Gas Supply Industry: Competition (Hansard, 30 November 1995)

§ Lord Chesham
My Lords, preparations are continuing for the first pilot phase of competition in gas supply to domestic consumers which it is intended will commence in the South-West on 1st April 1996. The Government are discussing the detailed arrangements for this with the Director General of Gas Supply and with the industry.

§ Lord Dubs
My Lords, given that one potential competitor in the South-West of England has indicated that it would be possible to reduce household gas prices by 15 per cent., will the Government give an assurance that they will not allow British Gas to drag its heels? Will the Government ensure that competition will be introduced in the South-West and other areas as soon as is possible?

§ Lord Chesham
My Lords, I am delighted to see the noble Lord has converted to Conservative principles. British Gas is not dragging its feet. This is a major task involving the introduction of computer systems and supporting contractual and administrative arrangements. British Gas is committed to achieving this programme and it is working hard to achieve it. As noble Lords would expect, the DTI and Ofgas monitor its progress and discuss that with the company. The target date is 1st April.

§ Lord Peston
My Lords, I believe the noble Lord has his history the wrong way round. It was the Government who privatised the gas industry as a monolithic monopoly. That was vigorously opposed by noble Lords on these Benches. Is he not aware that the passage of the recent Gas Bill, which at long last brought potential competition into the consumer market, was strongly supported by noble Lords on these Benches, notably by myself? That leads eventually to my question, which is the following. What the noble Lord said in answer to my noble friend was heartening. I take it the noble Lord is saying there is no slippage whatsoever in the programme which will lead both to the first pilot schemes and then quickly after that to the introduction more broadly of competition in the domestic gas market. Can the noble 694 Lord reassure your Lordships that, so far as the Government are aware, at this moment there are no delays as regards the introduction of competition?

§ Lord Chesham
My Lords, we are widening out the gas industry. We intend the framework to be in place for domestic consumers in the South-West to have a choice of supplier on 1st April. We are currently examining with Ofgas and the industry the technical details and timings of how customers' billings will change between the two suppliers. We are still on target for 1st April.

§ Lord Peston
My Lords, I must remind the noble Lord that the point of the pilot schemes is to introduce competition. We are not interested in the pilot schemes per se; the whole point is to make the Act work. Therefore the central question is whether the Act is still on track; the pilot schemes merely lead to that.

§ Lord Chesham
My Lords, that is the very point of a pilot scheme. We determine by a pilot scheme that everything is absolutely right and then we continue with that in the rest of the country. That is why there is a pilot scheme in existence.

§ Lord Geddes
My Lords, I may be getting extremely confused but is my noble friend aware that a year ago I was offered competitive quotes for domestic gas supplies? I live in mid southern England. Was that a one-off shot or can my noble friend help me in this respect?

§ Lord Chesham
My Lords, in some areas, including that mentioned by my noble friend, there is already competition in gas supplies. There are two methods. In the first method, British Gas offers a contract. The second method involves treating consumers as small businesses. This is very competitive at the moment. I have information of an instance where someone was quoted a 59 per cent. reduction in the gas bill.

§ Lord Haskel
My Lords, is the Minister satisfied that the price reductions which are being offered are sustainable in the long term, or are they simply a method of attracting customers away from British Gas?

§ Lord Chesham
My Lords, this is a matter of competition. If companies offer a price now and change it shortly afterwards, the consumer will be extremely upset and will go to a gas producer which keeps its prices at the level it quotes.