HL Deb 01 February 1996 vol 568 cc1556-8

3.32 p.m.

Lord Ezra asked Her Majesty's Government:

Whether they accept the recommendations contained in the National Consumer Council's report of January 1996 on strengthening consumer representation in the privatised utilities.

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

My Lords, the Government will of course consider the National Consumer Council's very recent report. In general, we are content with the existing consumer representation arrangements in the utilities, even though these do not conform to any one particular model.

Lord Ezra

My Lords, does the noble and learned Lord agree that there is growing concern among the public about the operation of the privatised utilities and that one way of dealing with that would be to strengthen consumer representation within those industries? Does he agree that the Gas Consumers Council, which is an independent body, has operated very successfully? In those circumstances, and because of growing public anxiety, does he not think that the Government ought to give serious consideration to the recommendation in the National Consumer Council's report that similar independent bodies representing the interests of consumers should be set up in the electricity, water and telecommunications industries rather than consumer interests being contained within the regulatory organisations?

Lord Fraser of Carmyllie

My Lords, I do not accept the first question that the noble Lord directed at me. I should think that those electricity consumers who will receive a £50 rebate will be far from disconcerted by that.

On the subject of representation within the utilities, it is clear from the report prepared by the National Consumer Council that the different models which exist have different virtues and strengths. I am not wholly persuaded that to adopt the model of the Gas Consumers Council is necessarily appropriate in every circumstance, although I accept that it has performed well. For example, I doubt whether those who live in some parts of the country who have anxieties about the water industry in their area would believe that a national council would necessarily be the best way to deal with their misgivings.

Lord Molloy

My Lords, does the Minister agree that the general tone of the National Consumer Council's report could well lead to better understanding and to increased trade? Are those two issues not important for the industries involved?

Lord Fraser of Carmyllie

My Lords, I am not sure how the recommendations contained in the report would lead to an increase in trade. However, there are a number of recommendations in the report with which we agree in general terms. For example, one of the recommendations is that there should be greater openness in the way in which the councils carry out their affairs. I am sure that all noble Lords will agree that that is a desirable objective.

Lord Marsh

My Lords, was not one of the purposes of privatisation to prevent Ministers and governments interfering in the running of the industries as they used to interfere in the nationalised industries? Is it not at least possible that a high proportion of the directors and shareholders of the utilities are consumers?

Lord Fraser of Carmyllie

Yes, my Lords, they are indeed. I certainly wish to resist the notion that, because we have a system of regulators for the various utilities, it is desirable for Ministers to interfere. The arm's length approach which has been adopted has, in the main, been successful. We would not wish to revert to a situation where Ministers in the Department of Trade and Industry or other departments sought to assume a more significant role.

Lord Clinton-Davis

My Lords, is it not a fact that Ministers do interfere? That concern is expressed by the National Consumer Council and other consumer bodies in relation to the draconian cuts that were made in their resources between 1993 and 1995. Is it pure coincidence that those cuts coincided with a period when strong criticisms were made by those consumer bodies on behalf of those they represent about, for example, VAT on fuel bills, threats to the Post Office and Cedric Brown's unwarranted pay rise? Does the Minister agree that those cuts can and do impact on the ability of the consumer councils to do their job as independent bodies; namely, to represent those who are least able to represent themselves?

Lord Fraser of Carmyllie

My Lords, I am astonished to hear the noble Lord suggest that VAT matters might appropriately be a subject for decision by consumer councils. That is clearly a matter for central government. The individual consumer bodies which are funded by the Department of Trade and Industry have received their 1996–97 settlements at the baseline. The funding of a number of other councils—as I am sure the noble Lord is aware, and he would not wish anyone to be misled—is a matter for the regulators concerned. As the noble Lord, Lord Marsh, urged, it is not for us to interfere with the work of the regulators.