HL Deb 31 March 1998 vol 588 cc147-9

2.53 p.m.

Lord Peston

My Lords, in the unavoidable absence of my noble friend Lord Dean of Beswick and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government how many public utilities privatised between 1979 and 1997 have been subjected to examination by the Audit Commission and the National Audit Office and with what result.

Lord McIntosh of Haringey

My Lords, the National Audit Office has examined and reported on all the sales of public utilities between 1979 and 1997. The Northern Ireland Audit Office reported on the sale of the electricity industry in Northern Ireland. The National Audit Office has also carried out a number of examinations of the work of the regulators. This Government levied a windfall tax on privatised utilities immediately on coming into office as they believed that they were sold too cheaply by the previous government.

Lord Peston

My Lords, I thank my noble friend for his reassuring Answer. Is not the problem that while my right honourable friend the Chancellor of the Exchequer said that the windfall tax would be once and for all, the propensity of the privatised utilities to abuse their market position and consumers goes on unabated? What are the Government going to do about that?

Lord McIntosh of Haringey

My noble friend may have seen that last week the President of the Board of Trade published a Green Paper on the regulation of the utilities in which for the first time it is proposed to place a primary statutory duty on the regulators that the consumer interest will be put at the heart of the regulatory system. I believe that that very fundamental change will go a considerable way to answering my noble friend's question.

Baroness Seccombe

My Lords, does the Minister agree with me that the consumer has done well out of privatisation? Telephone bills have come down by 35 per cent; gas bills by 25 per cent. and electricity bills by 13 per cent. Admittedly, the cost of water has risen but, as we all know, that is explained by the huge environmental costs and the need.

Lord McIntosh of Haringey

My Lords, I do not know how the noble Baroness can distinguish in that way between consumers and taxpayers. It is evident that the latter have done extremely badly out of privatisation, as is clear from the excess profits, some of which have been squeezed out by the windfall tax. Of course, there are continuing changes and improvements in the performance of all industries whether privatised or in the public sector.

Lord Mackay of Ardbrecknish

My Lords, is it not the case that before privatisation most nationalised industries were costing the taxpayers whereas now they actually contribute to the Exchequer? Furthermore, are not all taxpayers consumers? Also, as my noble friend Lady Seccombe said, is it not the case that all consumers gained hugely? Perhaps I may instance another example. Does the noble Lord recall trying to find a working telephone box in the days of nationalisation? Does he not acknowledge that now it is quite difficult to find one that does not work, thanks to privatisation?

Lord McIntosh of Haringey

My Lords, the noble Lord answers his noble friend just as I did; namely, that consumers are also taxpayers. That is exactly the point. I do not accept that one can make the distinction that the noble Baroness made. As I said in answer to her question, huge technological changes are taking place in all these industries, notably in telecommunications. These changes take place whether or not the industry is privatised, as evidenced by the experience of France Telecom and Deutsche Telecom.

Lord Ezra

My Lords, the noble Lord, Lord Mackay, over-simplified the position relating to the nationalised industries. In fact, a number were making a profit; namely, British Airways, as well as the telecommunications and electricity industries. If the noble Lord checks the record, he will see that all of these were profitable. Is it not a fact that those industries were subject to regular annual reviews at that time and that action was taken on them? Is it the Government's intention that their successors, the privatised utilities, shall also be subject to such reviews, the results of which will be published and acted upon?

Lord McIntosh of Haringey

My Lords, under the privatisation regime established by the previous government, the privatised utilities are not subject to any particular review, but the regulators are. That is why our Green Paper, published last week, proposes to extend the role and powers of the regulators to protect consumers. I hope that the noble Lord and his party will respond positively to the invitation to consultation issued with the Green Paper.

Lord Dixon-Smith

My Lords, can the noble Lord inform the House how many of the privatisations of the former utilities were opposed by the present Government when they were in opposition, and with what result?

Lord McIntosh of Haringey

My Lords, the result is obvious. When we were in opposition, we were in a minority and the privatisations went through against our reasoned and constructive opposition.

Lord Brabazon of Tara

My Lords, does the noble Lord agree that it would be far better to have more competition than more regulation? Is not that exactly what is happening in both the electricity and the gas industries right now?

Lord McIntosh of Haringey

My Lords, I simply do not accept that the two are in conflict. There are opportunities for competition under regulatory regimes just as there would be such opportunities without regulatory regimes. Indeed, that is the whole thrust of this Government's policy, as is evident from the Competition Bill which has just gone through your Lordships' House.