noble friend on what he has done. With his agility of mind I am sure that he can do it with the same ease as regards some of the amendments that we have already discussed.

Earl Ferrers

Such a bouquet of flowers coming from all round the Chamber is most unusual. I think that I must probably have got it wrong to have received all that. I am deeply grateful to the noble and learned Lord, Lord Brightman, who was courteous enough to write to me some time ago and tell me of the amendments that he proposed to put down. That enabled me to consider the matter in some detail. I am bound to say that I did have a certain amount of advice and help over that consideration, without which, of course, I would have been completely incapacitated. The result was that he alerted us to a problem.

It is not an easy issue. The difficulty we have is in meeting the two principles of separation, that is, making sure that the operation of the common pipeline network which is owned by British Gas is not distorted by the company's trading position, and avoiding undue detriment to the position of British Gas's counterparties. It would not in our judgment be possible to meet the first of those objectives if we sought to deal with the second in the manner which the noble and learned Lord suggested in his amendment. Requiring the pipeline to guarantee the gas purchase contracts of one supplier among many could he seen to compromise its neutrality. If those guarantees were ever called, that could raise the prospect of pipeline tariffs for the whole industry being raised in order to support British Gas's counterparties.

We came to the conclusion that more work needed to be done to the Bill about this. There is a concern that the present provisions of the Bill might allow one of the supply subsidiaries to be, as it were, a man of straw. That would obviously not be right. We propose that the Bill should limit British Gas to a single supply subsidiary rather than allowing the company to have two. That would guarantee that all the contracts were vested in a substantial business with a turnover of several billion pounds a year. Since British Gas will continue to have a monopoly in the domestic market in most of the country until some time in 1998 and the sheer number of customers in that market will limit the speed at which the company's market share can fall after that time, we think that this change will effectively meet the anxieties which have been expressed.

That is why I tabled the amendments. I understand that the noble and learned Lord has not had time to consider either of these amendments or—I was going to say more importantly—my letter. It would be extravagance on my part to suggest that my letter was more important. I wrote to him as soon as I could but, as he will realise, the matter took some consideration. I am sorry that he was unable to have the letter earlier than he did.

If the noble and learned Lord will withdraw his amendment, and if the Committee considers that it would be appropriate to accept my amendments, I would find that helpful. If the noble and learned Lord is agitated between now and Report stage, I shall be more than delighted to try to help him and meet any points of concern. I do not just say that to my noble friend Lord Gisborough. He expressed concerns to me earlier when he came to see me. We are continuing to consider, with the affected parties, whether there is an appropriate solution which will allow the network code to proceed in a fair way. I understand his position about having entered into contracts which might have untoward effects. This is not an easy matter. We are trying our best to see whether there are ways of overcoming the problem. I hope that meets the Committee's approval.

On Question, amendments agreed to.

Earl Ferrers moved Amendment No. 154K:

Page 71, line 8, leave out from ("appropriate") to end of line 10 and insert: ("() Without prejudice to the generality of sub-paragraph (3) (d) above, such a scheme may, in relation to transfers or transactions effected in pursuance of the scheme, make provision, either generally or for specified purposes—

1. (a) for the transfers or transactions to be regarded as taking place in a specified order; and
2. (b) for the nominated associate to be treated as the same person in law as the public gas supplier").

On Question, amendment agreed to.

[Amendment No. 155 not moved.]

Earl Ferrers moved Amendments Nos. 155A and 155B:

Page 71, line 30, leave out ("or nominations").

Page 71, line 32, leave out ("or nominations").

On Question, amendments agreed to.

Earl Ferrers moved Amendment No. 155C:

Page 72, line 9, leave out first ("treated as").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 155D:

Page 72, line 10, leave out ("or each licence").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 155E:

Page 72, line 14, leave out ("treated as").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 155F:

Page 72, line 17, leave out ("and") and insert: ("() such amendments as the Secretary of State thinks fit for varying the period of notice required for the revocation of the licence in accordance with any term contained in it; and").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 155G:

Page 72. line 19, at end insert: ("and such a scheme may also make such transitional provision as appears to the Secretary of State to be necessary or expedient").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 155H:

Page 72, line 37, leave out ("a") and insert ("the").

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 155J:

Page 73, line 6, after ("6(2)") insert (", and in paragraph 8(1) and (2) the words "or of a direction under paragraph 2(4) above",").

On Question, amendment agreed to.

Lord Peston

Before we proceed, I do not want to spoil the noble Earl's evening, but is there any possibility of him moving a number of amendments en bloc? Much as I enjoy the noble Earl getting up and sitting down, we could possibly get the thing owl- with somewhat more quickly.

Earl Ferrers

I am deeply grateful to the noble Lord, Lord Peston. He is not spoiling my evening; he is merely getting me out of my confusion. I am happy to move Amendments Nos. 155K to 156L en bloc:

Page 73, line 21, leave out ("sub-paragraph") and insert ("sub-paragraphs (1) and").

Page 73, line 24, at end insert:

("Shares issued to public gas supplier by transferee

. Any shares issued to the public gas supplier by the transferee in pursuance of the scheme under paragraph 2 above—

1. (a) shall be of such nominal value as may be specified in or determined under the scheme;
2. (b) shall be issued or allotted on such terms as may be so specified or determined; and
3. (c) shall be treated for the purposes of the Companies Act 1985 as if they had been paid up by virtue of the payment to the transferee of their nominal value in cash.").

Page 73, line 26, leave out ("a") and insert ("the").

Page 73, line 38, leave out ("a") and insert ("the").

Page 74, line 13, after ("person") insert ("in law").

Page 74, line 32, at end insert:

("Approvals under section 5(3) .

. Any approval—

1. (a) which has been given by the Secretary of State for the purposes of section 5(3) of the 1986 Act (approval of contract for supply of propane or butane); and
2. (b) which is in force immediately before the appointed day, shall have effect on and after that day as if it had been given for the purposes of paragraph 2 of Schedule 2A to that Act.").

Page 74, line 48, at end insert:

("Applications for authorisation under section 7

—(1) This paragraph applies where—

1. (a) an application has been made to the Secretary of State under section 7 of the 1986 Act (authorisation of public gas suppliers) by any person ("the applicant"); and
2. (b) the application is not determined before the appointed day.

(2) Subject to following provisions of this paragraph, the application shall have effect on and after the appointed day as if it were an application to the Director for—

1. (a) a licence under section 7 of the 1986 Act (licensing of public gas transporters) to be granted to one of the persons mentioned in sub-paragraph (3) below;
2. (b) a licence under subsection (1) of section 7A of that Act (licensing of gas suppliers) to be granted to the other of the persons so mentioned; and
3. (c) a licence under subsection (2) of that section (licensing of gas shippers) to be granted to the person mentioned in paragraph (b) above.

(3) The persons referred to in sub-paragraph (2) above are—

1. (a) the applicant; and
2. (b) such one of his associates as may be nominated by him for the purposes of this sub-paragraph.

(4) Sections 7, 7A and 7B of the 1986 Act shall apply in relation to the application, and any licence granted or proposed to be granted on the application, as if subsections (5) and (6) of section 7, and subsections (1) and (2) of section 7B, were omitted.

(5) No licence shall be granted on the application except with the consent of Secretary of State; and before giving his consent the Secretary of State shall consult—

1. (a) the Health and Safety Executive; and
2. (b) any public gas transporter whose authorised area includes the whole or any part of the area to which the application relates.

(6) For the purposes of this paragraph a company is an associate of the applicant if—

1. (a) the company is registered under the Companies Act 1985 and is limited by shares; and
858
2. (b) either the company is wholly owned by the applicant or the applicant is wholly owned by the company.

(7) Any reference in this paragraph to a licence of any description includes a reference to an extension of such a licence.").

Page 75, line 25, leave out first ("treated as").

Page 75, line 30, leave out ("treated as").

Page 75, line 33, leave out ("and") and insert: ("() such amendments relating to the revocation of the licence or exemption as the Secretary of State thinks fit; and").

Page 75, line 35, at end insert: ("and such a scheme may also make such transitional provision as appears to the Secretary of State to be necessary or expedient").

Page 76, line 32, leave out ("a nominated associate of his") and insert ("the nominated associate").

Page 76, line 42, at end insert (", or for different areas,").

Page 77, line 33, leave out from ("a") to end of line 38 and insert ("public gas supplier had been done on that day by or in relation to the supplier's transport successor").

Page 77, line 40, at end insert:

("Promotion of efficient use of gas

.—(1) Any determination or direction—

1. (a) which has been made as respects a public gas supplier, or given to such a supplier, under section 15B of the 1986 Act (promotion of the efficient use of gas); and
2. (b) which is in force immediately before the appointed day, shall have effect on and after that day as if it had been made as respects, or given to, the supply successor of that supplier under section 33BB of that Act.

(2) In this Part of this Schedule "supply successor", in relation to a public gas supplier, means the person who becomes the holder of a licence under subsection (1) of section 7A of the 1986 Act by virtue of a scheme made by or in relation to that supplier under Part I of this Schedule.").

Page 78, line 1, leave out ("of a particular pattern or construction of a meter") and insert (", consent or authorisation").

Page 78, line 2, leave out from ("under") to ("and") in line 3 and insert ("section 17 of the 1986 Act, or under regulations made, or having effect as if made, under that section").

Page 78, line 19, leave out ("domestic").

Page 78, line 26, leave out ("domestic").

Page 78, line 28, leave out sub-paragraph (3).

Page 79, line 2, leave out ("paragraph 10") and insert ("each of paragraphs 10 and 21A").

Page 79, line 12, leave out ("paragraph 10") and insert ("each of paragraphs 10 and 21A").

Page 79, line 13, leave out ("domestic").

Page 79, line 24, at end insert:

("Entry warrants

.—(1) Any warrant—

1. (a) which has been granted under section 2(1) of the Rights of Entry (Gas and Electricity Boards) Act 1954 (warrant to authorise entry) for the purpose of enabling an employee of a public gas supplier to enter any premises, in accordance with paragraph 15(1) (b) of Schedule 5 to the 1986 Act, in order to ascertain the quantity of gas supplied to those premises; and
2. (b) which is in force immediately before the appointed day,

shall have effect on and after that day as if it had been granted for the purpose of enabling an employee of the supplier's supply successor who is authorised by him for the purpose to enter those premises, in accordance with paragraph 20(1) (b) of Schedule 2B to the 1986 Act, in order to ascertain the quantity of gas supplied to the premises.

(2) Sub-paragraph (3) below applies to any warrant—

1. (a) which has been granted under section 2(1) of the Rights of Entry (Gas and Electricity Boards) Act 1954 for the purpose of enabling an employee of a public gas supplier to enter any 859 premises in order to cut off or discontinue the supply of gas to those premises in accordance with paragraph 16(1) of Schedule 5 to the 1986 Act; and
2. (b) which is in force immediately before the appointed day.

(3) Any warrant to which this sub-paragraph applies shall have effect on and after the appointed day as if it had been granted as two separate warrants—

1. (a) one for the purpose of enabling an employee of the supplier's transport successor who is authorised by him for the purpose to enter the premises, in accordance with sub-paragraph (2) of paragraph 21 of Schedule 2B to the 1986 Act, in order to disconnect the premises; and
2. (b) the other for the purpose of enabling an employee of the supplier's supply successor who is authorised by him for the purpose to enter the premises, in accordance with that sub-paragraph, in order to cut off or discontinue the supply to the premises.

(4) In this paragraph "employee" has the same meaning as in the Rights of Entry (Gas and Electricity Boards) Act 1954.").

Lord Airedale

I think that that list of amendments demonstrates the importance of having a revising Chamber.

Earl Ferrers

If I might say so, that was, as usual, a penetrating observation from the noble Lord, Lord Airedale, with which I totally concur.

On Question, amendments agreed to.

Schedule 5, as amended, agreed to.

Schedule 6 [Repeals]:

Earl Ferrers moved Amendments Nos. 157, 157A and 158:

Page 80, line 14, column 3, leave out from second ("in") to ("in") in line 20 and insert ("subsections (3) and (5), the words "paragraph (a) of' ").

Page 80, line 31, column 3, at end insert: ("In section 38(1), the words from "but no person" to the end.").

Page 80, line 47, column 3, at end insert: ("In Schedule 7, paragraphs 2, 4, 5, 6(2) and (26) (h), 15(4), 17, 20, 26(1) and 31.").

On Question, amendments agreed to.

Schedule 6, as amended, agreed to.

House resumed: Bill reported with amendments.