HL Deb 23 February 1998 vol 586 cc395-7
Lord Ezra

asked Her Majesty's Government:

When the domestic markets for gas and electricity are likely to be deregulated and under what conditions.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis)

My Lords, the timetables for opening the domestic markets for gas and electricity to competition are published by Ofgas and Offer respectively. In each case the market is being opened as soon as the relevant authorities are confident that the arrangements for administering the market will work reliably.

In the gas market, trials have been carried out in the South West, Kent and East and West Sussex. The remainder of the market is being opened in tranches across the country.

It is intended that the electricity market will open area by area, starting in September 1998. In the first areas to open, approximately 10 per cent. of customers will be free to choose their supplier straightaway; approximately half the customers will be free after three months and all customers after six months.

Lord Ezra

My Lords, is the noble Lord aware that a certain amount of confusion and concern has been created in the marketplace and among consumers at the delay in the opening-up of the electricity market, and is he satisfied that there will be no further delays? Furthermore, can he give an assurance that those customers who are disadvantaged for financial reasons, particularly those with prepayment meters, will be suitably safeguarded, as they were in the past, when the markets are opened up?

Lord Clinton-Davis

My Lords, before coming to those difficult points, perhaps I may take this opportunity, on behalf of the whole House, to congratulate the noble Lord on his birthday.

Noble Lords

Hear, hear!

Lord Clinton-Davis

My Lords, we thank him for his long devotion to the House and his unrestrained interest in energy matters.

The Government are not happy about the delay in opening the electricity market. However, the important thing is to get the answer right, as my honourable friend Mr. John Battle has made plain in the other place. We remain committed to seeing competition in electricity so that consumers can benefit. It would not be helpful to attempt to apportion responsibility for the delay.

We are carrying out a review with regard to help for poorer customers in the competitive market. There will be a consultation period in which all interested parties will have a role to play. So far as concerns electricity, the position of customers with prepayment meters has been protected by measures in the electricity price controls, which will run from 1st April until 31st March 2000. Under those controls prepayment customers should benefit to a broadly similar degree as should other customers from reductions in public electricity supply tariffs. The matter will be kept under review by Offer.

Lord Evans of Parkside

My Lords, is my noble friend aware that in the North West, where the gas market is soon to be deregulated, considerable confusion is being created among consumers by the high pressure salesmanship of certain companies and the conflicting claims about how much the consumer will benefit if he or she signs up with a different company? Will my noble friend give an undertaking that the Government will ensure, through the regulator, that customers will at least be able to compare like with like regarding the claims of different companies?

Lord Clinton-Davis

My Lords, I am aware of the difficulty that has arisen over the marketing tactics of a number of companies and rogue salesmen. This issue is being actively addressed by Ofgas through a new marketing condition in the licences of all gas supply companies. This will put responsibility where it lies—with the companies concerned.

Baroness Miller of Hendon

My Lords, do the Government agree that if the gas and electricity industries continue to make profits, whether by deregulation when it comes, increased capital investment or greater efficiency, those profits should not be confiscated by way of selective penal taxation?

Lord Clinton-Davis

My Lords, with respect to the noble Baroness, whom the House greatly admires, I believe that she has got this wrong. There was a case for a windfall tax, and that tax has been levied. It led to no proclamations of undue dissent, even from those who were required to pay it.

Lord Ezra

My Lords, I thank the Minister for his kind felicitations. However, can he say, in connection with the review that the Government are undertaking in relation to the position of those on low incomes—particularly with regard to electricity—whether he is aware of the proposal made by the electricity companies for raising a levy from all users of electricity which could then be used for the benefit of poorer users?

Lord Clinton-Davis

My Lords, I am aware of that proposal. It is a consideration which will be taken into account in the review to which I referred. I thank the noble Lord for raising that matter.

Lord Stoddart of Swindon

My Lords, is my noble friend aware that that is a dangerous road down which to go? Poverty should be relieved through general taxation and not taxation on one specific industry. If we do that for one, where will we stop?

Lord Clinton-Davis

My Lords, I am not sure whether my noble friend is referring to the supplementary raised by the noble Baroness, Lady Miller of Hendon, or to that raised by the noble Lord, Lord Ezra. I have not said that the Government will accept the proposition; I said that it will come within their deliberations in the review being undertaken and I go no further than that.