HL Deb 25 October 1995 vol 566 cc1114-40

3.25 p.m.

Read a third time.

Clause 1 [General duties under 1986 Act]:

The Earl of Cranbrook moved Amendment No. 1:

Page 1, line 21, at end insert— ("and a duty to take into account, in exercising those functions, the objectives of sustainable development. (1A) In performing his duty under subsection (1) above to take into account the objectives of sustainable development, the Director shall have regard to such guidance as the Secretary of State may from time to time provide.").

The noble Earl said: My Lords, my amendment, in its third, revised form, stands as a general qualifier to the three new general duties that will appear in the proposed new Section 4(1)(a) to (c) of the amended Gas Act 1986.

I am grateful to my noble and learned friend for his courteous response to the amendments in the form in which I tabled them at Report stage. I listened carefully to what he said at that time. I have since read the Official Report to be sure that I took in all the arguments that were put forward by my noble and learned friend and by other noble Lords who contributed to the debate on that occasion.

In the light of the wide scope of the international, European Union and national commitments that I summarised, I was reassured by my noble and learned friend's confirmation that the goal of sustainable development is indeed followed across government and is recognised as important policy guidance. My noble and learned friend went further. He said that weight had been given to the principles of sustainable development in framing the proposals of the Bill. That assurance from my noble and learned friend strengthens my conviction that an unambiguous reference to those principles can be accommodated in the Bill without any problems.

Sustainable development is about the management of social and economic aspirations in ways that respect the environment and use resources wisely, with respect for others, now and into the future. It is probably futile to attempt to find a form of words which comprehensively defines sustainable development in all its aspects and all its contexts. However, it is wholly relevant to a Bill which deals with the management of a nationally important energy source.

At Report stage my noble and learned friend commented that he believed that the regulatory regime had been structured in a way that, will allow the forces of the market to be harnessed in the cause of energy efficiency".—[Official Report, 18/10/95; col. 756.]

Those noble Lords who followed my somewhat lonely trail will realise that, against that, my starting point, as I emphasised at Committee and reiterated at Report, was the totally contrary conclusion reached unanimously by the working group of the Round Table on Sustainable Development (based on the direct experience of energy suppliers, among others) that market forces and sustainability issues such as energy efficiency are not intentionally aligned, and therefore not mutually reinforcing. Therefore we have two opposing views of the situation. But whoever may be right I hope that what I have said has made clear why I conclude that it will not be damaging to the position of my noble and learned friend to invoke sustainable development in the Bill. He has told us that the principles are contained in its framing. On the other hand, in order to safeguard against the more pessimistic prediction of those who were involved in the Round Table it is essential to introduce a form of words into the Bill which ensures that the exercise of the general duties of the Secretary of State and the director—they are detailed in the proposed new Section 4(1) referred to in the amendment—are conducted with proper regard to the objectives of sustainable development.

A duty to contribute to the objectives of sustainable development would also modulate the new obligations towards the environment which are introduced in the Bill and would thereby forestall the problem of excessive zeal on the part of the regulator about which my noble and learned friend expressed anxiety, again at col. 756.

In response to my noble and learned friend's accompanying arguments—that the regulator must not have too much freedom but that his independence must not be unacceptably restricted—noble Lords will note that in the revised form of my amendment I propose that the Secretary of State may provide guidance. However, that proposal is now in a revised form. The duty to provide guidance will be much less onerous than that proposed in my previous amendment. The provision still follows the model of the Environment Act, but it is optional: guidance may be given. Moreover, it is given at the discretion of the Secretary of State and is not obligatory. In the terms of my amendment, such guidance may be given from time to time.

The Government's programme for sustainable development has a high profile. It has drawn attention to the forward looking programme of the Government in the international arena. It involves a mix of institutional responses including the panel chaired by Sir Crispin Tickell, the Round Table co-chaired by Mr. John Gummer, the Secretary of State for the Environment, and Professor Sir Richard Southwood, and also Professor Ashworth's programme, Going for Green.

I am convinced that a positive reference written into the Gas Bill to the role of sustainable development and its objectives will be interpreted nationally and internationally as confirmation of the weight that the Government attach to those processes. I believe that the proposal will be regarded very positively in many quarters, nationally and internationally. For that reason, I beg to move.

Lord Skelmersdale

My Lords, I begin my remarks with an apology to my noble friend for misnaming him last Wednesday. It was an unintentional slip; I am sure that he will accept it as such.

I have no problem with the beginning of the amendment. As my noble friend made clear last Wednesday and today, in our various lives we all have a duty to take account of sustainable development, whether or not it is specifically defined. We have the word of no less a person than my right honourable friend the Prime Minister that sustainable development is almost indefinable. It is an issue of which we should all take account. That applies just as well to the Secretary of State as to the regulator. However, I have difficulty with the proposed new subsection (1A) of my noble friend's amendment, which states: The Director shall have regard to such guidance as the Secretary of State may from time to time provide".

I gently suggest to my noble friend that the relationship between the regulators and their sponsoring departments—usually the DTI—is rather different from that between the Secretary of State for the Environment and the Environment Agency. Uncomfortable though it is for both politicians and the regulated industries—and, indeed, the Government from time to time if they can be separated from politicians—the independence of the regulatory bodies has been well established over a number of years since the Government privatised the telecommunications industry. It would be a great mistake at this stage, even regarding an issue as important as sustainable development, to cut across the independence of the regulator. If the Secretary of State were to be involved in giving guidance to the director on a wide range of issues, it would cut across one of the key principles of utility regulation and, I suggest, make the position of the regulator considerably weaker. With the problems that we have had from time to time with the various regulators, I do not believe that that is desirable.

Lord Clinton-Davis

My Lords, I support the amended form of the amendment. I start by commenting on the rather curious argument adumbrated by the noble Lord, Lord Skelmersdale. Does he suggest that the regulator is entitled to go on a frolic of his own so far as concerns major policy matters regardless of the views of the Government of the day? We allude immediately to the distinction between "operational" and "policy" which has featured singularly in debates over the course of the past few weeks and in the media. One could not have a better example, in a way, than the one posed in this instance.

If the regulator were to abandon any consideration in his judgment of sustainable development, or any other major element of policy, could he possibly be justified in that regard? I am perfectly happy to give way to the noble Lord if he wishes to intervene.

Lord Skelmersdale

My Lords, I am conscious that this is Third Reading. However, the duties of the regulator are well established in statute, both in the Gas Act 1986 and by the amendment of that Act by this Bill.

Lord Clinton-Davis

My Lords, therefore the answer is, as I thought that it would be, that the regulator cannot go on a frolic of his own.

I believe that the noble Earl is absolutely entitled to introduce this provision because it goes to the very heart of environmental policy. The Secretary of State is responsible for adumbrating that environmental policy on behalf of the Government of the day. Consequently, he is entitled, therefore, to give guidance on those issues.

One of my responsibilities in the Commission, as the noble Lord, Lord Skelmersdale, will remember because he was a Government Minister in that field at that time, was in relation to environmental issues. One of the most important underlying features of both the Single European Act and the new chapter that was introduced and later modified advantageously in the Maastricht Treaty in relation to the environment was the sustaining of the very arguments that were put before the House by the noble Earl on a number of occasions in the context of this Bill. Consequently, there can be nothing lacking in conformity so far as the European angle is concerned in what he said. Should we therefore be looking at the matter in relation to this Bill or saying that it is all part and parcel of the Government's general objectives? In my view, it is right when dealing with a specific Bill to ensure that that Bill signals very clearly not simply objectives but specifics in relation to the sustaining of those objectives.

If what the noble Earl argued here were inconsistent with the Government's objectives, I could understand the Government saying that they could not go along with it. But that cannot be the case. If the noble Earl's proposal were inimical to the purposes of the Bill, I could equally understand it if the Government were to say that that was unacceptable to them. But neither of those propositions can be sustained. The noble Earl is saying here simply that the director shall have regard in this particular context to the objectives of sustainable development, to the guidance that the Secretary of State may from time to time provide. There is nothing wrong or ignoble about that. There is nothing that debases the purposes of the Bill or the Government's objectives.

As the noble Earl rightly said, there is an important audience that the Government ought to take into account in relation to these matters; namely, the audience outside. That is not simply the British electorate but the wider world community. It is important. Not that the wider world community will take too much notice, I suspect, of the Third Reading of the Gas Bill—though perhaps I am wrong; it may be on the tips of the tongues of all world leaders. I know that they always listen to what my noble friend Lord Peston has to say—I have that on the highest authority. It is important for the Government to signal in a very decisive way that they are concerned about these matters. Here is the ideal opportunity to do so. Therefore I strongly support this amendment. I hope that if the Government's response is negative, the noble Earl will take the appropriate course and challenge that view.

Lord Cochrane of Cults

My Lords, I am sorry to see that the noble Earl has reintroduced his amendment, with which we dealt at some length last Wednesday. Before dealing with it in more detail, with the leave of the House I draw noble Lords' attention to the declaration of interest that I made many moons ago when we first set out to deal with this Bill.

Gas, as at present organised, is an extractive industry. Sustainable development in the long term, and possibly the very long term, cannot exist in an extractive industry. Were it to do so, we should be in the happy position of having discovered the secret of perpetual motion. Alas, no such luck attends us.

I looked at the blue book report from the committee under the very wise and learned guidance of the noble Lord, Lord Tombs, on the subject of sustainable development, as no doubt did other noble Lords who have spoken on this subject. As last week, it leaves me confused. I profoundly agree with my right honourable friend the Member for Huntingdon, whose opinion was referred to by my noble friend Lord Skelmersdale. The Prime Minister said that the notion of sustainable development eludes precise definition. I have never heard a better reason for omitting something from a Bill. If we write something in which we know on good authority "eludes precise definition", all we are doing is giving work to the lawyers, or perhaps just wasting time. This is an unwise amendment.

The point that my noble friend sought to emphasise in his amendment about sustainable development is that we should make the supply of gas, which is finite and is available to us, last as long as we decently can. That is our duty. It is profoundly unfortunate that "sustainable" and "development" have become linked, rather in the way that all the fumes these days are toxic. There are many other examples that are very often used as the parrot cries of single interest groups. Therefore, as the duty to preserve in the longer term the finite resources of gas that are available to us is already written into the Bill and sustainable development is inherently indefinable, I much regret to tell my noble friend yet again that I cannot agree with him.

3.45 p.m.

Lord Ezra

My Lords, I support the amendment so effectively moved by the noble Earl. As presently drafted, new Section (4)(1) in Clause 1 is too narrowly drawn. It does not pay sufficient regard to the fact that gas is a commodity of particularly widespread and fundamental importance. Therefore, merely to talk about securing the supply and making sure that licence holders have the necessary finance and securing competition does not pay regard to that feature. The Government, in spite of what was just said, are committed to the concept of sustainable development. It occurs in many government publications. No doubt the noble and learned Lord, when he responds, will confirm that. The fact that it might be difficult to define is not the issue. The fact is, this is a broad concept; namely, making sure that we support environmental improvement as everybody understands it in that light.

Had I not been subject to an unfortunate sequence of events, I should also have moved in relation to this section an amendment to bring in consumer interest. I shall deal with that point at a later, appropriate stage. I very much hope that in his response the Minister will take very serious account of the remarks made by his noble friend Lord Cranbrook and will accept this amendment.

Lord Desai

My Lords, I hesitate to add my voice to the debate at Third Reading as I have not spoken before on this Bill. I also apologise to the noble Earl since I arrived after he had begun his remarks. My only point is that the fact that sustainable development cannot be defined is not a good enough reason for not accepting the amendment. New Section 4(1)(c) refers to "effective competition". As a professional economist, I challenge anybody to define effective competition any more precisely than sustainable development.

Making such a requirement helps us to sharpen a vague notion slightly more because it is now policy relevant. If we include "sustainable development" in the Bill, it will concentrate our minds. It will draw from the Secretary of State and the regulator a little more effort to define it more precisely. If they cannot define it more precisely, just as in relation to competition they refer to the Monopolies and Mergers Commission, a Royal Commission on the environment could be referred to to find out how it would implement sustainable development. The point is, were we to stop putting vague words into law, there would not be much legislation left.

Viscount Caldecote

My Lords, I also support this amendment. In the debate on Report, one of the points made against it was that it was not logical or appropriate to include this reference in the Gas Bill. The point was also made today that there was no precise definition. On the second point, it seems to me absurd and completely illogical that the Government in fact published a command paper on the strategy for sustainable development at the beginning of this year, and therefore presumably know what sustainable development is. I think I have a fairly good idea. The argument that the idea should not he included here because it was not included in similar Acts of Parliament seems extraordinary. We have to start somewhere. It was an error not to put such emphasis on sustainable development elsewhere. For goodness sake, let us start now.

Secondly, the point about the independence of the regulator was well made by my noble kinsman Lord Cranbrook. The second part of his amendment makes it perfectly clear that, the Director shall have regard to such guidance", as given by the Secretary of State.

Thirdly, surely this approach to emphasise the importance of the objectives of sustainable development is entirely in line with the Government's response to the report of the Select Committee on Science and Technology on sustainable development which we shall debate on Thursday. For all these reasons, I strongly support the amendment.

The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)

My Lords, I am grateful to the noble Earl for giving us a further opportunity to discuss this matter. In our previous debate at an earlier stage, I made it clear that the Government continue to offer their strong support for the concept of sustainable development. Without repeating myself, I should like to refer back to what the Prime Minister said in the White Paper. We have particular support to offer for the building of environmental and economic factors into the consideration and development of government policy.

The provisions of the Bill will help promote sustainable development by setting the forces of the market to work in favour of energy efficiency. We believe that, by breaking down the artificial constraints of monopoly, we shall be taking an important step towards the optimum and efficient use of resources in the sector. Apart from that general observation, the Bill has specific provisions which will help promote sustainable development. These include the duty to promote energy efficiency and new duties in respect of the environment—that word is specifically used. The licences under the Bill will take those provisions further and will, for example, extend a duty to provide energy efficiency advice to all suppliers.

Those are tangible results from the legislation which will support sustainable development and the work of the Round Table, about which my noble friend made a number of remarks. Without wishing to rebuff the Round Table in any way on the importance of taking forward questions of sustainable development and government policy, I must say that we are still in some difficulty in using that phrase in this legislation. That is an important point. I hope that noble Lords will hear with me if I rehearse some of the points that I made previously.

This amendment would have the effect of conferring wide powers on the director to set his own agenda because of the wide meaning of the term "sustainable development". As I said previously, it is an extremely widely used term. If we turn to the Agenda 21, following the Rio Summit, we see that, as I pointed out at an earlier stage, when sustainable development is discussed there it runs to no less than 470 pages. If a broad power were given, because of the broad nature of the director's powers in relation to the onshore gas industry, that could give the director a very real opportunity to take forward an agenda entirely of his or her own.

I understand the argument advanced by my noble friend. He too understands that it would give an extraordinarily wide power to the director to set a particular agenda. In a sense, because there is that clear appreciation of the difficulty, he seeks to restrict it by suggesting in his amendment that the director should have regard to guidance given by the Secretary of State on sustainable development, in some way bringing it in a little. However, in our view it remains the position that such a provision would have the effect of involving the Secretary of State in the policy of the director across a wide range of issues. In other words, the provision would breach the independence of the regulator, a policy which lies at the very heart of utility regulatory policy.

What is different about the utility regulators is that they do not report to the Secretary of State. They are accountable only in respect of their statutory duties. As my noble friend pointed out in relation to the gas industry, these are clearly set out in statute. Their accountability means that they may be subject to judicial review. They are also accountable to Parliament through their reports and to Select Committees. The model, therefore, requires clear statutory duties which are not subject to ministerial adjustment.

I understand very clearly what my noble friend said. The way in which he has drafted his amendment allows the director to "have regard to" the guidance and in that sense to accept or reject it. If that is the case and the director can accept or reject it without explanation or being subject to any particular duty in that regard, we are back to the first problem; namely, that the director would have very wide powers indeed. On the other hand, if it becomes more restrictive, then we introduce the interference of a Minister in a way that we have sought to avoid throughout the changes that we have introduced.

The ability of the Secretary of State to influence the regulator by guidance—or, for that matter, as I said, for the regulator to take his or her own view on sustainable development—could be used as a platform to promote a wide range of policies, such as seeking to promote certain uses of gas over others or to reduce the rate at which reserves are used. I accept that those are very important issues; but, with respect, it seems to me that they are matters which ought only to be embarked on formally by government and not be introduced in this way. I believe that it would run counter to the principle of regulating these industries at arm's length from government with the minimum of interference if we were to build in proposals of that kind.

In conclusion, I am afraid that my response to the amendment will be a disappointment to the noble Earl. I regret that, because I entirely share his very worthy preoccupation with the principles of sustainable development. However, I hope that he will recognise the strong endorsement that I have given to the principles of sustainable development and their inclusion in government policy.

I had anticipated that the noble Lord, Lord Peston, might respond on this matter. Certainly, as I understood his arguments when he contributed to our last discussion on this matter, he seemed to appreciate that that was a fundamental point. If sustainable development and a duty to look to it were to be introduced on one regulator, we ought to look at it across the whole board of regulatory policy.

Finally, while I regret that I cannot agree to a change in such a key principle of regulatory policy on the scale which would be imposed by this amendment, I hope that my noble friend will appreciate our approval of his commitment to sustainable development.

The Earl of Cranbrook

My Lords, I do greatly appreciate the struggle that my noble friend had in presenting those arguments. I believe that they were answered from all around the Chamber before he spoke. With regard to the definition, I am grateful to the noble Lord, Lord Desai, for his academic intervention. But it seems to me that we can equally say that, while a definition may take up so many pages, we still know perfectly well what would not be sustainable as, in the same way, we probably know what is not "effective competition". That kind of approach is actually a very useful and practical one to take towards definitions. The key thing I should like to emphasise is that I have proposed this amendment so that if the Secretary of State so decided, because he adhered firmly to the principles that my noble and learned friend has laid before us, he would not have to give any guidance. It is entirely optional.

Secondly, if the director and the Secretary of State, both of whom would be bound by this amendment, do take actions in terms of sustainability, since my noble and learned friend has already assured us that this is in fact the principle which lies behind the Bill, they would therefore be acting in accordance with the intentions of the Bill. Moreover, were they to use this basis to go any wider, they would be doing so in a totally benign sense, since sustainable development is entirely in accordance with stated Government policy at a major policy level.

I feel that this amendment clarifies and lays down a sound basis for this whole Bill at an early point in the Bill. It does not in any way act contrary to the aspirations of the Government as they were expressed by my noble and learned friend. Therefore, I wish to seek the opinion of the House.

4.1 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 76; Not-Contents, 133.

Division No. 1
Airedale, L. Hylton, L.
Archer of Sandwell, L. Ilchester, E.
Bruce of Donington, L. Jay of Paddington, B.
Caldecote, V. [Teller.] Jeger, B.
Callaghan of Cardiff, L. Jenkins of Hillhead, L.
Carmichael of Kelvingrove, L. Judd, L.
Cledwyn of Penrhos, L. Kinloss, Ly.
Clinton-Davis, L. Kintore, E.
Cocks of Hartcliffe, L. Kirkhill, L.
Cranbrook, E. [Teller.] Listowel, E.
David, B. Lockwood, B.
Dean of Beswick, L. Longford, E.
Desai, L. McIntosh of Haringey, L.
Donaldson of Kingsbridge, L. Mackie of Benshie, L.
Donoughue, L. McNair, L.
Dormand of Easington, L. Mar and Kellie, E.
Dubs, L. Masham of Ilton, B.
Ewing of Kirkford, L. Mason of Bamsley, L.
Ezra, L. Merlyn-Rees, L.
Farrington of Ribbleton, B. Monkswell, L.
Fitt, L. Monson, L.
Gallacher, L. Morris of Castle Morris, L.
Geraint, L. Nathan, L.
Gibson, L. Nicol, B.
Glasgow, E. Prys-Davies, L.
Glenamara, L. Raglan, L.
Gould of Potternewton, B. Robson of Kiddington, B.
Graham of Edmonton, L. Rochester, L.
Grey, E. Sainsbury, L.
Hanworth, V. Sandwich, E.
Harris of Greenwich, L. Sefton of Garston, L.
Haskel, L. Stoddart of Swindon, L.
Headfott, M. Strabolgi, L.
Hilton of Eggardon, B. Thomson of Monifieth, L.
Hollis of Heigham, B. Tope, L.
Hooson, L. Wharton, B.
Howie of Troon, L. White, B.
Hughes, L. Winchilsea and Nottingham, E
Aberdare, L. Ashbourne, L.
Addison, V. Astor of Hever, L
Ailsa, M. Balfour, E.
Alexander of Tunis, E Barber, L.
Allenby of Megiddo, V. Belhaven and Stenton, L
Alport, L. Bethell, L.
Ampthill, L. Birdwood, L.
Archer of Weston-Super-Mare, L. Blatch, B.
Boardman, L. Liverpool, E.
Boyd-Carpenter, L. Lucas, L.
Brentford, V. Lucas of Chilworth, L.
Bridgeman, V. Lyell, L.
Burnham, L. McConnell, L.
Butterworth, L. Mackay of Ardbrecknish, L.
Cadman, L. Mackay of Clashfern, L. [Lord Chancellor.]
Campbell of Alloway, L.
Campbell of Croy, L. Macleod of Borve, B.
Carnegy of Lour, B. Malmesbury, E.
Carnock, L. Marlesford, L.
Carr of Hadley, L. Merrivale, L.
Chalker of Wallasey, B. Mersey, V.
Charteris of Amisfield, L. Miller of Hendon, B.
Chelmsford, V. Milverton, L.
Chesham, L. [Teller.] Monteagle of Brandon, L.
Clark of Kempston, L. Montgomery of Alamein, V.
Cochrane of Cults, L. Mottistone, L.
Coleraine, L. Mountevans, L.
Courtown, E. Mowbray and Stourton, L.
Cross, V. Munster, E.
Cullen of Ashbourne, L. Newall, L.
Davidson, V. Noel-Buxton, L.
Dean of Harptree, L. Norrie, L.
Denham, L. Northesk, E.
Dilhorne, V. O'Cathain, B.
Dixon-Smith, L. Onslow, E.
Downshire, M. Orkney, E.
Ellenborough, L. Orr-Ewing, L.
Elles, B. Parkinson, L.
Elliott of Morpeth, L. Pearson of Rannoch, L.
Elton, L. Pender, L.
Faithfull, B. Pym, L.
Ferrers, E. Rankeillour, L.
Finsberg, L. Rawlings, B.
Flather, B. Rippon of Hexham, L.
Fraser of Carmyllie, L. Rodger of Earlsferry, L.
Fraser of Kilmorack, L. Romney, E.
Gainford, L. St Davids, V.
Geddes, L. Seccombe, B.
Goschen, V. Simon of Glaisdale, L.
Gray of Contin, L. Skelmersdale, L.
Gridley, L. Stanley of Alderley, L.
Grimston of Westbury, L. Stodart of Leaston, L.
Harding of Petherton, L. Stokes, L.
Harmar-Nicholls, L. Strathclyde, L. [Teller.]
Harrowby, E. Strathcona and Mount Royal, L
Hayhoe, L. Swansea, L.
Hemphill, L. Swinton, E
Henley, L. Tebbit, L.
Holdemess, L. Terrington, L.
Hood, V. Teviot, L.
Howe, E. Thomas of Gwydir, L.
Hylton-Foster, B. Torphichen, L.
Inglewood, L. Ullswater, V.
Killearn, L. Vivian, L.
Kimball, L. Westbury, L.
Lauderdale, E. Wyatt of Weeford, L.
Lawson of Blaby, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.10 p.m.

Lord Fraser of Carmylliemoved Amendment No. 2:

Page 2, line 18, after ("environment") insert ("(whether by way of pollution or otherwise)").

The noble and learned Lord said: My Lords, after that disagreement with my noble friend, Amendment No. 2 and Amendment No. 5, to which I wish to speak at the same time, are put forward in response to the concerns expressed by my noble friend a week ago at Report stage. His concern was that the definition of the environment, which we were lifting from the Environmental Protection Act 1990, did not encompass the prevention of harm to living organisms and the ecological systems of which they form part.

As I made clear at Report, the Government do not consider that the downstream gas industry is likely to have significant effects on wildlife. However, to the extent that such effects exist, it is appropriate that they are taken into account. Having taken advice from the draftsman, we consider that these amendments are the most appropriate way to introduce the additional definitions from Section 1 of the Environmental Protection Act 1990, and I hope that my noble friend will accept that they meet his points though, I regret to say, not with the economy of words which he himself proposed.

The Earl of Cranbrook

My Lords, I am most grateful to my noble and learned friend for taking these steps. I am totally perplexed by the ingenuity and the mind set of those who frame such legislation. I would point out to him that the downstream effects are in fact potentially enormous. Methane itself is a greenhouse gas of great power. Carbon dioxide when burnt is also a greenhouse gas. There are many effects also of disturbance of the environment—for instance, in pipe laying and so on—where it is the living environment which is as much affected, and potentially significantly affected, as the physical environment. Therefore, I am glad to have this amendment in place. I sincerely hope that it performs the function that it is intended to fulfil.

One of the morals that we might learn is that it could be important for people in this House and the Government to put their heads together and get a definition of "the environment" which actually means what we all know "the environment" to mean (going back to the point made by the noble Lord, Lord Desai), which includes living organisms. I am sorry that we have lost that opportunity in this Bill. So I shall amuse and perplex your Lordships by waving one that might perhaps have potential after further thought in suggesting that the environment "consists of all or any of the following media, namely, the air, water or land, and the biological diversity which these media support". That definition is economical, truthful and pretty exact. I realise that that is not where we have got to, but I am grateful to my noble and learned friend all the same.

On Question, amendment agreed to.

The Earl of Cranbrook moved Amendment No. 3:

Page 2, line 18, after ("or) insert ("—(i)")

The noble Earl said: My Lords, this amendment was presaged by what I said just now. There are large effects from the consumption of gas. I think I have been over this ground sufficiently in discussing previous stages of the Bill. The consumption of gas produces carbon dioxide. I hope that my noble and learned friend will agree that the importance of the Government's climate change programme makes it necessary to lift one's eyes above the narrow objective of efficiency, to which he referred in his previous answer. The reference to the environmental effects of gas cannot ignore the critical impact of the release of carbon dioxide at its combustion by the consumer.

As I have previously emphasised, the consumption of gas by the consumer differs from the consumption of electricity. As my noble and learned friend pointed out at col. 764 of the Official Report at Report stage, the Government's climate change programme has to look across the range of greenhouse emitters. The ground that other alternative sources are not simultaneously considered does not oblige us to avoid the present opportunity to provide guidance applicable to one source—piped gas. I pointed out on Report that the argument that we should not move forward with one regulator as against others is not tenable. It prevents all progressive legislation, it has not been observed in practice and in any case it would easily be resolved—I would willingly agree to do so—by the prompt introduction of further amending legislation to level the playing field. All those things could be done.

I predict that at some stage it may become necessary to introduce special measures to combat global warming. I believe that the industry could suffer great perturbations if the basis of this consideration was not in the Act. Those are the reasons why I have brought this matter forward once again for consideration. I beg to move.

4.15 p.m.

Lord Fraser of Carmyllie

My Lords, as my noble friend has indicated, we have debated this matter previously and that previous debate was certainly an important and useful one. I hope that noble Lords were reassured by the explanations I gave then about the existing duties of the director to promote the efficient use of gas conveyed through pipes and the important duties in the draft licences which will be designed to promote energy efficiency in the gas market. However, I still have the same concerns about the potential effect of these amendments in giving the director a wider duty to consider the effect on the environment of the use of gas in carrying out her functions. I remain of the view that it is difficult to conceive of an issue relating to the environmental impact of the use of gas which is properly within the director's remit that is not already covered by the efficiency duty already in the Bill.

As I indicated previously, the concern is that the duty of the director would become wider than appropriate if she was required to look at environmental questions arising from the burning of gas other than those relating to its efficient use. Matters such as the comparison of the efficiency of different fuels are for government to consider in the light of overall policies. In our view it would not be appropriate for a regulator who was rightly focusing on issues relating to the gas industry alone to have regard to or to be responsible for these wider measures.

As my noble friend rightly says, in the future special measures may be needed to combat global warming. Those may well involve the promotion of gas use as a low carbon fuel rather than its restriction. They could involve taxes, although I have mentioned before the difficulties with those. However, all these matters are clearly ones which it should be for government and Parliament to assess. In our view they are not matters for an independent regulator in a particular industry to pursue. We therefore feel that the balance of environmental and efficiency duties is right in the Bill as it stands.

I hope that my noble friend will in particular appreciate what I said in acknowledgement of his concern about special measures possibly being necessary in the future. I trust that I have said sufficient so that he will feel that he can withdraw his amendment. In harping back to the last amendment, I certainly acknowledge that methane clearly contributes to global warming. In that respect I have no doubt that where there is, for example, leakage from a gas pipe there could be in the longer term significant environmental implications. However, as I am sure he will appreciate, the existing duty provided for in the Bill would allow the director to take environmental issues in that respect into account.

The Earl of Cranbrook

My Lords, I take note of my noble and learned friend's opinion that the matters I raised are adequately covered and that the prediction I made will be able to be dealt with without this amendment. I therefore beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4. not moved.]

Lord Fraser of Carmylliemoved Amendment No. 5:

Page 2, line 28, leave out ("has the meaning given by section 1(2)") and insert ("and 'pollution', in relation to the environment, shall be construed in accordance with section 1").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 2 I spoke also to Amendment No.5. I beg to move.

On Question, amendment agreed to.

Clause 6 [Licensing of gas suppliers and gas shippers]:

Lord Fraser of Carmylliemoved Amendment No. 6:

Page 10, line 7, leave out from ("conveyed") to end of line 12 and insert ("otherwise than by a public gas transporter").

The noble and learned Lord said: My Lords, at an earlier stage of this Bill I indicated that there are a large number of technical and drafting amendments. I propose to move them briefly unless any noble Lord wishes to ask further questions about them. In moving this amendment, I shall speak to Amendments Nos. 8 to 11. They are all technical and drafting amendments. I beg to move.

On Question, amendment agreed to.

Lord Peston moved Amendment No. 7:

Page 10, line 13, leave out subsection (6).

The noble Lord said: My Lords, I now revert to what we might call the mainstream part of the Gas Bill. The origin of the amendment I am putting before your Lordships is an excellent article in the Financial Times of last Monday by Robert Corzine. That was followed by an equally interesting piece by him on Tuesday. Perhaps I may say, en passant, that he has another fascinating piece in the Financial Times today on the vexed question of the long-term contracts of British Gas. I suppose that I would be trying your Lordships' patience too much if I were to go over that ground again, but it is an important matter.

The essence of what Mr. Corzine had to say in his first two articles, which concerns us at the moment, is that there would be a delay in the introduction of the network code and that this would in turn delay bringing into effect the main purpose of this Bill, which is to extend competition in the market for gas.

Although we have differed on detail, we have all welcomed this Bill because of the benefits it is intended to bring to consumers. Certainly, for that reason alone, we would not wish to see the effects of the measure being delayed. There has been some suggestion that the delay has been due to the slow passage of the Bill through your Lordships' House. I am surprised at that. We have not spent an undue amount of time on the Bill. It would have been good if we had completed it before the Recess, but were unable to do so because the Government's business managers could not find the necessary time either here or in the other place. Certainly nothing that I or my noble friends have done has held things up: quite the contrary, I believe that it will be agreed that while we have subjected the Bill to very detailed scrutiny we have been at pains not to use delaying tactics. I may add that the Minister too has proceeded as expeditiously as possible.

Having said that, I do not see how the precise date of Royal Assent could or should have affected the planning process. The pilot programme for testing competition in the domestic market does not depend on that date. The ability of TransCo to sort out its relationship with the potentially independent gas shippers does not depend on that date. The construction of the computer database does not depend on it. In sum, I can see no good reason for the delay.

My main purpose is not to express my own view but to use this amendment as a means of asking the Minister to tell us how things are going. I hope that he will be able to assure us that no important snags have been discovered either in his department or in TransCo, and that what the Bill calls "effective competition" will emerge in the very near future. I beg to move.

Lord Skelmersdale

My Lords, in the normal way of things I suggest that the Companion to the Standing Orders might say—I confess that I have not checked it—that probing amendments on Third Reading are undesirable. I absolve the noble Lord, Lord Peston, entirely from any blame whatever on this score because it is important to establish from the Government exactly what the timetable now is for this Bill and, more importantly, the operation from 1st April of the trial competitive areas.

As I understand it, the original plan was that there would be six months between the passing of the Bill and 1st April. That slipped to four months and rumour has it that it is about to slip to two months and that in fact the code will not be available for operation until 1st February. In those circumstances, one wonders why six months was chosen originally. More importantly, one wonders whether two months, which is all that is left between 1st February and 1st April, is long enough to get the system up and running so that we can have a smooth introduction to trial competition on 1st April.

Lord Fraser of Carmyllie

My Lords, in responding to this amendment perhaps I may begin by reiterating our overall timetable for the liberalisation of the gas supply. Some 500,000 domestic gas consumers in Cornwall, Devon and Somerset, will be the first to he able to choose their supplier from April 1996. From a date to be determined in 1997 a further 1.5 million domestic consumers in Dorset, Avon, Kent, East and West Sussex, will also be able to choose. Domestic competition will then be extended to the whole of Great Britain, and to 18 million consumers from a date in 1998.

This phased approach is intended primarily to test the technical and administrative systems necessary for competitive supply. But before the timetable can start it is necessary for the new legislative framework provided for in the Bill to come into effect. That happens on the appointed day, which I can confirm to my noble friend Lord Skelmersdale we intend to be 1st February next year. On that date the new network code, which will govern transportation, will also come into effect. We had earlier hoped and indicated to the industry that the appointed day might be 1st December. That was based on the Bill being passed in the summer. I hasten to say immediately to the noble Lord, Lord Peston, and his other colleagues on the Front Bench, that I do not for one moment in anyway attribute any blame to them for the way they have taken the various stages of the Bill through your Lordships' House.

The fact of the matter is that we are still discussing the Bill. It is clear to us that three to four weeks would be insufficient time from Royal Assent to complete the implementation work for a Bill of this technical complexity. Noble Lords will have noticed the necessary number of technical matters that have had to be dealt with.

In any event, real concerns have emerged as to whether all aspects of the network code would have been ready on time. Clearly, noble Lords have read press reports that we are in discussion with British Gas about the relationship between this change in the appointed date and the timetable for extending competition to the domestic market.

While I am happy to respond to the amendment, this is a matter of detail which does not affect the Bill. The question is rather an abstract one: whether consumers can choose their gas suppliers from 1st April with a billing change to follow at the end of the month, or whether they can choose their supplier and have the billing change from that date. As I hope would be expected, we are probing carefully possible computer difficulties on this matter to ensure that the best possible result is available to consumers on 1st April.

As yet, we are still considering the detail and officials of the department and Ofgas are continuing to have constructive meetings with British Gas to finalise the position. I hope that that explanation is of some assistance to the noble Lord.

Lord Skelmersdale

My Lords, before my noble and learned friend sits down, I did venture to ask him whether he was satisfied that the two months now proposed would be long enough to do the work that he has just described.

4.30 p.m.

Lord Fraser of Carmyllie

My Lords, as I am sure my noble friend will appreciate, while there is a major task involved in the introduction of a large computer system and data base as well as supporting contractual and administrative arrangements, nevertheless I can emphasise that a great deal of hard work is going on. I have no indication at present that the two months will prove to be insufficient. There is clearly a volume of work that can be done in advance of 1st February. With the best endeavours that are currently under way, I hope that it will prove possible to achieve all that we wish to achieve on 1st April, notwithstanding 1st February being the appointed day.

Lord Peston

My Lords, I thank the Minister for that reassuring answer. I appreciate that he cannot go much further than he has gone. I apologise to the noble Lord, Lord Skelmersdale, for going slightly against the Companion, but it seemed to me that not only noble Lords but also interested parties outside would want to have a realistic view of what is now going to happen with this important piece of legislation. That was obviously the reason why I used this method. I could not think of any other way of getting a statement out of the Minister. I am more than pleased with what the Minister has had to say. What is more to the point, interested parties outside will note with great care what the Minister said and will regard it as helpful. I have achieved my purpose, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 8:

Page 10, line 20, leave out ("that") and insert ("the 1986").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 6 I spoke also to Amendments Nos. 8, 9. 10 and 11. I beg to move.

On Question, amendment agreed to.

Clause 11 [Amendments of Part III of 1986 Act]:

Lord Fraser of Carmylliemoved Amendment No. 9:

Page 16, line 17, leave out ("the 1986") and insert ("that").

On Question, amendment agreed to.

Clause 12 [Acquisition of rights to use gas processing facilities]:

Lord Fraser of Carmylliemoved Amendment No. 10:

Page 16, line 45, leave out ("his") and insert ("the owner").

On Question, amendment agreed to.

Clause 18 [Short title, commencement and extent]:

Lord Fraser of Carmylliemoved Amendment No. 11:

Page 20, line 4, after ("17(1)") insert ("and (2)").

On Question, amendment agreed to.

Schedule 2 [The gas code]:

Lord Fraser of Carmylliemoved Amendments Nos. 12, 13, 14, 15, 16 and 17:

Page 22, line 26, at end insert (", unless the context otherwise requires").

Page 23, line 43, leave out ("subsection (14) of section 17") and insert ("section 17(14)").

Page 26, line 26, at end insert ("; but this sub-paragraph shall not apply in any case where it is reasonably expected that neither of those sub-paragraphs will apply.").

Page 31, line 17, at end insert ("(i)").

Page 31, line 18, after ("or") insert ("(ii)").

Page 31, line 21, at beginning insert ("and in this sub-paragraph").

The noble and learned Lord said: My Lords, these again are all drafting and technical amendments. I beg to move.

On Question, amendments agreed to.

Schedule 3 [Other amendments of Part 1 of 1986 Act]:

Lord Fraser of Carmylliemoved Amendment No. 18:

Page 45, line 12, leave out ("the") and insert ("public gas").

The noble and learned Lord said: My Lords, this again is a technical amendment. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 19:

Page 52, line 31, leave out from ("that") to end of line 35 and insert (", in so far as the following, namely—

  1. (a) the cost of carrying out the modifications; and
  2. (b) a reasonable element of profit,
will not be recoverable by the public gas transporter from elsewhere, the transporter should be entitled to receive them by way of consideration for carrying out the modifications." ").

The noble and learned Lord said: My Lords, as some of your Lordships may recall, I did not move this amendment on Report as the version tabled was defective. It has now been remedied. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmylliemoved Amendments Nos. 20, 21, 22, 23, 24 and 25:

Page 56, line 22, leave out (", or could have been if he thought fit,").

Page 56, line 24, at end insert ("or could have been determined by the holder if he had thought fit or had been required to determine them by or under a condition of the licence").

Page 56, line 37, after ("above") insert ("which incorporates the standard conditions").

Page 59, line 16, leave out (", or could have been if he thought fit,").

Page 59, line 17, at end insert ("or could have been determined by the holder if he had thought fit or had been required to determine them by or under a condition of the licence").

Page 71, line 5, leave out from ("information") to ("by") in line 11 and insert ("if—

  1. (a) the disclosure is required by a notice under subsection (1) or (1A) of section 38 above;
  2. 1131
  3. (b) the information has been obtained in pursuance of a notice under subsection (1A) of that section; or
  4. (c) the disclosure is made by one licence holder to another and is required either by a condition of the disclosing licence holder's licence, or").

The noble and learned Lord said: My Lords, these again are technical drafting amendments to Schedule 3, affecting principally the provisions for amending licences pursuant to references to the MMC. I beg to move.

On Question, amendments agreed to.

Baroness Nicolmoved Amendment No. 27:

Page 74, leave out lines 41 to 44 and insert—

(""( ) Regulations made by the Secretary of State shall provide for a public gas transporter to pay compensation for any loss sustained by any person as a consequence of the exercise of those powers.").

The noble Baroness said: My Lords, I understand that the marshalling of the amendments was incorrect and that Amendment No. 27 should have come before Amendment No. 26. First, I should very much like to thank the Minister for the meeting he had yesterday with one or two of the people concerned about the Bill. It was very useful and helped to move things forward.

I should like to thank the Minister also for Amendment No. 26 which removes the uncertainty in regard to "if' the regulations were produced, about which so many noble Lords were concerned at previous stages of the Bill. It makes it clear also that the Government accept the principle of payment of compensation. But one or two uncertainties remain about what the regulations will contain; for example, will there be a ceiling on the size of business which may claim compensation? The Minister will recall that we had the much discussed British Gas amendment of a £500,000 ceiling. What consultation will the Minister have before drafting the regulations?

Those questions are important, and I should like to have answers to them before I decide what to do with my amendment, because my position remains that compensation should be paid to all businesses which can prove that they have suffered loss, regardless of their size. I repeat, why should they have to suffer at the hands of another private business? There is no greater inducement to efficient working than having to pay for inefficiencies. The gas transporters are no exception.

The other amendment in the group (my Amendment No. 28) has been pre-empted by the Minister's new amendment (Amendment No. 29). The part of the clause which gave the gas transporters right of veto over future legislation was unacceptable to many of us in parliamentary terms as well as in other ways, and would have opened the way for similar demands from other organisations in other legislation. The new amendment leaves the power where it belongs. I am pleased that the offending words have been deleted and so I shall not be moving my Amendment No. 28. I await the Minister's answers on how the regulations are to be arrived at. I beg to move.

Lord Stanley of Alderley

My Lords, I supported the noble Baroness on Report, and I do so again today. Put on the face of the Bill, her amendments would deal with the problem rather more effectively than the Government's method. I do not wish to sound churlish for I appreciate the care and great thought that my noble and learned friend has put into listening to the problem of compensation, and the amendments that he has brought forward. In my opinion they have two main snags which the noble Baroness partly pointed out. The first and most important is that the Government intend to act by regulation, and we do not know what will go in and what will not go in those regulations, particularly if there is any limit.

The Government promised consultation before the regulations come before Parliament, and I welcome that. However, consultation means very little if the officials happen to behave like Sir Humphrey, as I am painfully aware today over the Charity Commissioners apparent inflexibility over SORP. Moreover, when the consultation has taken place and the regulations are laid before Parliament it can do nothing to alter them. I know that that point worries all noble Lords.

The second matter that worried me greatly was sub-paragraph (5), which is now dealt with by my noble and learned friend's new amendment. In the train today I composed a thoroughly sarcastic and vitriolic attack on my noble and learned friend. However, on arriving here I discovered that he had removed the offending sentence, for which I thank him greatly. My temper will now have to find another target.

I thank my noble and learned friend and the noble Baroness for reaching such a good compromise which will be welcomed, I know, by many small businesses. I hope that they will be gracious enough to thank both of them, as I do now.

Lord Skelmersdale

My Lords, having supported the noble Baroness every inch of the way from the first day of Committee, it would be unfortunate if, shall we say, the hint of iron in her speech caused me to break company and to break ranks at the last minute. Since taking over the Bill, which is never easy—and I speak from experience—my noble and learned friend has bent over backwards to ensure that he and his officials are as accommodating as possible to your Lordships' views and wishes. I congratulate my noble friend Lord Stanley on having persuaded them to remove what I described last Wednesday as the rogue "if' at the beginning of this part of the Bill and for removing the provision which led to a certain amount of angst around the Chamber. It was, as my noble friend pointed out, the need to have the consent of all public gas transporters before the regulations were changed.

Bearing in mind that my understanding throughout was that the Government were thinking closely along the lines of the letter sent by the chief executive of British Gas in January, referred to in Committee in another place, and taking account too of the fact that the current non-statutory arrangement catches 90 per cent. of VAT registered businesses, which by definition means 100 per cent. of non-VAT registered businesses, perhaps I may gently suggest to the noble Baroness that seven-eighths of a loaf is considerably better than none.

Lord Peston

My Lords, we have made considerable progress and everyone involved is to be congratulated. Perhaps I may say to the noble Lord, Lord Stanley, that no material that one prepares is ever wasted; it can always be recycled on other occasions. I look forward to hearing the vitriolic attack which perhaps he will direct at me some day.

I believe that my noble friend got the main point right to start with; that as regards private enterprises imposing costs on other private enterprises and damaging their business, there ought to be grounds for compensation. That is a fundamental point and broadly we have established that and agreed it. It is now a matter of how we achieve it.

The noble Lord, Lord Skelmersdale, is right to say that we have moved seven-eighths of the way towards our destination. I am not sure whether it is a constitutional point or a point of honour but since the regulations are in response to your Lordships' demands it seems clear that the Government will introduce them corresponding to what we have discussed. It would be appalling if the Government, having introduced the regulations in response to what we have said, formulated them in a way which did not bite on the issues we have put forward. Perhaps holding government in higher esteem than one or two other noble Lords, I am willing to believe for the moment that the regulations we get will be the regulations we want. However, we must wait for that.

We have moved forward and a concession has been made. Indeed, it is more than a concession; a considerable change has been made to the Bill which will affect small businesses in particular but other businesses too. I am most supportive of how far we are going now.

4.45 p.m.

Lord Fraser of Carmyllie

My Lords, I am delighted that the vitriol which my noble friend conjured up on the train today will not be displayed before your Lordships tonight. I am grateful for the observations that have been offered from both sides of the House for the changes that we have made. Perhaps I may reiterate that we have agreed not to make a general point that in each and every case there is a right to compensation when one user of the street acting lawfully causes delay or disruption to another. However, we recognise that a special exception is to he made for prolonged gas repairs affecting small businesses. I am grateful to the noble Baroness for drawing together at such short notice a number of people with whom the matter could be discussed.

Our present view is that an appropriate threshold for defining a small business would be a turnover of £500,000 a year, linked—and I stress this—to the retail prices index. We understand that such a figure covers the vast majority of small businesses. However, I confirm to the noble Baroness that we will be consulting appropriate national associations before making the regulations. Obviously, we will be prepared to look at any evidence as to whether a slightly different threshold ought to be used so as to cover the vast majority. The noble Baroness will appreciate that time is such that we do not have the opportunity for a widespread formal consultation but we shall certainly discuss the regulations informally. We have in mind a period of about three weeks starting in November and we will consider any evidence submitted as to whether the turnover limit is set at the right level to define a small business.

I turn to my Amendment No. 26. In the course of introducing our proposals on Report I gave a commitment that the Government would make the regulations envisaged by the appointed day when the principal provisions of the Bill will come into force. However, in response to my noble friend Lord Skelmersdale I also said that I would look to see whether we could reinforce that commitment by making it a statutory duty, rather than a discretion, for the Secretary of State to make the regulations. The amendment achieves that result.

The other amendment standing in my name on the Marshalled List was drafted in response to the continuing concern about sub-paragraph (5), expressed again by the noble Baroness and by my noble friend Lord Stanley. Their concern focused on what was seen as a veto being given to public gas transporters. The noble Baroness will appreciate that that provision will be removed by my proposed amendment.

I hope that we have achieved a satisfactory result and that we can leave this issue behind us at the last stage of the Bill.

The Earl of Harrowby

My Lords, before my noble and learned friend sits down, perhaps I may ask him to look more carefully and personally at the turnover figure of £500,000 because it would not be my definition of a small business.

Lord Fraser of Carmyllie

My Lords, I attempted to put the matter as carefully as I could. The advice that we have received is that that turnover figure would be sufficient to capture the vast majority. However, yesterday evening I was advised that that might not truly be the case. It is in that context that I am suggesting that during the period of consultation which we have announced we will indeed look at any evidence which suggests that the figure is inappropriate.

Baroness Nicol

My Lords, I am greatly reassured by what the Minister said. Perhaps I could just say that a turnover of whatever figure does not necessarily relate to the profitability of the business. A business with a turnover of £0.5 million may be making a substantial profit or may be making a mere pittance, depending upon the nature of the business. Therefore, I believe that a degree of flexibility is needed in that approach.

I am very pleased that the Minister is to consult. I regret that the time has to be so short but I am sure that the organisations interested in this amendment will prepare their case to put to the Minister. I am very grateful indeed for the concessions that have been made and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmylliemoved Amendment No. 26:

Page 74, line 41, leave out from beginning to ("a") in line 42 and insert ("The Secretary of State shall by regulations provide that, in such cases and to such extent as may be provided by the regulations").

The noble and learned Lord said: My Lords, there are some difficulties because there was something of an error in the way in which the amendments were numbered. Amendment No. 27 comes before Amendment No. 26. Therefore, I now wish to move Amendment No. 26. I beg to move.

On Question, amendment agreed to.

[Amendment No. 28 not moved.]

Lord Fraser of Carmylliemoved Amendment No. 29:

Page 74, line 45, leave out from beginning to ("no").

The noble and learned Lord said: My Lords, in responding to Amendment No. 27, I explained Amendment No. 29. I beg to move.

On Question, amendment agreed to.

Schedule 5 [Transitional provisions and savings]:

Lord Fraser of Carmylliemoved Amendment No. 30:

Page 84, leave out lines 35 to 37.

The noble and learned Lord said: My Lords, we have been looking again at the Bill and have concluded that paragraph 2(2) of Schedule 5 serves no useful purpose. The Secretary of State already has a power to secure that the scheme makes such provision, and only such provision, as he considers requisite or expedient for the purposes of Part I of Schedule 5. This power is conferred on the Secretary of State in paragraph 3 of the schedule and it appears that the mention in paragraph 2(2) adds nothing. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmylliemoved Amendments Nos. 31 to 35:

Page 86, line 39, leave out ("4") and insert ("paragraph 4(1) to (4)").

Page 86, line 41, leave out ("4") and insert ("paragraph 4(1) to (4)").

Page 91, line 36, leave out ("Such a scheme") and insert ("A scheme under this paragraph").

Page 92, line 11, leave out ("this paragraph") and insert ("sub-paragraphs (1) to (6) above").

Page 92, line 14, leave out ("this paragraph") and insert ("sub-paragraphs (1) to (6) above").

The noble and learned Lord said: My Lords, these are technical amendments. I beg to move.

On Question, amendments agreed to.

Lord Fraser of Carmylliemoved Amendments Nos. 36 to 39:

Page 93, line 4, leave out from second ("gas") to ("shall") in line 9 and insert—

("(2) The supplier's supply successor").

Page 93, line 45, at end insert—

("( ) In this Part of this Schedule "supply successor", in relation to a public gas supplier, means the person who becomes a gas supplier by virtue of a scheme made by or in relation to that public gas supplier under Part I of this Schedule.").

Page 94, line 26, leave out sub-paragraph (6).

Page 97, line 31, at end insert—

("( ) the Valuation for Rating (Plant and Machinery) Regulations 1989, so far as those Regulations continue to have effect for the purpose of determining the rateable values of hereditaments for days falling before 1st April 1995;").

The noble and learned Lord said: My Lords, these are drafting and technical amendments. I beg to move.

On Question, amendments agreed to.

Schedule 6 [Repeals]:

Lord Fraser of Carmylliemoved Amendment No. 40:

Page 98, line 39, column 3, leave out ("of').

On Question, amendment agreed to.

Lord Fraser of Carmyllie

My Lords, I beg to move that this Bill do now pass. Before the Gas Bill leaves this House, I should like to say a few words in recognition of the work that has been done on the Bill. In particular, I should like to thank my government colleagues who steered the Bill through Second Reading and Committee—my noble friends Lord Ferrers and Lord Inglewood. As your Lordships will appreciate, since the summer the pack has been shuffled and they are elsewhere, but it has been a pleasure for me to build upon the foundations which they laid. I should like to thank all the noble Lords who have taken part in the proceedings on the Gas Bill as it has passed through its various stages in this House.

I should apologise for the number of government amendments that have been brought forward. My noble friend Lord Ferrers said at the outset that it was to be expected that the Government would need to bring forward a number of amendments because of the technical and complex nature of the Bill. It may he that the amendments surpassed all our expectations as regards their number, technicality and complexity, but I can say that these arose from a determination on the part of the department to do our utmost to ensure that the provisions of the Bill had the desired effect. I should like to thank noble Lords for their patience and for speeding progress by allowing the majority of these technical amendments to be moved formally.

I should like to thank the noble Lords, Lord Peston and Lord Ezra, who have led the Opposition's probing and questioning of the Bill, ably supported by the noble Lords, Lord Haskel and Lord Clinton-Davis. I believe that they have demonstrated the value of a revising chamber by effectively analysing the Bill for weaknesses and identifying points where we have been able to make improvements.

The improvements secured by the noble Lords are many indeed. They include a requirement on the director general to include in her annual report to Parliament an account of the development of competition; requirement on licensees to take steps to secure that officers authorised to exercise powers of entry are fit and proper persons; a new offence to control bogus meter readers; and greater clarity in the provisions relating to licences artificially framed to avoid social obligations.

I shall at this stage pay tribute to my noble friends Lord Skelmersdale and Lord Cochrane, who have brought to our debates a detailed knowledge of the workings of different parts of the gas industry.

Your Lordships have taken a keen interest in safeguarding the interests of the more vulnerable groups in society. My noble friend Lord Boyd-Carpenter, ably supported by the noble Baroness, Lady David, make the point that vulnerable groups of customers other than those who are disabled or of pensionable age, may need special consideration. The Bill now places an additional duty on the director to have regard to the needs of chronically sick people. I am also grateful to my noble friend Lady Gardner of Parkes for a number of suggestions on consumer matters, which have been helpful in revising the standard conditions of gas suppliers' licences.

Our considerations have also been helped by my noble friend Lord Cranbrook who has meticulously looked over the environmental duties of the director in the Bill. While I have not been able to agree with every point my noble friend made it has been possible in response to his suggestions to improve the reference to the environment, first by deleting the word "physical" and later by expanding it to take account of the impact of pollution on living organisms.

The noble Baroness, Lady Nicol, and my noble friend Lord Stanley took up the interests of traders suffering economic loss due to street works being undertaken outside their premises. While we could not accept the premise in logic on which their argument was based, we were able to bring forward amendments aimed at replacing the present British Gas scheme with regulations applying similar principles on a formal basis. I thank also my noble friend Lord Caithness, who contributed helpfully to our deliberations on many occasions.

I believe that it is right that competition should be extended to the domestic market so that households can benefit from a choice of gas supplier, as customers in the industrial and commercial markets have been able to do for the past few years. We are beginning to see evidence of the kind of benefits that customers might expect. Several gas companies have declared their intention to enter that domestic market, initially in the South West, and they have said that they expect to be able to offer savings of 10 per cent. or more to customers compared to the prices of British Gas. The existence of real choice will empower consumers to demand good service.

I believe that the Bill will provide a sound framework for the new fully competitive gas industry and that it will promote the development of competition in the domestic gas market. It should provide lasting benefits to consumers in general and the very careful consideration given by your Lordships to this complex Bill will have done a great deal to achieve that aim.

Moved, That the Bill do now pass.—(Lord Fraser of Carmyllie.)

5 p.m.

Lord Peston

My Lords, on behalf of my noble friends and, indeed, on behalf of all noble Lords I should like to thank the Minister for the many kind remarks that he has just made. It would weary the House if I were to go over every single name that the noble and learned Lord mentioned, but I can say that I am at least as appreciative as he is of the contributions made by all the noble Lords whom he mentioned. However, I should like to add to the list the name of my noble friend Lady Turner who also helped us.

I certainly wish to be associated specifically with remembering that the noble Earl, Lord Ferrers, and the noble Lord, Lord Inglewood, started the process. But, having said that, I should particularly like to congratulate the Minister. We have dealt with an immensely complicated Bill. The noble and learned Lord came into the process in the middle of the proceedings and I must say that he handled matters in a quite outstanding manner; that is, compared with me. I have actually had three people working with me and every time it got difficult I said, "Well, you do it", whereas I believe that the Minister has literally done everything since he began. That is a remarkable achievement.

I agree with the Minister that the Bill was a sensible measure in the first place. Indeed, promoting competition in the domestic market is a worthwhile objective and we wish to see it happen. Equally, the way that we have approached the matter has impressed me. I say that because the Government have been responsive to arguments and the Minister mentioned several places where the Bill has been changed in response to arguments put forward from different parts of your Lordships' House. I agree with the Minister that that shows the value of a revising Chamber.

However, I have to tell the Minister that during most of my years in this House I have had a fairly gloomy view of the latter, almost coming to the point where I did not see the point of a revising Chamber because, in my experience, almost anything that I put forward the Government turned down. Indeed, I believe that the list of amendments that I have had successfully accepted by the Government was still in single figures until we dealt with this Bill. Therefore, speaking just for myself, the Minister has changed my view from the rather gloomy one that I held to something a little more optimistic as regards what can be achieved by a Chamber such as ours.

After thanking the Minister and other noble Lords there is little more for me to say other than to reiterate the point that this is a very important measure. It is a measure which has been brought forward to give the consumer a better deal in the field. Many of us will be looking at it in the future with a view to seeing whether that happens. I strongly believe that it will. It is certainly my view that I wish to see a successful Bill.

Lord Ezra

My Lords, I should like to associate myself with the remark just made by the noble Lord, Lord Peston, in expressing appreciation to the noble and learned Lord for the very effective way in which he has conducted our affairs, bearing in mind that he was not present at the beginning of the proceedings. I should also like to thank the noble and learned Lord for his sympathetic manner in handling matters. The noble Lord, Lord Peston, and I met the Minister after the Committee stage and went through a number of points of concern. I must say that the Minister dealt with most of them, although not quite all, in a very satisfactory manner from our point of view.

However, there is one issue upon which I must say that I am less than happy at this stage. I refer to the duty to safeguard the interests of consumers. I moved an amendment unsuccessfully in Committee and I proposed a modified amendment on Report, which I withdrew on the understanding that, without commitment, the noble and learned Lord would have another look at the matter. That was on the 18th October. On the morning of the 19th I wrote to the Minister with a suggested amendment asking him whether he would like to put it forward or whether I should; or, indeed, whether he had any other ideas. I did not hear from the Minister until this very day when I was handed a letter dated 25th October as I entered the Chamber. As a result, the amendment I proposed to the noble and learned Lord was rejected by the Public Bill Office because those responsible claimed that it had already been dealt with in Committee. However, had I received the Minister's letter in time and had it not been dated the 25th and handed to me on my arrival today, I believe that I could have proposed an amendment which the noble and learned Lord might have accepted. I say that because he says in the third paragraph of his letter: as I explained at Report, the duties in Section 4(1) are themselves designed with the interests of the final consumer in mind". Therefore, I could have asked the Minister whether he would accept those words being included in one of the subsections. Unfortunately, however, caught between the Public Bill Office and the tardiness with which I received a reply from the noble and learned Lord—no doubt for a good reason—I was unable to do so. I wonder whether it would be in order for the Minister to comment on that matter now, or perhaps he will write to me. Having said that, I wish to emphasise my gratitude to the Minister for the way in which he has conducted our affairs, with that one small omission.

Lord Skelmersdale

My Lords, only a few moments ago we had an example—a real demonstration—of how cross-party co-operation can improve legislation. I have found that that cross-party co-operation has extended all the way through the Bill's proceedings from Second Reading until this moment. As a result, considerable progress has been made towards devising a sensible framework for domestic competition. It is a framework which I believe combines the principles of consumer protection and fair and equal competition. However, it is only a framework. Therefore, much now rests on the licences and on how they are interpreted and applied.

What we all seek to do by way of the Bill is unprecedented anywhere in the world, so we must edge forward with caution. But caution does not mean sloth, slowness or whatever one may want to call it; it means that we need to exercise a degree of care. In particular, as we hand over our framework to the regulator we must ask her to be vigilant. She must ensure that companies that wish to supply gas to domestic customers are fit to do so and that they will have sufficient gas not to leave customers high and dry. Bearing in mind that since 1986 gas prices have come down by 23 per cent., to achieve only 10 per cent. in the next 10 years—that is the figure currently going around—seems to me to be a pretty poor deal for the consumer. However, I shall leave the matter there.

The regulator must ensure that all suppliers are able to meet their social obligations and that they do so without, hesitation or deviation, or something like that, which I believe comes from a radio programme. There will no doubt be teething problems along the way, but I hope that all parties can work together to ensure that they are sorted out as quickly as we have done our work on the Bill. We shall watch closely the progress of this project. I, for one, wish it well.

Lord Cochrane of Cults

My Lords, as we have now reached the end of this long drawn-out Bill, I wonder whether my noble and learned friend can give us any indication as to when some of the pruning which has been referred to in health and safety documentation—that is, some pruning of the undergrowth left from earlier gas Acts—and some of the regulations which it is proposed to make for specific and smaller segments of that wide field, the gas industry, are likely to come before Parliament.

Lord Fraser of Carmyllie

My Lords, I should like briefly to respond by saying that I am most grateful to noble Lords for the remarks which have been made. I can only extend an apology to the noble Lord, Lord Ezra, for the tardiness in responding to him. I had hoped that a message had previously reached him stating that I would have to reply along those lines, but it would appear that that, too, had somehow gone astray. I can only repeat my apologies. So far as concerns the point raised by my noble friend Lord Cochrane of Cults, I think that the most suitable way for me to respond would be to write to him on the matter.

On Question, Bill passed, and returned to the Commons with amendments.